Builders & Mfrs. Mut. Cas. Co. v. Preferred A. Ins. Co., 8491.

• Decision Date: 14 March 1941
• Docket Number: No. 8491.,8491.
• Parties: BUILDERS & MFRS. MUT. CASUALTY CO. v. PREFERRED AUTOMOBILE INS. CO.
• Court: U.S. Court of Appeals — Sixth Circuit

118 F.2d 118 (1941)

BUILDERS & MFRS. MUT. CASUALTY CO. v. PREFERRED AUTOMOBILE INS. CO.

No. 8491.

Circuit Court of Appeals, Sixth Circuit.

March 14, 1941.

William A. Finn, of Toledo, Ohio, and E. R. Diehm, of Cleveland, Ohio (Klein & Diehm and Lester J. Farber, all of Cleveland, Ohio, on the brief), for appellant.

Wilbur E. Benoy, of Columbus, Ohio (Harry E. Rodgers, of Grand Rapids, Mich., on the brief), for appellee.

Before HICKS, SIMONS, and ALLEN, Circuit Judges.

ALLEN, Circuit Judge.

Appeal from an order dismissing a supplemental petition filed under Section 9510-4, General Code of Ohio. The facts in the main are not in controversy.

On October 17, 1933, Dwight W. Hummon, of Findlay, Ohio, while engaged in hauling interstate freight in his own automobile truck for the Buffalo and Ohio Transfer Company, from Buffalo, New York, to Cleveland, Ohio, collided with an automobile upon State Route No. 20 in Ashtabula County, Ohio, killing Ida Olle and seriously injuring J. R. Van Norman, occupants of the automobile, and damaging his own truck. At the time of the accident Hummon carried insurance issued by the appellee, the Preferred Automobile Insurance Company, a Michigan corporation, providing indemnity for public liability, property damage, and collision, and $157.73 was paid to Hummon under this policy for property damage. The Preferred policy carried limits for public liability of $5,000 for injury or death of one person, and $10,000 for more than one person. The Buffalo and Ohio Transfer Company, in compliance with the requirements of the Public Utilities Commission of Ohio applicable to interstate trucking operations, carried a blanket insurance policy payable on the gross receipts payment plan covering public liability, with a $25,000 to $50,000 limit, issued by the appellant, an Illinois corporation.¹

Actions were filed by Van Norman and the administrator of Ida Olle in the state court in Ashtabula County, Ohio, against the Transfer Company, in which actions Hummon was not joined as party defendant. These actions were settled and dismissed at the instance of the Mutual Company, which paid Van Norman $6,500 and the administrator of Ida Olle $2,500. Upon settlement, releases were executed by the respective plaintiffs, discharging Hummon as well as the Mutual Company from any and all causes of action growing out of the accident.

On April 17, 1935, the Mutual Company filed an action in the District Court of the Northern District of Ohio against Hummon, praying judgment in the amounts theretofore paid in settlement of the state court litigation, together with $750 attorneys' fees. Hummon failed to appear in person or by counsel when the case was called for trial in the District Court, and on October 5, 1937, judgment was entered on behalf of the appellant in the sum of $9,750, with interest. Meanwhile, the Mutual Company had on June 5, 1937, reinsured its business, transferred all of its assets to the Casualty Company, and thereupon surrendered its charter.

On December 29, 1937, the Casualty Company filed a supplemental petition in the instant case against Hummon and made the appellee a party defendant, seeking to recover from it the judgment against Hummon which was unsatisfied. Later the Casualty Company went into liquidation, and Ernest Palmer, Director of Insurance of the State of Illinois, who had been appointed liquidator, applied to amend the entry of judgment in the original proceedings against Hummon by substitution of the Casualty Company for the Mutual Company, which motion was taken under advisement. Evidence was taken at the hearing, bearing upon the questions (1) whether the appellee had notice of the pendency of the federal case against Hummon; (2) whether the Preferred policy applied to the trucking operation involved in the accident, and (3) whether Hummon was insured by the Mutual policy. The court did not rule upon these questions, but granted appellee's motion for judgment on the pleadings and the evidence, and thereupon dismissed appellant's petition upon the ground that the appellant was not authorized to maintain the supplemental proceeding under the Ohio statute.

The section in question, Section 9510-4, General Code of Ohio, with its amendments, reads as follows:²

"Upon the recovery of a final judgment against any firm, person or corporation by any person, including administrators and executors, for loss or damage on account of bodily injury or death, for loss or damage to tangible or intangible property of any person, firm, or corporation, for loss or damage on account of loss or damage to tangible or intangible property of any person, firm, or corporation, for loss or damage to a person on account of bodily injury to his wife, minor child or children if the defendant in such action was insured against loss or damage at the time when the rights of action arose, the judgment creditor or his successor in interest shall be entitled to have the insurance money provided for in the contract of insurance between the insurance company and the defendant applied to the satisfaction of the judgment, and if the judgment is not satisfied within thirty days after the date when it is rendered, the judgment creditor may proceed in a legal action against the defendant and the insurance company or his successor in interest, to reach and apply the insurance money to the satisfaction of the judgment, may file in the action in which said judgment was rendered, a supplemental petition wherein the insurer is made new party defendant in said action, and whereon service of summons upon the insurer shall be made and returned as in the commencement of an action at law. Thereafter the action shall proceed as to the insurer as in an original action at law."

It was the theory of the District Court that the purpose of the Legislature in enacting the amended statute was to give to the judgment creditor or his successor in interest in the original tort action the right to reach and apply the insurance money to the satisfaction of the judgment. It decided that the appellant should have joined Hummon in the original tort action in the state court, and if a judgment had...