American Fidelity & Cas. Co. v. Zurich General A. & L. Ins. Co.

• Decision Date: 31 March 1947
• Docket Number: Civil Action No. 665.
• Court: U.S. District Court — District of South Carolina
• Parties: AMERICAN FIDELITY & CASUALTY CO. OF RICHMOND, VA., v. ZURICH GENERAL ACCIDENT & LIABILITY INS. CO., Limited, et al.

70 F. Supp. 613

AMERICAN FIDELITY & CASUALTY CO. OF RICHMOND, VA., v. ZURICH GENERAL ACCIDENT & LIABILITY INS. CO., Limited, et al.

Civil Action No. 665.

District Court, W. D. South Carolina, Greenville Division.

March 31, 1947.

Love, Thornton & Blythe, of Greenville, S. C., for plaintiff.

Haynsworth & Haynsworth, by W. Francis Marion, all of Greenville, S. C., for defendant Zurich General Accident & Liability Ins. Co., Limited.

Thomas, Cain & Black, of Columbia, S.C., for defendant M. D. Hicklin Motor Trucker, Inc.

WYCHE, District Judge.

In this action the plaintiff seeks to recover from the defendants the sum of Four Thousand, Five Hundred Dollars ($4,500), the amount paid by the plaintiff as insurance carrier for Reliable Transfer Company, in settlement of an action brought by the administrator of Haskell M. Hite against H. F. Jennings and Reliable Transfer Company for the recovery of damages for the alleged wrongful death of Haskell M. Hite.

In compliance with Rule 52(a) of the Rules of Civil Procedure, 28 U.S.C.A. following section 723c, I find the facts specially and state my conclusions of law thereon, in the above cause, as follows:

Findings of Fact.

Reliable Transfer Company of Augusta, Georgia, and M. D. Hicklin Motor Trucker, Inc., of Columbia, South Carolina, on February 13, 1945, were both duly licensed by The South Carolina Public Service Commission and the Interstate Commerce Commission as common carriers of freight by motor vehicles. At that time, and as required by State and Federal law, the operations of Reliable were insured against public liability and property damage by the plaintiff American Fidelity and Casualty Company, and the operations of Hicklin were insured against public liability and property damage by the defendant Zurich General Accident and Liability Insurance Company.

The policy of American is written upon what is known as the gross receipt basis, and insures all trucks owned or operated by Reliable in its business, and contains the following provision: "It is further understood and agreed, subject to the conditions of the previous paragraph, that should any other like, valid and collectible insurance issued in the name of the owner or lessor or in favor of the Named Assured herein exist, this policy becomes excess over and above such valid and collectible insurance." The policy of American also contains the following provisions: "It is further understood and agreed that the Named Assured shall furnish the Company on or before the fifteenth (15th) of each calendar month a list of all vehicles including a specific description thereof, owned and hired during the previous calendar month. For purposes of computing the premium to be developed hereunder, the Named Assured agrees to maintain complete and adequate records, and agrees to furnish the Company or its accredited representatives on or before the fifteenth (15th) of each calendar month, a statement of Gross Receipts (whether collected or not) for the previous calendar month, applicable to such owned and hired equipment together with earned premium computed on the basis given below."

The policy of Zurich insures all automobiles owned and operated by M. D. Hicklin Motor Trucker, Inc.

It was the established practice among carriers to lease trucks when they did not have the equipment immediately available to perform the service requested of them by the public. Prior to February, 1945, Reliable had been leasing trucks from Hicklin at regular intervals during the preceding four years under certain stated conditions which provided, among other provisions, that the lessee would have dominion, supervision and control of the equipment during the operation and would insure the leased vehicle for public liability and property damage, as required by law.

On February 13, 1945, the General Manager of Reliable communicated with Hicklin over the telephone and asked to lease one of Hicklin's trucks for the purpose of transporting a cargo of freight from Shaw Field, South Carolina, to Warner Robins Field, Georgia. Hicklin agreed to lease a truck to Reliable under the usual conditions and delivered to Reliable one of its trucks at Shaw Field by H. F. Jennings, one of its drivers, for such use.

When a truck was leased it was the practice of the lessor to furnish the services of a driver and his wages were paid by the lessor and in turn the lessor was reimbursed by the lessee from the proceeds of the trip. It was also the practice for the parties to enter into a written contract or lease confirming the terms and conditions under which the truck was leased. This form of lease was prepared by Hicklin to cover this operation and sent to the General Manager of Reliable at Augusta for signature, where it was duly executed.

During the course of Jennings' journey from Shaw Field to Warner Robins Field the truck driven by Jennings collided with another truck being operated by one Haskell M. Hite in Lexington County, South Carolina, as a result of which Hite was killed. At the time of this accident the written lease had not been actually signed by the General Manager of Reliable but it was signed the next day in accordance with the telephone conversation of the day before.

Jennings returned after the accident to the terminal of Hicklin in Columbia and reported the accident to Hicklin. Hicklin in turn reported the matter immediately to Reliable by telephone and Reliable requested that its insurance agent be notified to investigate the accident. Jennings then proceeded on his way to Warner Robins Field.

The administrator of Hite brought an action against Hicklin and its insurance carrier, Zurich, for the recovery of damages on account of the alleged wrongful death of the intestate Hite. Upon the institution of this suit Hicklin duly notified Reliable thereof and requested Reliable to take over the defense thereof in accordance with the general practice and under the terms of the written lease, it having agreed thereunder to insure the leased vehicle for public liability and property damage. Zurich was not requested to and it did not assume the defense of the case because it was the contention of Hicklin that inasmuch as the lessee, Reliable, had agreed to provide the necessary insurance, Hicklin did not regard the vehicle as being covered by Zurich and no premium was paid to it for coverage for this carriage. Zurich offered to assume the defense of the case if the premiums for this and other similar operations of leased trucks were paid but, as above stated, Hicklin declined to pay the premiums for insurance on trucks while they were leased and under the control of other carriers, and where the other carrier had agreed to provide the insurance required by law. The premium for the insurance to be provided by the lessee was taken into consideration in fixing the compensation to be paid by it for the use of the truck.

While at first the officials of Reliable expressed a willingness to assume the defense of the case and to pay any judgment that might be recovered, its insurance carrier, American Fidelity and Casualty Company, the plaintiff herein, declined to do so on the ground that it was a risk not covered by its contract and as plaintiff refused to assume responsibility, Reliable did likewise, and answer was filed by Hicklin and Zurich in said suit.

Thereafter the question of liability was discussed between the attorneys for Hite's administrator and the attorneys for Zurich...