Myers v. Ocean Accident & Guarantee Corporation

• Decision Date: 19 October 1938
• Docket Number: No. 4341.,4341.
• Citation: 99 F.2d 485
• Parties: MYERS et al. v. OCEAN ACCIDENT & GUARANTEE CORPORATION, Limited.
• Court: U.S. Court of Appeals — Fourth Circuit

99 F.2d 485 (1938)

MYERS et al. v. OCEAN ACCIDENT & GUARANTEE CORPORATION, Limited.

No. 4341.

Circuit Court of Appeals, Fourth Circuit.

October 19, 1938.

Eugene Trivette, of North Wilkesboro, N. C., and J. E. Holshouser, of Boone, N. C. (J. M. Brown, of North Wilkesboro, N. C., on the brief), for appellants.

B. S. Womble, of Winston-Salem, N. C. (W. M. Hendren and I. E. Carlyle, both of Winston-Salem, N. C., on the brief), for appellee.

Before PARKER and SOPER, Circuit Judges, and CHESNUT, District Judge.

CHESNUT, District Judge.

In this case the federal district court for the middle district of North Carolina, rendered a declaratory decree (28 U.S.C.A. § 400) that the appellee, an automobile liability insurer, was not liable under its policy for an automobile collision accident occurring on January 6, 1935 near Waycross, Georgia, in which the appellants were injured. The policy was issued to the Bronart Company of Akron, Ohio, and covered a Packard Club Sedan, which, at the time of the accident, was in charge of its agent who had been employed to drive it from Akron, Ohio, to Miami, Florida, where the Bronart Company was engaged in renting cars or furnishing taxicab service. The decree as to non-liability was based on an "exclusion" clause of the policy which provided that:

"No insurance is granted by this policy — (f) while any private passenger or commercial motor vehicle covered herein is being used for rental or livery purposes or the carrying of persons for a consideration. Unless as respects each class of motor vehicles such use is specified in the Declarations and proper premium therein set forth." (Italics supplied) In this case such use was not specified in the policy nor was the proper premium therefor set forth. The district judge found as a fact that at the time of the accident three persons were being carried in the automobile for a consideration.

At the time of the collision the appellants in this case, W. S. Myers, I. M. Myers, and Dixie Myers, were riding in a Plymouth automobile involved in the collision, and all sustained personal injuries for which they subsequently brought suit against the Bronart Company in Ohio, where I. M. Myers obtained a judgment for $7500, the cases of the others, W. S. Myers and Dixie Myers, not yet having been tried. The judgment was affirmed on appeal. Under the Ohio statutory law (Gen.Code, § 9510, par. 4) the insurer in this case became directly liable on its policy for the payment of this judgment, without the necessity of an independent suit (Venditti v. Mucciaroni, 54 Ohio App. 513, 8 N.E.2d 460, Ohio Court of Appeals); but only if the insurer was legally liable under the policy conditions to the insured, the Bronart Company. Stacey v. Fidelity & Casualty Co., 114 Ohio St. 633, 151 N.E. 718; Venditti v. Mucciaroni, supra; Ocean Accident & Guarantee Corp. v. Schroeder, 6 Cir., 48 F.2d 727; Storer v. Ocean Accident & Guarantee Corp., 6 Cir., 80 F.2d 470; Ocean Accident & Guarantee Corp. v. Lucas, 6 Cir., 74 F.2d 115, 98 A.L.R. 1461; New Jersey Fidelity & Plate Glass Ins. Co. v. Love, 4 Cir., 43 F.2d 82; Richards on Insurance (4th Ed.) s. 505; Couch Cyc. Ins. Law. s. 1175d, p. 4187, note 23; Coleman v. New Amsterdam Cas. Co., 247 N.Y. 271, 160 N.E. 367, 72 A.L.R. 1443; Sleeper v. Mass. Bonding & Ins. Co., 283 Mass. 511, 186 N.E. 778.

Thereafter, and before any proceedings by I. M. Myers against the insurer in Ohio, the latter brought suit in the district court for North Carolina against the Myers who are citizens and residents of that State, to obtain the declaratory decree of non-liability and to enjoin them from proceeding against the insurer. The defendants filed answers making no objection to the jurisdiction of the court, and not opposing the relief sought on procedural grounds (see Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 242, 57 S.Ct. 461, 464, 81 L.Ed. 617, 108 A.L.R. 1000; Aetna Casualty & Surety Co. v. Quarles, 4 Cir., 92 F.2d 321, 325), but contending that the policy did cover the particular accident, and I. M. Myers set up counterclaims for $7500 against the insurer. The jurisdiction of the district court was based only on diverse citizenship. In the pleadings and proof the Myers are described only as "residents" of North Carolina, but on the attention of counsel being called to the technical insufficiency of this, an amendment was here made without objection which described the appellants as citizens of North Carolina, the appellee, The Ocean Accident and Guarantee Corporation, Ltd., being an alien corporation.

The controlling facts in the case, no material part of which are in dispute, were specially found by the district judge. The policy dated December 7, 1934, while executed in New York, was countersigned and delivered in Ohio. It was a blanket policy of automobile liability insurance which covered particular cars as described, for respective premiums, when duly reported to the Company and the policy accordingly so endorsed. An endorsement was duly made on this policy which appropriately described the particular automobile as covered by the policy from January 3, 1935. The Bronart Company had its principal office in Akron, Ohio, but was engaged in Miami, Florida, in renting automobiles for use as taxicabs or otherwise. For this purpose it bought numerous automobiles in Michigan or elsewhere and had them driven by employes to Miami. To cover its possible legal liability to third persons which might occur during this transit, it procured from time to time endorsements on the blanket policy to cover particular cars as purchased and driven from Ohio to Florida. In the insured's "declarations" attached to the policy it described such automobiles as used for "pleasure" purposes; the term "pleasure" being defined as "personal pleasure and family use including business calls"; but excluding the "renting or livery use of any disclosed motor vehicle and the carrying of persons for a consideration". The general liability assumed by the policy (within the maximum limits of $5,000 for injury to any one person and $10,000 for any one accident) was to pay for the insured's legal liability to others for bodily injury and property damage and to defend the insured against suits for such damages and to pay the expenses thereof.

On January 2, 1935, the Bronart Company made a written agreement with Doris Goldman, a young woman 23 years of age, to safely drive the automobile from Akron to Miami, leaving January 3rd, and the automobile to be delivered to destination on or before January 9, 1935. She was to be paid $5.00 upon arriving at destination, but after the accident terminated the trip she was paid $20.00 instead of $5.00, for what reason was not disclosed in the evidence. The contract provided that "it is agreed between the parties that said employe will not transport or carry in the said motor vehicle any passenger for hire or for any consideration whatsoever at any time he (she) is operating said motor vehicle".

Doris Goldman was going to Florida to sing in a Broadcasting Station. Before leaving Akron she arranged with two of her girl friends to go with her in the automobile, and the three of them contributed to a common fund in her charge for the purpose of paying their expenses on the trip, including the cost of oil and gasoline for the car. When they reached Cincinnati on the evening of January 3rd, the three young women called upon a Mrs. Schaeffer, an aunt of Doris Goldman, and while there learned from Mrs. Schaeffer that certain other friends or acquaintances of the latter, a Mr. and Mrs. Manoff and a young man named Johnnie, were then in Cincinnati on their way to Florida from Detroit, Michigan; that their Cadillac car in which they had intended to make the trip had broken down; and, as they desired to continue the journey they inquired if they could go with Doris Goldman in the car she was driving. These three persons were entire strangers to Doris Goldman and her two friends, but, at their request, she drove to their hotel to meet them and after some negotiations, agreed to take them and their baggage to Florida in the Packard car. The arrangement is described by the district judge in his findings of fact as follows:

"When these parties asked Miss Goldman how much they were to pay she said it was entirely up to them; and they suggested $10. each, and she accepted it and put the $30. into the pool out of which she made disbursements for gas and oil and other expenses of the trip. In order to make room for three persons and their baggage the three girls sent part of their baggage by express. Payment was made to Miss Goldman in Cincinnati and she put it into the general fund previously provided by her and her two friends." It further appeared from the proof that Mr. and Mrs. Manoff and Johnnie were to pay their own personal expenses in addition to the $30. paid to Miss Goldman. She made no change in her intended route to Florida by reason of taking the Cincinnati passengers.

The automobile collision occurred on January 6, 1935, near Waycross, Georgia. According to the apparent weight of the evidence, at the time of the accident Johnnie was driving the car with Doris Goldman and one of her friends also sitting on the front seat, Mr. and Mrs. Manoff, and the other friend of Doris Goldman riding on the rear seat of the automobile, but there was some evidence that Doris Goldman was then driving. All three of the Myers sustained personal injuries. The Packard car was abandoned and the occupants proceeded by railroad to Florida. The Manoffs and Johnnie made no demand for a refund of the money they had paid for their transportation. The insurer was notified of the accident, investigated it, and with reasonable promptness denied liability by reason of the exclusion clause of the policy. Thereafter and shortly before the trial of the Myers suit against the Bronart Company in Ohio, it advised the insurer that by reason of its financial...