Pennsylvania Casualty Co. v. Suburban Service Bus Co.

• Decision Date: 18 May 1948
• Docket Number: No. 27172.,27172.
• Citation: 211 S.W.2d 524
• Parties: PENNSYLVANIA CASUALTY CO. v. SUBURBAN SERVICE BUS CO.
• Court: Missouri Court of Appeals

211 S.W.2d 524

PENNSYLVANIA CASUALTY CO. v. SUBURBAN SERVICE BUS CO.

No. 27172.

St. Louis Court of Appeals. Missouri.

May 18, 1948.

Rehearing Denied June 18, 1948.

Appeal from Circuit Court, St. Louis County; Amandus Brackman, Judge.

"Not to be reported in State Reports."

Action by Pennsylvania Casualty Company, a corporation, against Suburban Service Bus Company, a corporation for a declaratory judgment to determine the obligation of insured under the terms of two liability policies. From a judgment for plaintiff, defendant appeals.

Affirmed.

Edwin A. Smith, of St. Louis, for appellant.

Oliver J. Miller and Lashly, Lashly, Miller & Clifford, all of St. Louis, for respondent.

WOLFE, Commissioner.

This is an action for a declaratory judgment wherein plaintiff, insurer, seeks to determine the obligation of the insured, defendant, under the terms of two policies of liability insurance. Plaintiff having paid out $4,600 in excess of its liability under one of the policies issued claims that it was obliged to do so by the terms of an endorsement on the other policy and that by virtue of the same endorsement defendant is obligated to the plaintiff for the overpayment so made. From a judgment for plaintiff in the circuit court the defendant has appealed.

The plaintiff's petition alleges in substance that it issued at the request of the defendant a policy of insurance to cover certain buses that were owned and operated by it and that the buses so covered were listed and described in a schedule attached to the policy. The policy provided that the insurer indemnified the insured against loss arising by reason of bodily injuries sustained by any one other than the driver of the bus through the negligence of the defendant in operating the buses described. It further alleges that the liability was limited to $10,000 as to any one person and $20,000 as to any one accident, and bus No. 114 was covered by this policy. It further alleges that another policy of the same nature was issued to cover one bus described as bus No. 115, and that the liability limits in this policy were $5,000 as to any one person and $90,000 as to any one accident. It further alleges that this policy last mentioned had two statutory endorsements, one prescribed by the Interstate Commerce Commission under the Interstate Commerce Act, 49 U.S.C.A. § 1 et seq., and one prescribed by the Missouri Public Service Commission, for interstate operations. It is further alleged that bus No. 114 covered by the first policy mentioned collided with another motor vehicle in the state of Illinois and that defendant reported the accident to plaintiff and called upon plaintiff to take over and adjust the claims that arose by reason of the accident. Plaintiff further alleges that it disposed of claims arising out of the accident and expended $19,100, at which time there was still outstanding and unpaid two judgments, one of which was for $1500 and the other for $10,000; that plaintiff advised defendant there was still remaining unexpended a total coverage of only $900 and that the remaining judgments could be disposed of in settlement for $5500, and that defendant refused to contribute the difference and that under and by virtue of the Interstate Commerce Act and the endorsement attached to the second policy mentioned it paid the $4600 over and above its liability on the first policy and claims that it is entitled to reimbursement from the defendant for the $4,600 so expended.

Attached to the petition as exhibits were the schedules of the buses described, together with "substantially correct" copies of the endorsements.

Defendant demurred to the petition and upon the demurrer being overruled and a motion to strike out portions of the petition being overruled filed its answer alleging that it was duly licensed both by the Public Service Commission of Missouri and the Interstate Commerce Commission of the United States as an interstate carrier, and was operating as such under the laws of Missouri and of the United States; that by reason of certain endorsements the claims arising out of the collision were covered by the plaintiff's insurance policies and that there were other policies issued in addition to those mentioned in plaintiff's petition, and concludes its answer by praying that the policies be construed to obligate the plaintiff to pay all claims arising out of the collision and that they be further construed to hold that the defendant is not indebted to the plaintiff for the payments made.

The evidence discloses that Suburban Service Bus Company was engaged in the operation of buses under certificate of the Interstate Commerce Commission, dated March 1, 1938, which permitted it to operate from St. Louis to points and places in Illinois within 125 miles from East St. Louis. It also appears that the company had been duly licensed to operate in interstate commerce by the Public Service Commission in the State of Missouri since January of 1937. A part of the business of the company consisted in the operation of its buses on "charter" trips. The Pennsylvania Casualty Company had issued to the defendant on September 3, 1940, a policy of liability insurance, standard in form, and covering twenty-two buses operated by the defendant and listed in the policy in a schedule attached to it. The schedule lists the defendant's number for each bus, the year each bus was made, the manufacturer's name and type of body, and the motor number. The policy provides as limits of liability $10,000 for each person suffering bodily injury and $20,000 for each accident. It further bore a special endorsement which states:

"It is hereby understood and agreed that buses covered hereunder are permitted to be used for picnics, outings, charter trips, and regular run.

"It is further understood and agreed that permission is given to replace the buses with other equipment in the event of a break down of any of the buses covered hereunder."

Bus No. 114 was among the buses listed in the schedule mentioned above.

Effective October 7, 1940, plaintiff also sold and delivered to defendant a like policy of insurance for a bus bearing defendant's number 115 except that the limits of liability in this policy were $5,000 for bodily injury for each person and $90,000 for each accident. This policy, according to plaintiff's evidence, had attached to it a rider known as BMC 31, required by the Interstate Commerce Commission, which rider contained the following provision:

"The Company hereby agrees to pay any final judgment recovered against the Insured for bodily injury to or the death of any person or loss of or damage to property of others * * * resulting from the negligent operation, maintenance, or use of motor vehicles under certificate of public convenience and necessity or permit issued to the Insured by the Interstate Commerce Commission, or otherwise under the Motor Carrier Act, 1935 [49 U.S.C.A. § 301 et seq.] within the limits of liability hereinafter provided, regardless of whether such motor vehicles are specifically described in the policy or not. * * *

"The Insured agrees to reimburse the Company for any payment made by the Company on account of any accident, claim, or suit involving a breach of the terms of the policy, and for any payment that the Company would not have been obligated to make under the provisions of the policy, except for the agreement contained in this endorsement."

It also carried the same endorsement as the first policy relative to substitution of the bus in event of a break down.

The policy with liability limits of $10,000 and $20,000 covering bus No. 114 bore the number 24-01-1321 and will be referred to herein as policy No. 21. The policy of $5,000 and $90,000 liability limits was policy No. 24-01-1334 and will be referred to herein as policy No. 34.

On the 17th day of October, 1940, while the defendant was operating both buses No. 114 and No. 115 on a trip for which they had been chartered its bus No. 114, which was covered by policy No. 21, collided with an automobile on a highway in the state of Illinois. At the time of the accident it was carrying a number of passengers who were injured and a great many claims for injuries to the passengers arose out of the accident as well as the claims of those who were in the automobile which was struck. The accident was reported by defendant to plaintiff and plaintiff undertook the defense and settlement of the claims. After plaintiff had expended the sum of $19,100 in payment of claims there still remained unpaid two judgments, one for $1,500 and one for $10,000, both of which judgments arose out of the accident mentioned. Plaintiff then informed the defendant that it was only liable for an additional sum of $900 and at the same time it informed defendant that the total unpaid judgments could be compromised for $5,500 and requested defendant to contribute the sum of $4,600 for the purpose of satisfying the judgments. This proposal was refused by defendant whose attorney wrote to the attorneys for plaintiff the following letter: "Gentlemen:

"Replying to your letter of this morning in re the above mentioned judgments, I discussed your letter with my client, the Suburban Service Bus Co., your client's (Penn. Casualty Co.) assured, and it and I are still of the same opinion as previously, namely, that your client's policies 1321 and 1334 fully cover both judgments, and, therefore, it respectfully rejects the offer of settlement of your client that it pay $3000 on a proposed settlement of $5500 on both judgments, and my client pay the difference, or $2500.

"We hereby again reiterate our previous request that your client make this settlement in its entirety and on its own accord and responsibility. Then if it wishes, and is still of the opinion it is not fully liable under both policies on both judgments, it may pursue any course it desires against my client."

Plaintiff thereafter paid the sum of $5,500 in...