Malisfski v. Indemnity Ins. Co. of North America

• Decision Date: 28 May 1943
• Docket Number: No. 5043.,5043.
• Citation: 135 F.2d 910
• Parties: MALISFSKI et al. v. INDEMNITY INS. CO. OF NORTH AMERICA.
• Court: U.S. Court of Appeals — Fourth Circuit

135 F.2d 910 (1943)

MALISFSKI et al. v. INDEMNITY INS. CO. OF NORTH AMERICA.

No. 5043.

Circuit Court of Appeals, Fourth Circuit.

May 28, 1943.

J. Gilbert Prendergast and Everett L. Buckmaster, both of Baltimore, Md. (Weinberg & Green, Hector J. Ciotti, and F. Murray Benson, all of Baltimore, Md., on the brief), for appellants.

Wendell D. Allen, of Baltimore, Md. (Alexander Gordon, III, and Armstrong, Machen, Allen & Eney, all of Baltimore, Md., on the brief), for appellee.

Before PARKER, DOBIE, and NORTHCOTT, Circuit Judges.

PARKER, Circuit Judge.

This is an appeal in an action brought to obtain a declaratory judgment as to the coverage of an automobile liability insurance policy. Theodore Malisfski, an employee of the City of Baltimore, was injured by a truck of the Wernig Express Company driven by one Charles Wernig, an employee of that company. The truck had for a number of years been hired by the city on an hourly basis and was being used for the removal of snow from the streets when Malisfski was injured. Malisfski was paid compensation by the city under the state compensation law and thereafter instituted suit against the driver of the truck, for his own use and that of the city, and recovered judgment against the driver in the sum of $4,000. The Indemnity Insurance Company had issued a liability insurance policy on the truck, naming the express company and the city as insured thereunder. The premiums on this policy were paid by the express company, but the city held the policy. The policy contained an omnibus coverage clause in the usual form. The question in the case was whether it covered the liability of the driver for the judgment obtained against him. The judge below held that it did not, basing his decision on paragraph (c) of the omnibus coverage clause and paragraph (f) of the exclusion provisions. In the view that we take of the case we need consider only the omnibus coverage clause, which provides:

"III. Definition of `Insured.' The unqualified word `insured' wherever used in Coverages A and B in other parts of this policy, when applicable to such coverages, includes not only the named insured but also any person while using the automobile and any person or organization legally responsible for the use thereof, provided the declared and actual use of the automobile is `pleasure and business' or `commercial,' each as defined herein, and provided further the actual use is with the permission of the named insured. The provisions of this paragraph do not apply:

* * * * *

"(c) to any employee of an insured with respect to any action brought against said employee because of bodily injury to or death of another employee of the same insured injured in the course of such employment in an accident arising out of the maintenance or use of the automobile in the business of such insured."

The facts with regard to the operation of the truck were correctly found by the trial judge as follows: "A local express company, known as the Joseph S. Wernig Express Company, hired out the truck at $1.50 per hour. It supplied and paid the driver, Charles Wernig, but gave him no orders after he reported to the Highways Department for work. The Express Company also paid for the gasoline, maintenance and any repairs of the truck. On this particular day the truck was being used for the removal of snow from the streets of Baltimore. While so hired, the job of snow removal was being conducted under the exclusive direction of a Highways Department foreman, who rode in the cab of the truck, with the driver, and directed him where to go. This foreman had working under him a gang of six Highways Department employees, including the injured Malisfski, who shoveled the snow into the truck, as it kept abreast of their work. When the accident occurred, the truck was proceeding to one of the yards or depots of the Highways Department, just before the noon, or dinner, hour. The foreman had complete control over the number of hours the driver worked, and the places where he would take the truck. This arrangement by Baltimore City for hiring trucks from the Express Company to supplement its own supply of them had been followed for seven or eight years."

The crucial question with respect to the application of the omnibus coverage clause is whether the truck driver, in carrying on the work which resulted in Malisfski's injury, is to be considered an employee of the express company or of the city. If he was an employee of the express company and not of the city, liability for the injury rested upon the express company and the omnibus coverage clause would apply, since the injured man was not an employee of the same insured. If, however, he was an employee of the city, liability for the injury rested upon the city and the clause would not apply since the injured man also was an employee of the city, the same insured, and the case would fall within the provisions of exception (c) above quoted. Directly in point is the case of Johnson v. Ætna Casualty & Surety Co., 5 Cir., 104 F.2d 22, 24, dealing with a like exception to the omnibus coverage clause. In that case one Frank Green was the named insured, and an employee of his was injured by a car operated by Elvin Green, another employee. The omnibus coverage clause, paragraph IV in the policy in that case, had an exception (d) which is precisely the same as exception (c) here. The court said: "But for Paragraph IV as quoted Frank Green would have been the only insured. Because of the first sentence, Elvin Green becomes also an insured. But this effect of Par. IV does not obtain if (d) is true, that is, if Elvin Green is an employee of an insured (Frank Green is an insured) and the action is brought against him for injury or death of another employee of the same insured (Frank Green) occurring in the course of the employment by the use of the insured automobile. We find no uncertainty or ambiguity in the language. It excludes the threatened suits against Elvin Green from the coverage of the policy."

Appellants argue that the word "insured" as used in exception (c) must be construed to mean the insured against whom liability is asserted; and that, as the truck driver is the one against whom liability is asserted here, the exception applies only with respect to his employees. The argument begs the question. The truck driver is not an insured unless the omnibus coverage clause makes him such, and the clause does not have that effect if both he and the man whom he injures are employees of the same insured. Kaifer v. Georgia Casualty Co., 9 Cir., 67 F.2d 309, is not in point, for the clause there relied on was not an exception limiting the application of the omnibus coverage clause.

Coming, then, to the question as to whose employee was the truck driver in the operation which resulted in Malisfski's injury, we find that liability for the acts of the driver of a car or truck, who is employed by the owner but is serving a hirer at the time, has been the subject of many and sometimes conflicting decisions. See annotation 42 A.L.R. 1416 et seq. and cases there cited. The rule to be deduced from these is the rule ordinarily applied in determining whether a servant is to be deemed the servant of him for whom work is done or of an independent contractor, i. e. he is the servant of him who has the right to control not merely results but the progress and details of the work and the manner in which it is done. If the driver is not subject to the control of the hirer of the vehicle in the performance of the work, he is deemed the servant of the owner, even though the hirer may have the power of directing him when and where to go and what to bring or carry. Craige v. Austin Powder Co., 4 Cir., 91 F.2d 664; Driscoll v. Towle, 181 Mass. 416, 63 N.E. 922; Quarman v. Burnett, 6 Mees. & W. 499. If, however, the hirer has the exclusive power of directing the work, he is deemed the servant of the hirer. H. E. Wolfe Const. Co. v. Fersner, 4 Cir., 58 F. 2d 27. The underlying principle is well stated in the case of Standard Oil Co. v. Anderson, 212 U.S. 215, 221, 222, 29 S.Ct. 252, 254, 53 L.Ed. 480, as follows:

"It sometimes happens that one wishes a certain work to be done for his benefit, and neither has persons in his employ who can do it nor is willing to take such persons into his general service. He may then enter into an agreement with another. If that other furnishes him with men to do the work, and places them under his exclusive control in the performance of it, those men became pro hac vice the servants of him to whom they are furnished. But, on the other hand, one may prefer to...