Karpe v. Great American Indem. Co

In Karpe v. Great American Indem. Co. (1961) 190 Cal. App. 2d 226, the court identified the primary issue on appeal as "whether the liability of a bailee to his bailor for the slaughter of a cow, the subject of their bailment, which the bailee mistook for his own cow, is covered by a policy of liability insurance which indemnifies against liability for damages because of the destruction of property caused by accident, but excludes property 'in the care, custody or control of the insured.'" ( Karpe, supra, 190 Cal. App. 2d at p. 228.) Karpe took charge of Mrs. King's cow, Domino Belle 2d, to have her bred by Karpe's bull. Unfortunately, Karpe sent Domino Belle 2d to the slaughterhouse instead. King got a judgment against Karpe for the value of the cow, and Karpe sought coverage under his liability policy. It was denied, based on an exclusionary clause which provided: "'This policy does not apply: . . . to injury to or destruction of . . . property in the care, custody or control of insured or property as to which the insured for any purpose is exercising physical control, . . .'" Karpe claimed that the property loss was caused by accident and thus fell within the scope of coverage of the policy, because Domino Belle 2d, through mistake and inadvertence, was sent to the slaughterhouse and destroyed. ( Id. at p. 228.) The Court of Appeal reviewed the various theories under which Karpe could have been held liable to King, some of which could have led to policy coverage. However, the court concluded that Karpe's liability to King was not covered by the policy, because it did not make any difference that the property was not actually under the care and control of the insured at the time of its destruction. Rather, the court explained: "The fallacy of this contention lies in the assumption that the exclusionary provisions are directed to the time when the destruction of the property which is the subject of damages for liability occurs. The policy is concerned with the insured's liability for damages; indemnifying him against such damages whether they are damages for injury to or the destruction of property, including its loss of use. Under the circumstances of this case the fact of injury or destruction determines primarily the amount of damages as distinguished from liability for damages. The liability for which such damages are awarded may be attributable to many factors. The exclusionary provisions of the policy are concerned with the insured's liability; with the act that makes him liable for damages because of injury or destruction. As a consequence, the decisive factor is control of the cow at the time of the act which made the insured liable for its destruction, rather than control at the time of destruction." (Karpe, supra, 190 Cal. App. 2d at p. 232; ) Thus, in Karpe the court concluded that the purposes of the exclusion required an exclusion from coverage, because Karpe's, the insured's, liability to King grew out of the bailment, i.e., out of the fact that he had the care and custody of Domino Belle 2d at the time the act of mistakenly sending her to the slaughterhouse occurred and brought liability upon him. ( Karpe, supra, 190 Cal. App. 3d at pp. 232-233.)