Tullgren v. Jasper

• Decision Date: 01 May 1939
• Docket Number: No. 6408.,6408.
• Citation: 27 F. Supp. 413
• Parties: TULLGREN v. JASPER et al.
• Court: U.S. District Court — District of Maryland

27 F. Supp. 413

TULLGREN v. JASPER et al.

No. 6408.

District Court, D. Maryland.

May 1, 1939.

Edgar T. Fell, Stanley E. Hartman, Fell & Hartman, and Harry J. Dingle, all of Baltimore, Md., for plaintiff.

Clarence W. Miles, Seymour O'Brien, and Miles & O'Brien, all of Baltimore, Md., for defendant Jasper.

Walter L. Clark, Roszel C. Thomsen, and Robert E. Coughlan, Jr., all of Baltimore, Md., for defendant Hoffmeister and Maryland Casualty Co., third-party defendant.

Harry O. Levin and C. Morton Goldstein, both of Baltimore, Md., for defendant Association of Independent Taxi Operators, Inc., third-party plaintiff.

CHESNUT, District Judge.

The motion before the court presents a question of third-party practice with respect to making an automobile casualty insurer a third-party defendant. It arises in the following way:

It is alleged in the complaint that the plaintiff was a passenger in a taxicab driven by (a) the defendant, Eli Goldstein, and (b) owned by the defendant, Charles Jasper, and (c) being operated under the control and for the use and benefit of the defendant, The Association of Independent Taxi Operators, Inc., which was in collision with an automobile truck operated by (x) the defendant, Otis D. Wood, and owned by (y) the defendant, Edward A. Hoffmeister of "C"; in consequence of which the plaintiff was injured due to alleged negligence of the defendant drivers of the two vehicles who were acting at the time as servants and agents of the respective owners.

In the course of the pleadings the defendant, The Association of Independent Taxi Operators, Inc., has filed a third-party complaint against the Maryland Casualty Company in which the latter is described as follows:

"a Maryland Corporation engaged in the business of insuring against the liability imposed by law arising out of the ownership, maintenance and use of motor vehicles and before the happening of the accident, had issued to Edward A. Hoffmeister of "C" its policy of insurance covering the operation of the automobile involved in the accident owned by said Edward A. Hoffmeister of "C", which policy was in effect on September 28, 1937, when the collision occurred and which automobile caused or contributed to the injuries claimed to have been suffered by the plaintiff; that under the terms of said policy, said Edward A. Hoffmeister of "C", may bring an action against the Maryland Casualty Company in the event the said Maryland Casualty Company fails to pay any judgment rendered against him; and in the event of a joint judgment against Edward A. Hoffmeister of "C", Charles Jasper and/or The Association of Independent Taxi Operators, Incorporated, said Edward A. Hoffmeister of "C", and/or the Maryland Casualty Company are liable for the payment of a proportionate amount of any joint judgment recovered."

The Maryland Casualty Company, so impleaded, has moved to dismiss the third-party complaint against it for the reasons (1) that said complaint fails to state a claim upon which relief can be granted; (2) that it is not a proper party and cannot be brought in under Rule 14, 28 U.S. C.A. following section 723c; (3) the court is without jurisdiction in that the defendants, Hoffmeister, Wood and The Association of Independent Taxi Operators, Inc., and the Maryland Casualty Company are all citizens of the State of Maryland and there is therefore no diversity of citizenship between them.

Rule 14 provides in part as follows:

"When Defendant May Bring in Third Party. Before the service of his answer a defendant may move ex parte or, after the service of his answer, on notice to the plaintiff, for leave as a third-party plaintiff to serve a summons and complaint upon a person not a party to the action who is or may be liable to him or to the plaintiff for all or part of the plaintiff's claim against him. Italics supplied * * * The third-party defendant is bound by the adjudication of the third-party plaintiff's liability to the plaintiff, as well as of his own to the plaintiff or to the third-party plaintiff. * * *"

It will be noted that the Maryland Casualty Company (the third-party defendant in this instance) has no relationship either ex contractu or ex delicto with the defendant, The Association of Independent Taxi Operators, Inc. The Maryland Casualty Company is alleged to be the insurer not of The Association of Independent Taxi Operators, Inc., but of E. A. Hoffmeister of "C", and the latter has not sought to implead the Maryland Casualty Company as its insurer. A person not made a party to the action by the plaintiff may be impleaded by a defendant only where the former "is or may be" liable to the said defendant or to the plaintiff. It seems reasonably clear that the Maryland Casualty Company, sought to be impleaded by the defendant, The Association of Independent Taxi Operators, Inc., is not liable to the latter; and therefore the Maryland Casualty Company may be properly impleaded only, if at all, on the theory that it "is or may be" liable to the plaintiff.

The possible liability of the Maryland Casualty Company to the plaintiff is alleged in the cross-complaint and is evidently based on the Maryland statutory provision in the Code, Art. 48A, § 54, being an Act of Assembly of 1924, Ch. 204, which enacts—

"that if an execution upon any final judgment against the assured is returned unsatisfied, in whole or in part, in an action brought by the injured or by another person claiming by, through, or under the injured, then an action may be maintained by the injured, or by such other person against the company under the terms of the policy for the amount of any judgment recovered in such action, not exceeding the amount of the policy, and every such policy shall be construed to so provide, anything in such policy to the contrary notwithstanding."

The cross-complaint also alleged that in the event of a joint judgment against the defendant Hoffmeister as owner of the truck, and one or more of the defendants responsible for the operation of the taxicab, then "said Edward A. Hoffmeister of "C", and/or the Maryland Casualty Company are liable for the payment of a proportionate amount of any joint judgment recovered." This allegation is evidently based on the Maryland Act of 1927, Ch. 539, now codified in the 1935 Supp. to the Maryland Code as Article 50, § 12A, providing for contribution between joint feasors where there is a joint judgment against them and payment made by one in excess of his pro rata share.

Several objections are made to the inclusion of the Maryland Casualty Company as a third-party defendant in the case. One ground is that, in jury trials, it is prejudicial to the defendant to permit the jury to have information that the defendant is insured. International Co. v. Clark, 147 Md. 34, 42, 127 A. 647; Stewart & Co. v. Newby, 4 Cir., 266 F. 287, 295. While there have been many judicial decisions to this effect, beginning many years ago when automobile insurance was much less customary, it may be doubted whether now, in view of the fact that automobile liability insurance is so general, the rule should be so rigidly applied; at least where the practice, as in the federal courts, permits definite legal instructions to the jury with respect to the legal effect of insurance in these negligence cases.

A more persuasive argument for the dismissal of the insurer is that it is not directly but only secondarily liable to the plaintiff, in the event of the non-payment of a judgment against the defendant insured. But even this consideration, I think, is not conclusive on the point because there may be cases in which a liability insurer could properly be brought in as a third-party defendant by the insured. In the ordinary case this is not at all likely to occur because, as is well known, the insurer, where there is no question of its liability under the policy to the insured, defends the suit for the insured by the insurer's counsel; that is to say, the insurer is in control of the litigation and its counsel would ordinarily decline to make the insurer a party. But in case the insurer denies liability and refuses to defend the action in accordance with its policy, I see no logical reason to deny to the insured, who is the defendant in a suit, the right to bring in the insurer as a third-party defendant, where under the terms of its policy it will be liable over to the insured defendant and where the judgment against the defendant will establish the liability of the insurer.¹ Of course in such case the defendant insurer is entitled to a hearing and trial of any defenses that it may set up against its liability and it is probable that the court would order a separate trial of its controversy with its insured under Rule 42(b).² The primary object of Rule 14 is to avoid circuity of action and thus to finally dispose in one litigation of an entire subject matter arising from a particular set of facts.

Another objection made by the Maryland Casualty Company is of very great general importance. It says that the court has no general federal jurisdiction of the controversy between it and the Association of Independent Taxi Operators, Inc., because both are Maryland corporations, and there is therefore no diversity of citizenship between them. The point is of great importance in the application of Rule 14. We must steadily bear in mind in applying the rules that they relate to procedural matters only and do not affect substantive rights; and Rule 82 expressly provides:

"These rules shall not be construed to extend or limit the jurisdiction of the district courts of the United States or the venue of actions therein."

The objection here is not based on improper venue, but on the alleged absence of diverse citizenship. It is obvious that if the objection is good the scope of application of the rule will be greatly restricted as to third-party practice, where...