312 U.S. 270 (1941), 194, Maryland Casualty Co. v. Pacific Coal & Oil Co.

Docket Nº:No. 194
Citation:312 U.S. 270, 61 S.Ct. 510, 85 L.Ed. 826
Party Name:Maryland Casualty Co. v. Pacific Coal & Oil Co.
Case Date:February 03, 1941
Court:United States Supreme Court
 
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Page 270

312 U.S. 270 (1941)

61 S.Ct. 510, 85 L.Ed. 826

Maryland Casualty Co.

v.

Pacific Coal & Oil Co.

No. 194

United States Supreme Court

Feb. 3, 1941

January 9, 1941

CERTIORARI TO THE CIRCUIT COURT OF APPEALS

FOR THE SIXTH CIRCUIT

Syllabus

1. To support a suit under the Declaratory Judgment Act, the facts must show a substantial controversy, real and immediate, between parties having adverse legal interests. P. 273.

2. An insurer issued a policy covering liability of the insured for personal injuries caused by automobiles "hired by the insured." Under the policy and the state law, an injured party could keep the policy from lapsing by serving notice of the accident, etc., if the insured failed to do so; and, if successful in obtaining judgment against the insured, could enforce it by supplementary proceedings against the insurer. The insured having been sued in the state court for personal injuries sustained in a collision between a truck driven by an employee of the insured and the automobile of the claimant, the insurer brought suit in the federal court against the insured and the claimant, alleging that the truck was not "hired by the insured" and contending that it was not bound to defend the state court suit or to indemnify the insured.

Held:

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(1) That diverse citizenship and jurisdictional amount being present, the insurer's suit involved an "actual controversy" cognizable under the Declaratory Judgment Act. P. 273.

(2) An injunction to restrain the proceedings in the state court is prohibited by § 265 of the Judicial Code. P. 274.

111 F.2d 214 reversed.

Certiorari, 311 U.S. 625, to review the affirmance of a decree in a suit for a declaratory judgment.

MURPHY, J., lead opinion

MR. JUSTICE MURPHY delivered the opinion of the Court.

Petitioner issued a conventional liability policy to the insured, the Pacific Coal & Oil Co., in which it agreed to indemnify the insured for any sums the latter might be required to pay to third parties for injuries to person and property caused by automobiles hired by the insured. Petitioner also agreed that it would defend any action covered by the policy which was brought against the insured to recover damages for such injuries.

While the policy was in force, a collision occurred between an automobile driven by respondent Orteca and a truck driven by an employee of the insured. Orteca brought an action in an Ohio state court against the insured to recover damages resulting from injuries sustained in this collision. Apparently this action has not proceeded to judgment.

Petitioner then brought this action against the insured and Orteca. Its complaint set forth the facts detailed above, and further alleged that, at the time of the collision, the employee of the insured was driving a truck sold to him by the insured on a conditional sales contract.

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Petitioner claimed that this truck was not one "hired by the insured," and hence that it was not liable to defend the action by Orteca against the insured or to indemnify the latter if Orteca prevailed. It sought a declaratory judgment to this effect against the insured and Orteca, and a temporary injunction restraining the proceedings in the state court pending final judgment in this suit.

Orteca demurred to the complaint on the ground that it did not state a cause of action against him. The District Court sustained his demurrer, and the Circuit Court of Appeals affirmed. Maryland Casualty Co. v. Pacific Coal & Oil Co., 111 F.2d 214. We granted certiorari , 311 U.S. 625, to resolve the conflict with the decisions of other Circuit Courts of Appeals cited in the note. *

The question is whether petitioner's allegations are...

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