American Surety Company of NY v. Canal Ins. Co., 7631.

• Court: United States Courts of Appeals. United States Court of Appeals (4th Circuit)
• Citation: 258 F.2d 934
• Docket Number: No. 7631.,7631.
• Parties: AMERICAN SURETY COMPANY OF NEW YORK, Appellant and Cross-Appellee, v. CANAL INSURANCE COMPANY, Appellee and Cross-Appellant.
• Decision Date: 29 August 1958

258 F.2d 934 (1958)

AMERICAN SURETY COMPANY OF NEW YORK, Appellant and Cross-Appellee,
v.
CANAL INSURANCE COMPANY, Appellee and Cross-Appellant.

No. 7631.

United States Court of Appeals Fourth Circuit.

Argued June 5, 1958.

Decided August 29, 1958.

258 F.2d 935

John P. Mann, Greenville, S. C. (James R. Mann, Greenville, S. C., on brief), for appellant and cross-appellee.

Wesley M. Walker and J. D. Todd, Jr., Greenville, S. C. (James H. Watson, Greenville, S. C., on brief), for appellee and cross-appellant.

Before SOPER and HAYNSWORTH, Circuit Judges, and MOORE, District Judge.

HAYNSWORTH, Circuit Judge.

This is a controversy between two insurance companies over their relative obligations respecting the liabilities of a lessee of trucking equipment which had been involved in a highway collision. The District Court held that no effect could be given an excess insurance clause, applicable to hired vehicles, in American Surety's policy issued to the lessee, because of a pro rata contribution clause in Canal's policy issued to the lessor, and covering the specific equipment, the protection of which was extended by an omnibus clause to the lessee. Judgment was entered requiring Canal to make pro rata contribution. 157 F.Supp. 386. Each party has appealed.

Johnson Motor Lines, an interstate carrier, leased from Mary B. Sutherland, doing business as S & S Produce Company, a tractor and trailer with its driver for a single trip from Greenville, S. C., to Philadelphia, Pa. En route, it was in a collision in Virginia, and, thereafter, suits for personal injury and property damage were filed against Johnson Motor Lines in North Carolina. Canal was called upon to defend these actions and to pay any judgments that might be obtained against Johnson Motor Lines, up to the limits of its coverages, but Canal refused to do so. American Surety, thereupon, defended the actions and satisfied the judgments after they were entered. American Surety then filed this suit in the District Court for the Western District of South Carolina by which it seeks reimbursement from Canal of so much of its payment in satisfaction of the judgments as is within the limits of Canal's coverages plus its attorney's fees, costs and expenses incurred in the defense of the North Carolina tort actions.

Canal would first focus all attention upon American Surety's obligations to Johnson Motor Lines and to the tort action plaintiffs under the provisions of its policy, the regulations of the Interstate Commerce Commission and the applicable laws of Virginia. There is no doubt about those obligations, but we do not

258 F.2d 936

overlook Canal's, for protection of its policy was extended by the omnibus clause to Johnson Motor Lines. Johnson Motor Lines had the protection of both policies, and the question is, not what American Surety's loss would have been had the lessor had no insurance, but whether the obligations of the two insurers is concurrent and pro rata or that of the one primary and that of the other secondary and excess

The common, and highly desirable, practice of including extended coverage clauses in automobile liability insurance contracts, sometimes leads to duplications of coverages. To resolve the questions inherent in such duplications of coverages, most policies incorporate excess insurance or "other" insurance clauses which usually follow the...