Canal Ins. Co. v. Carolina Cas. Ins. Co.

Decision Date06 February 1995
Docket NumberNo. 94-2129,94-2129
Citation59 F.3d 281
PartiesCANAL INSURANCE COMPANY, Plaintiff, Appellee, v. CAROLINA CASUALTY INSURANCE COMPANY, Defendant, Appellant. . Heard
CourtU.S. Court of Appeals — First Circuit

Jeffrey S. Stern with whom Sugarman, Rogers, Barshak & Cohen, Boston, MA, was on brief, for appellant.

George R. Suslak with whom Stanton & Lang, Lynnfield, MA, was on brief, for appellee.

Before TORRUELLA, Chief Judge, ALDRICH, Senior Circuit Judge, and CYR, Circuit Judge.

ALDRICH, Senior Circuit Judge.

By stipulation it appears that in August 1988 a tractor-truck, hereinafter the accident truck, owned by Jean L. Burnell, but leased to R.H. Graves Trucking Company (Graves) and operated by a Graves employee, John Rowe, Jr., on Graves business, struck and injured one Jeanne Wing, a citizen of Massachusetts, where the accident occurred. Graves was a New Hampshire company and had a so-called package liability insurance policy issued by Carolina Casualty Insurance Company (Carolina) covering all listed trucks and, under certain terms, unlisted trucks. In August 1988, when the accident occurred, the accident truck was unlisted. It was, however, insured by Burnell by Canal Insurance Company (Canal). There were many endorsements on both policies, including, on the Carolina policy, only, an endorsement required by the Interstate Commerce Commission.

Canal brought a declaratory judgment proceeding in the Massachusetts District Court against all of the above. 1 In due course Wing settled all claims for $55,000. This was paid, one half each, by Canal and Carolina under an agreement that their respective claims against each other should be resolved by the court. Each company moved for summary judgment. The court ruled that the full $55,000 obligation was owed by Carolina because of the ICC endorsement, and that it should pay Canal for its advance. Carolina appeals. We reverse in part.

The insurance companies are from Florida and South Carolina; the policies for some not apparent reason were written in Maine, and the present action was brought in Massachusetts. Graves was a New Hampshire company, and Burnell was a New Hampshire resident, and doubtless the trucks were registered there. We believe Massachusetts would consider the policies to be New Hampshire contracts. Cf. Searls v. Standard Accident Co., 316 Mass. 606, 608, 56 N.E.2d 127 (1944); Lee v. New York Life, 310 Mass. 370, 373, 38 N.E.2d 333; Bi-Rite Enterprises v. Bruce Miner Co., Inc., 757 F.2d 440, 443 (1st Cir.1985). The ICC endorsement of course, must be governed by federal law.

The Carolina Policy

The Carolina policy covered unlisted trucks for 30 days after Graves acquisition, and then longer, under certain conditions, one of which was notice within the 30 days. None had been given for the accident truck. It is irrelevant that it might otherwise have qualified; lack of notice conclusively excluded it, except for the ICC endorsement, post.

The Canal Policy

The Canal policy, by an endorsement, purports not to cover lessees. By a second endorsement, hereinafter the New Hampshire endorsement, it does cover them. Of this more later. 2

The ICC Endorsement

The ICC Insurance Branch requires a licensed interstate hauler's insurer, such as Carolina, to assume liability for all its hauler's truck accidents (up to $750,000) irrespective of the policy coverage, or whether the hauler has paid individual premiums on that truck. The various circuits have taken three different views of this situation. See Empire Fire & Marine Ins. Co. v. Guaranty National Ins. Co., 868 F.2d 357, 363 (10th Cir.1989) (cases collected). We have taken none. On reflection, we consider the ICC endorsement to be, in effect, suretyship by the insurance carrier to protect the public--a safety net--but not insurance relieving Canal, or any other insurer. On the contrary, it simply covers the public when other coverage is lacking. The question comes, did Canal supply any?

Canal Revisited

For Canal's liability we are presented with two, on their face conflicting, endorsements, one embracing coverage for lessees, one excluding them. In her application for the policy Burnell had denied an intention to lease. The excluding endorsement recited that in consideration of the...

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