Excess Ins. Co. of America v. Brillhart

• Court: U.S. Court of Appeals — Tenth Circuit
• Writing for the Court: PHILLIPS, BRATTON, and HUXMAN, Circuit
• Citation: Excess Ins. Co. of America v. Brillhart, 121 F.2d 776 (10th Cir. 1941)
• Decision Date: 28 August 1941
• Docket Number: No. 2223.,2223.
• Parties: EXCESS INS. CO. OF AMERICA v. BRILLHART et al.

121 F.2d 776 (1941)

EXCESS INS. CO. OF AMERICA v. BRILLHART et al.

No. 2223.

Circuit Court of Appeals, Tenth Circuit.

June 23, 1941.

Rehearing Denied August 28, 1941.

Dick H. Woods, of Kansas City, Mo. (Louis R. Gates, of Kansas City, Kan., and Paul R. Stinson and Ryland, Stinson, Mag & Thompson, all of Kansas City, Mo., on the brief), for appellant.

Clarence C. Chilcott, of Kansas City, Mo. (Stuart T. McAlister and Ratner, McAlister & Mattox, all of Parsons, Kan., on the brief), for appellee.

Before PHILLIPS, BRATTON, and HUXMAN, Circuit Judges.

HUXMAN, Circuit Judge.

This is an appeal from a decree of the District Court of the United States for the District of Kansas dismissing appellant's petition for a declaratory judgment. 28 U.S.C.A. § 400. The sole question presented for consideration is the right of the Excess Insurance Company of America, appellant herein, to maintain an action for a declaratory judgment seeking to determine its liability to appellees under a reinsurance agreement contract executed by it with the Central Mutual Insurance Company of Chicago, Illinois, herein referred to as Central.

Appellant and Central were both engaged in writing indemnity insurance. In 1932 appellant entered into a reinsurance contract with Central whereby it agreed to reinsure the risks assumed by Central under contracts it would write, subject to the conditions and provisions in the contract. In 1934 Central issued a public liability insurance policy to Cooper-Jarrett, Inc., insuring it against loss for liability imposed on it by law resulting from the operation of its trucks in its transport business. In October, 1934, a Cooper-Jarrett truck was involved in an accident resulting in death to appellee Brillhart's decedent and injury to appellee Walter C. Young. Immediately after the accident, appellees filed separate actions against Cooper-Jarrett to recover damages in the Circuit Court of Jackson County, Missouri. Central was tendered the defense of the suits, but declined on the ground that the accident was not within the coverage of the policy. Cooper-Jarrett thereupon employed attorneys, who filed answers traversing the allegations of the respective petitions.

In 1937 Central became insolvent and was liquidated in the Circuit Court of Cook County, Illinois. An order was entered restraining all claimants from prosecuting actions against it. No claims were filed by appellees with the receiver of Central and any liability against it on the policy has been extinguished.

Subsequent to the receivership of Central, Cooper-Jarrett undertook reorganization proceedings under Section 77B of the National Bankruptcy Act, 11 U.S.C.A. § 207. Appellees both filed their claims in this proceeding. Thereafter, on April 1, 1939, the bankruptcy court entered an order permitting them to withdraw their claims and prosecute their action in the District Court on the ground that Cooper-Jarrett had insurance. The attorneys who had filed answers for Cooper-Jarrett in the damage actions withdrew September 30, 1937. No other attorneys were employed thereafter by Cooper-Jarrett to represent it in the pending actions. On April 22, 1939, default judgments were entered by the Circuit Court of Jackson County, Missouri, against Cooper-Jarrett and in favor of appellee. After the default judgments, garnishment proceedings were instituted against Central, in violation of the order of the Circuit Court of Cook County, by summons delivered to the Superintendent of Insurance of Missouri. Judgment was entered in favor of appellee Young in these proceedings on February 9, 1940, and also apparently in favor of appellee Brillhart on June 28, 1940.

At no time was appellant ever notified by Central of the accident or of the suits filed in the Cook County Court. The first notice of any kind it ever received was in a letter from Frank P. Barker, attorney for Cooper-Jarrett in the reorganization proceedings, on February 9, 1939. In this letter Barker stated that he had learned that appellant had reinsured Central's risk and asked confirmation thereof. He listed the cases pending against Cooper-Jarrett, including those of appellees. Appellant replied that it had no knowledge of these cases and referred him to the receiver for Central.

Appellant filed its bill of complaint against appellees April 10, 1940, in the District Court of the United States for the District of Kansas, seeking a declaratory judgment determining its liability to them under the reinsurance contract between it and Central. It is not necessary to set out the allegations of the bill of complaint. It contained the usual allegations found in such an action. The bill clearly stated a justiciable controversy. Nor is it claimed by appellees that there was a failure to state a justiciable controversy. The assertion rather is that an action was pending in another forum in which the...