Elbert v. Lumbermen's Mut. Cas. Co.

• Decision Date: 30 October 1952
• Docket Number: No. 3548.,3548.
• Citation: 108 F. Supp. 157
• Parties: ELBERT v. LUMBERMEN'S MUT. CAS. CO.
• Court: U.S. District Court — Western District of Louisiana

108 F. Supp. 157

ELBERT v. LUMBERMEN'S MUT. CAS. CO.

No. 3548.

United States District Court, W. D. Louisiana, Shreveport Division.

October 30, 1952.

John N. Madison, Shreveport, La., Whitfield Jack, Shreveport, La., for plaintiff.

Charles L. Mayer, Jackson, Mayer & Kennedy, Shreveport, La., for defendant.

On Motion for Rehearing

DAWKINS, Chief Judge.

Plaintiff has sought a rehearing in this case because of the decision of the Court of Appeals for this Circuit in Cushing v. Maryland Casualty Company, 198 F.2d 536, 537.

In that case, jurisdiction was invoked under both Section 33 of the Merchant Marine (Jones) Act of 1920, 46 U.S.C.A. § 688, and Section 655 of Title 22 of the Louisiana Statutes Annotated — Revised Statutes, usually called the direct action law. The suits were by the beneficiaries of deceased seamen who lost their lives in a collision by a tug owned by their employer with a railroad bridge belonging to the Texas & Pacific Railway Company. Defendants were the Railroad and the insurers, alone, against liability of the owners of the tug for injury and death of seamen. This insurance policy also covered death by accidental means and applied solely to the employees of the owner of the tug. The complaints charged negligence on the part of the operators of both the tug and the bridge.

The trial court sustained a motion to dismiss the demands against the insurance companies under the State Direct Action Statute, on the ground that the matter was cognizable solely, in admiralty jurisdiction and the State law did not apply. The Court of Appeals reversed that ruling, stating the issues as follows:

"The dominant question is whether or not the statute Sec. 655, La.Rev. Stat. of 1950 applies to policies which protect the owner and charterer of a vessel against liability for personal injuries or accidental death suffered by the crew of a vessel in navigable waters." (Emphasis by the writer.)

In disposing of the case, the Court, among other things, said:

"While Sec. 655, supra, confers upon an injured party a substantive right which becomes vested at the moment of the injury, it is not a right essentially maritime in character * * *. The statute provides only an additional and cumulative remedy at law in the enforcement of obligations of indemnity voluntarily and lawfully assumed by the insurer" and that it "does not conflict with any feature of substantive admiralty law, nor with any remedy peculiar to admiralty jurisdiction. These suits are at law, not in admiralty." (Emphasis by the writer.)

It is hard to understand how a law can confer "a substantive right" and yet provide "only an additional and cumulative remedy". In Fisher v. Home Indemnity Company, 5 Cir., 198 F.2d 218, the same court of appeals, with Judge Hutcheson as its organ, had held that Sec. 655 created a substantive right, not a remedy, insofar as it attempted to give a direct action against the insurer alone, the enforcement of which as to contracts validly made in other states would violate the Federal Constitution.

Further on in the Cushing case, it is said:

"Appellees, the insurers, further contend that the Jones Act, 46 U.S.C.A. § 688, creates a right of action against an injured seaman's employer, but not against the employer's liability underwriter, and that the State of Louisiana can not add to the rights created by the Jones Act. It is unnecessary, however, to determine that question. Even if there were no jurisdiction, nor any right of action, under the Jones Act, which we do not decide, diversity of citizenship exists between all plaintiffs and the defendant insurers, and more than $3,000.00 is involved in each suit. These circumstances support federal jurisdiction. The complaints contain averments which sufficiently assert liability upon general principles of negligence, and also for accidental death within the coverage of the policies sued upon, so that a cause of action is stated." (Emphasis by the writer.)

Actions for death were unknown to the common law. In Louisiana the right to sue for personal injuries or death is purely statutory, and the liability created is confined to the person or persons at fault. The insurer, or persons secondarily liable, are not included, nor does Sec. 655 purport to make it an additional tort feasor. It simply authorizes the injured person or his heirs, at their option, to bring a direct proceeding against the insurer alone or against the insurer and insured together on the one cause of action created by the Code, and otherwise specifically preserves all other terms of the policy. Therefore, any such suit by a third person against the insurer must necessarily arise from an implied subrogation to the rights of the insured under his policy to demand of the insurer that it discharge his liability once it is established. Certainly the insured himself has no cause of action to sue his insurer until the controversy as to whose fault, under Art. 2315 of the LSA-Civil Code, caused the injury, is determined; nor can that right of action of the subrogee, the injured person, it would seem, rise any higher than that of the insured, that is, to require payment by the insurer of the judgment against the insured.

In Maryland Casualty Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 61 S.Ct. 510, 511, 85 L.Ed. 826, the court stated the circumstances as follows:

"Petitioner issued a conventional liability policy to the insured, the Pacific Coal & Oil Co., in which it agreed to indemnify the insured for any sums the latter might be required to pay to third parties for injuries to person and property caused by automobiles hired by the insured. Petitioner also agreed that it would defend any action covered by the policy which was brought against the insured to recover damages for such injuries.

"While the policy was in force, a collision occurred between an automobile driven by respondent Orteca and a truck driven by an employee of the insured. Orteca brought an action in an Ohio state court against the insured to recover damages resulting from injuries sustained in this collision. Apparently this action has not proceeded to judgment.

"Petitioner then brought this action against the insured and Orteca. Its complaint set forth the facts detailed above and further alleged that at the time of the collision the employee of the insured was driving a truck sold to him by the insured on a conditional sales contract. Petitioner claimed that this truck was not one `hired by the insured,' and hence that it was not liable to defend the action by Orteca against the insured or to indemnify the latter if Orteca prevailed. It sought a declaratory judgment to this effect against the insured and Orteca, and a temporary injunction restraining the proceedings in the state court pending final judgment in this suit." (Emphasis by the writer.)

Orteca demurred to the complaint on the ground that it did not "state a cause of action against him", which was sustained by the trial court and affirmed by the Court of Appeals in 111 F.2d 214. In disposing of the matter, the Supreme Court said:

"The question is whether petitioner's allegations are sufficient to entitle it to the declaratory relief prayed in its complaint. This raises the question whether there is an `actual controversy' within the meaning of the Declaratory Judgment Act, Judicial Code § 274d, 28 U.S.C. § 400, 28 U.S.C.A. § 400, since the District Court is without power to grant declaratory relief unless such a controversy exists. Nashville, C. & St. L. Ry. Co. v. Wallace, 288 U.S. 249, 259, 53 S.Ct. 345, 346, 77 L.Ed. 730, 87 A.L.R. 1191; U.S.C.A. Constitution, Art. III, § 2.

"The difference between an abstract question and a `controversy' contemplated by the Declaratory Judgment Act is necessarily one of degree, and it would be difficult, if it would be possible, to fashion a precise test for determining in every case whether there is such a controversy. Basically, the question in each case is whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment. See Aetna Life Ins. Co. of Hartford v. Haworth, 300 U.S. 227, 239-242, 57 S.Ct. 461, 463, 464, 81 L.Ed. 617, 108 A.L.R. 1000. It is immaterial that frequently, in the declaratory judgment suit, the positions of the parties in the conventional suit are reversed; the inquiry is the same in either case. Nashville, C. & St. L. Ry. Co. v. Wallace, supra, 288 U.S. at page 261, 53 S.Ct. 345 page 347, 77 L.Ed. 730, 87 A. L.R. 1191.

"That the complaint in the instant case presents such a controversy is plain. Orteca is now seeking a judgment against the insured in an action which the latter claims is covered by the policy, and sections 9510-3 and 9510-4 of the Ohio Code (Page's Ohio General Code, Vol. 6, §§ 9510-3, 9510-4) give Orteca a statutory right to proceed against petitioner by supplemental process and action if he obtains a final judgment against the insured which the latter does not satisfy within thirty days after its rendition. Compare Maryland Casualty Co. v. United Corporation, 1 Cir., 111 F.2d 443, 446; Central Surety & Insurance Corp. v. Norris, 5 Cir., 103 F.2d 116, 117; United States Fidelity & Guaranty Co. v. Pierson, 8 Cir., 97 F.2d 560, 562. Moreover, Orteca may perform the conditions of the policy issued to the insured requiring notice of the accident, notice of suit, etc., in order to prevent lapse of the policy through failure of the insured to perform such conditions. Hartford Accident & Indemnity Co. v. Randall, 125 Ohio St. 581; 183 N.E. 433; see, also, Lind v. State Automobile Mutual Insurance Association, 128 Ohio St. 1, 190 N.E. 138; State Automobile Mutual Insurance Association v. Friedman, 122 Ohio St. 334, 171 N.E. 591.

"It is clear that there is an actual controversy between petitioner and the insured. Compare Aetna

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