St. Paul-Mercury Indemnity Co. v. Martin
| Decision Date | 06 July 1951 |
| Docket Number | No. 4227.,4227. |
| Citation | 190 F.2d 455 |
| Parties | ST. PAUL-MERCURY INDEMNITY CO. v. MARTIN et al. |
| Court | U.S. Court of Appeals — Tenth Circuit |
Clyde Watts, Oklahoma City, Okl. (Looney, Watts, Ross, Looney & Smith, Oklahoma City, Okl.), for appellant.
Claude Monnet, Oklahoma City, Okl. (Monnet, Hayes & Bullis, Oklahoma City, Okl.), for appellees.
Before PHILLIPS, Chief Judge, and MURRAH and PICKETT, Circuit Judges.
This appeal involves the extent of the liability of two insurance companies under their respective public liability policies of insurance for damages resulting from an automobile accident.
Appellant, St. Paul-Mercury Indemnity Company, issued its policy to James Zigler on a Frazier passenger automobile, covering bodily injury liability not to exceed $5,000 to one person or $10,000 for any one accident. The policy also contained the conventional omnibus clause extending the same coverage to anyone driving the automobile with the permission of the named insured.
Appellee, Central Surety and Insurance Corporation, issued its policy to Eugene Martin on a Chevrolet automobile, covering bodily injury liability not to exceed $20,000 to any one person, or $40,000 for any one accident. This policy contained a provision covering the named insured while operating any private passenger automobile, only to the extent, however, of the excess of liability over the limits of any other valid and collectable insurance available to the insured.
Clara Zigler, wife of the insured Zigler, and Martin were partners in the cafe business at Snyder, Oklahoma, and used the insured cars indiscriminately in the business. On the night of November 19, 1947, while Martin was driving the Zigler car in company with Mrs. Zigler, taking employee Eva Studdard and her husband home, Martin lost control of the car, resulting in serious injury to the Studdards. Mr. and Mrs. Studdard sued the Martins and Ziglers jointly for $24,048 and $17,281, respectively. Martin notified Central of the accident, and Central in turn notified St. Paul, requesting it to undertake defense of the suits. St. Paul denied liability, but secured an offer from the Studdards' attorney to settle both suits for a total of $9,500. Upon receipt of this information, Central secured an agreement from the Studdards' attorney to allocate $6,000 of the offer of settlement to Mr. Studdard, and $3,500 to Mrs. Studdard, together with costs. Central thereupon wrote to St. Paul, reciting the terms of the offer, the serious nature of the injuries, and expressing the view that they should be settled. It called attention to St. Paul's policy limits, tendered its check in the sum of $1,000, representing the excess of St. Paul's liability to Mr. Studdard under its policy, and demanded that St. Paul settle these suits for the amounts offered at the risk of paying the full amount of any judgment which might be rendered, even in excess of its coverage.
Faced with this dilemma, St. Paul brought this declaratory action, setting up the accident, the respective policies, the offers of settlement, and Central's demand of their acceptance. It denied liability under its policy on the grounds that at the time of the accident, Martin was not opperating the Zigler automobile with the permission of the insured, but alleged that it had undertaken the investigation and handling of the claims arising out of the accident in good faith, and that it was ready and willing to pay the Studdards the sum of $4750, or one-half of the settlement offer, if Central would pay the remaining one-half. It prayed a declaration to the effect: (1) that Martin is not an insured under St. Paul's policy, and it was therefore not liable to the Studdards thereunder; (2) if Martin is decreed to be an insured, then Central is equally liable under its policy; and (3) if St. Paul be held primarily liable under its policy, it is not obligated in the exercise of good faith or reasonable care to accede to Central's and Martin's demand that it pay $5,000 in the settlement of Mr. Studdard's claim, and $3,500 in settlement of Mrs. Studdard's claim, and that the court correctly adjudge that in the exercise of good faith and reasonable care, Central should contribute the sum of $4,750 toward the settlement of the two cases, or assume full responsibility for any judgment that may be in the case.
While this action was pending, and before Central answered, the two...
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