Allstate Insurance Company v. Hill, 17115.

• Citation: 378 F.2d 112
• Decision Date: 08 June 1967
• Docket Number: No. 17115.,17115.
• Parties: ALLSTATE INSURANCE COMPANY, Plaintiff-Appellee, v. Harris Tom HILL, Defendant-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

378 F.2d 112 (1967)

ALLSTATE INSURANCE COMPANY, Plaintiff-Appellee, v. Harris Tom HILL, Defendant-Appellant.

No. 17115.

United States Court of Appeals Sixth Circuit.

June 8, 1967.

COPYRIGHT MATERIAL OMITTED

Irvin A. Meserth, Cincinnati, Ohio, for appellant.

James F. Barnhart, Dayton, Ohio, H. Thomas Haacke, Jr., of Pickrel, Schaeffer & Ebeling, Dayton, Ohio, on brief, for appellee.

Before PHILLIPS and EDWARDS, Circuit Judges, and CECIL, Senior Circuit Judge.

CECIL, Senior Circuit Judge.

This is an appeal from a decision of the United States District Court for the Southern District of Ohio, Western Division, granting judgment in favor of the plaintiff-appellee, Allstate Insurance Company, hereafter referred to as Allstate. Jurisdiction is invoked by reason of diversity of citizenship under Section 1332, Title 28, U.S.C. and under Section 2201, Title 28, U.S.C. which authorizes actions for Declaratory Judgments.

The relevant facts, as stipulated by the parties are as follows: Allstate issued a policy of insurance protecting the Service Transport Company against liability arising from the operation, maintenance and use of motor vehicles on its behalf, and agreeing to defend litigations arising therefrom. An endorsement attached to the policy entitled "Receipts Basis-Truckmen (Form B)," known as an omnibus clause, defined "insured," in part, as follows:

"With respect to the insurance for Bodily Injury Liability and for Property Damage Liability the unqualified word `insured\' includes the named insured and also includes any person while using an owned automobile or a hired automobile and any person or organization legally responsible for the use thereof, provided the actual use of the automobile is by the named insured or with his permission. The insurance with respect to any person or organization other than the named insured does not apply:

* * * * * *

"(c) to any employee with respect to injury to or sickness, disease or death of another employee of the same employer injured in the course of such employment in an accident arising out of the maintenance or use of an automobile in the business of such employer: * * *."

Part (c) of this endorsement is known as a "cross employee exclusion" clause.

Service Transport Company is an Ohio corporation engaged in the business of transporting cargo for hire. In furtherance of this business, Service Transport Company leases tractors from individuals and then hires these individuals to operate them. Harris Tom Hill and Paul R. Diehl were individuals who had leased their tractors to Service Transport Company and who had in turn been employed by Service Transport to operate the tractors in the conduct of Service Transport's business. Allstate is a corporation organized under the laws of the State of Illinois, with its principal place of business in Skokie, Illinois.

On August 22, 1962, appellant, Harris Tom Hill, stopped his tractor on the east berm of northbound Interstate 75, south of Dayton, in Montgomery County, Ohio, to effectuate some repairs. About a half hour later, Paul R. Diehl, seeing Hill, stopped his tractor somewhat to the front of Hill's, in order to assist him. While Hill was working on his tractor, Diehl's tractor rolled backward into the front of Hill's tractor injuring Hill and damaging the tractor. At the time of this accident, both Hill and Diehl were employed by Service Transport Company and were acting within the scope of their employment.

On August 17, 1964, Hill filed an action in the Common Pleas Court of Hamilton County, Ohio, against Diehl praying for damages in the amount of $40,000. On November 16, 1964, Allstate filed an action for Declaratory Judgment in the District Court against Hill, Diehl and Service Transport Company, requesting that the Court declare that it has no obligation to defend the suit in the Common Pleas Court on behalf of Diehl nor to pay any judgment rendered against Diehl in the action.

Hill and Diehl claim that Diehl is an additional insured under the omnibus clause of the insurance policy issued by Allstate to Service Transport Company. See Travelers Ins. Co. v. Auto-Owners (Mutual) Ins. Co., 1 Ohio App.2d 65, 203 N.E.2d 846. It is in Diehl's status as an additional insured that it is claimed that Allstate is obligated to defend him and pay any judgment recovered against him in Hill's action. Allstate does not deny that under some circumstances Diehl would be an additional insured under its policy of insurance. It claims however that Hill and Diehl are fellow employees of Service Transport and that it is not liable by reason of the "cross employee exclusion" clause. Hill claimed in the District Court that this clause was ambiguous and not applicable to this case. He further claimed that the exclusion clause was against public policy and contrary to Section 4921.11 Ohio Revised Code.

Since jurisdiction of the District Court rests upon diversity of citizenship, Ohio law controls. Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188. Allstate, plaintiff in the District Court, moved for summary judgment. Thereafter the case was submitted to the court on the pleadings, deposition of Frank Chlad, Vice President of Safety and Industrial Relations of Service Transport Company, and an agreed statement of facts of the parties.

The district judge made a finding of facts and stated the conclusions of law. Contrary to Hill's contention, he held that the exclusion clause was not ambiguous. Hill accepts this conclusion for the purpose of this appeal. The district judge further found that the exclusion clause was not void as being against public policy. He concluded that Allstate was not obligated to defend Diehl or to pay any judgment rendered against him in the action which Hill brought against Diehl in the Common Pleas Court of Hamilton County, Ohio. Only Hill appealed. The sole ground of the appeal is that the "cross employee exclusion" clause is contrary to public policy.

The appellant alleged in his petition in the Common Pleas Court that he suffered severe personal injuries; that he was unable to operate his truck under the lease agreement with Service Transport Company for the balance of 1962 and for part of 1963; that he lost wages and profits in the amount of $4442; that he will be permanently impaired in the performance of his occupation and that his truck was damaged in the amount of $450.

We will first consider Allstate's liability to defend Diehl and to pay any judgment against him by reason of Hill's personal injuries and the financial loss resulting therefrom. Appellant concedes that a literal interpretation of the exclusion clause, which denies coverage where one employee is injured by a co-employee in the course of their employment, would relieve Allstate of liability unless, as he maintains, the clause is void as being contrary to the public policy of Ohio. The leading Ohio case involving an identical "cross employee exclusion" clause is Morfoot v. Stake, 174 Ohio St. 506, 190 N.E.2d 573 (1963). See also, Home Indemnity Co. v. Village of Plymouth, 146 Ohio St. 96, 64 N.E.2d 248, where the Court held that the clause did not apply because the injured party was an officer of a municipal corporation and not an employee. In the Morfoot case such a clause was applied where one employee, injured in the course of his employment, sued a co-employee who was driving a motor vehicle for the named insured. Although the driver was in the position of an additional insured under the employer's insurance policy, the insurance company was not liable for the injury to a fellow employee of the driver by reason of such an exclusion clause. The injured employee had received Workmen's Compensation as had Hill in the case before us. The question of public policy was not discussed.

The appellant claims that Morfoot is not applicable because of the requirements of Section 4921.11 Ohio Revised Code. That section provides that a certificate of...