United Services Auto. Ass'n v. Hartford Acc. & Indem. Co.

• Decision Date: 21 April 1967
• Citation: 414 S.W.2d 836,220 Tenn. 120,24 McCanless 120
• Parties: , 220 Tenn. 120 UNITED SERVICES AUTOMOBILE ASSOCIATION, Appellant, v. The HARTFORD ACCIDENT & INDEMNITY COMPANY, Appellee.
• Court: Tennessee Supreme Court

Page 836

414 S.W.2d 836

24 McCanless 120, 220 Tenn. 120

UNITED SERVICES AUTOMOBILE ASSOCIATION, Appellant, v.The HARTFORD ACCIDENT & INDEMNITY COMPANY, Appellee.

Supreme Court of Tennessee.

April 21, 1967.

Pierce Winningham, III, Nashville, for appellant.

Stephenson, Lackey & Holman, Nashville, for appellee.

OPINION

CRESON, Judge.

This appeal comes from the Chancery Court of Davidson County, Tennessee.

On June 2, 1966, appellant, United Services Automobile Association, filed its original bill in that court.The original bill alleged that on March 7, 1965, United had in full force and effect a family automobile insurance policy covering Lt. Col. Jacob Helms.On the same date, the appellee, The Hartford Accident & Indemnity Company, had in full force and effect a liability insurance policy covering U-Haul Rental Corporation of Murfreesboro, Tennessee.

Lt. Col. Helms, while driving a one and one-half ton Ford truck, which he had leased from U-Haul corporation's Louisville, Kentucky office, was involved in a serious automobile accident on Murfreesboro Road in Lavergne, Tennessee.As a result of this accident, three lawsuits were filed against Lt. Col. Helms; one by Mary Florence White, for personal injuries sustained in the aforementioned accident; one by Bart White, Jr., for personal injuries resulting from the accident, and one by Dr Bart N. White, for property damage to his automobile with which Helms collided while it was being driven by Bart White, Jr.Also named a defendant in this lawsuit was the U-Haul Corporation.

The cases were tried in Murfreesboro, Tennessee, before the Rutherford County Circuit Court, on February 22 and 23, 1966.At the conclusion of the trial, judgments were entered; one in favor of Mary White for $23,111.77; one for Bart White, Jr. for $5,000.00, and one for Dr. Bart White for $344.70.All of these judgments were returned against Lt. Col. Helms.The actions against his co-defendantU-Haul Corporation were dismissed.On April 26, 1966, these judgments became final.

On May 18, 1966, a written demand was made by the appellant, United, upon the appellee, Hartford, to pay the judgments rendered against Lt. Col. Helms, in each case.The appellee, Hartford, refused to do so, and continues to refuse.

It also appears in the original bill that United States Fire Insurance Company had a policy of collision insurance at the time of the accident, covering Bart White, Sr. and his automobile.As a result of this coverage, United States Fire Insurance Company paid out $1,925.00 toward repair of Bart White, Sr's. automobile involved in this collision.United States Fire Insurance Company now has a subrogation claim in the amount of $1,925.00 filed against Lt. Col. Helms, and has made demand for this amount.United Services Automobile Association, on May 18, 1966, made formal demand upon Hartford for the payment of this amount.Hartford again refused to pay.

It is also alleged that appellant United has expended large sums for attorneys' fees and court costs in the defense of Lt. Col. Helms, and they seek reimbursement from Hartford for the same.So far as the transcript indicates, the judgments have remained unpaid.

United Services Automobile Association prays for declaratory judgment that Hartford is primarily liable for the judgments rendered against Lt. Col. Helms; and that the United policy constitutes excess coverage only.They further pray for declaratory judgment for the payment by Hartford of United States Fire Insurance Company's subrogation claim, and that a judgment be entered in favor of United against Hartford for an amount covering attorneys' fees, court costs and other incidental expenses incurred by United in defense of these lawsuits.

The policy provisions to be construed are made exhibits to the original bill.United's policy provides coverage for liability sustained by the insured, Lt. Col. Helms, while driving a non-owned automobile with the permission of the owner, but such coverage purports to be limited by the following language:

'Other insurance.If the insured has other insurance against a loss covered by Part I of this policy the company shall not be liable under this policy for a greater proportion of such loss than the applicable limit of liability stated in the declarations bears to the total applicable limit of liability of all valid and collectible insurance against such loss; provided, however, the insurance with respect to a temporary substitute automobile or non-owned automobile shall be excess insurance over any other valid and collectible insurance.'

Hartford's policy provides as follows:

'4.The first sentence of Insuring Agreement III--Definition of Insured, is amended to read:

III.Definition of Insured: With respect to the insurance for Bodily Injury Liability and for Property Damage Liability the unqualified word 'Insured' includes

(1) the named insured and, if the named insured is an individual, his spouse if a resident of the same household,

(3) any other person, but only if no other valid and collectible automobile liability insurance, either primary or excess, with limits of liability at least equal to the minimum limits specified by the financial responsibility law of the state which is applicable with respect to the accident out of which claim arises, is available to such person,'

'5.'Condition 1, Limits of Liability--Coverage A,' and 'Condition 2, Limits of Liability--Coverage C' are made subject to the following provision:

'Provided that with respect to a person described as insured under sub-paragraph (3) of Insuring Agreement III--Definition of Insured--and any person or organization legally responsible for the use of the automobile by such person, other than the named insured and any person or organization described in sub-paragraph (2) of Insuring Agreement III--Definition of Insured,'

'(ii) the insurance under this policy shall not apply to any loss with respect to which the insured has other valid and collectible insurance unless the total amount of the loss exceeds the sum of the limits of liability of all other policies affording such other insurance and the company shall then be liable, subject to clause (i) foregoing only for the excess."

On July 11, 1966, Hartford filed a demurrer to the effect that under the provisions of the insurance policy just quoted, the policy issued by Hartford did not constitute 'other valid and collectible insurance' within the meaning of the language of the policy issued by United, and that, therefore, United's original bill did not state a good cause of action.A second basis for demurrer was alleged as to the subrogation claim of United States Fire Insurance Company.This was that any suit upon such claim could not at that time be instituted for the reason that it would constitute a splitting of the cause of action of Bart White, Sr.On August 31, 1966, a decree was entered sustaining Hartford's demurrer.Appeal from this action has been timely perfected to this Court.

Appellant's assignment of error is as follows:

'The decree of the Chancery Court of Davidson County, Division II, sustaining the respondent's demurrer to the petitioner's original bill was erroneous.'

Much authority in support of their respective positions is cited by both the appellant and the appellee.However, neither party, nor this Court, upon extended independent investigation, has found any Tennessee authority directly bearing upon the primary issue here involved.From a careful reading of the policy provisions previously quoted, this Court concludes that were it not for the other insurance policy, either of the policies here involved would provide coverage for the claims against Lt. Col. Helms.However, United's policy, where a non-owned automobile is involved, attempts to make its coverage secondary; that is, liable only for any excess judgment above policy limits of other valid and collectible insurance.Hartford's policy, in defining insured, states that it is not liable at all if there is other valid and collectible automobile liability insurance, either primary or excess, with limits of liability at least equal to the minimum limits of the financial responsibility laws of the State involved.

A recent survey of this problem is contained in 7 Am.Jur.2d 544(Automobile Insurance, Sec. 202).This text authority treats the problem of 'other insurance' as breaking down into five situations, as follows:

'Many cases have arisen involving conflicts between insurance policies both of which purport to restrict or escape liability for a particular risk in the event that there is other insurance.Such conflicts have arisen, under automobile liability policies covering the same risk, in the following situations: (1) where one of the policies contains an 'excess insurance' clause and the other contains a 'pro rata' clause; (2) where one of the policies contains an 'excess insurance' clause and the other a 'no liability' clause; (3) where both of the policies contain an 'excess insurance' clause; (4) where one of the policies contains a 'pro rata' clause and the other contains a 'no liability' clause; and (5) where a 'no liability' clause expressly designates the types of insurance with which it might conflict.'

The appellant in this case contends that the situation involved in the case presently before this Court is the situation presented by (2) in the above quote.The appellee contends that the situation here presented is that referred to in (5) of the above quote.Situation (2) is summarized as follows, in the authority just cited:

'In the second situation mentioned above--where one of the policies contains an 'excess insurance' clause and the other contains a 'no liability' clause--the conflict has been resolved in the greatest number of cases by imposing liability...