Security Ins. Co. v. Jay

Citation109 F. Supp. 87
Decision Date14 November 1952
Docket NumberCiv. No. 655.
PartiesSECURITY INS. CO. et al. v. JAY.
CourtUnited States District Courts. 8th Circuit. United States District Court of Minnesota

A. J. Berndt, Mankato, Minn., and Carroll & Thorson, Minneapolis, Minn., for plaintiffs.

Gallagher, Farrish & Sheran, Mankato, Minn., for defendant.

NORDBYE, Chief Judge.

On or about August 14, 1950, one Charles Yahnke was injured when the trailer which was attached to defendant Jay's car broke loose from Jay's moving car and caused Yahnke, who was riding on the trailer with Jay's knowledge and consent, to jump or be thrown to the ground. Yahnke subsequently died from the injuries.

Jay was insured against liability for bodily injuries, property damage, and medical expenses under a policy issued to him by the plaintiff herein. One of the exclusionary provisions of that policy declared,

"This policy does not apply:
* * * * * *
"(d) under Coverages A and C, to bodily injury to or sickness, disease or death of any employee of the Insured while engaged in the employment, other than domestic, of the Insured or in domestic employment if benefits therefor are either payable or required to be provided under any workmen's compensation law; * * *."

(Coverages A and C apply to bodily injury and medical payments, respectively).

Plaintiff now brings this action for a declaratory judgment to determine if this exclusionary provision applies and thereby relieves it from liability under the policy. Plaintiff contends that Yahnke was Jay's employee and therefore was not protected by the provisions of this policy. Defendant Jay contends (1) that this Court lacks jurisdiction, (2) that Yahnke was not an employee of Jay when the accident occurred, and (3) that plaintiff has waived its right to set up the above quoted clause as a defense and is estopped from doing so. The special administrator of Yahnke's estate originally was joined as a defendant to the action, but the action has been dismissed as to him.

Jay contends that jurisdiction is lacking because no action has been filed by Yahnke's representative, that the amount which will be in controversy therefore is unknown now, and the $3,000 jurisdictional amount therefore is lacking. The action is based upon diversity of citizenship. Some authority appears to support Jay's position. Standard Accident Ins. Co. v. Alexander, Inc., D.C.Tex., 23 F.Supp. 807. But compare Commercial Casualty Ins. Co. v. Humphrey, D.C.Tex., 13 F.Supp. 174. Others have held, however, that the face amount of the policy determines the amount in controversy. Builders & Manufacturers Mutual Casualty Co. v. Paquette, D.C.Me., 21 F.Supp. 858; C. E. Carnes & Co. v. Employers' Liability Assurance Corp., 5 Cir., 101 F.2d 739. But others have held that the expense of defending, not the face amount of the policy is the amount which determines jurisdiction. United States Fidelity & Guaranty Co. v. Pierson, D.C.Ark., 21 F.Supp. 678, reversed on other grounds, 8 Cir., 97 F.2d 560. The question does not appear to have been decided in Minnesota. Because the fact situations vary so substantially, no general rule seems available at this time. The mere fact that a claim has not been filed should not determine if the court does or does not have jurisdiction. American General Ins. Co. v. Booze, 9 Cir., 1945, 146 F.2d 329. Each case must be determined on its realistic facts.

But in the instant case it is admitted that a claim is being made by Yahnke's representative. Yahnke left a widow and one or more adult children surviving him. In Minnesota the maximum amount allowable for wrongful death is $17,500. For the Court not to take judicial notice of the almost invariable practice of litigants to seek the maximum amount in their claim or complaint would ignore what is known to lawyer and layman alike. The insurance policy in the instant case covers up to $10,000 for bodily injury to one person and to $20,000 for all persons involved in an accident. Consequently, it appears that the required jurisdictional amount exists here. To reject jurisdiction because suit has not yet been started would ignore one of the purposes of a declaratory judgment—to determine questions prior to the filing of a regular action and prevent multiplicity of actions. Consideration of the premises justifies the conclusion that the Court has jurisdiction in this case.

Plaintiff's contention that Yahnke was acting as Jay's employee when the accident occurred appears justified on the record presented to the Court. Jay hired Yahnke to assist him in repairing Jay's corn crib. Yahnke worked at that job for Jay on the morning of the accident. Jay then invited Yahnke to join him for lunch at Jay's house in town. Although Jay did not undertake to furnish Yahnke his lunch as part of the employment arrangement, Jay and Yahnke proceeded to the lumber yard after finishing their lunch and noon time rest period. There they loaded onto Jay's trailer the lumber for the corn crib upon which they were working and were going to work that afternoon. Yahnke rode on the load on the trailer to secure it, and Jay proceeded to drive his car to which the trailer was attached in the direction of the farm and the corn crib. While so proceeding, the tongue of the trailer broke, and Yahnke was fatally injured in his fall from the trailer. The lunch period had expired when the accident occurred. Work relative to the corn crib had been and was going to be performed that afternoon. The material which was upon the trailer was for the crib, and it was to be used by Yahnke and Jay in repairing the crib. The evidence does not justify the conclusion that Yahnke was working free for Jay while hauling lumber to the job. Yahnke was working by the hour. And whether he was actually doing carpenter work or aiding in the transportation of lumber so as to enable him to continue his work on the crib, every inference suggests that he was to be paid by Jay for all of such work. Jay's statement which is in evidence leaves little doubt that he paid Yahnke by the hour and that he considered that Yahnke's time had started again when they were loading the lumber. In view of these premises, therefore, Yahnke was serving Jay as an employee when the accident occurred.

As a third defense, Jay seeks application of the rule that, where an insurer has knowledge, actual or presumed, of a defense of nonliability under the policy, and without notifying the insured of this defense or reserving the right to raise the defense, assumes control of the insured's defense, then the insurer can be held estopped from raising the defense without proof of prejudice. This rule is well established in Minnesota. Tozer v. Ocean Accident & Guarantee Corp., 94 Minn. 478, 103 N.W. 509; Mann v. Employers' Liability Assurance Corp., 123 Minn. 305, 143 N.W. 794; Oehme v. Johnson, 181 Minn. 138, 231 N.W. 817, 81 A.L.R. 1308; Peterson v. Maloney, 181 Minn. 437, 232 N.W. 790; ...

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