Buxton v. Midwestern Ins. Co.

• Decision Date: 11 January 1952
• Docket Number: Civ. A. No. 3434.
• Parties: BUXTON v. MIDWESTERN INS. CO. et al.
• Court: U.S. District Court — Western District of Louisiana

102 F. Supp. 500

BUXTON v. MIDWESTERN INS. CO. et al.

Civ. A. No. 3434.

United States District Court W. D. Louisiana, Lake Charles Division.

January 11, 1952.

COPYRIGHT MATERIAL OMITTED

Nathan A. Cormie and Carmouche, Martin & Wilson, all of Lake Charles, La., for plaintiff.

Plauche & Stockwell, Lake Charles, La., for Midwestern Ins. Co.

Thompson, Lawes, Cavanaugh & Hickman, Lake Charles, La., for Pacific Employers Ins. Co.

PORTERIE, District Judge.

Plaintiff, a Louisiana citizen, sues for $66,300.00, plus interest and costs, for personal injuries sustained on July 20, 1951, when a 1950 Chevrolet coach automobile, owned and then being driven by Richard A. Parker and insured by Midwestern Insurance Company (hereafter called Midwestern), an Illinois corporation, in which she was a guest, was involved in a collision on a Louisiana highway (U. S. 90), near Lake Charles, Louisiana, with a 1949 Ford coach automobile, owned by Houston Oil Field Material Company, Inc. (hereafter called Houston), a Delaware corporation, then being driven by one B. R. Nelson with Houston's permission and insured by Pacific Employers Insurance Company (hereafter called Pacific), a California corporation.

The defendants, Midwestern and Pacific, non-resident insurance companies, authorized to transact insurance business in this State,¹ were served and cited through the Secretary of State of Louisiana, on September 27, 1951, as public liability insurers of the two automobiles.

This Court, therefore, has jurisdiction; there is diversity and the requisite amount. 28 U.S.C. § 1332, 28 U.S.C.A. § 1332.

Pacific moved to dismiss the complaint and for a summary judgment, based on identical grounds, hereinafter set forth, which is the issue now before us. The uncontroverted and admitted facts, necessary to the disposition of the motion for summary judgment — besides those hereinabove stated —, are these.

Effective January 1, 1951, for over $12,000.00 worth of premiums,² Pacific issued and delivered its policy of comprehensive automobile liability insurance to Houston³ and Houston Oil Field Material Company, Inc. of California (hereafter called Houston, et al.) in Houston, in the State of Texas, with limits of $150,000/300,000 bodily injury and $10,000 property damage. The policy (a copy of which Pacific filed in the record) applies to accidents which occur within the United States, its territories or possessions. Canada or Newfoundland and while the automobiles are being transported between ports thereof. An endorsement (No. 7) extends it to accidents within certain distances in the Republic of Mexico.⁴

Schedule B-1 of the policy lists 37 automobiles and 7 trucks with Louisiana as being the "State in Which the Automobile will be Principally Garaged". Then premiums are charged for coverage of "Hired Automobiles", if any, in Louisiana; as also for "Non-Owned Automobiles" and it appears six of these give Louisiana addresses.

There is an "Endorsement No. 8 for Motor Carrier Policies of Insurance for Bodily Injury Liability, and Property Damage Liability, under Section 4 of Act No. 301 of the Louisiana Legislature of 1938 LSA-R.S. 45:163".

We quote further the following pertinent provisions of the policy:

"2. Inspection and Audit The company shall be permitted to inspect the insured premises, operations, automobiles and elevators and to examine and audit the insured's books and records at any time during the policy period and any extension thereof and within three years after the final termination of this policy, as far as they relate to the premium bases or the subject matter of this insurance.

* * * * * *

"8. Financial Responsibility Laws Coverages A and C. Such insurance as is afforded by this policy for bodily injury liability or property damage liability shall comply with the provisions of the motor vehicle financial responsibility law of any state or province which shall be applicable with respect to any such liability arising out of the ownership, maintenance or use during the policy period of any automobile insured hereunder, to the extent of the coverage and limits of liability required by such law, but in no event in excess of the limits of liability stated in this policy. The insured agrees to reimburse the company for any payment made by the company which it would not have been obligated to make under the terms of this policy except for the agreement contained in this paragraph.

* * * * * *

"10. Notice of Claim or Suit. If claim is made or suit is brought against the insured, the insured shall immediately forward to the company every demand, notice, summons or other process received by him or his representative.

"11. Assistance and Cooperation of the Insured. The insured shall cooperate with the company and, upon the company's request, shall attend hearings and trials and shall assist in effecting settlements, securing and giving evidence, obtaining the attendance of witnesses and in the conduct of suits. The insured shall not, except at his own cost, voluntarily make any payment, assume any obligation or incur any expense other than for such immediate medical and surgical relief to others as shall be imperative at the time of accident.

"12. Action Against Company. No action shall lie against the company unless, as a condition precedent thereto, the insured shall have fully complied with all the terms of this policy, nor until the amount of the insured's obligation to pay shall have been finally determined either by judgment against the insured after actual trial or by written agreement of the insured, the claimant and the company.

"Any person or organization or the legal representative thereof who has secured such judgment or written agreement shall thereafter be entitled to recover under this policy to the extent of the insurance afforded by this policy. Nothing contained in this policy shall give any person or organization any right to join the company as a co-defendant in any action against the insured to determine the insured's liability.

"Bankruptcy or insolvency of the insured or of the insured's estate shall not relieve the company of any of its obligations hereunder."

This latter provision (No. 12) is the "no action clause".

Pacific contends that, since its policy was issued and delivered in the State of Texas, where a "no action clause" in a policy is valid and enforceable, the Louisiana law permitting direct action against the insurer is not applicable; that, alternatively, if the Louisiana law is applied, as to Pacific that law would be unconstitutional in that: it would impair the obligations of the insurance contract, Art. I, Sec. 10, U.S. Const.; Art. 4, § 15, La.Const. of 1921; it would violate the Full Faith and Credit Clause, Art. IV, Sec. 1, U.S.Const.; and it would deny due process and equal protection of the laws. Amendment XIV, Sec. 1, U.S.Const.

The pertinent Louisiana statutes, in force at the time of the delivery and issuance of Pacific's policy, at the time of the accident, at the time of the filing of this complaint, and now, provide as follows:

"Section 1. Be it enacted by the Legislature of Louisiana that Section 655 of Title 22, Louisiana Revised Statutes of 1950 is hereby amended and reenacted to read as follows:

"Section 655. No policy or contract of liability insurance shall be issued or delivered in this state, unless it contains provisions to the effect that the insolvency or bankruptcy of the insured, shall not release the insurer from the payment of damages for injuries sustained or loss occasioned during the existence of the policy, and any judgment which may be rendered against the insured for which the insurer is liable which shall have become executory, shall be deemed prima facie evidence of the insolvency of the insured, and an action may thereafter be maintained within the terms and limits of the policy by the injured person or his or her heirs against the insurer. The injured person or his or her heirs, at their option, shall have a right of direct action against the insurer within the terms and limits of the policy in the parish where the accident or injury occurred or in the parish where the insured has his domicile, and said action may be brought against the insurer alone or against both the insured and the insurer, jointly and in solido. This right of direct action shall exist whether the policy of insurance sued upon was written or delivered in the State of Louisiana or not and whether or not such policy contains a provision forbidding such direct action, provided the accident or injury occurred within the State of Louisiana. Nothing contained in this section shall be construed to affect the provisions of the policy or contract if the same are not in violation of the laws of this state. It is the intent of this section that any action brought hereunder shall be subject to all of the lawful conditions of the policy or contract and the defenses which could be urged by the insurer to a direct action brought by the insured provided the terms and conditions of such policy or contract are not in violation of the laws of this state.

"Section 2. All laws or parts of laws in conflict herewith are hereby repealed." La. Act No. 541 of 1950, LSA-R.S. 22:655. (Emphasis supplied.)

"Section 1. Be it enacted by the Legislature of Louisiana that Section 983 of Title 22, Louisiana Revised Statutes of 1950 is hereby amended to add after Subsection "D" a new subsection to be captioned subsection "E" and to read as follows:

"E — No certificate of authority to do business in Louisiana shall be issued to a foreign or alien liability insurer until such insurer shall consent to being sued by the injured person or his or her heirs in a direct action as provided in Section 655 of this title, whether the policy of insurance sued upon was written or delivered in the State of Louisiana or not, and whether or not such policy contains a provision forbidding such direct action, provided...