Wilhide v. Keystone Insurance Company

• Decision Date: 18 July 1961
• Docket Number: Civ. A. No. 7147.
• Citation: 195 F. Supp. 659
• Parties: George L. WILHIDE, Administrator of the Estate of Ervin L. Harbold, Deceased, Plaintiff v. KEYSTONE INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Middle District of Pennsylvania

195 F. Supp. 659

George L. WILHIDE, Administrator of the Estate of Ervin L. Harbold, Deceased, Plaintiff v. KEYSTONE INSURANCE COMPANY, Defendant.

Civ. A. No. 7147.

United States District Court M. D. Pennsylvania.

July 10, 1961.

As Amended July 18, 1961.

Hurwitz, Klein, Meyers & Benjamin, Harrisburg, Pa., for plaintiff.

Metzger, Wickersham & Knauss, Harrisburg, Pa., for defendant.

FOLLMER, District Judge.

This matter is presently before the Court on motion of defendant to dismiss for the following reasons:

1. Lack of jurisdiction over the subject matter.

2. Lack of jurisdiction over the person of the plaintiff.

3. Failure to state a claim upon which relief can be granted.

4. Failure to join Warehousing and Equipment Corporation, assured, as an indispensible party.

This being a motion to dismiss based on the insufficiency of the complaint to set forth a cause of action, the facts averred in the complaint must be taken as admitted. 2 Moore's Fed. Practice, 2d Ed., ¶ 12.08. Therefore, for the purpose of this motion, the facts are as follows:

The plaintiff, George L. Wilhide, a citizen of the State of Maryland, is the Administrator d.b.n. of the Estate of Ervin L. Harbold, deceased, by grant of Letters of Administration by the Register of Wills of Adams County, Pennsylvania.

On December 18, 1958, plaintiff's decedent was killed when the automobile he was operating in Adams County, Pennsylvania, was struck by a Fruehauf tractor-trailer owned by and operated on behalf of Warehousing and Equipment Corporation, a Pennsylvania corporation. The serial number of the trailer involved was P117409. For said death plaintiff instituted suit against Warehousing in this Court and after trial, which Warehousing failed and refused to defend, judgment was entered in the total sum of $62,500. No appeal was taken from this judgment.

Plaintiff made demand on Keystone Insurance Company, defendant herein, for payment of the said judgment which he claimed Keystone was legally bound to pay by reason of a liability insurance policy it had issued to Warehousing, insuring against any liability for damages resulting from the use and operation of the said trailer. Defendant has at all times refused to pay on the basis that the trailer was not one of the vehicles listed in and covered by the said policy.

It appears that on or about June 1, 1958, Keystone through its duly authorized agent, one R. T. Knobler, issued its automobile liability policy to Warehousing, wherein a schedule of certain motor vehicles were listed to be covered by said insurance and that it was the intention and agreement of Warehousing and Keystone to provide liability insurance for all vehicles listed in said policy, as well as any additional vehicles which Keystone was thereafter informed were to be included.

It further appears that on August 15, 1958, Warehousing orally notified Knobler's office of its desire to have the Fruehauf trailer with Serial Number P117409 (the one involved in the accident causing Harbold's death) added as an additional vehicle for coverage under the said policy. Warehousing was advised that coverage was being provided and that written endorsement thereof would follow. However, when the written endorsement was received on or about September 10, 1958, Warehousing discovered that the said Fruehauf trailer was not included, but that a Strick trailer with Serial Number 2730 was included in said endorsement despite the fact that the latter trailer was already included in the policy as originally issued, and of which error Warehousing notified Keystone's agent on October 4, 1958. No additional endorsement had been received by Warehousing prior to December 18, 1958, the date of the accident.

The policy contains the following provision:

"Any person * * * who has secured such judgment * * * shall thereafter be entitled to recover under this policy to the extent of the insurance afforded by this policy. * * *"

The questions involved may be briefly stated as follows:

1. Does the Court have jurisdiction of the subject matter and the person of the defendant?

2. Does the action as pleaded state a claim upon which relief can be granted?

3. Does the complaint aver facts warranting reformation of the insurance policy and a recovery thereon in one action?

4. May the action for reformation and to recover damages be maintained by plaintiff without the joinder of Warehousing and Equipment Corporation as a party?

The equities in this case are clear. The complaint avers an agreement on the part of defendant's agent to provide coverage for a particular vehicle which was by mistake of the insurer or its agent omitted from the written endorsement subsequently mailed in accordance with the previous agreement. Under such circumstances, the insurance company is estopped to deny responsibility for its original undertaking of liability:—

"* * * the mistake of the agent, * * * was, in law, that of the company, and it does not lie in its mouth to claim that it has escaped liability by reason of the error of its agent. No person or company should profit by his or its own mistake, and if the location of personal property is misdescribed by insurer's agent when, as in this case, the proper information has been given to him, the insured, without asking for reformation of the policy, may, in an action recover for his loss, if he can convince the jury that such is the case * * *." Litto v. Public Fire Ins. Co., 109 Pa.Super.Ct. 195, 200, 167 A. 603, 604.

In St. Paul Mercury Indemnity Co. of St. Paul v. Long, 3 Cir., 1936, 85 F.2d 848, 850, the Court said: "it is not necessary to reform a policy to correct mere matters of description."

In 1 C.J.S. Actions § 94, it is stated: "A plaintiff may in the same pleading properly join causes of action for the reformation of a written instrument and its enforcement as reformed."

In a suit to reform an insurance policy upon certain furniture and fixtures of the plaintiff so as to disclose the existence of a chattel mortgage in favor of a third person and to thereby avoid a forfeiture of the right to recover for loss of the property by fire, the Court said: "I do not conceive that it is necessary for plaintiff to prosecute two separate causes of action, but that the form of pleading adopted is proper and avoids a multiplicity of suits." Rapides Club v. American Union Ins. Co. of New York, D.C.W.D. La.1929, 33 F.2d 552, 553.

The last two citations are included as basic in the consideration of the problem presented here even though they involve as parties to the action only those privy to the original transaction, namely, the insured and the insurer.

Is the basic theory changed by the intervention of a third party?

7 Appleman Ins. L. & P. § 4259, says: "It is generally held that an injured third person has a right to seek reformation of a policy, notwithstanding the insured's failure to demand reformation."

In line with the opinion of the Third Circuit in St. Paul Mercury Indemnity Co. of St. Paul, supra, Appleman says (7 Appleman Ins. L. & P. § 4260):

"Reformation of a policy covering a loss has been held not necessary for recovery. And the failure of a state court in a suit between the insured and the insurer to correct an erroneous description of a truck, was no ground for reversal of a judgment for the injured person against the insurer in the federal court, since reformation of the policy was unnecessary to correct mere matters of description. Where the facts necessary to the reformation of an automobile liability policy were pleaded and proved, a judgment for the recovery of money thereunder without a formal decree of reformation was proper."

As to the general proposition of the reformation of a contract, Vol. 5 Williston on Contracts, Revised Edition, § 1547, page 4338, says: "Equity...