433 F.2d 1007 (8th Cir. 1970), 20123, State Farm Mut. Auto. Ins. Co. v. American Cas. Co.

Docket Nº:20123.
Citation:433 F.2d 1007
Party Name:STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, an Illinois Corporation, Plaintiff-Appellee, v. AMERICAN CASUALTY COMPANY, a Pennsylvania Corporation, Defendant-Appellant, The Fidelity and Casualty Company of New York, a New York Corporation, Defendant-Appellee.
Case Date:November 10, 1970
Court:United States Courts of Appeals, Court of Appeals for the Eighth Circuit
 
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Page 1007

433 F.2d 1007 (8th Cir. 1970)

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, an Illinois Corporation, Plaintiff-Appellee,

v.

AMERICAN CASUALTY COMPANY, a Pennsylvania Corporation, Defendant-Appellant, The Fidelity and Casualty Company of New York, a New York Corporation, Defendant-Appellee.

No. 20123.

United States Court of Appeals, Eighth Circuit.

November 10, 1970

Page 1008

Frank X. Cronan, Minneapolis, Minn., for appellant.

James D. Cahill, Moorhead, Minn., for appellee.

Before GIBSON and LAY, Circuit Judges, and HUNTER, District Judge.

LAY, Circuit Judge.

A declaratory judgment action was initiated by State Farm Insurance Company to determine the rights and liabilities of three insurers on their respective contracts of insurance. The issue on appeal is whether American Casualty's policy provides only excess coverage. The district court held that the policies of State Farm and American Casualty are both primary insurance and ordered pro rata contribution. State Farm Mut. Auto Ins. Co. v. Northwest Leasing Corp., 299 F.Supp. 630 (D.N.D.1969). American Casualty appeals. We affirm.

The facts show that the local station manager of Pembina Broadcasting Company of Fargo, North Dakota, a wholly owned subsidiary of Evansville Television, Inc., of Evansville, Indiana, leased a 1965 Ford station wagon from the Northwest Leasing Corporation of Fargo. 1 The lease required Pembina to purchase liability insurance of $100,000/$300,000 for personal injury and $25,000 for property damage. This policy was issued to Pembina by State Farm. The policy provides that if a loss is covered by other collectible insurance the State Farm coverage shall be applied pro rata with the other insurance.

Evansville Television, the parent corporation, was insured by a policy issued by American Casualty. The policy provided coverage of $500,000/$1,000,000 for personal injury and $100,000 for property damage. It is the effect of this policy which is in question here. The insuring agreement covered the insured for liability arising out of the use of 'any automobile.' Under a policy amendment Pembina, as a subsidiary, is named as an additional insured. The

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policy contains a pro rata clause similar to the State Farm Clause. However, it also contains a provision that the policy shall be excess insurance only for loss arising from the use of 'any hired automobile insured on a cost of hire basis' or arising from the use of 'any nonowned automobile.' It is on the basis of this provision that American Casualty claims to be an excess carrier rather than a primary insurer responsible for contributing on a pro rata basis.

On January 31, 1965, Pembina's station manager collided with another vehicle while driving the leased 1965 Ford. The accident occurred near Dalton, Minnesota. He was killed and several other persons in the two cars were injured. Claims of more than $1,000,000 in state and federal courts were brought against the estate of the station manager, Pembina, and Northwest Leasing. All the actions were tried and concluded, except for the claim of one Janice Pritchard which was settled by State Farm for $6,500 without suit. It is the Pritchard settlement for which State Farm sought and the district court granted pro rata contribution from American Casualty.

American Casualty has questioned the jurisdiction of the district court for lack of the requisite amount in controversy. When the action commenced, however, involving all the claims arising out of the accident, the jurisdictional amount was satisfied several times over. 2 It is well settled in diversity cases that jurisdiction, once properly vested, is not lost by subsequent events which reduce the amount in controversy to less than the jurisdiction amount. St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283, 292-293, 58 S.Ct. 586, 82 L.Ed. 845 (1938).

American Casualty's primary argument is that the State Farm policy specifically covered the 1965 Ford station wagon, whereas the schedule of insured vehicles appended to the American Casualty policy did not mention this specific automobile. The argument is that since Pembina did not request coverage of the Ford by American Casualty (through Evansville) the intention of the parties was not to provide coverage for that automobile. This overlooks the policy contract which provides liability insurance for loss arising out of the use of 'any automobile' by the insured. This language does not manifest an intention to exclude automobiles not listed on the policy schedule. At most it raises a doubt as to the intention, and such an ambiguity (if it really is ambiguous) must be resolved against the insurer preparing the contract. As a matter of simple policy construction it appears that the American Casualty policy is primary insurance unless limited by some other term of the policy.

The question then becomes whether any policy exclusion...

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