Collier v. Harvey

• Decision Date: 28 December 1949
• Docket Number: No. 3912.,3912.
• Citation: 179 F.2d 664
• Parties: COLLIER v. HARVEY et al.
• Court: U.S. Court of Appeals — Tenth Circuit

179 F.2d 664 (1949)

COLLIER v. HARVEY et al.

No. 3912.

United States Court of Appeals Tenth Circuit.

December 28, 1949.

Tom Biggers, Wewaka, Okl. (Dick Bell, Seminole, Okl., on the brief), for appellant.

Duke Duvall, Oklahoma City, Okl. (C. A. Sims, Seminole, Okl. and Dudley, Duvall & Dudley, Oklahoma City, Okl., on the brief), for appellee, O. L. Harvey.

Gus Rinehart, Oklahoma City, Okl. (Butler & Rinehart, Oklahoma City, Okl., on the brief), for appellee Employers Mutual Liability Ins. Co. of Wisconsin.

Before PHILLIPS, Chief Judge, and BRATTON and HUXMAN, Circuit Judges.

PHILLIPS, Chief Judge.

On February 24, 1947, Employers Mutual Liability Insurance Company of Wisconsin¹ issued its policy of automobile insurance to Harvey by which it agreed to pay on behalf of Harvey all sums which he should become obligated to pay by reason of liability imposed upon him by law for damages because of bodily injury sustained by any person caused by accident and arising out of the ownership, maintenance, or use, "for the purposes stated as applicable thereto in the declarations" of the automobile described in the policy and to "defend in his name and behalf any suit against the insured alleging such injury * * * and seeking damages on account thereof, even if such suit is groundless, false or fraudulent. * * *"

Collier brought an action² against Harvey in the superior court of Seminole County, Oklahoma, to recover damages for personal injuries. In his complaint, Collier alleged that he suffered personal injuries on or about May 1, 1947, by reason of the negligence of Harvey in the operation of a truck belonging to Harvey, and sought damages in the sum of $32,642.37. The policy was in full force and effect on May 1, 1947, and described such truck.

On July 1, 1948, the Insurance Company brought this action against Harvey and Collier for a declaratory judgment. It alleged the issuance of the policy and attached a copy thereof to its complaint. It alleged the filing of the state court action by Collier against Harvey and that Collier, in his petition, alleged that Collier received personal injuries on or about May 1, 1947, by reason of the negligence of Harvey in the operation of the truck; that Harvey had demanded that the Insurance Company defend the state court action and pay any judgment that might be rendered against Harvey therein; that the truck involved in the accident was owned by Harvey and that prior to the accident, Harvey had loaned the truck to the City of Seminole and that it was being used under the direction of the Street Superintendent of the City in setting electric light poles in the ball park of the City and not in connection with any maintenance or use of Harvey; that the accident was not within the coverage of the policy; that Harvey did not give written notice of the accident to the Insurance Company as soon as practicable as required by the policy and did not give notice of the accident to the Insurance Company until May 26, 1948; and that by reason of non-coverage and the failure to give timely notice, no obligation existed under the policy on the part of the Insurance Company, either to defend the state court action or to pay any judgment rendered therein against Harvey. It sought a declaratory judgment determining the rights, obligations, and liabilities of the parties to the action and declaring and adjudging that the Insurance Company had no obligation or liability to Harvey or Collier under such policy on account of such accident.

Harvey filed an answer and counterclaim, and a cross-claim against Collier. In his answer, Harvey alleged that the truck involved in the accident was owned by him, but that at the time of the accident, it was loaned to the City without charge and was not under the control of Harvey or any agent or employee of his, but was under the control of the City, acting through its Street Superintendent; that the petition in the state court action alleged that Harvey was responsible for the operation of the truck at the time of the accident and was guilty of negligence, rendering him liable to Collier; that the issue of his liability to Collier gives rise to disputed questions of fact and law, and that if he is liable in the state court action to Collier, the Insurance Company is obligated to pay any judgment rendered against him therein; and that it is the obligation of the Insurance Company under the policy to defend such state court action and that the Insurance Company has neglected and refused so to do. In his counterclaim, Harvey alleged by reference the facts set up in his answer and sought a declaratory judgment adjudging and declaring that the Insurance Company was obligated under the policy to defend the state court action and to pay within the limits of the policy any judgment that may be rendered against Harvey therein. Harvey asserted that the delay in giving notice did not result in any prejudice to the Insurance Company.

In his cross-claim against Collier, Harvey alleged by reference the facts set up in his answer and further alleged that on May 1, 1947, the City owned and operated a baseball park; that he loaned to the City without charge the truck, equipped with gin poles and a mechanical winch to lift and erect necessary electric light poles at the baseball park of the City upon which to affix flood lights, and men to operate such equipment; that the equipment was placed in the control and under the supervision of the City Engineer and Street Superintendent who were supervising and directing the work of electrification of the baseball park; that at the time of the accident, the truck and equipment were operated and controlled by the City and not by Harvey, and Harvey's employees operating the truck were controlled and supervised by the City and not by Harvey. Harvey sought a declaratory judgment against Collier declaring and adjudging that Harvey was not responsible for the negligence of his employees loaned to the City at the time of the accident and that Harvey was not liable to Collier for any injuries received in such accident.

Collier filed an answer to the complaint of the Insurance Company in which he denied: that the truck had been loaned to the City without charge; that at the time of the accident it was being used under the direction of the Street Superintendent of the City and not in connection with any maintenance or use by Harvey; that the accident was not within the coverage of the policy; that there was no obligation on the part of the Insurance Company, either to defend the state court action or to pay any judgment Collier might recover therein; and prayed for a declaratory judgment adjudging the Insurance Company to be liable under the policy to him and to Harvey for the damages sustained by Collier as a result of the accident. Collier filed no pleading to Harvey's cross-claim.

Certain admissions of fact were requested and made; certain interrogatories were propounded and answered; and certain depositions were taken and filed.

The Insurance Company and Harvey interposed a motion for summary judgment. The trial court found there was no genuine issue of fact with respect to Harvey's liability to Collier, sustained the motion, and entered a judgment in which it adjudged that at the time of the accident in which Collier was injured, the truck and the employees operating the same were loaned to the City and were under its control and supervision, and not under the control or supervision of Harvey, and that neither Harvey nor the Insurance Company was liable to Collier for the injuries incurred by him as a result of the accident.

I. Jurisdiction of the Principal Claim

The Insurance Company is a corporation organized under the laws of Wisconsin and is not a citizen of Oklahoma. Harvey and Collier are citizens of Oklahoma.

There was a genuine dispute between the Insurance Company and Harvey with respect to the obligation of the Insurance Company to defend the state court action and to pay any judgment within the limits of the policy that Collier might recover against Harvey therein.

The mere fact that Harvey asserted a defense in the state court action which, if adjudged to be true, would establish that the claim of Collier for injuries was not within the coverage of the policy would not constitute an admission on the part of Harvey that the Insurance Company was not obligated to defend the state court action or render the controversy, between the Insurance Company and Harvey respecting the former's obligation to defend the state court action, non-substantial.

The policy obligated the Insurance Company to defend in Harvey's name and his behalf any suit brought against him alleging an injury within the coverage of the policy, even if such suit be groundless. The duty of the Insurance Company to defend must be determined, not from the facts asserted by Harvey as a defense to Collier's claim, but from the allegations of Collier's petition in the state court action, seeking to recover damages for personal injuries against Harvey.³ Such petition alleged facts in support of a claim for damages for personal injuries. If such facts were true, Harvey was liable to Collier on such claim and his liability was within the coverage of the policy.

Accordingly, it is our conclusion that there was an existing substantial controversy between the Insurance Company and Harvey, that Harvey should not be realigned as a party plaintiff for the purpose of determining jurisdiction, and that the court had jurisdiction of the principal claim.⁴ American Fidelity Casualty Co. v. Service Oil Co., 4 Cir., 164 F.2d 478, Indemnity Insurance Co. of North America v. Schriefer, 4 Cir., 142 F.2d 851, and State Farm Mutual Automobile Insurance Co. v. Hugee, 4 Cir., 115 F.2d 298, 132 A.L.R. 188, are distinguishable. In each of those cases, the insurance company admitted its obligation to defend the state court action and there was no real controversy between the...