Provident Tradesmens B. & T. Co. v. Lumbermens Mut. Cas. Co.

• Decision Date: 17 June 1963
• Docket Number: Civ. A. No. 26455.
• Citation: 218 F. Supp. 802
• Parties: PROVIDENT TRADESMENS BANK AND TRUST COMPANY, Administrator of the Estate of John R. Lynch, a/k/a John Robert Lynch, Deceased and John Landis Harris and Sarah B. Smith, Administratrix of the Estate of Thomas W. Smith, Deceased v. LUMBERMENS MUTUAL CASUALTY COMPANY and George M. Patterson, Administrator of the Estate of Donald Cionci, Deceased.
• Court: U.S. District Court — Eastern District of Pennsylvania

218 F. Supp. 802

PROVIDENT TRADESMENS BANK AND TRUST COMPANY, Administrator of the Estate of John R. Lynch, a/k/a John Robert Lynch, Deceased and John Landis Harris and Sarah B. Smith, Administratrix of the Estate of Thomas W. Smith, Deceased v. LUMBERMENS MUTUAL CASUALTY COMPANY and George M. Patterson, Administrator of the Estate of Donald Cionci, Deceased.

Civ. A. No. 26455.

United States District Court E. D. Pennsylvania.

June 17, 1963.

Freedman, Landy & Lorry, by Avram G. Adler, and Bayard M. Graf, Philadelphia, Pa., for Provident Tradesmens Bank & Trust Co.

Herbert C. Nelson, Norristown, Pa., for John Landis Harris and Sarah B. Smith.

Swartz, Campbell & Henry, by Lynn L. Detweiler, Philadelphia, Pa., for Lumbermens Mut. Cas. Co.

Schroeder, Jenkins & Raymond, by R. Stuart Jenkins, Media, Pa., for George M. Patterson.

LUONGO, District Judge.

Defendant, Lumbermens Mutual Casualty Company (Lumbermens), has presented motions for new trial and for judgment n. o. v. following an adverse verdict in this declaratory judgment proceeding under 28 U.S.C.A. § 2201. The action involved the question of coverage of a policy of insurance issued by Lumbermens to one Edward S. Dutcher, the named insured. In addition to Dutcher, the policy insured "* * * any person using such automobile, provided the actual use thereof is with the permission of the named insured." This action, resulting in directed verdicts in favor of two Estate plaintiffs (Provident Tradesmens Bank and Trust Company, Administrator of the Estate of John R. Lynch, and Sarah B. Smith, Administratrix of the Estate of Thomas W. Smith), and a verdict by the jury in favor of plaintiff John Landis Harris, against defendant Lumbermens, arose out of the following circumstances:

On January 17, 1958, John Lynch and Donald Cionci, driving the automobile of Edward Dutcher, picked up John Landis Harris in Media, Pennsylvania. On the way from Media to Bryn Mawr, the Dutcher vehicle, driven by Cionci, was involved in a collision with a truck operated by Thomas W. Smith. Lynch, Cionci and Smith were killed, Harris was injured.

As a result of the accident three trespass actions were commenced:

(a) Harris instituted suit in the Court of Common Pleas of Delaware County against Dutcher, the Lynch Estate and the Cionci Estate;

(b) The Smith Estate instituted suit in the Court of Common Pleas of Delaware County against the same defendants named in the Harris suit;

(c) The Lynch Estate commenced an action in this Court against the Cionci Estate.

When Lumbermens refused to defend the Cionci Estate in the action in this Court and to make available the coverage of the policy issued to Dutcher to satisfy any verdict or judgment in favor of the Lynch Estate, this declaratory judgment action was instituted by the Administrator of the Lynch Estate seeking a declaration that Cionci was driving with Dutcher's permission, that Cionci was, therefore, an insured under the policy in question, and that the policy is available to satisfy a verdict or judgment obtained by the Lynch Estate in its action against the Cionci Estate. Lumbermens joined, as an additional defendant, the Cionci Estate and, as additional plaintiffs, John Landis Harris and the Smith Estate. A subsequent motion by Lynch's Estate to sever Harris and the Smith Estate as plaintiffs was successfully resisted by Lumbermens.

At the trial of the declaratory judgment action plaintiffs proved the existence of the insurance policy, Dutcher's ownership of the car and the fact (conceded at the trial by Lumbermens) that Cionci was the driver of the car. This was a diversity suit with all operative facts occurring in Pennsylvania, hence Pennsylvania law was applicable. Lind v. Schenley Industries, Inc., 278 F. 2d 79 (3rd Cir., 1960), cert. den. 364 U.S. 835, 81 S.Ct. 58, 5 L.Ed.2d 60 (1960). Under Pennsylvania law proof of the above facts raises a presumption that Cionci was driving with Dutcher's permission, and, in the absence of credible testimony to rebut the presumption, justifies the entry of a directed verdict in favor of the plaintiff. Exner v. Safeco Insurance Company of America, 402 Pa. 473, 167 A.2d 703 (1961); Waters v. New Amsterdam Casualty Company, 393 Pa. 247, 144 A.2d 354 (1958).

Lumbermens' defense was that Cionci's use deviated substantially from the permission granted by Dutcher, that he was therefore operating without permission and the coverage of the policy was not available to him. Lumbermens offered to prove by the testimony of Dutcher that he had given permission to Lynch and Cionci to drive to Ardmore, Pennsylvania, a point a mile or two from Bryn Mawr, to enable one of the two to pay a bill and to return without delay. Timely objection was made by the two Estate plaintiffs to the offer of Dutcher's testimony. Dutcher was ruled incompetent, under the Pennsylvania Dead Man's Act, to testify against the two Estates but he was permitted to testify as to Harris. With Dutcher's testimony ruled out, there was no evidence, as to the two Estate plaintiffs, to rebut the presumption of permission and, on the authority of the Exner and Waters cases the jury was directed to return verdicts in favor of the Lynch Estate and the Smith Estate. Harris' case was submitted to the jury which returned a verdict in favor of Harris.

1. Motion for a new trial as to the Lynch and Smith Estates:

Dutcher's competency to testify against the two Estate plaintiffs is controlled by the Pennsylvania Dead Man's Act, 28 P.S. § 322 which in pertinent part provides:

"Nor, where any party to a thing or contract in action is dead, * * * and his right thereto or therein has passed, either by his own act or by the act of the law, to a party on the record who represents his interest in the subject in controversy, shall any surviving or remaining party to such thing or contract, or any other person whose interest shall be adverse to the said right of such deceased * * *, be a competent witness to any matter occurring before the death of said party, * * *."

Competency of a witness is the rule in Pennsylvania and incompetency the exception. In re Hendrickson's Estate, 388 Pa. 39, 44, 130 A.2d 143 (1957). One of the exceptions is the disqualification of surviving parties to a transaction and any other person whose interest is adverse to the interest of a decedent. In re Hendrickson's Estate, supra, 388 Pa. at page 45, 130 A.2d at pages 146-147. The test of adversity expressed in In re Gaston's Estate, 361 Pa. 105, 109, 62 A.2d 904, 906 (1949) and reiterated in Commonwealth Trust Co., Admr. v. Szabo, 391 Pa. 272, 281, 282, 138 A.2d 85, 89 (1957), is as follows:

"The true test of the interest of a witness is that he will either gain or lose, as the direct legal operation and effect of the judgment, or that the record will be legal evidence for or against him in some other action. It must be a present, certain and vested interest, and not an interest uncertain, remote or contingent."

The issue is a simple one, whether Dutcher's interest in this case was such as to render him incompetent under the foregoing tests. Lumbermens seeks to equate "interest" with "money" and contends that, since Dutcher is not a party to these proceedings, he has nothing to gain or lose from the judgment entered in these proceedings. That is too narrow a view. The subject matter of this suit is the coverage of Lumbermens' policy issued to Dutcher. Depending upon the outcome of this trial, Dutcher may have the policy all to himself or he may have to share its coverage with the Cionci Estate, thereby extending the availability of the proceeds of the policy to satisfy verdicts and judgments in favor of the two Estate plaintiffs. Sharing the coverage of a policy of insurance with finite limits with another, and thereby making that policy available to claimants against that other person is immediately worth less than having the coverage of such policy available to Dutcher alone. By the outcome in the instant case, to the extent that the two Estate plaintiffs will have the proceeds of the policy available to them in their claims against Cionci's estate, Dutcher will lose a measure of protection. Conversely, to the extent that the proceeds of this policy are not available to the two Estate plaintiffs Dutcher will gain. I will not indulge, as Lumbermens would have me do, in speculation as to whether any of the plaintiffs have a real probability of recovery against Dutcher, or as to the size of the verdicts which may be rendered in favor of any of the plaintiffs against any of the defendants. It is sufficient for the purpose of determining adversity that it appears clearly that the measure of Dutcher's protection under this policy of insurance is dependent upon the outcome of this suit. That being so, Dutcher's interest in these proceedings is adverse to the interest of the two Estate plaintiffs, the parties who represent, on this record, the interests of the deceased persons in the matter in controversy.

Lumbermens' motion for new trial against the Estate of Lynch and the Estate of Smith is denied.

(2) Motions as to Harris:

(a) Motion for judgment n. o. v.:

Lumbermens' motion for judgment n. o. v. was not preserved as required by Rule 50 and for that reason must be denied. Massaro v. United State Lines Company, 307 F.2d 299 (3rd Cir., 1962). Nevertheless I feel obliged to offer the following comments on the lack of merit of the motion.

Lumbermens relies on Waters v. New Amsterdam Cas. Co., 393 Pa. 247, 144 A.2d 354 (1958). That case does not support Lumbermens' position, instead it confirms in every respect the procedure employed in the trial of this case. The basic problem in Waters was burden of proof. The trial judge there had instructed the jury that where a person is driving a vehicle owned by another there is a presumption that the vehicle is being driven with the permission of the owner and the presumption shifts the burden to the defendant to prove...