Commercial Standard Ins. Co. v. Garrett

• Citation: 70 F.2d 969
• Decision Date: 11 April 1934
• Docket Number: No. 922,923.,922
• Parties: COMMERCIAL STANDARD INS. CO. v. GARRETT. GARRETT v. TRANSPORTATION INDEMNITY CO. et al.
• Court: United States Courts of Appeals. United States Court of Appeals (10th Circuit)

70 F.2d 969 (1934)

COMMERCIAL STANDARD INS. CO. v. GARRETT.

GARRETT v. TRANSPORTATION INDEMNITY CO. et al.

Nos. 922, 923.

Circuit Court of Appeals, Tenth Circuit.

April 11, 1934.

Ivor O. Wingren, of Denver, Colo. (Jas. C. Cheek and Frank E. Lee, both of Oklahoma City, Okl., on the brief), for Commercial Standard Ins. Co.

T. H. Williams, Jr., and Alger Melton, both of Chickasha, Okl., for cross-appellant.

Robt. R. Rittenhouse, of Chandler, Okl. (F. A. Rittenhouse and John F. Webster, both of Oklahoma City, Okl., on the brief), for Transportation Indemnity Co.

Duke Duvall, of Oklahoma City, Okl. (J. B. Dudley and Geo. F. Short, both of Oklahoma City, Okl., on the brief), for American Fidelity & Casualty Co.

Before PHILLIPS, McDERMOTT, and BRATTON, Circuit Judges.

PHILLIPS, Circuit Judge.

Ethel O'Neal Garrett, for herself and as next friend of her three minor children, brought this action against the Transportation Indemnity Company, the American Fidelity & Casualty Company, and the Commercial Standard Insurance Company to recover upon three policies of liability insurance.

John T. Reynolds, doing business as the Auto Transport Company, was engaged in business as a motor carrier for hire under permit No. 1732 issued to him by the Corporation Commission of Oklahoma on October 18, 1930.

O. S. 1931, § 3708, requires, as a prerequisite to the issuance of such a permit, that the motor carrier file a liability insurance policy or bond with the Corporation Commission "covering public liability and property damage," and provides that "after judgment against the carrier for any such damage, the injured party may maintain an action upon such policy or bond to recover the same."

O. S. 1931, § 3701, provides that:

"The Corporation Commission shall have the power and authority by general order or otherwise to prescribe rules and regulations applicable to any or all motor carriers."

Rule 32 of Rules and Regulations of the Corporation Commission in part reads as follows:

"(b) Original or duplicate indemnity or liability insurance policy or policies carried for the protection of the public or other evidence of adequate protection, shall be filed with the Commission for record.

"(b) No contract or policy of insurance for the protection of the public against death, injury or damage resulting from the operation of a motor carrier shall be entered into or secured for a period of less than one year and no such contract or policy shall be altered by substitution of another for the original risk without notice to and approval in writing by the Commission."

The Corporation Commission by regulation adopted motor vehicle form E. We set out the material parts thereof in note.¹

While motor vehicle form E is attached to regular policies issued by insurers, in reality it constitutes the contract of insurance as between the insurer and the state.

Reynolds filed with the Corporation Commission Transportation Company policy 38,638 for the term from October 27, 1930, to October 27, 1931. Motor vehicle form E was attached thereto.

On April 9, 1931, the Transportation Company wrote a letter to the Corporation Commission, which is identified in the record as Ex. 4, and reads as follows:

"We were recently advised by Eberle & Company, General Agents that there is now pending a death claim against the Auto Transport Company. In Eberle & Company's letter to us they set out that your department insist that our company is liable as you do not have a record of the cancellation of our policy. For your information I am attaching hereto photostatic copy of the cancellation evidence that we have in our file."

The photostat copy referred to in such letter is identified as Ex. 5, and reads as follows:

"Corporation Commission

"State of Oklahoma

"Motor Bus Department.

"Oklahoma City, Oklahoma.

"1732 "cc No. ______ Operator Auto Transport Company "Policy No. 38638 Address St. Louis, Mo "Transportation Indemnity Co. "New York

"This will acknowledge receipt of notice from you of the cancellation of the above numbered policy effective on the 11th day of January, 1931.

"The rules of this Commission do not permit the department to return cancelled policies as they are considered a part of the official records, but a copy of this letter will be attached to the policy, in the files of the Commission, and the assured will be notified of the withdrawal of insurance by your company.

"Corporation Commission "Motor Bus Department "By Patton "Copy sent to assured ______ by ______ "Corporation Commission of Oklahoma "Received January 1931 "Motor Carrier Dept."

Holland, an insurance broker at Oklahoma City, attended to the insurance requirements of Reynolds. In January, 1931, he was also local agent for the Transportation Company. Holland testified that after receiving oral notice from Eberle & Company, general agents for the Transportation Company, to cancel policy 38,638, he wrote on a blank form for acknowledging receipt of notice of cancellation, the following: "Transportation Indemnity Company, St. New York"; "Auto Transport Company, St. Louis, Mo.," "11th day of January, 1931"; and then delivered it to M. B. Hickman; that it was customary for the agents to fill in the blanks on such forms; that he did not write the name Patton or place the commission's receiving date stamp thereon; and that he received the original, of which Ex. 5 is a copy, from the motor carrier department of the commission through the mail.

M. B. Hickman testified that he was director of the motor carrier division of the commission; that he held the position in 1930 and 1931; that he had charge of the issuance of permits and the handling of insurance policies; that Moody Patton, an employee under him, looked after the filing of insurance policies and handled cancellation notices; that permits, bonds, and insurance policies were filed in numerical order under the numbers of the permit or certificate; that no permanent record of each instrument was made; that instruments, correspondence with reference thereto, and matters of that kind were placed in loose leaf folders and filed in a filing cabinet; and that the cabinet was not kept locked.

He further testified that on February 24, 1931, there was no evidence in his files of the cancellation of policy 38,638, and that the first notice he had of the claimed cancellation thereof was the letter identified as Ex. 4; that Ex. 5 first appeared in the office of the commission on April 9, 1931; that the commission made and kept carbon copies of the original acknowledgment of receipt of notices of cancellation; that there was no carbon copy of Ex. 5 in the files of the commission; that he did not know whether the signature on Ex. 5 was that of Patton; that he did not sign the name Patton to Ex. 5; and that the records of the commission did not show any notice from Holland or from Eberle & Company of intention to cancel policy 38,638.

Moody Patton testified that in January, 1931, he was auditor for the motor carrier department of the Corporation Commission, and had charge of the insurance files and cancellation of insurance policies; that he did not receive on January 6, 1931, notice from the Transportation Company, Holland, or Eberle & Company of intention to cancel policy 38,638; that he never at any time acknowledged in writing receipt of notice of intention to cancel such policy; that he did not sign Ex. 5; that the name Patton thereon was not in his handwriting; and that he generally signed acknowledgments of cancellation notices "Moody Patton."

On January 12, 1931, Scruggs & Davis as agents for the American Company, at Holland's request, issued American Company policy 8007. On the same day Holland as insurance broker for Reynolds filed such policy in the office of the commission. No. 1732 was endorsed on the back thereof. Holland testified that at the time he filed such policy, he told M. B. Hickman that it was in lieu of policy 38,638. Form E was attached to policy 8007.

On January 19, 1931, the American Company sent the following notice to the commission:

"Please accept notice of cancellation of American Fidelity and Casualty Company policy No. 8007, covering the Auto Transport Company's operations in the State of Oklahoma, effective this date."

This notice was received by the commission on January 21, 1931, as shown by the commission's stamp thereon, and the commission made a pencil notation thereon, "Effective Feb. 10th, 1931."

On November 28, 1931, M. B. Hickman as director of the motor carrier division sent a letter to the American Company acknowledging receipt of such notice of cancellation on January 21, 1931, and stating that the liability ceased on policy 8007 on February 10, 1931.

Moody Patton on Receipt of such notice on January 21, 1931, wrote on policy 8007, "Liability ceased 2-8-31." Thereafter M. B. Hickman corrected "2-8-31" to read "2-10-31."

Policy 8007 contained among others the following provisions:

"J. This policy may be cancelled at any time by either party * * * upon written notice to the other stating when thereafter cancellation may be effective; the date of cancellation shall then be the end of the policy period."

No written notice of the cancellation of policy 8007 was given to Reynolds by the American Company, but on January 21, 1931, the American Company orally notified Holland as agent for Reynolds that it desired to cancel policy 8007, and Holland notified Reynolds thereof by telephone. Reynolds instructed Holland to secure another policy. Thereupon Holland as insurance broker for Reynolds applied to R. B. Hickman agent for the Standard Company for a policy. Hickman communicated with the Standard Company and it authorized him to write such policy, but expressly stipulated that the premium therefor should be paid before the policy was delivered. R. B. Hickman thereupon notified Holland that such company would furnish the policy, but upon the express condition that the...