Commercial Ins. Co. of N.J. v. Papandrea

• Decision Date: 02 March 1960
• Docket Number: No. 1873,1873
• Citation: 159 A.2d 333,121 Vt. 386
• Parties: COMMERCIAL INSURANCE COMPANY OF NEW JERSEY, v. Vincenzo PAPANDREA and Paoli Sormani, Administratrix of the Estate of Pietro Sormani.
• Court: Vermont Supreme Court

Page 333

159 A.2d 333

121 Vt. 386

COMMERCIAL INSURANCE COMPANY OF NEW JERSEY, v. Vincenzo PAPANDREA and Paoli Sormani, Administratrix of the Estate of Pietro Sormani.

No. 1873.

Supreme Court of Vermont.

March 2, 1960.

Edmunds, Austin & Wick, Burlington, for plaintiff.

Finn & Davis, Barre, for Papandrea.

Monti & Calhoun, Barre, for Sormani.

Before HULBURD, C. J., HOLDEN, SHANGRAW and SMITH, JJ., and DALEY, Superior Judge.

HOLDEN, Justice.

The question presented is whether declaratory relief in equity is available to determine an automobile liability insurer's duty to defend two conflicting actions at law. The problem centers on the identity of the operator of the insured vehicle.

It appears from the complaint that the plaintiff issued its policy to Vincenzo Papandrea to cover his 1950 Chevrolet automobile. During the term of the contract, September 5, 1956, Papandrea and Pietro Sormani were traveling in the insured vehicle when it left the Barre-Plainfield highway. Sormani died and his administratrix instituted an action in Washington County Court against the named insured, Papandrea, in September 1957 seeking to recover in negligence for the next of kin. The complaint attributes Sormani's death to the negligent operation of the car by Papandrea, in permitting the insured vehicle to leave the highway.

In January 1958, Papandrea presented a claim to the commissioners in Sormani's estate to recover for injuries received in the accident. He charges that it was Sormani who negligently operated the insured vehicle. The plaintiff has been called upon by both Papandrea and Sormani's estate to defend the claims asserted against them.

On these allegations, the plaintiff seeks declaratory relief and joins both defendants to determine whether the insured vehicle was operated by Papandrea or Sormani. The plaintiff also requested temporary relief to stay the actions at law until the identification of the operator in the accident is settled. The defendant Sormani demurred to the complaint. The demurrer was sustained and the complaint dismissed. The plaintiff appeals from this ruling. All parties appeared in this Court and filed separate briefs.

The Uniform Declaratory Judgments Act states its purpose is 'to settle and to afford relief from uncertainty and insecurity with respect to rights, status and other legal relations * * *.' 12 V.S.A. § 4722. To this end, the statute confers upon the county courts, and courts of chancery and probate, within their respective jurisdictions, the power to adjudicate and declare the rights of the parties in legal controversies, at their inception. Gifford Memorial Hospital v. Town of Randolph, 119 Vt. 66, 70, 118 A.2d 480. The declaration may be affirmative or negative in form and effect. 12 V.S.A. § 4711. And a party to a contract may obtain judicial construction of his agreement without the necessity of a prior breach. 12 V.S.A. § 4713.

The plaintiff comes within the framework of the act in each of these particulars. Yet, the defendants oppose the application of the act on the contention that declaratory relief is not available to settle a disputed issue of fact. The defendants maintain there is no controversy here that cannot be settled by resort to the insurance contract itself and hence the complaint was properly dismissed.

The argument is not new, and it troubled the courts considerably until it was put at rest by the opinion of Chief Justice Hughes in Aetna Life Insurance Company v. Haworth, 300 U.S. 227, 57 S.Ct. 461, 464, 81 L.Ed. 617, 622. See Borchard, Declaratory Judgments 2d ed. (1941) p. 393. The question was whether an issue of fact between the insurer and its insured as to policy coverage, presented an actual controversy that could be settled under the Federal Declaratory Judgments Act, 28 U.S.C.A. §§ 2201, 2202. The answer given in the language of the opinion was 'There is here a dispute between parties who face each other in an adversary proceeding. The dispute relates to legal rights and obligations arising from the contracts of insurance. The dispute is definite and concrete, not hypothetical or abstract. * * * That the dispute turns upon questions of fact does not withdraw it, as the respondent seems to contend, from judicial cognizance. The legal consequences flow from the facts and it is the province of the courts to ascertain and find the facts in order to determine the legal consequences. * * *'

The policy contemplates protection to persons other than the named insured. It has an additional insured clause to afford coverage to any person legally responsible for the use of the vehicle provided the use of the vehicle is with the consent of the named insured. Gulla v. Reynolds, 151 Ohio St. 147, 85 N.E.2d 116, 120; Home Indemnity Co. v. Bowers, 194 Tenn. 560, 253 S.W.2d 750, 36 A.L.R.2d 668, 671. The decedent, Sormani, fulfills the description of a 'person legally responsible' within the meaning of the policy definition, provided he was operating the insured vehicle at the time it left the highway. Maryland Casualty Co. v. Ronan, 2 Cir., 37 F.2d 449, 72 A.L.R. 1360, 1362; see also, annotation 72 A.L.R. 1414; 106 A.L.R. 1263.

The policy requires the plaintiff to '* * * pay on behalf of the insured all sums which the insured shall become obligated to pay as damages because of bodily injury, including death at any time resulting therefrom, sustained by any person, caused by accident and arising out of the ownership, maintenance or use of the automobile * * * and to defend any suit alleging such injury and seeking damages on account thereof, even if such suit is groundless, false or fraudulent.'

In the brief filed in behalf of the Sormani Estate, the administratrix concedes that one of the actions at law which the plaintiff has been called upon to defend is groundless, and probably false or fraudulent. Notwithstanding the presence of fraud, it is argued that the plaintiff is bound by its contract to defend both actions,--the false as well as the true. In this both defendants join to urge that the dilemma which confronts the plaintiff is imposed by its own insuring agreement.

The roots of our problem go deeper than this. It turns on whether or not there was an additional insured in this accident. Was Sormani operating the insured vehicle or not? If he was, his representative's request to the plaintiff to defend the action against the estate is well founded and must be honored under the policy. On the other hand, if, in truth, Papandrea was at the wheel the insurer has no obligation to defend Sormani's estate, for in that event the decedent was not a person legally responsible for the operation of the insured car.

In the first instance, the duty of the insurance carrier to defend a claim is measured by the allegations upon which the claim is stated. The provision in the policy requiring the insurer to defend the insured in any suit, although it be groundless, false or fraudulent, is to the same effect. It only confirms by contract what the courts have held in countless cases. Goldberg v. Lumber Mutual Casualty Ins. Co., 297 N.Y. 148, 77 N.E.2d 131, 133; Klefbeck v. Dous, 302 Mass. 383, 19 N.E.2d 308, 311; Lumbermen's Mutual Casualty Co. v. McCarthy, 90 N.H. 320, 8 A.2d 750, 126 A.L.R. 894, 896; annotation 50 A.L.R.2d 461 et seq. This rule applies with a just result where the claimant is a stranger to the policy. It precludes the insurer from determining, ahead of trial, the truth or...