EMPLOYERS'LIABILITY ASSUR. CORP. v. Travelers Ins. Co.
| Decision Date | 15 May 1969 |
| Docket Number | Docket 32821.,No. 353,353 |
| Citation | 411 F.2d 862 |
| Parties | The EMPLOYERS' LIABILITY ASSURANCE CORPORATION, Ltd., Plaintiff-Appellant, v. The TRAVELERS INSURANCE COMPANY, H. Gordon Incorporated, The Griffin Construction Company, Ralph Michaud and James E. Gill, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Second Circuit |
John F. Scully (Cooney & Scully, Hartford, Conn., Joseph P. Cooney and David T. Ryan, Hartford, Conn., of counsel), for plaintiff-appellant.
Peter C. Schwartz (Gordon, Muir & Fitzgerald, Hartford, Conn., George Muir, Hartford, Conn., of counsel), for defendants-appellees.
Before FRIENDLY, KAUFMAN and HAYS, Circuit Judges.
In this declaratory judgment action between two insurance companies, three New York federal judges must first determine what is the Connecticut law on a difficult insurance question which the Supreme Court of that state, particularly expert in insurance matters, has had no occasion to consider. The case is in federal court because plaintiff, The Employers' Liability Assurance Corporation, Ltd., is a British corporation, while the defendants, of whom The Travelers Insurance Company is the only one having a financial stake, are Connecticut citizens. Any notion that Connecticut judges would be prejudiced in favor of Travelers, particularly on a legal issue where the situation of the two companies could equally as well have been reversed, would be fantastic in the last degree. Yet the statute maintaining diversity jurisdiction substantially in the form in which it has existed since the Judiciary Act of 1789, 1 Stat. 73, 78, requires us to take time from pressing issues of federal law to essay a prediction on a subject concerning which only Connecticut's highest court can speak with authority.
Travelers had issued an automobile liability policy to James E. Gill, a trucker. Section III of the Travelers' policy defined the term "insured" as follows:
"The unqualified word `insured\' includes the named insured and also includes * * * any person while using the automobile and any person or organization legally responsible for the use thereof, provided the actual use of the automobile is by the named insured or with his permission."
One of the conditions of the policy coverage, number six, provided:
"(c) Use of the automobile for the purposes stated includes the loading and unloading thereof."
Another provision stated that the policy did not apply:
"(d) * * * to bodily injury to or sickness, disease or death of any employee of the insured arising out of and in the course of (1) domestic employment by the insured, if benefits therefor are in whole or in part either payable or required to be provided under any workmen\'s compensation law, or (2) other employment by the insured. * * *"
Still another clause, entitled "Severability of Interests," provided:
"The term `the insured\' is used severally and not collectively, but the inclusion herein of more than one insured shall not operate to increase the limits of the company\'s liability."
Travelers had also issued a workmen's compensation policy to Gill.
Griffin Construction Company, which was engaged in building a church at Meriden, Conn., hired Gill to provide a tractor-trailer and the services of a driver-helper to haul wooden roof trusses from a railroad siding to the church; it also hired H. Gordon, Incorporated, to furnish a crane to aid in the loading and unloading. As a result of maneuvers of the trusses, the crane, and connecting lines directed by Griffin and carried out by him in cooperation with an employee of Gordon and Michaud, the driver-helper supplied by Gill, a truss fell in the course of unloading and injured Michaud. This was on November 4, 1957.
Gill promptly reported the accident to Hemingway-Lewis Insurance and Realty Company, which had written both his policies with Travelers. An officer of the agency gave notice to Travelers on a form entitled "Employer's First Report of Injury." This was designed for the reporting of workmen's compensation claims, and Travelers processed the claim as such.
On July 1, 1958, Michaud's attorneys wrote the H. Gordon Co., which Employers had insured against liability, advising of their representation of Michaud "for personal injuries sustained due to the negligence of one of your employees." The attorneys suggested that Gordon "turn this letter over to your insurance company and advise them to contact us at once if you wish to avoid suit in this matter." Neither Gordon nor Employers gave notice to Travelers. Michaud began a state-court suit against Gordon and Griffin late in October 1958, seeking $100,000 damages; Gill, represented by a Travelers attorney, intervened as a plaintiff to assert a subrogation right. The first notice to Travelers that Gordon claimed coverage under Gill's policy and wished to have Travelers defend on its behalf was given by Employers on August 10, 1959. Travelers declined the latter request because of the lateness of the notice. In 1967 Employers paid $20,000 toward a settlement of Michaud's negligence claim against Gordon and Griffin.
In 1966 Employers brought this action in the District Court for Connecticut seeking a declaration of Travelers' liability to protect Gordon against Michaud's claim. The action, which apparently had lain dormant, came to life after Employers' payment. Travelers defended on two grounds: (1) that, although Gordon would otherwise have been covered under the "loading and unloading" clause, liability was excluded in the case of injury to an employee of any insured, here an employee of Gill; and (2) that Gordon had failed to comply with the condition of the policy requiring prompt notice. Judge Clarie upheld the first defense and thus had no occasion to consider the second, 293 F.Supp. 604.
The interplay between provisions of liability policies extending coverage beyond the named insured and excluding employees has given rise to much controversy — which, of course, insurers could readily end by the simple expedient of saying clearly what they mean. See Annot., 50 A.L.R.2d 97-107 (1956); 7 Am.Jur.2d Automobile Insurance § 133 (1963); 28 Ins. Counsel J. 100 (1961); 7 Appleman, Insurance Law & Practice § 4413 (1942). Travelers claims the clause excludes employees of any insured; Employers counters that it excludes only employees of the insured seeking recovery under the policy, a construction somewhat favored by the severability clause. Since either construction would come within the reach of the words, we must look to probable purpose and to good sense. The loading and unloading clause seems designed to cover liability for that activity rather comprehensively. Travelers has shown no purpose that would be served by a construction that would cover Gordon's liability in negligence if the truss had hit a passerby but would not apply if it hit Gill's employee. Also Travelers' construction would appear to require a conclusion that Gill would not be covered if the injury had been to an employee of Gordon or Griffin, with the result that the...
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