AMERICAN EMPLOYERS'INS. CO. v. Maryland Casualty Co.

• Decision Date: 30 December 1954
• Docket Number: No. 6878.,6878.
• Parties: AMERICAN EMPLOYERS' INSURANCE COMPANY, a Massachusetts corporation, Appellant, v. MARYLAND CASUALTY COMPANY, a Maryland corporation, Appellee.
• Court: U.S. Court of Appeals — Fourth Circuit

218 F.2d 335 (1954)

AMERICAN EMPLOYERS' INSURANCE COMPANY, a Massachusetts corporation, Appellant, v. MARYLAND CASUALTY COMPANY, a Maryland corporation, Appellee.

No. 6878.

United States Court of Appeals, Fourth Circuit.

Argued October 20, 1954.

Decided December 30, 1954.

John L. Abbot, Lynchburg, Va., for appellant.

Claude E. Taylor, Jr., Martinsville, Va. (Joyce & Stone, Martinsville, Va., on the brief), for appellee.

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

SOPER, Circuit Judge.

Maryland Casualty Company brought this suit against American Employers' Insurance Company to recover the sum of $11,250 as a contribution toward the sum of $26,750 which Maryland Casualty has paid in satisfaction of several judgments obtained against James Henry Arrington, W. E. Frye and Tyler Fountain by or on behalf of certain persons who were killed or injured on June 4, 1951 in Henry County, Virginia, in a collision between several vehicles including an automobile driven by Arrington, an employee of Frye, and an automobile driven by Fountain. At the time of the collision there were outstanding an automobile liability policy issued to Fountain by American Employers' and also an automobile liability policy issued to Frye by Maryland Casualty, and the basis of the claim in suit was that Maryland Casualty, having paid the judgments as the insurer of Frye, was entitled to contribution from American Employers', the insurer of Fountain, to the extent of one-half of the money paid by Maryland Casualty in satisfaction of the judgments. The claim was reduced to the sum of $11,250 because of limitations of liability in the policy issued by American Employers'. Judgment for that amount was given in the District Court.

The policy issued by American Employers' to Fountain covered a 1937 Chevrolet Coupe owned by him. Included in the definition of the term "automobile" in the policy was a provision for the extension of the coverage to a "Temporary Substitute Automobile" — not owned by the insured — while temporarily used as a substitute for the described automobile while withdrawn from normal use because of its breakdown, repair, service, loss or destruction. At the time of the accident Fountain was driving a Ford automobile owned by his wife, and an important question at issue is whether this car was a temporary substitute automobile within the meaning of this provision. The car owned by Frye and driven by his employee Arrington in the collision was a Fruehauf tractor-trailer which was covered by the policy issued by the Maryland Casualty Company.

The defense most earnestly urged by American Employers' in the District Court was that the policy issued to Fountain did not cover the vehicle driven by him at the time of the accident. Considerable testimony was taken on this issue and after careful consideration, the District Judge rejected the defense. The car described in Fountain's policy was acquired by him in a trade, in which Fountain received the car and $100, and gave in exchange a 1940 Chevrolet. When the trade was made the coupe was not in satisfactory running condition and it was towed to a small garage at which Fountain from time to time repaired cars. Thereafter Fountain and an associate endeavored to repair or put the car in condition without success. The appellant contends that during the whole period between the acquisition of the car in August, 1950 and the accident on June 4, 1951 the car was not in condition for use and that therefore the Ford car, driven by Fountain at the time of the accident, could not be considered as a temporary substitute. During this period, however, Fountain paid for the insurance policy issued by the American Employers' covering the car, drove it to some extent on back roads, and used his skill and experience in the repair of cars in an endeavor to recondition it. He tried to fit it with a new engine so that it would be serviceable and finally sent it away to a service station and garage to be repaired. In the meantime his wife was in possession of the Ford car which she had purchased for her own use in going to and from her work ten miles distant from the Fountain home. When she was not using her car, Fountain occasionally used it on business of his own; but the use was occasional and not regular. Usually he was able to go to his work at a saw mill in a lumber truck of the mill.

On the other hand, there was evidence tending to show that Fountain had no license on the car in 1950 or 1951 when he owned and was trying to repair it; and there was some reason to believe that he took out the insurance policy so as to be able to retain a driver's license, which he would have lost because of a previous accident, if he had not taken out the American Employers' policy under the Virginia Motor Vehicle Safety Responsibility Act, Code 1950, § 46-386 et seq. There was also evidence tending to show that before the accident he had given up any real attempt to repair the car and had sold it to another person who bought it for salvage purposes, and ultimately sold it for junk.

Since this defense was vigorously pressed by the defendant in the District Court, the District Judge gave it most careful attention in his opinion. He did not credit the testimony that Fountain had sold the car before the accident and he found that Fountain had been able to run the car with difficulty to a limited extent after acquiring it, that he had made a bona fide effort to repair it, and put it in condition himself, and had ultimately sent it to a garage to be repaired about six weeks before the accident, although there was some indication that it might have been out of his hands for a longer period. Upon all the testimony the judge reached the conclusion that the car was owned by Fountain and was under repair on June 4, 1951, the day of the accident, and that on that day as on other occasions Fountain was using his wife's car on an errand of his own.

In short, the judge found that Fountain used his wife's car as a substitute for his own because the latter was under repair and not susceptible of normal use, and he rejected the contention that the car described in the policy had been given up or abandoned as a usable car or sold. It was not an easy decision to make since the evidence at certain points was indefinite and conflicting, but it presented a situation that could only be satisfactorily resolved by the trial court, and we find no reason to disturb the court's findings on this appeal. See Fleckenstein v. Citizens' Mutual Automobile Ins. Co., 326 Mich. 591, 40 N.W.2d 733; cf. Western Casualty & Surety Co. v. Norman, 5 Cir., 197 F.2d 67.

It is also contended that even if Fountain's policy covered the car he was driving at the time of the collision, Maryland Casualty is not entitled to contribution from American Employers' because this would permit the former to recover under a contract of indemnity to which it was not a...