New Amsterdam Cas. Co. v. Hartford Acc. & Indem. Co.

• Decision Date: 11 January 1940
• Docket Number: No. 7916.,7916.
• Citation: 108 F.2d 653
• Parties: NEW AMSTERDAM CASUALTY CO. v. HARTFORD ACCIDENT & INDEMNITY CO.
• Court: U.S. Court of Appeals — Sixth Circuit

108 F.2d 653 (1940)

NEW AMSTERDAM CASUALTY CO. v. HARTFORD ACCIDENT & INDEMNITY CO.

No. 7916.

Circuit Court of Appeals, Sixth Circuit.

January 11, 1940.

Benjamin F. Washer, of Louisville, Ky. (Walter E. Huffaker, Edw. J. Hogan, and Ben F. Washer, all of Louisville, Ky., on the brief), for appellant.

Mortimer Viser, of Louisville, Ky. (Davis, Boehl, Viser & Marcus, of Louisville, Ky., on the brief), for appellee.

Before HICKS, SIMONS, and ARANT, Circuit Judges.

ARANT, Circuit Judge.

The question presented by this case is whether appellant or appellee was liable for $10,000 of a loss resulting from an automobile accident. Each had issued an insurance policy containing an omnibus clause which apparently covered the loss, but each claimed that this clause was made inoperative under the circumstances by another clause. Each admits that the loss was covered, and each paid $5,000 of it on the understanding that suit would later be brought by appellant to determine liability. Accordingly, suit was filed, in the Circuit Court of Jefferson County, Kentucky, but was removed to the United States District Court on the ground of diversity of citizenship. The Court sustained a demurrer to the petition, which is the error assigned.

The Kaufman-Straus Company is a Kentucky corporation engaged in retailing merchandise in the City of Louisville, Kentucky. It owns and operates a number of trucks, but sometimes hires additional trucks from the Louisville Taxicab and Transfer Company, also a Kentucky corporation, engaged in operating trucks and taxicabs for hire in Louisville.

On December 24, 1934, a Chevrolet truck, hired from the Louisville Taxicab and Transfer Company, while being operated by the Kaufman-Straus Company's driver, struck and fatally injured one John Perkins. His administrator brought suit against the Kaufman-Straus Company for $50,000 damages. Both appellant and appellee were called upon to defend the suit. With the approval of both insurance companies, it was finally settled for $14,000. There was no question as to appellant's liability for the loss in excess of $10,000. Pursuant to agreement, appellant brought suit to recover the $5,000 of the disputed loss that it had paid. The District Court held that the limiting provisions in each policy hereafter discussed, cancel each other and make the companies coinsurers, with the consequence that appellant was entitled to recover nothing, since it had borne no more than its proportionate share of the loss.

The Louisville Taxicab and Transfer Company held appellee's Policy No. ACP-1002199, effective for one year from January 1, 1934, and an endorsement covering the Chevrolet truck involved in the accident, Certificate No. AC-11935, effective from November 23, 1934, to January 1, 1935. The policy contained a so-called omnibus clause, as follows: "A. This policy is extended to cover as an additional assured any person while operating any automobile described in the Declarations or any person, firm or corporation legally responsible for its operation, where the disclosed and actual use of the automobile is for `Pleasure and Business,' or `Commercial' purposes as defined in Item 8. * * *"

The foregoing clause, however, is limited by the "Other Insurance" provision, as follows: "* * * If others than the named assured entitled to the benefits of this policy by the provisions of Condition A hereof, are covered by other valid insurance against a claim otherwise covered by this policy, said Condition A shall be void."

The Kaufman-Straus Company held appellant's Policy No. LA-35669, effective for a year from April 13, 1934, and insuring the Company against loss to the extent of $50,000. It contained an endorsement relating to cars hired by the named assured, as follows:

"In consideration of the premium determined as hereinafter provided for, it is hereby understood by and between the named assured and the company that this policy shall cover the operation of all automobiles and trailers of the type stated in the policy hired by the assured during the term thereof and used for the purpose stated in the declaration, without specific description of and specific premium charge for each automobile to be covered as required by the policy. * * *

"Condition H of the policy (the co-insurance clause) is hereby eliminated from the policy, and it is understood and agreed that if the named assured is covered under a policy taken out by the owner or operator of any automobile insured under this endorsement, the coverage under this endorsement shall be an excess coverage over and above the valid and collectible insurance under the policy taken out by the owner or operator of the car." (Italics ours.)

Another policy issued on the same date by appellant to the Kaufman-Straus Company, covering the same period of time, contained a similar clause, as follows: "Condition H (concurrent insurance) of the policy is hereby eliminated as respects the coverage provided under this Endorsement and it is agreed and understood that if there exists, at the time of the accident, a policy of insurance taken out by or effected on behalf of any other than the named assured and under the terms of which policy the named assured is entitled to protection and coverage, then this Endorsement shall operate only as excess insurance over and above the amount of such valid and collectible insurance."

Each party admits that it would have been liable if the other's...