Government Employees Insurance Company v. United States, 7998.

• Decision Date: 16 September 1965
• Docket Number: No. 7998.,7998.
• Parties: GOVERNMENT EMPLOYEES INSURANCE COMPANY, a corporation created under the laws of the District of Columbia, and licensed to do business in the State of New Mexico, Appellant, v. UNITED STATES of America, Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

349 F.2d 83 (1965)

GOVERNMENT EMPLOYEES INSURANCE COMPANY, a corporation created under the laws of the District of Columbia, and licensed to do business in the State of New Mexico, Appellant, v. UNITED STATES of America, Appellee.

No. 7998.

United States Court of Appeals Tenth Circuit.

July 22, 1965.

Rehearing Denied September 16, 1965.

Lowell White, of White & Steele, Denver, Colo., for appellant.

Robert J. Vollen, Attorney, Department of Justice, Washington, D. C. (John W. Douglas, Asst. Atty. Gen., John Quinn, U. S. Atty., and Alan S. Rosenthal, Attorney, Department of Justice, Washington, D. C., on the brief), for appellee.

Before MURRAH, Chief Judge, LEWIS, Circuit Judge, and KERR, District Judge.

KERR, District Judge.

This is an appeal by Government Employees Insurance Company from a judgment entered by the United States District Court for the District of New Mexico determining that Appellant was liable to the United States for the amount of the judgment rendered against the United States in an action brought pursuant to the Federal Tort Claims Act. The crux of the problem before us is whether the insurer intended to and did cover the United States as an additional "insured" when it defined the word "insured" to include the named insured and "any person or organization legally responsible for the use" of the automobile.

The facts are not in dispute. Otto and Christine Nilson sustained injuries from a collision between a vehicle owned and operated by Otto Nilson and a truck owned and operated by Price T. Crume, the named insured. Their original complaint against Price T. Crume was dismissed and a First Amended Complaint was filed, which made the United States of America the sole defendant. Upon motion of the United States, the District Court ordered that a Third Party Complaint be filed against the Government Employees Insurance Company. The District Court expressly found that Price T. Crume was negligent in the operation of his vehicle; that at the time of his negligent acts and at the time of the accident, he was an employee of the United States and was acting within the scope and course of his employment; and that the automobile liability insurance policy issued by the Government Employees Insurance Company to Price T. Crume was in full force and effect at the time of the collision. The Court further found that at the time of the accident the United States was a person or organization legally responsible for the use of Mr. Crume's automobile and that the United States was an "insured" within the terms of the liability policy. The District Court concluded as a matter of law that the United States was an additional insured and had properly asserted its rights as an insured under the policy by way of a Third Party Complaint. Judgment was thereupon entered that the plaintiffs recover from the United States of America the sum of $15,000, that the Intervenor, Phoenix Assurance Company of New York, recover from the United States the sum of $750 for property damages, and that the United States recover from the third party defendant, the Government Employees Insurance Company, the sum of $15,750.00.

We find no fault with the trial court's Findings of Fact and Conclusions of Law. The United States is not claiming indemnity against the Government Employees Insurance Company. It seeks, rather, to recover from the insurer on the contractual obligation of liability to the United States as an insured who has been found legally obligated to pay the claims of persons injured from the negligence of a government employee in the course of his government employment.

Appellant claims that the indemnity insurance policy issued to Crume was not intended to protect the United States; that the United States is not "a person or organization" within the meaning of the policy and therefore is not an insured under the policy of insurance. Appellant further claims that it has a valid defense against the claim of the United States for its failure to comply with the conditions precedent to liability under the policy of insurance, namely, Appellant's right to have sole control of all phases of the defense of any claim against an insured, including the right to use its own attorneys and to demand a jury trial. Appellant denies liability to the United States for the further reason that the judgment in favor of the plaintiffs against the United States was entered upon the stipulation and agreement between the plaintiffs and the United States without the written agreement of the appellant contrary to the requirements of the policy.

Appellant's position is not supported by the facts and is contrary to the applicable judicial pronouncements which we consider legally sound.¹ On the policy, the named insured's occupation was given as "Gov't Hunter", and the purposes for which the truck was to be used were listed as "Pleasure and Business". The term "insured" was defined as the named insured and "any person or organization legally responsible for the use" of the automobile. The facts in this case, the conditions under which the policy was issued, and the provisions of the Federal Tort Claims Act combine to dictate the conclusion that the United States is an additional insured and a "person" under the policy definition of the term "insured".

The purpose of the Federal Tort Claims Act was "to render the Government liable in tort as a private individual would be under like circumstances." Richards et al v. United States et al., 369 U.S. 1, 6, 82 S.Ct. 585, 589, 7 L.Ed.2d 492 (1962), italics added; 28 U.S.C. §§ 1346 (b) and 2674. The design of the Act was to characterize the United States as a private employer. Congress intended to put an end to the many private claims with which it had been burdened, and to do so it shed the cloak of sovereignty and entered the market place, so to speak. The United States, therefore, is liable as a person, and concomitant with that liability is the right to be insured as a private person within the unlimited coverage of the insurance policy here in issue.

The Government Employees Insurance Company issued its liability policy to Price T. Crume in February 1961, and on ...