Fidelity and Casualty Company of New York v. Reece, 5053.

• Decision Date: 22 June 1955
• Docket Number: No. 5053.,5053.
• Parties: The FIDELITY AND CASUALTY COMPANY OF NEW YORK, a corporation, Appellant, v. James REECE, Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

223 F.2d 114 (1955)

The FIDELITY AND CASUALTY COMPANY OF NEW YORK, a corporation, Appellant, v. James REECE, Appellee.

No. 5053.

United States Court of Appeals Tenth Circuit.

May 25, 1955.

Rehearing Denied June 22, 1955.

Edgar Fenton, Oklahoma City, Okl. (Elliott C. Fenton, Oklahoma City, Okl., on the brief), for appellant.

Jack Cummins, Lawton, Okl. (Bill Logan, W. W. Godlove and Jack Brock, Lawton, on the brief), for appellee.

Before PHILLIPS, Chief Judge, and MURRAH and PICKETT, Circuit Judges.

MURRAH, Circuit Judge.

In this garnishment action, Appellee James Reece seeks to impose liability for personal property damage under an automobile liability insurance policy issued by Appellant, The Fidelity and Casualty Company of New York to Harry Poston, dba Poston Construction Company.

Reece sustained damages from the negligent operation of a truck engaged by Poston to haul gravel in the course of his construction business for a specified sum per load. In a suit to recover the damages, Reece obtained a default judgment against the owner of the truck, Ralph Hudson, and his operator, Carl Creswell, and after executions thereon were returned unsatisfied, he instituted this garnishment proceedings against Appellant insurance company. He contends that by the comprehensive terms of the "omnibus endorsement" to the insurance policy, Appellant extended the protection of its policy, to cover the liability of the truck owner and his operator as unnamed assureds within a specifically defined group in the endorsement.

In rendering judgment in garnishment, the trial court construed the policy as covering the truck owned by Ralph Hudson and operated by Carl Creswell, and accordingly held that the insurance company was liable for damages to the plaintiff caused by the negligent operation of the truck.

By the terms of the policy, the Appellant insurance company insured Harry Poston dba Poston Construction Company for property damage "caused by accident and arising out of the ownership, maintenance or use of any automobile." The face of the policy showed that the coverage extended to owned, non-owned and hired automobiles. An owned automobile was defined as one owned by the named insured. A hired automobile was defined as one used under contract in behalf of, or loaned to, the named insured provided that such automobile "is not owned by or registered in the name of (a) the named insured or (b) an executive officer thereof or (c) an employee or agent of the named insured who is granted an operating allowance of any sort for the use of such automobile." And a non-owned automobile was defined as "any other automobile."

The word "insured" was defined in "Insuring Agreement III" of the policy to include "the named insured and also * * * any person while using an owned automobile or a hired 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 and any executive officer of the named insured with respect to the use of a non-owned automobile in the business of the named insured." And it was then provided that, "The insurance with respect to any person or organization other than the named insured does not apply: * * * (d) with respect to any hired automobile, to the owner thereof or any employee of such owner; * *."

But the endorsement to the insurance policy entitled "Use of Other Automobiles" in effect provides that the definition of the word "insured" in "Insuring Agreement III" of the policy is inapplicable to any automobiles other than those owned by the named insured. And for the purposes of the endorsement, the contracting parties redefined the word "insured" to include:

"(a) Each individual named below, if a relative of and a resident in the household of the named insured or of any partner in or executive officer of the named insured, or if an executive officer or other employee of the named insured, and

"(b) the spouse of such an individual, if a resident of the same household, and

"(c) any person with respect to his presence in such other automobile with such named individual or spouse, but not his operation of the automobile, and any person or organization legally responsible for the use of the automobile by such named individual or spouse."

Harry Poston is the only "individual named below" in the endorsement.

The endorsement specifically excluded from its coverage:

"(a) * * * any automobile owned by such named individual or a member of his household other than a private chauffeur or domestic servant of the named individual or spouse;

"(b) * * * any automobile while used in the business or occupation of the named individual or spouse, unless operated or occupied by such named individual, spouse, chauffeur or servant; * * *."

Appellant earnestly contends that by specific provisions in the endorsement, coverage on automobiles not owned by Harry Poston is expressly limited to Harry Poston and to his spouse.

Appellee's argument is to the effect that the inclusion in the endorsement definition of "insured" of a group defined as "any person or organization legally responsible for the use of the automobile by such named individual or spouse" brought the truck owner and driver within the intended coverage of the policy. His reasoning is to the effect that Harry Poston was "using" the truck within the broad definition of the term, through its operation in his behalf by his servant or employee, Ralph Hudson, as distinguished from the more narrow term "operating". See Annotation 160 A.L.R. 1195, 1204, and Samuels v. American Automobile Insurance Co., 10 Cir., 150 F.2d 221, 160 A.L.R. 1191. And he seeks to avoid the exclusionary effect of the endorsement relative to automobiles used in the business of the named insured "unless operated or occupied by the named individual, spouse, chauffeur or servant" by invoking the determination of the state court in the negligence action to the effect that in the operation of the truck, the truck owner and...