Continental Casualty Company v. Suttenfield

• Decision Date: 04 October 1956
• Docket Number: No. 15873.,15873.
• Citation: 236 F.2d 433
• Parties: CONTINENTAL CASUALTY COMPANY, Appellant, v. James E. SUTTENFIELD and Columbus Fiber Mills Company, Inc., Appellees. James E. SUTTENFIELD and Columbus Fiber Mills Company, Inc., Appellants, v. TRAVELERS INDEMNITY COMPANY, Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

236 F.2d 433 (1956)

CONTINENTAL CASUALTY COMPANY, Appellant, v. James E. SUTTENFIELD and Columbus Fiber Mills Company, Inc., Appellees.

James E. SUTTENFIELD and Columbus Fiber Mills Company, Inc., Appellants, v. TRAVELERS INDEMNITY COMPANY, Appellee.

No. 15873.

United States Court of Appeals Fifth Circuit.

September 6, 1956.

Rehearing Denied October 4, 1956.

Otis B. Gary, D. L. Case, Robertson, Jackson, Payne, Lancaster & Walker, J. L. Lancaster, Jr., Dallas, Tex., for appellant, Continental Cas. Co.

Ernest E. Specks, W. C. Gowan, Carrington, Gowan, Johnson, Bromberg & Leeds, Dallas, Tex., for appellants James E. Suttenfield and Columbus Fiber Mills Co., Inc.

David M. Kendall, Jr., Pinkney Grissom, Thompson, Knight, Wright & Simmons, Dallas, Tex., for appellee, Travelers Indemnity Co.

Before TUTTLE, CAMERON and JONES, Circuit Judges.

JONES, Circuit Judge.

The factual situation presenting the questions posed for our decision is set forth in an opinion by the district court. Suttenfield v. Travelers Indemnity Co., 133 F.Supp. 418. Less than was there said may here suffice for presenting the issues of the appeal.

James E. Suttenfield, a Virginia resident, was a salesman employed by Columbus Fiber Mills Company, Inc. Suttenfield owned a 1950 Studebaker sedan automobile. Travelers Indemnity Company issued to Suttenfield as the sole insured its public liability insurance policy with liability limits of $25,000 and $50,000. Robertson Auto Rentals & Leases, Inc. leased to Columbus Fiber Mills a 1953 Ford automobile which was primarily but not exclusively for the use of Suttenfield. Travelers Indemnity Company issued to Suttenfield, Columbus Fiber Mills, and Robertson Auto Rentals, each being named as an insured thereunder, its public liability insurance policy with liability limits of $25,000 and $50,000. Each of the Travelers policies contained the following provisions:

"V. Use of Other Automobiles. If the named insured is an individual who owns the automobile classified as `pleasure and business\' or husband and wife either or both of whom own said automobile, such insurance as is afforded by this policy for bodily injury liability, for property damage liability and for medical payments with respect to said automobile applies with respect to any other automobile, subject to the following provisions:

"(a) With respect to the insurance for bodily injury liability and for property damage liability the unqualified word "insured" includes (1) such named insured, (2) the spouse of such individual if a resident of the same household and (3) any other person or organization legally responsible for the use by such named insured or spouse of an automobile not owned or hired by such other person or organization. Insuring Agreement III, Definition of Insured, does not apply to this insurance.

"(b) This insuring agreement does not apply:

"`(1) to any automobile owned by, hired as part of a frequent use of hired automobiles by, or furnished for regular use to the named insured or a member of his household other than a private chauffeur or domestic servant of the named insured or spouse".

On January 18, 1954, Suttenfield was in Dallas, Texas, on the business of his employer, Columbus Fiber Mills. In the course of such business he needed transportation to Waco, Texas, and for the account of his employer he rented a Chevrolet car from Hertz Stations, Inc., in Dallas. This car, while being driven by Suttenfield en route to Waco, was in a collision with an automobile driven by Edgar E. Hoppe, who was seriously injured. The Hertz Chevrolet was insured against public liability with limits of $25,000 and $50,000, by Continental Casualty Company. Its policy contained, among other provisions, the following:

"II. The insurance does not apply to any liability for such loss as is covered on a primary, contributory, excess, or any other basis by a policy of another insurance company; but this exclusion does not apply to insureds with whom the named insured Hertz has agreed that the insurance under the policy for such insured shall be primary as against any insurance afforded such insured under any other policy."

Hoppe brought suit against Suttenfield and Columbus Fiber Mills. Both Travelers and Continental were tendered the defense. As insurers have done before, each asserted that if any liability existed, it was under a policy issued by the other, and each disclaimed any liability on its own behalf. See the recently decided case of Maryland Casualty Co. v. Southern Farm Bureau Casualty Insurance Co., 5 Cir., 1956, 235 F.2d 679. Travelers undertook the defense of the case under a Reservation of Rights Agreement. Prior to Travelers taking over the defense of the suit, Suttenfield and Columbus Fiber Mills Company had employed counsel who were later paid $2,000 for their services. The suit of Hoppe was settled by the payment to him of $40,000 by Columbus Fiber Mills. Of the amount paid, $1,000 was treated as damage to the Hoppe car. It was stipulated that the settlement would not prejudice any rights with respect to insurance. Suttenfield agreed with Columbus Fiber Mills that it should have the benefit of any insurance proceeds available to him. Suttenfield and Columbus Fiber Mills brought their action, with Federal jurisdiction based on diversity of citizenship, against the two insurance companies claiming from them the amount paid to Hoppe, the $2,000 paid for attorneys' fees, and interest and costs.

Excluding his use of the car leased by Robertson Auto Rentals & Leases, the only uses of hired automobiles by Suttenfield during the year prior to the collision were on March 25, 1953, May 28, 1953, August 17, 1953, August 18, 1953, August 20, 1953, November 4, 1953, November 20, 1953, and December 6, 1953, a total of eight times. An adjuster for Travelers wrote Columbus Fiber Mills requesting information as to the dates and places when and where Suttenfield rented cars. The letter continued:

"Does Mr. Suttenfield frequently rent cars as a customary practice for the use in his work?

"In addition to Mr. Suttenfield and your company, another insured named under our policy is the Robertson Auto Rentals and Leases, Incorporated. Can you please advise us the address of this concern and the frequency in which Mr. Suttenfield rents its cars for use in his work."

The Office Manager of Columbus Fiber Mills replied in its name giving a list of the dates and places of the rental of cars by Suttenfield, and saying:

"Mr. Suttenfield frequently rents a car for use in his work. We rent cars from Robertson Auto Rentals and Leases each month for all the salesmen in Richmond, Virginia."

Suttenfield and his employer, Columbus Fiber Mills, insisted before the district court, and do here insist, that Continental is liable to the extent of its limit and that Travelers is liable for the remainder of the amount paid Hoppe, or that Travelers is liable for the entire amount. Continental insisted before the district court, and does here insist, that it has no liability because one or both of the Travelers policies covered the liability and the coverage was expressly excluded from its assumed risks. Travelers insisted before the district court, and does here insist, that it is without liability because its exclusionary clauses exempted it and that, within Continental's limit it was Continental's liability. The district court held that the Travelers policy on the car owned by Robertson Auto Rentals & Leases did not insure against the liability to Hoppe because, although Suttenfield was a named insured along with Columbus Fiber Mills and Robertson Auto Rentals & Leases, the car was owned by the Robertson corporation and there was no named individual who owned the car and hence the coverage did not extend to the use by Suttenfield of the Hertz car. It was determined by the district court that the Travelers policy on the car owned by Suttenfield did not insure against the liability to Hoppe because the Hertz car used by Suttenfield at the time of the collision was "hired as a part of a frequent use of hired automobiles by, or furnished for...