Standard Surety & Casualty Co. v. Metropolitan Casualty Co. , 45 Ohio Law. Abs. 428 ( 1945 )

DISSENTING OPINION

By MORGAN, J.

The plaintiff appellee in this case is The Standard Surety Casualty Compand of New York and will be hereinafter referred to as “Standard.” The defendant appellant is The Metropolitan Casualty Insurance Company of New York and will be hereinafter referred to as “Metropolitan.”

To the petition filed by Standard in this case, Metropolitan demurred. The demurrer was overruled. Metropolitan not wishing to plead further, permitted judgment to. be taken against it and then filed this appeal.

The petition discloses that Metropolitan issued to one French an automobile liability insurance policy. While French was operating his automobile in Youngstown on April 27, 1940, one Mary Hoskins made a claim that she was injured by reason of French’s negligent operation of his automobile.

Mary Hoskins brought an action in common pleas court in Mahoning County against French and the United Insurance Company for damages, alleging that French was an employee of United Insurance Company and that at the time she was injured, French was acting in the course and within the scope of his employment. Her husband, Samuel Hoskins, also brought an action against the same parties in the same court for the loss of her services.

Both plaintiffs dismissed French as a defendant and the action proceded against The United Insurance Company alone.

The petition in the instant case alleges that the plaintiff, Standard, had issued a policy of liability insurance to the United Insurance Company, which was known as “Employers Non-ownership Liability.” This policy insured the United Insurance Company against any loss by reason of the operation of an automobile of which the United Insurance Company was not the owner, but 'for the operation of which it might be held responsible.

The petition in this case further alleges that service was duly had on the United Insurance Company in the Hoskins cases, and that the petitions in those cases were also served on Standard as the insurer of the United Insurance Company.

The petition further alleges that the liability insurance policy issued by defendant, Metropolitan, to French contains the following provisions:

“Definition of ‘Insurer:’ Except where specifically stated to the contrary, the unqualified word ‘insurer’ wherever used in Coverages H and I, and in other parts of this policy, when applicable to such coverages, includes not only the named Insurer, but also any person while using the automobile and any person or organization legally responsible for the use thereof, provided the declared and actual use of the automobile is ‘pleasure and business’ or ‘commercial’ each as defined herein, and provided further that the actual use is with the permission of the named insured.”

That the United Insurance Company when sued in the Hoskins cases, made prompt demand upon Metropolitan to furnish a defense for it in the Hoskins cases, but Metropolitan refused and declined so to do.

That the non-ownership liability policy issued by Standard to the United Insurance Company contains the following provisions:

“Other Insurance: The insurance affoi'ded hereby shall be excess insurance over any other valid and collectible insurance available to the named insured, either as an insured under a policy applicable with respect to the automobile or otherwise, against a loss covered hereunder.”

“Subrogation: In the event of any payment under the policy, the company shall be subrogated to all the insured’s rights of recovery therefor and the insured shall execute all papers required and shall do everything that may be necessary to secure such rights.”

Standard’s petition in this case concludes with the following two paragraphs:’

“This plaintiff now says, under the terms of its policy issued to the said United Insurance Company and by reason of the failure of this defendant to enter a defense in behalf of the United Insurance Company, it, the Standard Surety & Casualty Company of New York did employ attorneys to investigate and defend the United Insurance Company in the actions brought against it as referred to herein, and did defend said actions, and did pay the costs of said investigation and legal services, and there are attached hereto and marked “Exhibit 5” and “Exhibit 6” itemized accounts of said services rendered, totaling the sum of Three Hundred Fifty Three and 95/100 Dollars ($353.95).

WHEREFORE, plaintiff prays judgment against, the defendant herein in the sum of Three Hundred Fifty Three and 95/100 Dollars ($353.95) together with costs and interest from the 12th day of June, 1942.”

The petition in this case, however, does not contain any allegations that the United Insurance Company, defendant in the Hoskins case, was “legally responsible for the use” of the automobile driven by French, and that the “actual use” of French’s automobile when Mary Hoskins was injured, was “pleasure and business” or “commercial.” In other words, Standard’s petition in this case contains no allegation that The United Insurance Company was an “insured” as defined in Metropolitan’s liability insurance policy issued to French.

Evidently Standard in preparing its petition in this case deemed it sufficient to allege that the petitions in the Hoskins cases against the United Insurance Company contained the allegation that French was an employee of the United Insurance Company at the time Mary Hoskins was injured and that he was then acting within the course and scope of his employment.

The only question presented in this case is this: For the petition to be good against demurrer, was it neccessary for plaintiff Standard, in this case to allege that its named insured, United Insurance Company, was covered by the policy issued by defendant, Metropolitan, to French, by reason of the' fact that the United Insurance Company came within the definition of “insured” as found in the said policy.

The policy issued by defendant Metropolitan, to French, provided that “the company shall defend in his name and behalf, any suit against the insured alleging such injury or destruction, and seeking damages on account thereof, even if such suit is groundless, false or fraudulent.” When French originally was made a party defendant in the two Hoskins cases, clearly Metropolitan was obligated to make a defense for French, the named insured, no matter how groundless it considered the claim against him. Likewise, Standard was under an obligation by reason of its policy issued to the United Insurance Company to make a defense for the latter company, as its named insured, when it was made a party defendant in the Hoskins cases.

This principle was established in the two cases of Bloom-Rosenblum-Kline Co. v Union Indemnity Co., 121 Oh St 220; 167 N. E. 864 (1929) and, Socony-Vacuum Oil Co. v Continental Casualty Co., 144 Oh St 382 (1945).

It is my opinion that the doctrine of the said two cases should not and do not apply or govern, when some one other than the named insured is sued.

The consideration which caused the Supreme Court to hold in the Rosenblum and Socony-Vacuum Oil Company cases that the policies of insurance therein considered imposed an obligation on the insurance companies in those cases to defend the suits brought against the named' insured, do not, in my judgment apply in this case.

There is no claim that the United Insurance Company paid anything for its coverage in Metropolitan’s policy to French. It does not even appear that it knew anything about the policy previous to the accident. The United Insurance Company had protected itself from liability by placing a policy of liability insurance with Standard. Any claim that it might have against Metropolitan would be in the nature of a windfall.

The fact that there was imposed upon Metropolitan in its policy issued to French the obligation to defend the suit against the named insured, French, did not impose an obligation on Metropolitan to defend any suit brought against a person not named in the policy where the petition in the case might contain allegations which, if true, would bring the person sued within the protection of the omnibus provision of the Metropolitan policy.

In Southern Underwriters v Dunn, 96 Fed. (2d) 224, Circuit Court of Appeals, Fifth. Circuit, the very question involved in this case was decided.

In the above case, Southern Underwriters had issued to one Kimmel an automobile insurance policy. By this policy Kimmel was the named assured but it also was issued for the protection of “other assured” which according to the policy was “any.other person or organization using the automobile or legally responsible for the use thereof.”

One Dunn and Stanolind Pipe Line Company brought an action for a declaratory judgment against Southern Underwriters in which they alleged that three suits had been brought against them and Kimmel for personal injuries received in a collision with Kimmel’s truck. They prayed for a declaratory judgment that Southern Underwriters was obligated under its insurance policy issued to Kimmel to defend the said suits on behalf of Dunn and Stanolind Pipe Line Company and to pay within the policy limits any judgment rendered against Dunn and Stanolind Pipe Line Company in those suits.

It was stipulated that in each of the said three suits it was alleged by plaintiff that at the time of the collision, Kimmel was acting as the servant or agent of the defendant, Dunn and Stanolind Pipe Line Company, in driving the automobile truck. Each of the pleadings also alleged that the collision was caused by the negligence and want of care of defendant in that Kimmel at the time of the collision, acting as the servant and employee of defendants, Dunn and Stanolind Pipe Line Company, violated the rules of the road and was otherwise negligent and careless.

It was further stipulated that contrary to the allegations in said petitions, the truck involved in the accident was solely owned by Kimmel and that Kimmel was hauling casing under an independent contract with Dunn and that Dunn did not reserve or have any control or supervision over Kimmel or the truck; that Southern Underwriters had been requested to defend the said suits on behalf of Dunn and Stanolind Pipe Line Company but had refused so to do.

The District Judge held that Southern Underwriters was obligated to defend suits on behalf of Dunn and Stanolind Pipe Line Company, by reason of the allegation contained in the petition filed against them. The judgment of the District Court was reversed by the Fifth Circuit Court of Appeals which upheld the contention made by Southern Underwriters as follows:

“The defense was that, obligated by the policy as defendant below, appellee here, admittedly was to defend the ‘named’ and any ‘other insured’ from groundless suits against them, it was not obligated by the policy to defend any one but the ‘named assured’ and ‘any other person’ who not merely by allegations in a plaintiff’s pleading but in fact was ‘another assured’ under its terms. That the claim made in this suit, if sustained, would rewrite the policy, to require the insurer to defend any person whom anyone might elect to sue m connection with an accident involving the truck described in the policy, though the person sued was not the ‘named assured’ and was not, in fact, using or legally responsible for the use of the truck, if only the plaintiff in that suit should allege that the defendant in the suit was either using or legally responsible for the use of the truck.”

• It is therefore my opinion that the petition filed by Standard in this case does not state a cause of action against the defendant, Metropolitan, inasmuch as it does not contain an allegation that the United Insurance Company, was within the coverage of the Metropolitan policy by reason of the definition of “insured” which, as above stated, was contained in the policy.

It is, therefore, my opinion that the demurrer to the petition in this case should have been sustained and that the judgment of the common pleas court should be reversed.