Hartford Accident and Indemnity Company v. Shaw

• Decision Date: 23 December 1959
• Docket Number: No. 16281,16282.,16281
• Citation: 273 F.2d 133
• Parties: HARTFORD ACCIDENT AND INDEMNITY COMPANY, Appellant, v. Larry SHAW, a minor by H. L. Shaw, next friend, Appellee. HARTFORD ACCIDENT AND INDEMNITY COMPANY, Appellant, v. J. H. CARSON and C. M. Miller, Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

273 F.2d 133 (1959)

HARTFORD ACCIDENT AND INDEMNITY COMPANY, Appellant, v. Larry SHAW, a minor by H. L. Shaw, next friend, Appellee.

HARTFORD ACCIDENT AND INDEMNITY COMPANY, Appellant, v. J. H. CARSON and C. M. Miller, Appellees.

Nos. 16281, 16282.

United States Court of Appeals, Eighth Circuit.

December 23, 1959.

Howell L. Fuller, Sioux Falls, S. D., and Frank H. Strong, Maryville, Mo., for appellant.

Gene Thompson, Maryville, Mo., and O. W. Watkins, Jr., St. Joseph, Mo., for appellees.

Before GARDNER, VOGEL, and VAN OOSTERHOUT, Circuit Judges.

VAN OOSTERHOUT, Circuit Judge.

Defendant Hartford Accident and Indemnity Company (Hartford) appeals from declaratory judgment entered against it in these two consolidated actions declaring that it is liable under its automobile liability insurance policy issued to its named insured, Miller, covering among other vehicles a tractor owned by Miller, to defend and indemnify Miller, the driver Shaw and the lessee of the tractor, Carson, as to claims of one Volluz and occupants of his car for damages arising from a collision occurring between the insured tractor while in the possession of Carson and operated by Shaw and the Volluz car on July 3, 1957, near Aberdeen, South Dakota.

One action was commenced against Hartford by the driver Shaw.¹ The other action was commenced by Carson against Hartford and Miller. Miller counterclaimed against Carson and cross-claimed against Hartford seeking a declaration of his rights as against each of them. Hartford by its answer in both cases admitted the issuance of its policy as claimed but generally denied liability thereunder. Hartford in response to interrogatories filed by Miller, which among other things required it to state reasons why its policy was not in full force and effect on July 3, 1957, the date of the Volluz collision, states:

"1. The copy of the policy of liability insurance attached to the original petition filed herein is a true and correct copy of the policy that was issued to C. M. Miller by this defendant.

"2. Such policy was in full force and effect on the 3rd day of July, 1957, subject to its terms, conditions and limitations. It did not afford coverage against claims arising out of the accident referred to in the petition herein occurring on July 3, 1957, because of such terms, conditions and limitations, in that:

(a) The tractor described in the policy involved in such accident was being used for the towing of a trailer not covered by like insurance in the Company.

(b) Such vehicle was not being used exclusively in the business of C. M. Miller, the named insured, and over a route C. M. Miller was authorized to serve by Federal or public authority.

(c) Such accident occurred while such vehicle was not being used principally within a 75 mile radius of Grant City, Missouri, and neither such vehicle nor the other vehicles described in the policy were used principally within either a 75 mile radius or a 150 mile radius of Grant City, Missouri."

We agree with the statement of the trial court that Miller, Shaw and Carson by their pleadings each seek a declaration of their rights under the insurance policy issued by Hartford to Miller.

These consolidated cases were tried to the court without a jury. The court filed a memorandum opinion (D.C., 178 F. Supp. 571) and entered final judgment declaring that owner Miller, driver Shaw and lessee Carson are each entitled to all the protection afforded by Hartford's policy and that Hartford is obligated to defend suits instituted against each of them as a result of the Volluz accident and that Hartford is also obligated to pay all judgments that have been or may be rendered against any or all of them in suits arising out of the Volluz collision to the extent of the coverage limits set forth in the policy. Timely appeals were taken from said judgment.

Jurisdiction exists in these actions by reason of diversity of citizenship and the requisite jurisdictional amount.²

The policy in controversy was issued by Hartford to Miller in August, 1956, covering seven described vehicles. Miller is engaged as a common carrier of livestock from Grant City, Missouri, to St. Joseph, Missouri. The insured units were used primarily in connection with such business. An endorsement on Form A-1113, Missouri Public Service Commission Endorsement for Intrastate and/or Interstate Motor Carriers, and two endorsements on Form A-1112, 3rd Revision, one making the insurance applicable to certain described units when principally used within a radius of 75 miles of the city where vehicle is principally garaged, and another containing the same restriction as to the use of other described vehicles but providing a radius of 150 miles, are attached to the policy and are by specific reference in the policy itself made a part of the policy.

The tractor involved in the present litigation, a 1956 Chevrolet tractor, was acquired by Miller subsequent to the issuance of the policy just described, and is insured by a change, elimination or addition endorsement dated October 1, 1956. By this endorsement insurance on item two covered by the original policy, a 1955 Chevrolet tractor, is eliminated and the insurance is afforded as to item two — a 1956 Chevrolet tractor (the unit here involved) and also a described semi-trailer. The unit replaced was covered by the 75 mile radius endorsement. On the change in coverage endorsement under the heading of purpose for which the automobile is to be used, the words "`Commercial': other use, if any (describe):" are checked and the following is added in typewriting: "as amended by End. Form A-1112 4th Rev."

Hartford concedes that Form A-1112, 4th Revision, was never attached to the policy or shown to or delivered to insured Miller.

Carson is engaged in the business of harvesting and curing blue grass seed in Missouri and other states. On June 25, 1957, the 1956 Chevrolet tractor was leased by Miller to Carson by a written lease which provided that Carson would have exclusive control of the tractor and pay rental thereon upon a mileage basis. No restrictions as to the use of the tractor were imposed and Miller understood that Carson was to use the tractor for seed operations in South Dakota. The lease provides that Carson shall assume all public liability and property damage liability resulting from the operation of the leased vehicle. Carson in his pleadings alleged and Miller admitted that as part of the leasing arrangement Miller agreed to keep the leased vehicle insured against public liability and property damage.

Shaw previously had been employed as a driver by Miller. Whether Shaw was employed by Miller or by Carson at the time of the accident is a question of no importance as it is stipulated that Shaw at the time of the collision was driving the tractor with the knowledge, consent and permission of the owner Miller.

The leased tractor while being used by Carson in his seed operations and while being driven by Shaw was involved in a collision with a car operated by one Volluz, near Aberdeen, South Dakota. Volluz and two passengers were killed and two other passengers were injured as a result of such collision. Actions were brought against Miller, Carson and Shaw to recover damages resulting from the collision. One of said actions was tried resulting in a judgment for $10,000 against Shaw and Carson. The other actions are pending.

The question presented in these cases is Hartford's obligation under its policy to defend Miller, Carson and Shaw in the actions above described and Hartford's obligation to pay judgments obtained against any of them to the extent of the policy limitations. Hartford contends in substance that it is entitled to a reversal of the judgment entered against it because the trial court in reaching its decision erred in the following respects:

1. Determination that omnibus coverage is afforded Carson.

2. Determination that Form A-1112, 3rd Rev., radius endorsement, does not apply to the vehicle involved in the collision.

3. Determination that the radius limitation was not violated.

4. Determination that the Form A-1112, exclusive use endorsement, was not operative.

5. Determination that no violation of the trailer exclusion was established.

6. Overruling motions to reopen for proof of ownership of trailer.

This case involves the construction and interpretation of a Missouri insurance contract and therefore Missouri law governs. Sulzbacher v. Travelers Insurance Co., 8 Cir., 137 F.2d 386, at 390; Pennsylvania Mutual Life Ins. Co. v. Forcier, 8 Cir., 103 F.2d 166, at page 167.

Findings of fact by the trial court in cases tried to the court shall not be set aside unless it is clearly demonstrated that they are without adequate evidentiary support or were induced by an erroneous view of law. Nelson v. Seaboard Surety Co., 8 Cir., 269 F.2d 882, at page 886. See Rule 52(a), Federal Rules of Civil Procedure, 28 U.S.C.A.

In considering the question of the sufficiency of the evidence we are required to give the prevailing party the benefit of all reasonable inferences which can be drawn from the evidence. Pendergrass v. New York Life Ins. Co., 8 Cir., 181 F.2d 136, at page 138.

With the foregoing general principles applicable to this appeal in mind, we will proceed to consider the errors urged, in the order heretofore stated.

The omnibus clause reads:

"III. Definition of Insured: (a) with respect to the insurance for bodily injury liability and for property damage liability the unqualified word `insured\' includes the named insured and, if the named insured is an individual, his spouse if a resident of the same household, 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 such spouse or with the permission of either. * * *" (Certain exceptions are set out which are not here applicable).

The burden...