Trinity Universal Insurance Co v. Cincinnati Insurance Co.

• Decision Date: 16 April 1975
• Docket Number: Nos. 74-1794,74-1795,s. 74-1794
• Citation: 513 F.2d 915
• Parties: TRINITY UNIVERSAL INSURANCE COMPANY, Plaintiff-Appellee, v. CINCINNATI INSURANCE COMPANY, Defendant-appellant, and Joe L. Chittum, Individually and as Executor of the Estate of Mary RuthChittum, Deceased, Defendant-Appellee. TRINITY UNIVERSAL INSURANCE COMPANY, Plaintiff-Appellee, v. CINCINNATI INSURANCE COMPANY, Defendant-Appellee, Joe L. Chittum, Individually, and as Executor of the Estate of Mary RuthChittum, Deceased, Defendant-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 915

513 F.2d 915

TRINITY UNIVERSAL INSURANCE COMPANY, Plaintiff-Appellee, v. CINCINNATI INSURANCE COMPANY, Defendant-appellant, and Joe L. Chittum, Individually and as Executor of the Estate

of Mary RuthChittum, Deceased, Defendant-Appellee.

TRINITY UNIVERSAL INSURANCE COMPANY, Plaintiff-Appellee, v. CINCINNATI INSURANCE COMPANY, Defendant-Appellee, Joe L. Chittum, Individually, and as Executor of the Estate

of Mary RuthChittum, Deceased, Defendant-Appellant.

Nos. 74-1794, 74-1795.

United States Court of Appeals Sixth Circuit.

April 16, 1975.

Smith H. Tyler, Jr., Gary D. Bullock, Dinsmore, Shohl, Coates & Deupree, Cincinnati, Ohio, for defendant-appellant in No. 74-1794.

C. J. DeMichelis, Philip J. Marsick, Cincinnati, Ohio, for defendant-appellant in No. 74-1795.

Milton M. Bloom, Cincinnati, Ohio, William A. Miller, Louisville, Ky., for plaintiff-appellee.

Before CELEBREZZE and MILLER, Circuit Judges, and O'SULLIVAN, Senior Circuit Judge.

WILLIAM E. MILLER, Circuit Judge.

This is a diversity action instituted by Trinity Universal Insurance Company (Trinity) against Cincinnati Insurance Company (Cincinnati) and Joe L. Chittum, individually and as executor of the estate of his wife, Mary Ruth Chittum, under the Declaratory Judgment Act, 28 U.S.C. § 2201 et seq., seeking a declaration of rights and duties of the parties with respect to claims growing out of a collision of vehicles.

The basic facts are not in dispute. Joe L. Chittum and Mary Ruth Chittum were executive officers, stockholders and employees of Moore & Chittum, Inc. The genesis of the present litigation stems from a collision between two automobiles on a Kentucky highway, in which the car operated by Mrs. Chittum and owned by her husband, was involved. At the time of the accident Mrs. Chittum was on a trip for a dual purpose, one objective being personal and the other to perform a mission for the corporation of Moore & Chittum.

As a result of the accident, Mrs. Chittum was killed and the two individuals in the other car (Abell and Millett) were seriously injured. In ensuing litigation in the Kentucky courts, the court of appeals of that state held that Mr. Chittum, Mrs. Chittum, and Moore & Chittum, Inc. were all three jointly liable for any damages resulting from the accident. Chittum v. Abell, 485 S.W.2d 231 (Ky.1972). Mrs. Chittum's estate was held liable because of her own negligence. The liability of Mr. Chittum was based on the family purpose doctrine. The corporation's liability was founded upon the doctrine of respondeat superior, in that Mrs. Chittum was also acting on behalf of Moore & Chittum, Inc. in performing a mission on its behalf. Abell's recovery was fixed at $250,000.00 and Millett's at $116,500.00. By written agreement between Trinity and Cincinnati, the two insurance companies involved, the judgments have been paid, with the companies reserving the right to have their respective legal responsibilities determined in the present proceeding. ¹

There are three relevant insurance policies. The primary policy is a homeowner's automobile policy issued by Cincinnati to Joe L. Chittum as the named insured and naming Mary Ruth Chittum and Moore & Chittum, Inc., as additional insureds. This policy is undisputably the primary insurance available for satisfaction of the claims arising out of the accident. The policy contains a limit of $100,000 per person, which has been duly paid and the policy released from any further liability. This leaves open the question of which, if either, insurance company is required to pay the liability in excess of $100,000 paid to each injured party under the homeowner's policy.

The second relevant policy is a general liability policy issued by Trinity to Moore & Chittum, Inc. as the named insured. It had a limit of $100,000 per individual for any one accident, and thus provided additional protection to Moore & Chittum for liability in excess of the limits of the Cincinnati homeowner's policy. The issue under this policy is whether it provides the same coverage of Mrs. Chittum.

The final insurance policy relevant to the case is a commercial catastrophe policy issued by Cincinnati to Moore & Chittum, Inc. as the named insured. This policy had limits of $1,000,000 and was to be effective only after all "underlying insurance" was exhausted. It specified the Trinity general liability policy as underlying insurance. It is therefore necessary to determine the coverage of the Trinity policy in order to ascertain the point at which the catastrophe policy takes over. This is true since the Trinity policy can only be considered as "underlying insurance" to the extent of the coverage provided by it. If the underlying policy excludes coverage for the particular occurrence in question, or if that coverage is exhausted, the catastrophe policy is liable for any excess over the homeowner's policy up to $1,000,000, subject to its own exclusions. The catastrophe policy contains exclusionary language which Cincinnati contends excludes coverage of Mr. and Mrs. Chittum. It thus becomes necessary to interpret the exclusionary clauses of two complementary insurance policies.

Cincinnati argues that the following provisions of the Trinity insurance policy are ambiguous or inconsistent and that the policy should therefore not be interpreted as establishing an exclusion of Mrs. Chittum:

"PERSONS INSURED

Each of the following is an Insured under this insurance to the extent set forth below:

(b) any partner or executive officer thereof, but with respect to a non-owned automobile only while such automobile is being used in the business of the named insured;

None of the following is an insured:

(iii) an executive officer with respect to an automobile owned by him or by a member of his household; . . ." (Italics ours.)

Cincinnati points out that one provision defines a person in Mrs. Chittum's position as an insured while another provision seemingly would exclude her. Since under Ohio law an insurance policy subject to different interpretations will be given that interpretation most favorable to the insured, especially in the case of exclusions and exceptions from coverage, it is urged by Cincinnati that the Trinity general policy should be construed as covering Mrs. Chittum. Great American Mutual Indemnity Co. v. Jones, 111 Ohio St. 84, 144 N.E. 596 (1924); Butche v. Ohio Casualty Insurance Company, 174 Ohio St. 144, 187 N.E.2d 20 (1962); American Finance Corp. v. Fireman's Fund Insurance Co., 15 Ohio St.2d 171, 239 N.E.2d 33 (1968); Preferred Accident Ins. Co. v. Rhodenbaugh, 160 F.2d 832 (6th Cir. 1947).

This rule of construction does not become applicable until an ambiguity is found in the policy which makes it susceptible of conflicting interpretations which cannot reasonably be reconciled. Bright v. Ohio Casualty Ins. Co., 444 F.2d 1341 (6th Cir. 1971). The district court was unable to find any such ambiguity in the provisions of the Trinity policy.

The provisions are obviously designed to cover any executive officer on company business driving an automobile not owned by the company, unless the automobile is owned by the executive or a member of his family. The rationale for structuring the coverage in this manner is understandable. The provisions protect corporate officers while they are driving automobiles not owned by the company but at the same time prevent the possible abuse of company officers' wrongfully transferring their own personal risks to the company's insurance by erroneously insisting that they are on incidental company business when a loss occurs. Such abuses could result in the company's insurance having to bear losses which would ordinarily be covered by the officers' personal insurance.

The provision extending coverage to non-owned vehicles is clearly limited by the phrase "to the extent set forth below." The wording which directly follows specifically excludes coverage with respect to vehicles owned by executive officers or members of their families.

A Louisiana court of appeals has found that a virtually identical policy issued to the City of Natchitoches, Louisiana as the named insured, was clear and unambiguous. It was there held that the policy did not extend coverage to the police chief of the city operating his personally owned vehicle on city business as an escort in a funeral procession. Bouis v. Employers Liability Assurance Corp., 160 So.2d 36 (La.App., 1963). ² We think that the Bouis decision is well reasoned and is persuasive authority in this case. As Mrs. Chittum was driving a car owned by her husband, a member of her household, she was not covered under the terms of the Trinity policy. This result, we believe, is a reasonable reconciliation of provisions of the policy which are only in apparent conflict.

Having...