Heyden Newport Chem. Corp. v. Southern Gen. Ins. Co., A-10141

Citation387 S.W.2d 22
Decision Date27 January 1965
Docket NumberNo. A-10141,A-10141
PartiesHEYDEN NEWPORT CHEMICAL CORPORATION et al., Petitioners, v. SOUTHERN GENERAL INSURANCE COMPANY, Respondent.
CourtTexas Supreme Court

Barnes & Barnes, Beaumont, for petitioners.

John H. Benckenstein, Beaumont, for respondent.

HAMILTON, Justice.

This is a suit between petitioners, Heyden Newport Chemical Corporation and its insurer, The Insurance Company of North America, against Southern General Insurance Company, the respondent, to recover the cost of defending a prior suit under the omnibus clause of Southern General's policy. In the prior suit Heyden Newport Chemical Corporation, Newport Industries Division, hereinafter referred to as 'Newport Industries', was named as a defendant along with Raymond Pickering and Arthur Marks in an action brought to recover damages for the death of Sam Traylor. The defendant, Raymond Pickering, carried an automobile liability insurance policy with the Southern General Insurance Company, hereinafter referred to as 'Southern General'. Newport Industries demanded that Southern General furnish it a defense in such prior suit, claiming to be an additional insured under the omnibus provision of the policy covering Pickering. Southern General furnished Pickering and Marks a defense but refused to defend Newport Industries. Newport Industries had a policy of insurance with The Insurance Company of North America, who furnished this defense and joined Newport Industries in the present suit as a plaintiff. A jury being waived, the trial court after hearing evidence granted judgment for Southern General. The Court of Civil Appeals has affirmed. 376 S.W.2d 821. We reverse the judgments of the Court of Civil Appeals and the trial court and remand with instructions.

The allegations in the prior suit were in part as follows:

'II

'Defendant, Newport Industries, is a turpentine refining business along with other related items. The raw materials from which said turpentine and other items are refined are old pine stumps that are full of resin and are sometimes referred to as 'rich' and 'litered' stumps. The principal source or supply of said raw materials or stumps is from the pine woods of Louisiana and East Texas. The stumps are purchased from lumber companies, dynamited and removed from the ground with bulldozers, loaded by men onto trucks, and hauled to Newport Industries by means of trucks. At all material times herein, Defendant, Raymond Pickering was an agent for Newport Industries, and his job was to purchase said stumps in the field, and get the said stumps to Newport Industries at Oakdale, Louisiana. Defendant Raymond Pickering was the owner of many trucks, which were used to haul said stumps and had employees to load and haul said stumps. Defendant Arthur Marks job was to drive a truck into the forest, load it with stumps, and haul the stumps to Newport Industries in Oakdale, Louisiana.

'IV.

'Heretofore, to-wit: On or about the 16th day of February, 1961, at about 6:30 A.M., Sam Traylor, a husband and father of plaintiffs was wrongfully killed when a motor vehicle driven by defendant Arthur Marks, who was then and there in the course of his employment with defendant Raymond Pickering, collided with his pickup truck on Highway #63, approximately Seven (7) miles east of Jasper, Texas. The said collision, made the basis of this suit, was brought about by one or more of the negligent acts on the part of the said Arthur Marks as hereinafter set out with particularity * * * At the time of said collision made the basis of this suit, the driver of the vehicle, Arthur Marks, was within the scope of his employment with defendant Raymond Pickering, and at the time of said collision under the exclusive direction of defendant Raymond Pickering.'

The policy of insurance contained the following provisions:

'I. COVERAGE A-BODILY INJURY LIABILITY: To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury, sickness or discase, including death at any time resulting therefrom, sustained by any person, caused by accident and arising out of the ownership, maintenance or use of the automobile. * * *

'II. DEFENSE, SETTLEMENT, SUPPLEMENTARY PAYMENTS: With respect to such insurance as is afforded by this policy for bodily injury liability and for property damage liability, the company shall:

'(a) defend any suit against the insured alleging such injury, sickness, disease or destruction and seeking damages on account thereof, even if such suit is groundless, false or fraudulent; * * *

'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. * * *'

The petitioners contend that Newport Industries was entitled to be defended under respondent's policy by reason of the fact that the allegations in the prior suit say in effect that Pickering was an agent of Newport Industries at all material times, and that therefore Newport Industries was legally responsible for the use of the automobile involved in the collission causing the death of Sam Traylor. After the allegations were made Newport Industries advised the respondent, Pickering's insurer, that Pickering was not in fact an agent of Newport Industries at any relevant time. It was on the sole ground that Pickering was not an agent of Newport Industries and time of the collision that Southern General for the use of the automobile at the time of the collission that Southern General refused to defend the lawsuit against Newport Industries. It contends that no duty to defend the lawsuit arose under the policy until a legal determination had been made and that the one demanding a defense be shown to be legally responsible for the use of the automobile in question.

In upholding the contention of respondent the Court of Civil Appeals has held in effect that in determining liability under the defense clause of the policy the court must look further than the terms of the policy and allegations of the suit against petitioner. It must actually determine the question of legal responsibility. We do not agree.

We think that in determining the duty of a liability insurance company to defend a lawsuit the...

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