American Casualty Co. of Reading, Pa. v. Howard

• Decision Date: 02 April 1949
• Docket Number: No. 5846.,5846.
• Citation: 173 F.2d 924
• Parties: AMERICAN CASUALTY CO. OF READING, PA. v. HOWARD et al.
• Court: U.S. Court of Appeals — Fourth Circuit

173 F.2d 924 (1949)

AMERICAN CASUALTY CO. OF READING, PA. v. HOWARD et al.

No. 5846.

United States Court of Appeals Fourth Circuit.

April 2, 1949.

W. Francis Marion and C. F. Haynsworth, Jr., both of Greenville, S. C. (Haynsworth & Haynsworth, of Greenville, S. C., on the brief), for appellant.

Wesley M. Walker, of Greenville, S. C. (D. B. Leatherwood and Leatherwood & Walker, all of Greenville, S. C., on the brief), for appellees Howard.

J. Wilbur Hicks, of Greenville, S. C., for appellees Roberts.

Before PARKER, Chief Judge, and SOPER and DOBIE, Circuit Judges.

DOBIE, Circuit Judge.

This is an appeal from a judgment of the District Court of the United States for the Western District of South Carolina, dismissing a civil action seeking a declaratory judgment, filed by the American Casualty Company of Reading, Pennsylvania (hereinafter called Casualty), against Elaine Howard, Elias Howard, F. C. Roberts, Senior, individually and as Administrator of the estate of George Roberts, deceased, and Mrs. Broadess Roberts.

Casualty issued to Elaine Howard an automobile liability policy with limits of liability as to bodily injuries of $5,000 for each person and $10,000 for each accident, and limits of liability to $5,000 as to each accident for property damage and $500 for medical payments to each person. The policy contained a clause providing that Casualty, within the coverage of the policy, shall "defend in his name and behalf 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."

While the policy was in force, Elias Howard, driving the insured automobile of Elaine Howard with her permission, was involved, on May 1, 1947, in a collision with a motorcycle driven by George Roberts, who died on May 2, 1947, from injuries sustained in the collision.

In October, 1947, an action was instituted by the Administrator of the estate of George Roberts, deceased, against Elias Howard, seeking $50,000 damages for the alleged wrongful death of George Roberts. This action, for the benefit of the father and mother of George Roberts, was brought under the provisions of Sections 411, 412, Code of Laws of South Carolina, 1942, familiarly known as the South Carolina Lord Campbell's Act. Both prior to and after the filing of this action, efforts to negotiate a settlement failed. After lengthy negotiations, when Casualty declined an offer to settle the case for $5,000, attorneys for Elias Howard notified Casualty that if this offer of settlement was not accepted and a settlement effected, Casualty would be expected to pay in full any judgment recovered in this action, even though the amount of this judgment should be in excess of the policy limits. Again Casualty declined the offer of settlement, the case was duly tried and in July, 1948, judgment for $7,000 was duly entered for the Administrator against Elias Howard. Further controversy then ensued as to who should pay this judgment.

In August, 1948, another action was instituted by the Administrator against Elias Howard, under the South Carolina Survival Statute, ß 419, Code of Laws of South Carolina, 1942, in which damages of $25,000 were sought. This action, seeking to recover damages for pain and suffering of George Roberts from the time of the injury until his death, is for the benefit of the Estate of George Roberts and is still pending in the State Court. After service of the complaint in this action on Elias Howard, his attorneys demanded that Casualty defend this action and informed Casualty that they would also look to it for payment of any judgment that might be recovered.

Casualty informed Elias Howard that it was under no obligation to defend this action under the Survival Act or to pay any judgment recovered therein but that Casualty, for the protection of all parties, was filing an answer in this action, under an express reservation of all of its rights.

On September 1, 1948, Casualty filed in the District Court of the United States the instant action seeking a declaratory judgment of its rights and duties under the policy. On September 10, 1948, Casualty paid the Administrator $5,000 on the judgment rendered against Elias Howard in the action under the South Carolina Lord Campbell's Act, and Elias Howard paid the balance of $2,000 due under this judgment. On September 17, 1948, the defendants filed a motion to dismiss Casualty's action for a declaratory judgment.

On September 24, 1948, Elias Howard filed a civil action in the State Court against Casualty for $3,000 which included the $2,000 overage paid by Elias Howard and damages for Casualty's failure to settle the action brought under the South Carolina Lord Campbell's Act.

Defendants, in their motion to dismiss Casualty's action for a declaratory judgment, questioned the alignment of the parties and the presence of the requisite jurisdictional amount. We think this alignment was proper. True it is that in both the civil actions by the Administrator, Elias Howard and Casualty had a common interest to defeat any recovery. But this is not the situation in the action of Casualty seeking a declaratory judgment. Both Elias Howard and the Administrator either now assert, or may be expected in the future to assert, liability on the part of Casualty for any judgment rendered in the actions instituted by the Administrator. So far as questions relating to the coverage or limitations of the policy are concerned, the interests of Casualty are hostile to those both of Howard and the Administrator. It was, therefore, proper for Casualty in the declaratory judgment action to align as defendants Elaine Howard and Elias Howard, F. C. Roberts, Senior, as Administrator of the Estate of George Roberts, deceased, and F. C. Roberts, Senior, individually, and Mrs. Broadess Roberts. Maryland Casualty Co. v. Pacific Coal & Oil Co. and Orteca, 312 U.S. 270, 61 S.Ct. 510, 85 L.Ed. 826; Maryland Casualty Co. v. Boyle Construction Co., 4 Cir., 123 F.2d 558, 562; ?tna Casualty & Surety Co. v. Yeatts, 4 Cir., 99 F.2d 665, 668. F. C. Roberts, Senior, and Mrs. Broadess Roberts, the father and mother of George Roberts, deceased, were the beneficiaries of the recovery in the action brought under the South Carolina Lord Campbell's Act.

In veiw of the asserted liability of Casualty to pay the overage of $2,000 in the action under the Lord Campbell's Act, plus $1,000 damages in that connection, as well as the asserted liability of Casualty to defend the action under the Survival Statute and to pay any judgment recovered therein (damages of $25,000 were sought in this action), we think it is clear that Casualty's action for a declaratory judgment involved the requisite jurisdictional amount, more than $3,000, exclusive of interest and costs. ?tna Casualty & Surety Co. v. Yeatts, supra, 99 F.2d at page 668; United States Fidelity & Guaranty Co. v. Pierson, 8 Cir., 97 F.2d 560; Associated Indemnity Corporation v. Manning, 9 Cir., 92 F.2d 168.

We append the concluding paragraphs of the able opinion filed by the District Court in Casualty's action seeking a declaratory judgment 80 F.Supp. 983, 988:

"A controversy, to come within the Declaratory Judgments Act, must be definite and concrete. `It must be a real and substantial controversy admitting of specific relief through a decree of a conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts.' (Emphasis added.) ?tna Life Insurance Co. v. Haworth, 300 U.S. 227, 57 S.Ct. 461, 464, 81 L.Ed. 617, 108 A.L.R. 1000; Mutual Life Ins. Co. v. Moyle, D.C.E.D.S.C.1940, 34 F. Supp. 127. The Act excludes `an advisory decree upon a hypothetical state of facts.' Ashwander v. Tennessee Valley Authority, 297 U.S. 288, 56 S.Ct. 466, 473, 80 L.Ed. 688.

"Judicial discretion dictates a like conclusion. Should the court take jurisdiction of this case, it would thereby remove from the South Carolina courts issues which originated and are now pending there; issues which can be completely and expeditiously tried there. The result of removal would place undue hardship, expense, delay and frustration, especially on defendant Administrator, and probably on Elias Howard; and for what purpose? To decide speculative issues which may never arise, or render a decision that may never be applied.

"As said by the Supreme Court in Brillhart v. Excess Ins. Co., 316 U.S. 491, 494, 495, 62 S.Ct. 1173, 1175, 86 L.Ed. 1620: `Ordinarily it would be uneconomical as well as vexatious for a ...