London Guarantee & Accident Co. v. Shafer

• Decision Date: 07 October 1940
• Docket Number: No. 1224.,1224.
• Citation: 35 F. Supp. 647
• Parties: LONDON GUARANTEE & ACCIDENT CO., Limited, v. SHAFER et al.
• Court: U.S. District Court — Southern District of Ohio

35 F. Supp. 647

LONDON GUARANTEE & ACCIDENT CO., Limited, v. SHAFER et al.

No. 1224.

District Court, S. D. Ohio, E. D.

October 7, 1940.

Ingalls & Warnick, of Columbus, Ohio, for London Guarantee & Accident Co.

B. B. Bridge, of Columbus, Ohio, for State Automobile Mut. Ins. Co.

Joseph F. Hogan, of Columbus, Ohio, for Lester L. Clymer.

Clyde C. Beery and B. G. Watson, both of Columbus, Ohio, for Minnie Shafer.

UNDERWOOD, District Judge.

This is an action for a declaratory judgment which has been submitted to the court upon the pleadings, stipulated testimony, briefs, and arguments of counsel. A jury trial was waived as to any issue which might be triable to that body, and the court is to determine all the issues in the case.

Two accidents occurred on U. S. Route 30 South, near Delphos, in Allen County, Ohio, on the second and fourth of July, 1936, at approximately the same place and under the same conditions. In the first accident, Loma Scott suffered injuries which resulted in her death, and in the second accident, Minnie Shafer was injured. Actions were instituted against the defendant, Lester L. Clymer, in both cases, alleging that the accidents were caused by his negligent operations in building a new section of U. S. Route 30 South. Upon trial of the Scott case the jury disagreed, and Clymer settled the case for $2,000, expending $975.41 in defending the suit, which the parties have agreed is a reasonable sum for that purpose. Since the institution of this action, the appeal in the Shafer case has been determined in favor of the plaintiff therein, and Clymer has paid the judgment and expenses incurred, in the amount of $4,195.65, which the parties have agreed is a reasonable sum, excepting $1,000 for Clymer's attorney's fee. Minnie Shafer no longer has any interest in these proceedings, since her judgment against Clymer has been paid, and she should be dismissed from this action.

The plaintiff insured the defendant Clymer for public liability on this contract job, excepting liability for motor vehicles; and the defendant, the State Automobile Mutual Insurance Company, insured Clymer against liability caused by motor vehicles used by him in this construction work. Both insurance companies disclaimed liability for these accidents and refused to defend the actions against Clymer. Each insurance company claims that the other is liable, and this action was commenced praying for a declaration of the rights and liabilities of the parties. The defendant Clymer contends that one or both of the insurance companies are liable to him for failure to defend the actions brought against him and that he is entitled to recover his costs and expenses in defending the actions, together with the sums paid in satisfaction of the judgment and claim.

Plaintiff's policy covered injuries and death to third parties incurred as a result of the prosecution of the construction of said highway. It specifically excluded liability for injuries caused by reason of the existence, maintenance or use of any motor vehicle except while within or upon the premises owned or leased by the insured. The policy of the defendant company covered injuries arising out of the ownership, maintenance or use of the trucks, which, for the purposes stated, included the loading and unloading thereof.

The plaintiff and defendant insurance companies maintain that the court in this action must determine the proximate cause of the accidents in order to ascertain which company is liable to the defendant Clymer. However, the court is of the opinion that their liability to Clymer for his costs and expenses in defending the actions brought against him, may rest upon their refusal to defend.

Therefore, the first question to be determined is: "What is the extent of the duty of the insurer to defend the insured?"

In its policy, the plaintiff agreed "To defend * * * any claim or suit against the Assured, even if groundless, to recover damages on account of such injuries." The defendant company agreed to "defend * * * any suit against the Insured alleging such injury or destruction and seeking damages on account thereof, even if such suit is groundless, false or fraudulent".

The obligation to defend is to be determined when the action is brought, and not by the outcome of the action. Couch, Insurance, § 1175 (e), p. 4189. The language of the insurance contract must first be construed and next, the allegations of the complaint in the action against the insured. Where the obligation is to defend the action whether the action is groundless or not, the insurer is liable for failure to defend an action in which the complaint shows a...