Maryland Casualty Co. v. United Corporation
| Decision Date | 02 May 1940 |
| Docket Number | No. 3559.,3559. |
| Citation | 111 F.2d 443 |
| Parties | MARYLAND CASUALTY CO. v. UNITED CORPORATION OF MASSACHUSETTS et al. |
| Court | U.S. Court of Appeals — First Circuit |
David Burstein, of Boston, Mass. (Harry B. White, of Boston, Mass., on the brief), for appellant.
Gerald May, of Boston, Mass. (Burns & Brandon, of Boston, Mass., on the brief), for appellees United Corporation of Massachusetts and Mexican Petroleum Corporation.
Dunham et al., executors, appellees, did not file brief or argue.
Before MAGRUDER and MAHONEY, Circuit Judges, and McLELLAN, District Judge.
The Maryland Casualty Company filed in the court below a complaint asking for a declaratory judgment under 28 U.S.C.A. § 4001 against the United Corporation of Massachusetts and the executors under the will of Annie S. B. Dunham. Another complaint, identical in nature, was brought by the Maryland Casualty Company against the Mexican Petroleum Corporation and the said executors under the will of Annie S. B. Dunham. In each case the district court entered judgment dismissing the complaint. The two cases have been consolidated for the purpose of appeal. Hereafter in this opinion reference will be made only to the first-mentioned case, against the United Corporation of Massachusetts, which will be called the Assured.
From the complaint, it appears that the facts are as follows:
The plaintiff issued a motor vehicle liability policy, for the calendar year 1932, contracting to indemnify the Assured against loss by reason of liability to pay damages to others for bodily injuries, arising out of the ownership, operation, maintenance, control, or use of certain specified motor vehicles. The policy also covered liability for property damage "arising out of the ownership, maintenance or operation" of the specified motor vehicles or "by the loading or unloading of merchandise carried on any such motor vehicle". The policy contained the usual agreement by the insurer to defend in the name of and on behalf of the Assured "any claims, suits or other legal proceedings alleging such injuries and demanding damages on account thereof".
In April, 1938, a claim was made under the said policy against the plaintiff on account of an accident alleged to have occurred on April 6, 1932, resulting in bodily injuries and damage to the property of certain persons.
This claim was based upon the assertion that the Assured had entered into an agreement with Annie S. B. Dunham to supply oil to the oil tank in the basement of an apartment house in Cambridge, Massachusetts, owned by her; that on April 6, 1932, a servant of the Assured drove a motor vehicle covered by the policy to the said apartment house and filled the oil tank with oil drawn from the motor vehicle; that later on the same day an explosion and fire occurred in the building; that as a result thereof several suits were thereafter filed against Annie S. B. Dunham, and a number of judgments were recovered against her for damages to person and property. These judgments were fully paid and satisfied in 1934. The declarations in these suits alleged that the explosion resulted from the negligent maintenance of the oil tank and oil heater by Annie S. B. Dunham. Thereafter, on April 5, 1938, the executors under the will of Annie S. B. Dunham brought an action for damages against the Assured seeking to recover the loss suffered by the executors as the result of being obliged to pay the judgments entered in the suits which had been brought by the tenants in the apartment house. The declaration alleged negligence of the Assured in filling the oil tank and in so repairing the tank and pipes that oil continued to leak therefrom, resulting in the accident.
That suit is now pending in the Superior Court for the Commonwealth of Massachusetts. On April 10, 1938, the Assured notified the plaintiff of the commencement of said action by the defendant executors and made demand of the plaintiff to defend the action in its entirety and to indemnify the Assured against any loss.
Plaintiff alleges that an actual controversy exists between the parties depending for its determination upon a proper construction and interpretation of the liability policy and prays that the defendant executors be temporarily restrained and enjoined from further prosecuting the action against the Assured in the state court. In addition, it prays for a declaration that the relationship of insurer and insured does not exist between the plaintiff and the defendant United Corporation of Massachusetts as to any liability of the said defendant arising out of the explosion aforesaid, or as to any liability of the said defendant in the pending action commenced against it by the Dunham executors, and further for a declaration that the plaintiff has neither the right nor the obligation to defend the said action or to indemnify the Assured against any liability on account thereof.
The defendants moved in the district court (1) to dismiss the action because the complaint does not state a case which falls within the terms of the Declaratory Judgment Act, since no right of the plaintiff is in controversy, and (2) to dismiss the action as a matter of discretion. From the opinion filed by the district court it appears that the judgment dismissing the complaint was based upon an assumed lack of jurisdiction rather than the exercise of discretion.
In support of the judgment below we are urged to make a narrow reading of the phrase "rights and other legal relations" appearing in the Declaratory Judgment Act, and to hold that when an insurance company asks for a declaration of non-liability under an insurance policy, because of non-coverage, as in this case, the insurance company is not asking for a declaration of its "rights or other legal relations" but rather is asking for a determination of its "liabilities". Though some earlier lower court decisions so held, this narrow construction of the Declaratory Judgment Act is no longer admissible since the opinion of the Supreme Court in Aetna Life Insurance Co. v. Haworth, 300 U.S. 227, 57 S.Ct. 461, 81 L.Ed. 617, 108 A.L.R. 1000. In that case a life insurance policy provided for waiver of premiums and for the payment of certain disability benefits in the event that the insured became totally and permanently disabled. The insured, claiming to have suffered such a disability, stopped paying premiums and called upon the company for the stipulated disability payments. The company, on the other hand, claimed that the insured had suffered no total and permanent disability and that the policy had therefore lapsed by reason of the non-payment of premiums. The Supreme Court held that the district court should have entertained the insurer's complaint asking for a declaration that the policy was null and void, having lapsed because of non-payment of premiums.2 It is generally agreed now that the phrase "rights and other legal relations" is broad enough to authorize a...
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