Ryder Truck Lines, Inc. v. Carolina Cas. Ins. Co., 279

• Decision Date: 09 February 1979
• Docket Number: No. 279,279
• Citation: 385 N.E.2d 449,270 Ind. 315
• Parties: RYDER TRUCK LINES, INC., and Liberty Mutual Ins. Co., Appellants, v. CAROLINA CASUALTY INSURANCE CO., Appellee. S 40.
• Court: Indiana Supreme Court

Page 449

385 N.E.2d 449

270 Ind. 315

RYDER TRUCK LINES, INC., and Liberty Mutual Ins. Co., Appellants, v. CAROLINA CASUALTY INSURANCE CO., Appellee.

No. 279 S 40.

Supreme Court of Indiana.

Feb. 9, 1979.

Peter G. Koransky, William S. Spangler, Gary, for appellants.

John T. Lorenz, Indianapolis, for appellee.

PIVARNIK, Justice.

This cause comes to us on a transfer petition from the appellants, plaintiffs below, following an unfavorable ruling in the trial court and the Third District Court of Appeals. Ryder Truck Lines, Inc. v. Carolina Casualty Ins. Co., (1978) Ind.App., 372 N.E.2d 504. Ryder Truck Lines, Inc., and Liberty Mutual Insurance Company brought this action to require Carolina Casualty Insurance Company to indemnify them for costs they incurred in settling a claim for personal injuries.

The facts are not in dispute and can be rather simply set out. On July 24, 1968, Ryder Truck Lines entered into a one-way lease of a tractor-trailer owned by Corkren & Company, Inc., for the transport of goods from Gary, Indiana, to Nashville, Tennessee. Corkren also supplied a driver, one James Weldon. Under the terms of lease, Corkren was to receive 73% Of the fee Ryder earned for transporting the goods. In return, Corkren agreed to deliver the tractor-trailer in good working order and to maintain the vehicle throughout the trip by furnishing gas and oil and any repairs. In addition, Corkren was obliged to pay Weldon's salary, compensation coverage, and payroll taxes. Weldon was operating the vehicle under the authority of permits issued to Ryder by the Interstate Commerce Commission (ICC) and the Public Service Commission of Indiana.

While en route to Nashville on the above date, Weldon was involved in a collision with an automobile wherein the driver of the auto, and others, were injured. Weldon's liability for this collision and resultant injury is not questioned here. Subsequently, a settlement was made with the injured parties for $46,000 and the suit brought by the injured parties was dismissed. In the settlement, Ryder paid the first $25,000 deductible and Liberty, Ryder's carrier, contributed $21,000. As a result of the respective insurers failure to reach an agreement as to their respective liabilities, Ryder Truck Lines, Inc., and Liberty Mutual Insurance Company brought action to require Carolina Casualty Insurance Company, Corkren's carrier, to indemnify them for costs they incurred in settling the claim for personal injuries. The trial court determined that Liberty Mutual provided primary coverage and should sustain the entire loss. The judgment of the trial court was affirmed by the Third District Court of Appeals.

Both carriers claimed the other is the primary carrier, and that their own coverage if "other insurance" in the event there is no other insurance to cover the loss. That is, both policies pro-rated the liability of the insurer if other insurance is available to cover the loss. In addition to this, the Liberty policy contained an ICC endorsement which states in relevant part:

"Within the limits of liability hereinafter provided it is further understood and agreed that no condition, provision, stipulation, or limitation contained in the policy, or any other endorsement thereon or violation thereof, or of this endorsement, by the insured, shall relieve the Company from liability hereunder or from the payment of any such final judgment, irrespective of the financial responsibility or lack thereof or insolvency or bankruptcy of the insured. . . ."

The ICC endorsement was a required provision of any insurance policy issued to a company operating under such permits. Section 215 of the Interstate Commerce Act, 49 U.S.C. § 315 (1963), requiring the ICC endorsement discussed above, was passed for the purposes of providing ways of securing compensation to injured parties and encouraging safety on highways.

The problem of conflicting "other insurance" provisions in policies of insurance, coupled with the ICC endorsement, is not new. This court discussed the problem of conflicting "other insurance" provisions in Indiana Ins. Co. v. American Underwriters, Inc., (1973) 261 Ind. 401, 304 N.E.2d 783, in which a dispute arose between two insurance companies as to which was primarily responsible for a tortfeasor's damage when the tortfeasor comes within the coverage of both insurance companies which have "other insurance" clauses in their policies. The court, in an opinion authored by Justice Hunter, was concerned with securing compensation for the injured parties as well as protecting the insured person and so held that competing clauses between insurers should not be allowed judicial sanction at the expense of removing the insured's coverage. The court stated:

"Both policies, when read separately, appear to afford coverage to the insured. Yet each 'other insurance' provision forces an examination of its opponent. This 'circular riddle' can be resolved by (1) attempting to give effect to one policy provision over the other, or (2) applying mechanical or arbitrary rules . . . , or (3) holding both clauses to be conflicting and mutually repugnant and, therefore disregarding them. We find the last mentioned alternative to be the most reasonable. This method not only provides indemnification for the insured, but also, through the process of proration, gives effect to the general intent of the insurers . . . In such a case (as this) there exists Dual primary liability."

Id., 261 Ind. at 407, 304 N.E.2d at 787. Our Indiana Court of Appeals further held in Jones v. Furlong, (1951) 121 Ind.App. 279, 97 N.E.2d 369, that the driver, under circumstances such as these, is a joint employee of both the owner and the lessee. The joint employee...