American Surety Co. of New York v. Canal Insurance Co., Civ. A. 2100.

• Court: United States District Courts. 4th Circuit. United States District Court of South Carolina
• Citation: 157 F. Supp. 386
• Decision Date: 24 December 1957
• Docket Number: Civ. A. 2100.
• Parties: AMERICAN SURETY COMPANY OF NEW YORK, Plaintiff, v. CANAL INSURANCE COMPANY, Defendant.

157 F. Supp. 386

AMERICAN SURETY COMPANY OF NEW YORK, Plaintiff,
v.
CANAL INSURANCE COMPANY, Defendant.

Civ. A. 2100.

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

December 24, 1957.

157 F. Supp. 387

John P. Mann (Mann & Mann), Greenville, S. C., for plaintiff.

Wesley M. Walker (Leatherwood, Walker, Todd & Mann), Greenville, S. C., for defendant.

WYCHE, Chief Judge.

Prior to the commencement of this action, the plaintiff, as insurer of Johnson Motor Lines, Inc., had defended actions instituted by E. M. Whittenton and J. C. Neighbors against Johnson Motor Lines, Inc. and had paid the judgments rendered in the actions. The judgment rendered in favor of E. M. Whittenton was for property damages in the amount of $11,629.80. The judgment rendered in favor of J. C. Neighbors was for personal injuries in the amount of $5,370.20.

In this action plaintiff seeks to recover from the defendant the amounts expended in payment of these judgments, up to the limits of defendant's policy, and, in addition, the sum of $1,505.73 for expenses in the defense of the actions. Plaintiff amended its complaint by increasing its demands to $11,875.93.

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

Findings of Fact

1. Johnson Motor Lines, Inc., on November 3, 1954, was duly licensed and franchised by the Interstate Commerce Commission as a common carrier of freight by motor vehicles. Pursuant to the Rules and Regulations of the I.C.C., the plaintiff filed a certificate of insurance on behalf of Johnson, insuring the operations of Johnson for public liability and property damage. In addition to the I.C.C. filing, plaintiff had filed its certificate of insurance on behalf of Johnson in many of the States along the Eastern Seaboard, including Virginia, North Carolina and South Carolina, pursuant to applicable State law.

2. The defendant had issued its policy of liability insurance to Mary B. Sutherland, d/b/a S & S Produce Company, covering one 1952 White tractor, which policy was in full force and effect on November 3, 1954. Mary B. Sutherland d/b/a S & S Produce Company, was not authorized to engage in interstate commerce by the I.C.C. and no certificate of insurance was required to be filed on her behalf by any State or Federal agency.

3. On November 2, 1954, at the solicitation of agents of Johnson, a written lease agreement was entered into whereby Johnson leased from Mrs. Sutherland the services of a driver and a 1952 White tractor and a trailer to be used to transport merchandise in interstate commerce under the I.C.C. franchise of Johnson from Greenville, South Carolina, to Philadelphia, Pennsylvania. The leased equipment was delivered to the Johnson terminal in Greenville, where it was loaded with the merchandise which Johnson had been employed to transport. When the loading was completed, the doors of the trailer were locked, a seal placed thereon and Johnson's I.C.C. identification device was affixed to the leased equipment. All of the foregoing work was performed by Johnson's employees.

157 F. Supp. 388

The driver was then given the Driver's Daily Logs, as required by I.C.C., the bill of lading, and directions by Johnson and sent on his way to Philadelphia

4. Enroute, the leased equipment was involved in an accident which occurred near Fredricksburg, Virginia, in which a tractor and trailer owned by E. M. Whittenton, d/b/a E. M. Whittenton's Transfer, was damaged and the driver J. C. Neighbors received personal injuries. Actions which were instituted in the North Carolina State Courts by Whittenton and Neighbors resulted in judgments being rendered against Johnson. Demand was made by the plaintiff upon defendant to defend these actions. The defendant denied coverage and refused to defend the actions. Subsequently, these judgments were paid in full by the plaintiff.

5. The plaintiff's policy had limits as of November 3, 1954, of $250,000 for each person for bodily injury and a like amount for property damage for each accident. The policy was written upon what is known as the "Gross Receipts Basis" and insured all trucks and equipment used by Johnson in its business. The policy provided for insurance on leased equipment as well as on equipment owned by the named insured and there was no difference or distinction made in the premium charged Johnson by plaintiff as to whether the equipment was owned or leased.

6. The policy of the plaintiff which insured Johnson contained many endorsements, among which was one entitled "Amendment of Comprehensive General-Automobile Liability Policy". Paragraph 7 of this endorsement is as follows: "The insurance for Bodily Injury Liability and for Property Damage Liability with respect to loss arising out of the maintenance or use of any hired automobile shall be excess insurance over any other valid and collectible insurance available to the Insured, either as an Insured under a Policy applicable with respect to the automobile or otherwise." The following provisions are found in the main body of plaintiff's policy under "Conditions": "3. Definitions. * * * (b) Automobiles. The word `automobile' shall mean a land motor vehicle, trailer or semitrailer, provided the following described equipment shall not be deemed an automobile except while towed by or carried on a motor vehicle not so...