Clinchfield Railroad Co. v. UNITED STATES FIDEL. & G. CO., Civ. A. 1198.

• Decision Date: 27 March 1958
• Docket Number: Civ. A. 1198.
• Citation: 160 F. Supp. 337
• Parties: CLINCHFIELD RAILROAD COMPANY v. UNITED STATES FIDELITY AND GUARANTY COMPANY.
• Court: U.S. District Court — Eastern District of Tennessee

160 F. Supp. 337

CLINCHFIELD RAILROAD COMPANY v. UNITED STATES FIDELITY AND GUARANTY COMPANY.

Civ. A. 1198.

United States District Court E. D. Tennessee, Northeastern Division.

March 27, 1958.

Tucker & Erwin, A. K. McIntyre, Harry N. Fortune, Erwin, Tenn., for plaintiff.

S. J. Milligan, Greeneville, Tenn., E. Lynn Minter, Kingsport, Tenn., for defendant.

ROBERT L. TAYLOR, District Judge.

This suit was removed to this court from the Circuit Court of Unicoi County, Tennessee. Plaintiff, Clinchfield Railroad Company, seeks indemnity for the payment of a judgment in the amount of $20,000, plus interest and costs, recovered by Ted Harrison in a suit against it lately pending in this court. For convenience plaintiff will be referred to as Clinchfield and defendant as Guaranty Company.

Clinchfield claims that the Guaranty Company by automobile disability and physical damage insurance policy issued to it agreed to pay on behalf of Clinchfield all sums which Clinchfield became legally obligated to pay as damages because of bodily injuries sustained by any person caused by accident arising out of the use or maintenance of the vehicles described in the policy. The policy also covered property damage but that provision is not pertinent to the issues in this case. The Guaranty Company also agreed to defend any suit against Clinchfield seeking damages on account of injuries to person or property.

The judgment recovered by Harrison was for injuries sustained by him on June 9, 1955. His suit was based on the Federal Employers' Liability Act, 45 U. S.C.A. § 51 et seq. He was injured while riding in a Jeep driven by a fellow employee. The Jeep was listed in the policy and was being driven in furtherance of Clinchfield's business at time of the accident.

Guaranty Company moved to dismiss the complaint under Rule 12(b) (6), F.R. Civ.P. 28 U.S.C.A. upon the ground that the complaint failed to state a cause of action, or in the alternative for summary judgment under Rule 56, on the ground that there was no genuine issue as to any material fact and that the record in the case of Harrison v. Clinchfield Railroad Company and the insurance policy upon which the present suit is based, show that the judgment recovered by Harrison was not covered by the aforementioned insurance policy. Certain parts of the record in the Harrison case were filed as Exhibits to the motion.

The Court was of the opinion that the motion should not be sustained until Clinchfield was given a full opportunity to present its case. An order was accordingly entered on November 8, 1957 overruling the motion.

The answer of Guaranty Company denies liability upon the ground that the judgment in the Harrison case is not covered by the insurance policy. A pre-trial was recently held and the parties agreed that the questions involved were questions of law for the determination of the Court and that each would file a motion for summary judgment. This agreement is set forth in the pre-trial order of March 5, 1958.

Clinchfield has filed a motion for summary judgment insisting that the pleading, order pursuant to pre-trial and stipulations show that it is entitled to a judgment for the reason that the judgment is covered by the policy.

Guaranty Company has renewed its motion to dismiss, or for a summary judgment, based on the record in the present case and the record in the case of Harrison v. Clinchfield Railroad Company lately pending in this Court, renewing its insistence that the judgment is not covered by the policy.

The parties stipulated that Harrison was injured on June 9, 1955, while employed as a machinist by Clinchfield, at 3:30 p. m. after he had finished his physical labor on that date; that after he finished his work that day he went to a basement in a storehouse owned by Clinchfield and after taking a shower and changing his clothes started to walk on a concrete walkway on the premises of the railroad and proceeded half way between the machine shop and the place where he would cross the railroad track when Foster, a fellow-employee, driving a Jeep owned by Clinchfield and driven in furtherance of the business of Clinchfield, picked him up, and as the Jeep crossed the railroad company's yards in Erwin it collided with one of the moving trains of Clinchfield, causing injuries to Harrison. Clinchfield was not required to furnish Harrison transportation from his work to his home. Guaranty Company stipulated without waiving its insistence that the judgment settled the relationship of Harrison and Clinchfield at the time of the accident.

Paragraph III of the policy provides in part:

"The insurance with respect to any person or organization other than the Named Insured does not apply: (b) to any employee with respect to injury or sickness, disease or death of another employee of the same employer injured in the course of such employment in an accident arising out of the maintenance or use of the automobile in the business of such employer."

The exclusion provision in the policy that is relied on by the Guaranty Company to defeat recovery states:

"This policy does not apply:

(d) under coverages A and C, to bodily injury to or sickness, disease or death of any employee of the Insured while engaged in the employment, other than domestic, of the Insured or in domestic employment if benefits therefor are either payable or required to be provided under any workmen's compensation law;"

Defendant says that by deleting the inapplicable language from the foregoing exclusion provision that it would read thus:

"This policy does not apply:

(d) under coverages A and C, to bodily injury to * * * any employee of the Insured while engaged in the employment * * * of the insured * * *."

Clinchfield does not contend that the policy covers accidental injuries of Harrison sustained by him while engaged in his work for it. Clinchfield contends that Harrison had finished his day's work on the day of the accident and that the aforementioned exclusion provision does not exclude his accident from coverage.

Clinchfield contends further that the verdict of the jury and the judgment thereon of this Court is not res adjudicata of the question that Harrison was engaged in his work for Clinchfield at the time of the accident.

Guaranty Company insists that the verdict and judgment settled the question of the relationship of Harrison and Clinchfield at the time of the accident and that Clinchfield is judicially estopped to now assert that the verdict and judgment are not binding upon it in this suit.

The doctrine of res adjudicata in general binds only parties to the action in which judgment was rendered and their privies. 50 C.J.S. Judgments § 762, p. 288.

If a party has had a fair trial on a particular issue he is not, ordinarily, entitled to relitigate the issue because the policy of the law is to end litigation. The courts rule that such party is judicially estopped to relitigate an issue in a suit to which he was a party. 50 C.J.S. Judgments § 763, pp. 291, 292.

It is a general rule, subject to exceptions based on reason or necessity, that estoppels must be mutual. 50 C.J.S. Judgments § 765, p. 293.

As applied to the doctrine of res adjudicata, it is generally held that parties include all persons who have direct interest in the subject matter of the litigation and a right to control the litigation. 50 C.J.S. Judgments § 768, pp. 297, 298.

An indemnitor who has notice of a suit against an indemnitee and who is called upon to defend by the indemnitee will be concluded by judgment rendered in the suit, even though the indemnitor does not appear. 50 C.J.S. Judgments § 811, p. 361.

The indemnitor is concluded by the judgment rendered in respect to issues in prior litigation to which indemnitee was a party and identical with those issues in subsequent litigation if indemnitor had notice of the suit and was called upon to defend. 50 C.J.S. Judgments § 811, p. 362.

Notice and an opportunity to defend the action against the indemnitee are necessary to render the judgment against the indemnitee conclusive of the indemnitor. 50 C.J.S. Judgments § 812, p. 363; Restatement of the Law, Judgments, sec. 107, Clause "e", p. 515.

"In actions between the indemnitor and the indemnitee, the indemnitee is subject to the burdens, as well as entitled to the benefits, of the rules of res adjudicata with reference to matters determined in an action brought by the obligee or by the injured person. If the judgment is based on a finding of fact which if correct would discharge the indemnitor, the latter is discharged from liability to the indemnitee by such finding, unless by agreement the entire defense is controlled by the indemnitor. Thus where an insurance company insures a person against liability because of a negligent act except where he is driving an improperly registered car, in a jurisdiction in which the insurance company is made liable to an injured person for the negligent act by the insured within the terms of the policy, if an action is brought against the insured and the insurer refuses to defend or to participate in the defense, a finding of fact relevant to the judgment that the insured was driving an unregistered car, would bind the insured in a subsequent action against the insurance company for indemnity. * * *" Restatement of the Law, Judgments, sec. 107, Clause (h), pp. 517, 518. See A.L.R.2d, Vol. 24, p. 330.

Guaranty Company, as indemnitor, was given notice by Clinchfield, as indemnitee, to defend the Harrison suit and Guaranty Company refused upon the ground that the wrongs complained of in the complaint were not covered by the insurance policy.

The question of whether Harrison was within his employment at the time of the accident was presented to the jury in various portions of the charge, for example: "The first question that arises to be disposed of by the jury is whether plaintiff was within his employment at the time of his injury." And again, "I say the first...