Liberty Mutual Insurance Co. v. Sweeney, 11303.

• Decision Date: 03 November 1954
• Docket Number: No. 11303.,11303.
• Citation: Liberty Mutual Insurance Co. v. Sweeney, 216 F.2d 209 (3rd Cir. 1954)
• Parties: LIBERTY MUTUAL INSURANCE CO., a Massachusetts Corp., Appellant, v. Richard D. SWEENEY and Ruth T. Connelly.
• Court: U.S. Court of Appeals — Third Circuit

216 F.2d 209 (1954)

LIBERTY MUTUAL INSURANCE CO., a Massachusetts Corp., Appellant, v.Richard D. SWEENEY and Ruth T. Connelly.

No. 11303.

United States Court of Appeals, Third Circuit.

Argued October 14, 1954.

Decided November 3, 1954.

Wallace E. Edgecombe, Pittsburgh, Pa. (John H. Sorg, Pittsburgh, on the brief), for appellant.

James P. McArdle, Pittsburgh, Pa., for appellee.

Before GOODRICH, KALODNER and HASTIE, Circuit Judges.

GOODRICH, Circuit Judge.

This is an action by an insurance company in a declaratory judgment proceeding seeking a declaration of noncoverage with regard to a particular accident.The district court held for the defendants and the insurance company has appealed to this Court.

The case turns upon a provision in the policy which was issued to the Charles E. Hires Company by the present plaintiff.The insurer has agreed:

"(1) To pay on behalf of the Charles E. Hires Company any damages imposed upon it by law on account of

"(a) personal injuries or death within certain limits stated in the said policy; and

"(b) property damage within certain limits stated within said policy arising out of the maintenance or use of motor vehicles owned by the Charles E. Hires Company; and

"(2) To defend said Charles E. Hires Company against any claims or suits, even though false or groundless, alleging liability on its part for such damages due to the maintenance or use of any insured vehicle while the said insurance was in force."¹

The critical point in the case has to do with the definition of "insured."The policy includes, under this term, the named insured and any person using an owned automobile of the insured "provided the actual use of the automobile is by the named insured or with his permission."

The named insured in this case was the Charles E. Hires Company.Richard D. Sweeney was a part time employee of this company at its Pittsburgh branch.The remainder of his time was spent as a student in Duquesne University.On Saturday night, March 11, 1950, he was riding in a company car with Ruth T. Connelly, the other defendant in this action.The car had a collision with a vehicle owned by the Pittsburgh Railways Company and both Sweeney and Miss Connelly were badly hurt.Miss Connelly sued the Railways Company in the Common Pleas Court of Allegheny County.This Company joined Sweeney and his employer as additional defendants.The insurance company in this declaratory judgment action seeks to get itself out of responsibility for defending that suit on the basis that Sweeney's operation of the car at the time of the accident was not with the permission of the insured.

The action is brought under the federal declaratory judgment statute, 28 U.S.C. §§ 2201,2202 (1952), but the sole basis for federal jurisdiction is diversity and we, of course, are applying Pennsylvania law.

At the outset we are invited to declare that although the insurance company brings this action as plaintiff, the burden of establishing permission is on the defendant since permission by the insured to Sweeney to operate the automobile is a condition of the company's liability.In support of this position the plaintiff gives us the New Hampshire rule set out in Traveler Ins. Co. v. Greenough, 1937, 88 N.H. 391, 190 A. 129, 109 A.L.R. 1096.He also urges upon us the Second Circuit's adoption of that rule in Preferred Accident Ins. Co. of New York v. Grasso, 2 Cir., 1951, 186 F.2d 987.We find the subject interesting and note that Moore's Federal Practice points out that: "Generally, it is reasonable and fair that one who brings another into court should have the burden of proving the prima facie elements of his asserted claim."Further Moore says: "Where the insurer seeks a declaration of non-coverage as to a particular accident, the insurance company should likewise experience no technical difficulty in producing proof of the facts it asserts.The insurer here seeks an advanced determination of its liabilities, and the injured third party is forced to litigate the coverage issue before it has established its claim against the insured.Since no policy or technical consideration dictates a change in the general rule, we believe that in these casesthe plaintiff should bear the usual burden of proving his prima facie case."Moore's Federal Practice, ¶ 57.312(1953).

We also bear in mind that this matter of burden of proof is one in which the federal court in a diversity case will follow state decisions.Moore, op. cit.¶ 57.313.On the particular point involved we are, therefore, being asked to decide Pennsylvania law in the absence of Pennsylvania authority on the subject.

We do not think our problem is as hard, however, as the plaintiff would now have us believe.In fact, no mention of the possibility of reversing the burden of proof appears in the record of the case in the district court.²The insurance company alleged in its complaint that it believed and expected to prove that Sweeney was driving this car without permission of the employer.When the case was tried to the judge without a jury, plaintiff went ahead with its proof as in the usual lawsuit.It called Sweeney as for cross-examination; it called Wilt, the general manager of the Hires Pittsburgh plant and such other witnesses as it thought necessary to prove its case.Then the defendants took over and offered their testimony.The only occasion we would have to face up to the question of who bears the burden of proof under the procedure followed in this case would be if, at the end of the testimony, the matter stood in even balance in the mind of the trier of fact.

This question of what happens in a declaratory judgment suit when the plaintiff has...