Goulding v. Sands, 15286.

• Decision Date: 01 February 1966
• Docket Number: No. 15286.,15286.
• Citation: 355 F.2d 230
• Parties: George W. GOULDING, Plaintiff on Counterclaim, v. Michael SANDS, Defendant on Counterclaim, v. UNITED STATES FIRE INSURANCE COMPANY, Garnishee-Appellant.
• Court: U.S. Court of Appeals — Third Circuit

355 F.2d 230 (1966)

George W. GOULDING, Plaintiff on Counterclaim, v. Michael SANDS, Defendant on Counterclaim, v. UNITED STATES FIRE INSURANCE COMPANY, Garnishee-Appellant.

No. 15286.

United States Court of Appeals Third Circuit.

Argued November 2, 1965.

Decided February 1, 1966.

Arthur G. Stein, Pittsburgh, Pa. (Stein & Winters, Pittsburgh, Pa., on the brief), for United States Fire Insurance Company.

Norman J. Cowie, Pittsburgh, Pa. (Pringle, Bredin, Thomson, Rhodes & Grigsby, Pittsburgh, Pa., on the brief), for George W. Goulding.

Before STALEY and FREEDMAN, Circuit Judges, and COHEN, District Judge.

COHEN, District Judge:

Garnishee-Appellant, United States Fire Insurance Company (Insurer), a New York corporate underwriter of liability insurance, and carrier for Michael Sands (Sands), defendant on counterclaim, seeks review of the grant of Summary Judgment in favor of Appellee, George W. Goulding (Goulding), and the denial of its cross motion for similar relief.

The primary litigation was a personal injury negligence action based upon diversity of citizenship in which the motor vehicles of Sands, a New York resident, and Goulding, a Pennsylvania resident, were in collision August 27, 1960, in Westmoreland County, Commonwealth of Pennsylvania, resulting in injuries and damages to all parties. Both vehicles contained, as passengers, the respective wives of the parties. An action for negligence was instituted in the United States District Court for the Western District of Pennsylvania by Sands and his wife against Goulding, who in turn filed a counterclaim for his damages and those of his wife, and for contribution from Sands in the event that the jury found both drivers jointly liable for the personal injuries to Mrs. Sands. A verdict of $15,000.00 in favor of Mrs. Sands was returned against both drivers, finding them guilty of concurrent negligence. Goulding paid the entire judgment, and on his claim for contribution against the joint tortfeasor, the trial court entered a judgment for one-half ($7,500.00) in favor of Goulding and against Sands.

In his endeavor to recover on his $7,500.00 judgment, Goulding resorted to execution proceedings wherein he named Sands' insurance carrier, the appellant here, as garnishee. Cross motions for Summary Judgment were filed, and the present appeal stems from the grant of Goulding's and the denial of Appellant-Garnishee's.

Both at the time the New York insurance policy was issued to Sands and on the date of the collision in Pennsylvania, he resided in New York. After the commencement of suit by Sands, and upon the filing of a counterclaim by Goulding, the Insurer engaged Pennsylvania counsel to defend Sands in his capacity as defendant on the counterclaim.

Now that recovery is sought from Sands' insurer, it maintains that the Trial Court erred in entering Summary Judgment against it. It contends that under the law of New York, which it alleges governs the contract of insurance, a statutory exclusion of liability for injuries as between spouses prevails,¹ no provision to the contrary having been incorporated into the policy, and that Pennsylvania courts, both state and federal, must give effect to the New York statute, thus absolving it from liability.

In support of the judgment in his favor, Goulding counters that the laws of Pennsylvania, not the laws of New York, govern the terms, construction and effect of the insurance policy resulting in coverage as found by the Trial Court; and further, that the Insurer is estopped from asserting lack of coverage, under a New York statutory exclusion as between spouses, by reason of its conduct of the litigation on behalf of the assured throughout these proceedings.

The estoppel asserted here, although briefed and presented below, was not reached by that Court because it determined that the dispositive issue was one involving a conflict of laws between New York and Pennsylvania. In resolving the applicability of the Pennsylvania law, it considered unnecessary the question of estoppel. The Trial Judge concluded that Griffith v. United Air Lines, 416 Pa. 1, 203 A.2d 796 (1964), while not directly in point, established a new rule in a choice of laws problem, now known as the doctrine of "center of gravity" or "grouping of contacts." Hence, the laws of the place having the greater interests and connections with the problem, Pennsylvania, should control. It was here that the collision occurred and the damages sustained; Goulding and his wife were Pennsylvania residents; and Sands and his wife instituted suit in which the Gouldings counterclaimed, thereby submitting all parties to the jurisdiction of the Pennsylvania Courts for redress of their grievances. The sole contact with New York was the issuance of the policy to Sands, there. Pennsylvania law, the Trial Court held, favors coverage for its residents and effectively inhibits the New York statutory exclusion of liability between spouses.

We are of the opinion that the Trial Court properly entered Summary Judgment in favor of Goulding, and against the Insurer. However, in reaching its conclusion the Trial Court, relying...