American Fidelity & Cas. Co. v. Pennsylvania Cas. Co.

• Decision Date: 27 March 1953
• Court: United States State Supreme Court — District of Kentucky
• Parties: AMERICAN FIDELITY & CASUALTY CO. et al. v. PENNSYLVANIA CASUALTY CO. et al.

Page 5

258 S.W.2d 5

AMERICAN FIDELITY & CASUALTY CO. et al. v. PENNSYLVANIA CASUALTY CO. et al.

Court of Appeals of Kentucky.

March 27, 1953.

Rehearing Denied June 12, 1953.

Stoll, Keenon & Park, Lexington, Dorsey & Dorsey, Henderson, for appellants.

Ortmeyer, Bamberger, Ortmeyer & Foreman, Evansville, Ind., Wilson & Wilson, Owensboro, for appellees.

DUNCAN, Justice.

This is a declaratory judgment action in which a declaration is sought determining liability under an unusual factual situation as between Dixie Greyhound Lines and its insurance carrier, American Fidelity & Casualty Company, and Cecil E. Williams and his insurance carrier, Pennsylvania Casualty Company. The lower court found in favor of Williams and Pennsylvania Casualty Company, and Dixie Greyhound Lines and American Fidelity & Casualty Company have appealed.

Prior to December 12, 1943, Dixie Greyhound Lines was operating as an inter and intrastate common carrier of passengers between Evansville, Indiana, and Memphis, Tennessee, via Henderson, Kentucky, and Camp Breckinridge, Kentucky. During 1943, a number of soldiers were stationed at Camp Breckinridge and the traffic between the camp and Evansville was unusually heavy. For the purpose of taking care of the overflow of passengers, Dixie entered into an agreement with Cecil E. Williams by the terms of which Williams leased to it certain busses individually owned by him. Under the agreement, Dixie was to pay Williams twenty cents per bus mile for the use of the vehicles and Williams was to furnish and pay the drivers and provide maintenance and repairs for the leased equipment. The busses were operated over Dixie's certificated routes and under authority of its inter and intrastate permits.

On December 12, 1943, two of the Williams-owned busses, then being operated under the lease agreement, collided in Henderson County, Kentucky. As a result of the collision, one passenger, Semian, was killed, and another, Bidwell, was injured. Minor injuries were suffered by several other passengers.

At the time of the collision, there was in effect a policy of insurance issued to Dixie Greyhound Lines by American Fidelity & Casualty Company under the terms of which the insurer agreed to pay any judgment rendered against Dixie up to $10,000 for injury to any one person or $100,000 for injuries sustained as a result of one accident. There was also in effect on the date of the accident a policy issued to Williams by Pennsylvania Casualty Company under which it agreed to pay in behalf of its insured up to $5,000 for injury to one person and not more than $50,000 for injuries resulting from one accident. Although admitting that its policy was in effect, Pennsylvania Casualty contends that neither of the busses involved in the collision was covered by its policy. American Fidelity, although admitting its coverage of the vehicles involved, contends that the vehicles are also covered by the Pennsylvania policy and that Pennsylvania Casualty is either primarily or proportionately liable for damages sustained as a result of the collision.

The issues presented require a determination of the following questions: (1) Is Williams as lessor or bailor liable for injuries to passengers transported on the busses which were operated under the lease agreement? (2) Aside from the question of the liability of Williams, is Pennsylvania Casualty Company under the omnibus clause in its policy liable for such injuries as an insurer of Dixie Greyhound Lines? (3) Were either of the busses involved in the collision covered by the policy issued by Pennsylvania Casualty Company?

In considering the first question, we have no trouble in concluding that liability for injury to passengers transported in the leased vehicles rested on Dixie rather than Williams. It is generally established that a bailor who does not retain control of the article bailed is not responsible to a third person for its negligent use by the bailee. The rule applies to a motor vehicle leased for hire. Packard-Louisville Motor Co. v. O'Neal, 248 Ky. 438, 58 S.W.2d 630; Fisher v. Fletcher, 191 Ind. 529, 133 N.E. 834, 22 A.L.R. 1392; City of Rockford v. Nolan, 316 Ill. 60, 146 N.E. 564. Although the bus drivers were employed generally by Williams, they were under the control and direction of Dixie. We do not think the mere fact that the drivers were employed and paid by Williams is sufficient to remove this case from the application of the general rule.

A second and more impelling reason which fixes liability on Dixie is that the obligations which it assumed under the contract of carriage with its passengers were nondelegable. Williams, therefore, could not have been an independent contractor in the transportation of Dixie's passengers. American Fidelity & Casualty Co. v. Pennsylvania Casualty Co., D.C., ...