Connecticut Indemnity Co. v. Lee

• Decision Date: 14 June 1948
• Docket Number: No. 4327.,4327.
• Citation: 168 F.2d 420
• Parties: CONNECTICUT INDEMNITY CO. v. LEE et al.
• Court: U.S. Court of Appeals — First Circuit

168 F.2d 420 (1948)

CONNECTICUT INDEMNITY CO. v. LEE et al.

No. 4327.

Circuit Court of Appeals, First Circuit.

June 14, 1948.

Alexander B. Way, Jr., of Boston, Mass., for appellant.

Maurice P. Neiman, of Boston, Mass., for appellee Benjamin Bernhardt.

Dana J. Kelley, of Boston, Mass., (Norman F. Fermoyle, and Henry Hellyer, both of Boston, Mass., on the brief), for appellee Massachusetts Bonding & Ins. Co.

Before MAHONEY and WOODBURY, Circuit Judges and PETERS, District Judge.

MAHONEY, Circuit Judge.

This is an appeal from a declaratory judgment entered in an action brought under § 274d of the Judicial Code, 28 U.S. C.A. § 400, by the Connecticut Indemnity Company, a Connecticut corporation doing business in the Commonwealth of Massachusetts, against John M. Lee (an individual doing business as Lee's Express), George Nicholson, and Benjamin Bernhardt, all citizens of the Commonwealth of Massachusetts, and the Massachusetts Bonding and Insurance Company, a Massachusetts corporation, for a determination of the question whether the policy of insurance issued by the plaintiff to Lee's Express covers an accident in which Bernhardt suffered personal injuries.

The plaintiff had issued a Massachusetts motor vehicle liability policy in the name of Lee's Express, effective for the calendar year 1946, to apply as the interest of Lee's Express might appear, to certain specified motor vehicles. Under Insuring Agreement 1, Coverage A of the policy, the plaintiff agreed "to pay on behalf of the Insured in accordance with the `Massachusetts Compulsory Automobile Liability Security Act' G.L.Mass.(Ter.Ed.) c. 90, § 34A et seq.; c. 175, § 113A et seq. * * * all sums which the Insured shall become obliged to pay by reason of the liability imposed upon him by law for damages to others for bodily injury * * * caused by the ownership, operation, maintenance, control or use of the motor vehicle upon the ways of the Commonwealth of Massachusetts." Under Insuring Agreement 1, Coverage B, which was an optional coverage, the plaintiff agreed "to pay on behalf of the Insured * * * all sums which the Insured shall become obligated to pay by reason of the liability imposed upon him by law for damages * * * sustained by any person in Division 1, 2 and 3 caused by accident and arising out of the ownership, maintenance or use of the motor vehicle." Division 3 of Coverage B includes any person other than a guest occupant, whether on or off the ways of the Commonwealth of Massachusetts. Item 5 of the Declarations which form a part of the policy, states that "The purposes for which the motor vehicle is to be used are Commercial * * * (b) The term `commercial' is defined as use principally in the business occupation of the named Insured * * *. (c) As respects coverages (B) and (C) use of the motor vehicle for the purposes stated includes the loading and unloading thereof."

The Massachusetts Bonding and Insurance Company had issued a public liability policy to Lee's Express, effective from April 15, 1945 to April 15, 1946. The company agreed "to pay on behalf of the Insured, all sums which the Insured shall become obligated to pay by reason of the liability imposed upon him by law for damages * * * because of bodily injury * * * sustained by any person or persons, caused by accident and arising out of the Hazards hereinafter defined." Lee's Express was afforded coverage under Division 1 of Definition of Hazards which includes ownership, maintenance or use of the premises described in the policy and all operations necessary or incidental thereto. An Exclusion Clause provides that "This policy does not apply: (a) Under Division 1 of the Definition of Hazards, to aircraft * * * or to * * * vehicles of any kind other than hand trucks * * * or the loading or unloading thereof, while away from the premises, unless specifically declared and described in this policy * *."

On March 28, 1946, George Nicholson, who was employed by Lee's Express as a truck driver, operated a truck belonging to that company to a point on Summer Street, a public highway in the City of Boston, and stopped the vehicle in front of a building occupied in part by Frank G. Shattuck Company, known as Schrafft's. Nicholson stopped the truck for the purpose of making deliveries of merchandise to Schrafft's. The truck was stopped with its right side close to and parallel with the curbstone adjacent to 11 Summer Street, which is the number of the store occupied by Schrafft's. It was the intention of Nicholson to make delivery of the merchandise by means of an elevator which opens on to the sidewalk in front of the premises. The doors over the elevator, when closed, form a part of the public sidewalk. At a point near the elevator and on the outside wall of the premises is a bell button which when pressed notifies some one in the basement of Schrafft's store that the elevator is wanted. This person in turn throws a switch releasing a guard which allows the person on the sidewalk to open the doors. When the doors are open the elevator can be raised so that the platform of the elevator is even with the sidewalk. Nicholson got out of the truck, crossed the sidewalk adjacent to Schrafft's store, and pressed the bell button. The guard was released and after opening the doors Nicholson crossed the sidewalk and went to the rear of the truck for the purpose of getting boxes of merchandise from the truck. While Nicholson was in the act of picking up a box of merchandise from the truck, he heard a noise, looked up, and saw that one door was going down and the defendant Bernhardt was falling head first into the elevator well.

Bernhardt brought suit in the Superior Court for Suffolk County, Massachusetts, against Lee's Express and Nicholson to recover damages for the personal injuries suffered by him as a result of the fall, and they called upon the Connecticut Indemnity Company, the plaintiff herein, to defend them. The Connecticut Indemnity Company then brought this action in the federal district court. It asked the court to declare that the relation of insurer and insured does not exist between it and Lee's Express and Nicholson, as to any liability on their part arising out of the accident, and that it does not have the right nor obligation to defend the state court action or to indemnify the defendants therein for any loss. The Massachusetts Bonding and Insurance Company, which was joined as a party defendant by the plaintiff, filed an answer denying that the plaintiff's policy does not cover the accident, and praying the court for a declaration that its policy does not cover the accident and that the plaintiff's does. The plaintiff in reply asked the court to determine that the policy issued by the Massachusetts Bonding and Insurance Company covers the accident. The district court, applying Massachusetts law, determined that there was a causal relation between the lifting of the elevator doors and the unloading of the truck. It held that the relationship of insured and insurer exists between the defendants, Lee's Express and Nicholson, and the plaintiff, and does not exist between them and the Massachusetts Bonding and Insurance Company. It entered judgment accordingly.

Although not urged by any of the parties, the question of federal jurisdiction must be determined. Jurisdiction in the plaintiff's action is founded on diversity of citizenship between it and all the defendants, it being a Connecticut corporation, and the defendants being either citizens of Massachusetts or Massachusetts corporations. The Massachusetts Bonding and Insurance Company by its "answer" asked for a declaration that its policy does not cover the accident. Its interest in this respect is thus adverse to the interest of Lee's Express and Nicholson; yet there is no diversity between them. But it seeks a declaration of its rights in regard to the same transaction or occurrence that is the subject matter of the plaintiff's action. Cf. Moore v. New York Cotton Exchange, 1926, 270 U.S. 593, 610, 46 S.Ct. 367, 70 L.Ed. 750, 45 A.L.R. 1370. The same factual and legal issues are involved. To settle the controversy between the plaintiff and Lee's Express and Nicholson, it is necessary to determine whether the accident arose out of the...