Travelers Indemnity Co. v. American Cas. Co. of Reading, Pa.

• Decision Date: 07 February 1964
• Docket Number: Civ. A. No. 2321.
• Parties: The TRAVELERS INDEMNITY COMPANY, a corporation, and Hartford Accident and Indemnity Company, a corporation, (additional party plaintiff), Plaintiffs, v. AMERICAN CASUALTY COMPANY OF READING, PENNSYLVANIA, a corporation, J. Jackson Amick, Dale F. Spaur, Ollie Marie Smith, Dorrence M. Rowe and Robert W. Rowe, Jr., Defendants.
• Court: U.S. District Court — Southern District of West Virginia

226 F. Supp. 354

The TRAVELERS INDEMNITY COMPANY, a corporation, and Hartford Accident and Indemnity Company, a corporation, (additional party plaintiff), Plaintiffs, v. AMERICAN CASUALTY COMPANY OF READING, PENNSYLVANIA, a corporation, J. Jackson Amick, Dale F. Spaur, Ollie Marie Smith, Dorrence M. Rowe and Robert W. Rowe, Jr., Defendants.

Civ. A. No. 2321.

United States District Court S. D. West Virginia, Charleston Division.

February 7, 1964.

Walter C. Price, Jr., Payne, Minor, Ray, Price & Loeb, Charleston, W. Va., for plaintiff, The Travelers Indemnity Co.

Edward H. Tiley, Kay, Casto & Chaney, Charleston, W. Va., for plaintiff, Hartford Accident and Indemnity Co.

Edward W. Eardley, Steptoe & Johnson, Charleston, W. Va., for defendant, American Cas. Co. of Reading, Pennsylvania.

John J. Lane, Lane & Preiser, Charleston, W. Va., for defendant, Ollie Marie Smith.

FIELD, Chief Judge.

In this declaratory judgment action three insurance companies seek a determination of their respective obligations under certain automobile liability policies issued by them. The companies here involved are The Travelers Indemnity Company (hereinafter referred to as "Travelers"), Hartford Accident and Indemnity Company (hereinafter referred to as "Hartford"), and American Casualty Company of Reading, Pennsylvania (hereinafter referred to as "American").

Some of the facts were stipulated by the attorneys of record herein, and in addition to the stipulation, certain testimony was taken in open court.

Stipulation of Facts

I

On October 31, 1958, a 1956 Chevrolet convertible automobile driven by Dale F. Spaur collided with a vehicle owned and operated by Ollie Marie Smith on U.S. Route No. 60 in Kanawha County, West Virginia. Ollie Marie Smith instituted an action against Dale F. Spaur in the Court of Common Pleas of Kanawha County, West Virginia, seeking damages in the amount of $75,000.00 for alleged personal injuries and property damage resulting from this accident. This action was instituted on January 13, 1959. On October 5, 1960, the defendant not appearing, a writ of inquiry was held in the Court of Common Pleas resulting in a verdict against the defendant in the amount of $20,685.43. A final judgment on this verdict was entered on October 7, 1960, in favor of Ollie Marie Smith against Dale F. Spaur with interest at the rate of 6% per annum from October 5, 1960, and costs in the amount of $36.00.

II

The 1956 Chevrolet convertible automobile driven by Spaur at the time of the accident with Ollie Marie Smith was titled in the name of Dorrence M. Rowe, 905 Vincent Street, Charleston, West Virginia. On or about October 1, 1955, defendant American had issued its automobile Policy No. T360695 to Dorrence M. Rowe, effective for a period of one year, insuring a 1955 Chevrolet two-door Bel Air automobile. By an endorsement dated February 4, 1956, the subject 1956 Chevrolet convertible was substituted in the place and stead of the Chevrolet Bel Air as the insured vehicle under this policy. On October 1, 1956, American renewed this policy by issuing to Dorrence M. Rowe its Policy No. T622235, which policy was effective for a period of one year from date. On June 14, 1957, American cancelled this policy and issued to Dorrence M. Rowe its Policy No. FA10 2300 which policy carried an effective period of one year from the date of issuance. On June 14, 1958, American issued its Policy No. F-7-2985 to Dorrence M. Rowe effective for a period of one year to June 14, 1959, insuring the 1956 Chevrolet convertible automobile.

The last mentioned Policy No. F-7-2985 provides:

"Persons Insured — The following are insureds under Part 1:

"(a) With respect to the owned automobile,

(1) the named insured and any resident of the same household,

(2) any other person using such automobile provided the actual use thereof is with the permission of the named insured;

* * * * * *

"Definitions — Under Part 1:

"`named insured' means the individual named in Item 1 of the declarations and also includes his spouse, if a resident of the same household;

"`insured' means a person or organization described under `Persons Insured';

"`relative' means a relative of the named insured who is a resident of the same household;"

III

On or about July 15, 1958, Travelers had issued to J. Jackson Amick a Family Automobile Policy No. MP-4942588, effective for a period of one year to July 15, 1959, covering a 1954 Chevrolet two-door sedan. Under the provisions of this policy a person insured with respect to a nonowned automobile is defined as (1) the named insured, and (2) any relative, but only with respect to a private passenger automobile or trailer, provided the actual use thereof is with the permission of the owner. The word "relative" is defined in the policy as a relative of the named insured who is a resident of the same household.

IV

On July 18, 1958, Hartford had issued its automobile Policy No. HK-781159 to J. J. and Mary Frances Amick d. b. a. Speedway Motel, covering a 1957 Mercury two-door sedan, which policy of insurance was effective for a period of one year to July 18, 1959. The provisions of this policy define an insured as the named insured and his spouse if a resident of the same household, and also includes any person while using the automobile provided the actual use of the automobile is by the named insured or his spouse or with the permission of either of those two. The "automobile" includes a temporary substitute automobile. The definition of a temporary substitute automobile is as follows:

"(3) TEMPORARY SUBSTITUTE AUTOMOBILE — under coverages A, B-1 and C, an automobile not owned by the named insured or his spouse if a resident of the same household, while temporarily used as a substitute for the described automobile when withdrawn from normal use because of its breakdown, repair, servicing, loss or destruction;"

V

American was promptly notified of the occurrence of the accident of October 31, 1958, and after an investigation of all the facts and circumstances, on May 14, 1959, American issued letters of cancellation to both Dorrence M. Rowe and Dale F. Spaur, copies of these letters also being forwarded to the local claims superintendent of Hartford. Hartford was notified of the accident on November 28, 1958, and began its investigation thereof on December 23, 1958.

Neither Amick nor Spaur notified Travelers of the accident of October 31, 1958, nor the institution of the action by Ollie Marie Smith on January 13, 1959. Neither Amick, his wife, nor Spaur notified Hartford of the accident of October 31, 1958, or the institution of the action by Smith on January 13, 1959. Neither Dorrence M. Rowe, Robert W. Rowe, nor Dale F. Spaur notified American of the institution of the action by Smith on January 13, 1959.

VI

On June 9, 1959, counsel for American discovered the pending action of Smith against Spaur on the docket of the Court of Common Pleas of Kanawha County, and on June 10, 1959, they advised the local claims manager of American of the pending action by letter, copies of which letter together with copies of the declaration in the pending litigation were sent to the local claims representatives of both Hartford and Travelers. Thereafter Travelers entered into an agreement with Spaur, dated June 22, 1959, under which Travelers conducted an investigation of the accident without prejudice to the rights of either party under its policy of insurance. On July 1, 1959, Travelers notified Spaur that it denied coverage to him under this policy and sent a copy thereof to J. Jackson Amick.

VII

On June 14, 1955, American had issued its automobile Policy No. T2 6-0707 to Dorrence M. Rowe, insuring a 1953 Oldsmobile automobile which policy was in effect for a period of one year until June 14, 1956, and on this latter date American renewed this policy to Dorrence M. Rowe by issuing its Policy No. T 51-4965, insuring a 1956 Oldsmobile which policy was in effect for a period of one year until June 14, 1957. Both of these policies contained an endorsement relative to the use of other automobiles extending coverage under such endorsement to Robert W. Rowe, Jr., for an additional premium charge of $5.08. On June 14, 1957, American issued to Dorrence M. Rowe a Family Automobile Policy No. FA10 2325 insuring the 1956 Oldsmobile automobile for a period of one year until June 14, 1958. On June 14, 1958, American issued to Dorrence M. Rowe a Family Automobile Policy No. F7-2984 insuring the 1956 Oldsmobile automobile which policy was in effect for a period of one year until June 14, 1959. This policy did not contain the endorsement which had been placed on the prior policies.

Prior to the issuance of any policy to Dorrence M. Rowe, American obtained a credit report on Dorrence M. Rowe from Retail Credit Company dated June 23, 1955. This credit report contained information as to drivers, stating that the wife of Dorrence M. Rowe was a good driver and well regarded and that his brother, Robert, age 29, had his own car at that time. American never obtained a credit report on Robert W. Rowe, Jr.

Findings of Fact

From the testimony taken in open court I find the facts in addition to those stipulated to be as follows:

At the time of the accident Robert W. Rowe, Jr., was living at the Speedway Motel in St. Albans, West Virginia, having been employed and lived there since June 14, 1958. The Motel was owned and operated by J. Jackson Amick and his wife, and Dale Spaur, who is the stepson of Amick, lived with his mother and stepfather at the Motel. At that time Robert Rowe, Jr., had possession of the 1956 Chevrolet convertible which was titled in the name of Dorrence Rowe, and was keeping it at the Motel. The 1954 Chevrolet sedan covered by the Travelers policy and owned by J. Jackson Amick was also kept at the Motel.

The 1957 Mercury sedan which was covered by the Hartford policy had been purchased by J. J. and Mary Frances Amick from Kanawha City...