Ocean Accident & Guarantee Corp. v. Felgemaker

• Decision Date: 12 June 1944
• Docket Number: 9681,9718,No. 9680,9719.,9680
• Citation: 143 F.2d 950
• Parties: OCEAN ACCIDENT & GUARANTEE CORPORATION, LIMITED, v. FELGEMAKER et al. (two cases). FELGEMAKER et al. INTER INS. EXCHANGE OF CHICAGO MOTOR CLUB v. SAME (two cases).
• Court: U.S. Court of Appeals — Sixth Circuit

143 F.2d 950 (1944)

OCEAN ACCIDENT & GUARANTEE CORPORATION, LIMITED, v. FELGEMAKER et al. (two cases). FELGEMAKER et al. INTER INS. EXCHANGE OF CHICAGO MOTOR CLUB v. SAME (two cases).

Nos. 9680, 9681, 9718, 9719.

Circuit Court of Appeals, Sixth Circuit.

June 12, 1944.

Clinton M. Horn, of Cleveland, Ohio (McKeehan, Merrick, Arter & Stewart and Clinton M. Horn, all of Cleveland, Ohio, on the brief), for appellant Ocean Accident & Guarantee Corp.

Joseph P. Brodie, of Chicago, Ill. (Joseph P. Brodie, of Chicago, Ill., and John H. & Harley J. McNeal, of Cleveland, Ohio, on the brief), for appellant Inter Ins. Exchange.

Parker Fulton, of Cleveland, Ohio (John J. Hynes, Robert M. Weh, and Parker Fulton, all of Cleveland, on the brief), for appellees.

Before HICKS, ALLEN, and HAMILTON, Circuit Judges.

ALLEN, Circuit Judge.

In these companion cases judgments were rendered against the insurance companies upon policies of liability insurance theretofore issued to Vernita Mason, defendant below. The actions arose out of an automobile accident which occurred November 7, 1940, in the Village of Westlake, Ohio.¹

The plaintiffs, Jean U. Felgemaker and her husband, Joseph A. Felgemaker, were injured in a collision with an automobile operated by Mrs. Mason. Suits in the state court were removed to the federal court, and the plaintiffs recovered judgments of $2,000 and $10,000 respectively, upon which only $400 has been paid. Neither judgment having been satisfied after thirty days, and both judgments having become final, the plaintiffs each filed in the original action an amended and supplemental complaint praying for judgment against the insurance companies in accordance with Section 9510-4, General Code of Ohio.

The policy issued by Ocean Accident and Guarantee Corporation, Limited hereinafter called Ocean, was issued in compliance with the compulsory motor vehicle liability insurance act of the State of Massachusetts, of which state Mrs. Mason was a resident at the time the policy was issued. Massachusetts requires of its residents a coverage insuring all automobile operation on highways within the state. The policy issued also included an optional coverage insuring against liability for damages arising out of operation of the automobile in the United States and Canada.

Shortly prior to the accident Mrs. Mason moved from Massachusetts to Chicago, Illinois, and desiring to secure local automobile insurance, she wrote a letter on October 4, 1940, in which she returned her policy to Ocean's home office with the request that it be cancelled effective October 1, 1940. At about the same time Mrs. Mason took out a policy of liability insurance with Inter Insurance Exchange of the Chicago Motor Club, hereinafter called Inter Insurance, which was in force at the time of the accident. This policy obligated Inter Insurance to pay on behalf of the insured all sums which the insured should become obligated to pay by reason of the liability imposed upon the insured by law, for damages because of bodily injury, death or property damage sustained by any person, caused by accident and arising out of the ownership, maintenance or use of the automobile described in the policy. The policy also included the following provision: "The Exchange, after rendition of final judgment against the Insured, shall be liable to the person entitled to recover for such death or for any such injury to the person or property when caused by the Insured, in the same manner and to the same extent that said Exchange is liable to the Insured." It also obligated Inter Insurance to defend in the name and on behalf of the insured any suit brought against the insured to enforce a claim, whether groundless or not, for damages alleged to have been suffered in such automobile accident. When the suits were filed the defense was assumed and conducted by the Cleveland attorneys of Inter Insurance, who exercised full control of the case.

The plaintiffs each filed a motion to subject Inter Insurance to the jurisdiction of the District Court under Rule 4 of the Rules of Civil Procedure, 28 U.S.C.A. following section 723c, and summons was served upon the company by a deputy marshal of the Northern District of Illinois, in Chicago. Inter Insurance moved to quash the service of summons in each case, and these motions were granted on the ground that under Section 51 of the Judicial Code, Title 28 U.S.C., Section 112, 28 U.S.C.A. § 112, the material portion of which is given in the margin,³ the District Court has no jurisdiction to issue process in this case beyond the limits of the district. However, the court held that it had jurisdiction on the ground that Inter Insurance had made a general appearance in the suits by actively defending the cases through its attorneys, and hence was required to answer the amended and supplemental complaints. After hearing and argument the court entered a judgment in favor of the plaintiffs against Inter Insurance in each case for its proportional share of the liability.

The sole defense of Ocean was that the policy issued by it under the provisions of the Massachusetts compulsory insurance law had been cancelled prior to the accident; but the court held that no effective cancellation of the policy had been made, and that hence Ocean was liable under the optional coverage for its share of the judgments.

As to Inter Insurance, we think that the judgment must be affirmed. Inter Insurance is a resident of Illinois and does no business in Ohio. While no jurisdiction was obtained by the attempted service and the court correctly sustained the motion to quash, it rightly held that Inter Insurance voluntarily subjected itself to the jurisdiction when it entered a general appearance by conducting the defense. Counsel for Inter Insurance at the hearing stated that it had no defense outside of the jurisdictional question, and the sole contention here is that jurisdiction of the person was not conferred because Inter Insurance conducted the defense not for itself, but for its insured. Concededly Inter Insurance took every action in the case which it could have taken if it had itself been the defendant, and in fact it exercised absolute and complete control over the proceedings. It had the right to cross-examine, to present testimony, and if it desired, to appeal. It also had a substantial interest in the controversy, for Inter Insurance had insured Mrs. Mason against any automobile accident occurring in North America or the possessions of the United States, and was directly concerned, under...