Ohio Casualty Co. of Hamilton, Ohio v. Swan

• Decision Date: 30 April 1937
• Docket Number: No. 10680.,10680.
• Citation: 89 F.2d 719
• Parties: OHIO CASUALTY CO. OF HAMILTON, OHIO, v. SWAN.
• Court: U.S. Court of Appeals — Eighth Circuit

89 F.2d 719 (1937)

OHIO CASUALTY CO. OF HAMILTON, OHIO, v. SWAN.

No. 10680.

Circuit Court of Appeals, Eighth Circuit.

April 5, 1937.

Rehearing Denied April 30, 1937.

Albert L. Ramacciotti, of Omaha, Neb. (Charles S. Reed and Richard E. Robinson, both of Omaha, Neb., on the brief), for appellant.

Harvey Johnsen, of Omaha, Neb. (Dan Gross and Bryce Crawford, Jr., both of Omaha, Neb., on the brief), for appellee.

Before STONE, SANBORN, and VAN VALKENBURGH, Circuit Judges.

VAN VALKENBURGH, Circuit Judge.

July 19, 1931, Blanche Swan, appellee, and plaintiff below, was injured in an automobile accident on Lincoln Highway, about 4½ miles east of Dorchester, Neb. The automobile was owned by Lloyd V. Smith, and, at the time of the accident, was driven by Mrs. Gladys Stapp, who was appellee's daughter, and apparently the fiance of Smith. In the car also were William Swan, husband of appellee, and LeRoy Hoehn, eleven year old son of Mrs. Stapp. The occupants of the car were starting on a vacation trip to Estes Park, Colo., where they planned to take a cottage and do some fishing, etc. The car for some cause left the highway at the point above indicated, overturned, and finally landed in the ditch. The only person sustaining substantial injury was the appellee. Mrs. Swan brought suit for damages against Smith in the district court of Douglas county, Neb., and recovered judgment in the sum of $7,500, afterwards reduced by remittitur to $6,000. At the time of the accident the Smith automobile was covered by a liability policy under which appellant herein carried the risk, which was limited to $5,000 for bodily injury to any one person for any one accident. After judgment as aforesaid in the state court, appellee caused a writ of execution to be issued against Smith upon which a nulla bona return was made. Thereupon, July 14, 1934, appellee, alleging her inability to collect from Smith because of his insolvency, brought suit against appellant in the district court of Douglas county, Neb., for the full amount of her judgment with interest and costs. The case was removed to the federal District Court for the District of Nebraska at Omaha, and therein, December 21, 1935, appellee recovered judgment in the sum of $5,685. This appeal followed.

In order that the issues presented may be better understood, a recital of the acts of the parties during a substantial period succeeding the accident are deemed necessary. July 23, 1931, Smith made a signed statement to D. F. Lynch, a representative of appellant, in which he said that the parties were making the trip as aforesaid with an arrangement to share the expenses; that he was driving the car at a rate of about 30 to 35 miles per hour. The center of the highway, particularly, was covered with gravel about 6 inches deep. That a Chevrolet coupe, apparently to avoid the gravel in the center of the highway, came toward him somewhat on Smith's side of the road. That to avoid a threatened collision, "I turned a little to the right, and the car then simply went off the shoulder into the ditch, overturning twice."

August 4, 1931, William Swan, husband of appellee, made a statement to Lynch containing the following:

"We were bound for Estes Park, Colorado, having arranged the trip beforehand. We lined up the trip and Mr. Smith asked us all to go in his car. There was no arrangement that we were to pay any of the car expense but we expected to share the cottage expense and the meals after getting out there. We left Omaha about 7 A. M. Sunday and Mrs. Stapp drove from Omaha to Lincoln, Mr. Smith taking the wheel there and driving till the accident happened. The day was clear and the road dry. It is graveled at the place where the accident happened and the road, Highway #38 runs straight I think north and south. Smith was driving between 35 and 40 m. p. h. over to the right of the center and was driving carefully. I had cautioned him going down to be careful about the gravel as my folks live down that way and I am acquainted with the road. We were in the back seat talking and looking at a road map and I looked up and saw a car coming toward us. I felt the car swerve to the right and the wheel then seemed to catch in the gravel and we went into the right ditch. * * * We do not know exactly what caused the accident but it seems to have been a combination of circumstances of the gravel, the car coming and getting over to the edge too far."

To this statement Gladys Stapp appended the following:

"I have read the report of my father, and believe it correct from my own knowledge of the accident."

October 15, 1931, Blanche Swan also made a statement:

"My daughter Mrs. Stapp and Mr. Smith wanted to take their vacation together and they asked Mr. Swan and myself to go along to chaperon them. Mr. Smith was to take his car as it was a coach where ours is a coupe. I don't know what arrangements were made for the expenses either on the car or the rest. We left Omaha about 7 A. M. and my daughter drove to Lincoln and Mr. Smith took over the wheel there. She then got in the front with Mr. Smith and Mr. Swan and I in the rear seat. We also had LeRoy Hoehn in the back seat with us. Mr. Smith drove west out of Lincoln on the gravel road at an average rate of speed taking time to see the sights, I should judge the speed at 35 to 40 miles per hour. It was a bright day I think at least it was not raining and as Mr. Smith drove he was not driving recklessly and it was not necessary to protest his driving and I did not nor did anyone else. I have ridden with Mr. Smith on prior occasions around town and I think he is a careful driver."

November 4, 1931, Blanche Swan filed her first petition against Smith in the district court of Douglas county, Neb., in which she stated that Smith was the driver of the car and that "he, the said defendant, negligently and carelessly and while going at a high, reckless and terrific rate of speed, and at a rate of speed of at least forty to fifty miles, caused his car to swerve and drive directly into the ditch at the right hand or north side of the roadway causing the car to turn turtle twice, and causing the plaintiff to be severely injured as hereinafter stated, and that he was grossly negligent in so driving and operating said vehicle."

December 19, 1931, Mrs. Swan filed her first amended petition in which the same recital respecting the negligence of Smith was contained. Further investigation by representatives of appellant disclosed the falsity of the statements theretofore made in certain material respects, and, on April 29, 1932, Smith was confronted by this disclosure, and finally confessed that Mrs. Stapp was driving at the time of the accident at a speed not exceeding 30 or 35 miles per hour, and that she had been forced off the highway by a car approaching them at an excessive rate of speed. This confession was finally made in a sworn statement in which, among other things, Smith said:

"Both Mr. and Mrs. Swan had ridden with Mrs. Stapp on many occasions prior to this time and made no objections whatever to her operating the car on this trip, nor to the manner in which she drove."

This disclosure made necessary the filing of a second amended petition in the state court in which it was alleged that the automobile was being driven at the time of the accident by Mrs. Stapp, "acting as defendant's agent, and driving said automobile at his special instance and request." Then followed the same charges of negligence in driving on the part of Mrs. Stapp, as had been attributed to Smith in the two previous petitions. It was upon the issues framed upon this petition and the answer thereto that the judgment sued on was recovered in the state court. Immediately after learning of the false statement made by Smith, he was advised that the insurance company considered the policy voided by his breach of its condition respecting co-operation, and that the company would defend the suit in the state court only under that reservation. To this Smith agreed and the action was defended by counsel for appellant.

The policy in question contains the following pertinent provisions:

"The Assured, wherever referred to under Section II of this policy shall include, in addition to the named Assured, all members of the named Assured's household, or any other person riding in or legally operating any automobile covered by this policy as well as any person, firm or corporation legally responsible for the operation of said automobile; provided the coverage afforded under this paragraph to others than members of the named Assured's household shall not apply unless the said automobile is being used with the consent of the named Assured, or if such Assured is an individual, an adult member of such Assured's household other than a chauffeur or domestic servant.

"Upon the occurrence of any loss or accident covered under Section II hereof, and irrespective of whether any injury or damage is apparent at the time, the Assured shall give, as soon as practicable, written notice to the company at its office in Los Angeles, California, or to its authorized representative, with the fullest information obtainable at the time. If a claim is made on account of any such accident the Assured shall give like notice thereof after such claim is made, with full particulars: If thereafter any suit is brought against the Assured to enforce such claim, the Assured shall immediately forward to the Company every summons or other process as soon as the same shall have been served: Whenever requested by the Company, the Assured shall aid in effecting settlement, securing information and evidence, the attendance of witnesses and in prosecuting appeals, and at all times render all possible co-operation and assistance; the Assured shall not voluntarily assume any liability or interfere in any negotiation for settlement or in any legal proceedings or incur any expense or settle any claim, except at Assured's own cost,...