Vance Trucking Company v. Canal Insurance Company

• Decision Date: 09 March 1966
• Docket Number: Civ. A. No. 4364.
• Parties: VANCE TRUCKING COMPANY, Inc., and Allstate Insurance Company, Plaintiffs, v. CANAL INSURANCE COMPANY, Forrester Trucking Company, Inc., Herbert Francis Carson, Scott Carson, Susan Carson, David Carson, Christopher Carson, and Robert H. Carson, Administrator of the Estate of Annie Barbara Carson, Deceased, Defendants.
• Court: U.S. District Court — District of South Carolina

251 F. Supp. 93

VANCE TRUCKING COMPANY, Inc., and Allstate Insurance Company, Plaintiffs, v. CANAL INSURANCE COMPANY, Forrester Trucking Company, Inc., Herbert Francis Carson, Scott Carson, Susan Carson, David Carson, Christopher Carson, and Robert H. Carson, Administrator of the Estate of Annie Barbara Carson, Deceased, Defendants.

Civ. A. No. 4364.

United States District Court D. South Carolina, Greenville Division.

March 9, 1966.

W. Francis Marion and O. G. Calhoun, Jr., of Haynsworth, Perry, Bryant, Marion & Johnstone, Greenville, S. C., for plaintiffs.

Wesley M. Walker and O. Doyle Martin, of Leatherwood, Walker, Todd & Mann, Greenville, S. C., for defendants Canal Ins. Co. and Forrester Trucking Co., Inc.

David L. Freeman, and C. T. Wyche, of Wyche, Burgess, Freeman & Parham, Greenville, S. C., for defendants Carson.

HEMPHILL, District Judge.

Plaintiff and defendant insurance companies, by cross motions and oppositions to same, seek this forum's decision as to their individual or collective obligations to their named insured and others. The determination is whether coverage is properly classified as primary and secondary—excess, or concurrent and pro rata. Allstate insists that Canal has primary responsibility protecting both Vance, Allstate's insured, and Forrester, Canal's named insured. Canal urges pro rata responsibility. Each relies on policy inclusions and exclusions of both as dissected together and separately.

This Court's review was had on December 8 and 9, 1965 in a declaratory action arising out of an automobile-truck collision in October, 1962 in Sumter County, South Carolina. Crucial to decision was determination of the agency of the driver of the truck, each of two trucking companies, Vance Trucking Lines and Forrester Trucking Company, contending that the driver was the agent and servant of the other at and before the time and place of the collision. This Court's order held that Vance and Forrester both had supervision of the driver at the time of the accident, that both were therefore liable. This order decided that both Allstate and Canal, insurers for Vance and Forrester respectively, would have to defend tort actions arising out of the accident. The question of the pecuniary responsibility of Allstate and/or Canal was not an issue then.

Subsequent to initial determinations, both Allstate and Canal filed motions¹ to have the order amended to declare the rights, duties, obligations and legal relations of the parties under the respective terms of their policies, especially as relates to pecuniary responsibility. Allstate has asked the court to find that its policy, issued to Vance, does not extend coverage to Burgess, the driver, or Forrester, but that the policy of Canal provides coverage to Vance, Forrester and the driver. Canal asks that the court determine the proportionate pecuniary responsibility of the insurers in relation to their respective coverages and the factual determinations heretofore made by the court. The matter is before the court under Rule 59(e), Federal Rules of Civil Procedure, but, aside from that, the parties have stipulated that it is properly before the court.

Basically, this is a controversy between two insurance companies over their related, or unrelated, obligations to their named insureds and others. In other words, is the coverage of one company primary and the other secondary and excess, or are the coverages concurrent and pro rata? Allstate submits that Canal's coverage is primary and protects Vance, Allstate's named insured, Forrester, Canal's named insured, and Burgess, the driver. Canal urges pro rata liability in asking the court to determine the "proportionate" responsibility of the parties. Both companies rely upon varying policy inclusions and exclusions in an effort to obtain the desired result.

Policy construction is imperative here since parties may contract to extend or limit insurance liability risks as they see fit. Thus, the issue here—the coverage of liability insurance—must be determined from the contractual intent and objectives of the parties as expressed in their policies and applicable endorsements. Fidelity & Cas. Co. of New York v. Reece, 223 F.2d 114 (10th Cir. 1955); 7 Appleman, Insurance Law & Practice, section 7481; 45 C.J.S. Insurance §§ 827 and 829. The extent or limit of risks, if unambiguous, must be taken in their ordinary and popular sense, and an insurer may not be compelled to assume liability which cannot be clearly said to be within a fair and reasonable interpretation of the contract. Fidelity & Cas. Co. of New York v. Reece, 223 F.2d 114 (10th Cir. 1955); Farm Bureau Mut. Auto. Ins. Co. v. Daniel, 104 F.2d 477 (4th Cir. 1939). The contentions of Allstate and Canal regarding their policies must be examined in this light.

Allstate would first focus all attention upon Canal's obligations but, while there may be no doubt about these obligations, the court cannot construe Canal's policy and delineate the obligations therein, without being simultaneously aware of Allstate's policy and the obligations there. It is not practical to consider either policy alone for it is apparent that both policies were written with the express thought that other insurance might be involved.

In attempting to provide for a comprehensive policy, it is a common practice to include extended coverage clauses in automobile liability insurance contracts. Because of this, duplications of coverage would often be found were it not for the further practice of setting forth exclusions to coverage. Such exclusions or limitations may take many forms and may be found in the body of the policy or in endorsements. Regardless of where they are posited, however, these exclusions and limitations have led to a substantial body of jurisprudence. See, e. g., Annot., 76 A.L.R.2d 502; 7 Am.Jur.2d, Automobile Insurance, section 202 (1963); 8 Appleman, Insurance Law & Practice, sections 4911, et seq.

Here, both Allstate and Canal have rather comprehensive policies and both seek to limit particular coverages by exclusions. The extent to which reliance is placed upon an exclusion is shown by the fact that both Allstate and Canal assert a particular exclusion as a basis for denying coverage to one person or company or another Allstate relies completely on its exclusionary endorsement 14B-1 to deny coverage to Forrester and the driver. The endorsement, in part, provides:

With respect to the insurance for Bodily Injury Liability and for Property Damage Liability the unqualified word `insured' includes the named insured and also includes any person while using an owned automobile or a hired automobile and any person or organization legally responsible for the use thereof, provided the actual use of the automobile is by the named insured or with his permission. The insurance with respect to any person or organization other than the named insured does not apply:

(a) except with respect to an employee of the named insured, to any person or organization, or to any agent or employee thereof, engaged in the business of transporting property by automobile for the named insured or for others (1) unless the accident occurs while such automobile is being used exclusively in the business of the named insured and over a route the named insured is authorized to serve by federal or public authority.

* * * * * *

Provided, however, a driver or other person furnished to the named insured with an automobile hired by the named insured shall not be deemed an employee of the named insured;

* * * * * *

(d) with respect to any hired automobile, to the owner * * * of such automobile, or to any agent or employee of such owner * * *, if the accident occurs (1) while such automobile is not being used exclusively in the business of the named insured * * *.

Other Insurance—Coverage A and B: If the insured has other insurance against a loss covered by 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 collectable insurance against such loss; provided, however, the insurance with respect to temporary substitute automobiles under Insuring Agreement IV or other automobiles under Insuring Agreement V shall be excess insurance over any other valid and collectable insurance.

Canal places no less reliance on its E-45 endorsement to deny coverage to Vance. Its endorsement provides:

In consideration of the premium charged for the policy to which this endorsement is attached, it is understood and agreed that no coverage is extended to any person, firm or organization using the described automobile pursuant to any lease, contract of hire, bailment, rental agreement, or any similar contract or agreement either written or oral, expressed or implied, the terms and provisions of the Insuring Agreement III, entitled `Definition of Insured' notwithstanding.

In the event the automobile described in this policy is being used or maintained pursuant to any lease, contract of hire, bailment, rental agreement or any similar contract or agreement, either written or oral, expressed or implied, the insurance afforded the named insured shall be excess insurance over any other insurance.

Allstate urges that because of the 14B-1 endorsement its policy offers no protection to Forrester or the driver since the court has already found that the truck was not exclusively about the business of Vance. Unquestionably, the exclusion serves its purpose here. Forrester and Burgess are not covered under Allstate's policy.

Conversely, Canal urges that because of the E-45 endorsement its policy affords no protection to Vance or the driver. Again, unquestionably, this exclusion serves its purpose. Vance and Burgess are not covered under Canal's policy.

The controversy thus resolves itself to this: Allstate's policy protects Vance and Canal's...