Maryland Casualty Co. v. Indemnity Ins. Co.

Maryland Casualty Company and Bankers Indemnity Insurance Company are engaged in writing casualty insurance. The C.C.C. Motor Freight Company and Superior Transfer Company are engaged in operating trucks in the motor trucking business. The C.C.C. Motor Freight Company carried liability insurance in the Maryland Casualty Company specifically insuring all of its trucks, and containing an endorsement insuring hired trucks. Superior Transfer Company held a liability policy in Bankers Indemnity Insurance Company specifically covering the equipment which it owned. On account of increased business the freight company hired a truck from the transfer company and while the truck was being operated by an employee of the freight company it was involved in a collision, as a result of which one Walker was injured and later died from the injuries received in such accident. Walker's administrator brought an action against the freight company for wrongful death because the truck was being operated in its business at the time of the accident, and he obtained a judgment for $1,800. The action was defended by Maryland Casualty Company under a hired car policy issued by it to the freight company. After the judgment was obtained Maryland refused to pay, claiming that a policy issued by the Bankers also covered the loss. The administrator then proceeded by a supplemental petition against Maryland and Bankers under Section 9510-4, General Code. The case was then submitted to the Court of Common Pleas on an agreed statement of facts.

The Bankers was a $1,000 deductible policy. It was contended by Maryland that under the terms of its policy it was not liable because the hired car endorsement provided that in the event there was any insurance on the hired equipment the hired car coverage should be excess insurance only. It further contended that a provision in the Bankers policy, making the Bankers insurance available to anyone operating the trucks covered with the permission of the Bankers, assured that Bankers was liable for the judgment in excess of $1,000. The Common Pleas Court held the Maryland Company liable for the full amount of the judgment. The Maryland Company now seeks to reverse this judgment on the ground that the court erred in its interpretation of the respective policies and the obligations imposed.

The Maryland policy is in the form known as a hired car policy. It indemnifies the freight company from any liability incurred as a result of the operation of automobiles hired by the freight company. The deceased was injured as a result of the operation of the truck hired by the freight company from the transfer company. One of the purposes of the Maryland policy was to furnish protection to the freight company against loss by reason of any accident arising from its use of hired trucks. This policy insures generally against accidents resulting from the use of hired cars. The accident in which the deceased was injured occurred as a result of the operation by the freight company of a truck owned by the transfer company and rented to the freight company for use in its own business, and at that time the truck was being operated by an employee of the freight company in the course of his employment. Under this state of facts it would seem that the accident involved in this litigation was covered by the Maryland policy, unless some other provision of the policy would exclude it.

The Bankers policy was issued to the transfer company, which was the owner of the truck, but that company was not operating the truck at the time of the accident. The transfer company was not sued in the personal injury action, as the truck at the time of the accident was being operated by the freight company in the course of its business. As the Bankers policy is what is known as a $1,000 deductible policy no insurance is covered by the Bankers policy for the first $1,000 of any loss sustained by its insured. By its terms the assured agrees to bear any loss up to $1,000 and the insurance company agrees to bear any loss over $1,000 within the terms of the policy. Under these terms the Bankers company would not in any event be liable for anything unless it would be liable for the excess over $1,000. The Maryland Company asserts that the freight company is also insured under the Bankers policy by the so-called omnibus clause of the Bankers policy, by the terms of which insurance is extended to any other person than the named assured while riding in or legally operating the truck with the consent of the owner. It is asserted that the freight company can not claim the benefit of this omnibus provision of the Bankers policy by reason of the following paragraph in the policy:

"If the named assured carries any other insurance covering concurrently a loss covered by this policy the company shall be liable only for the portion of such loss which the sum hereby insured bears to the whole amount of valid and collectible insurance, but if any person, firm or corporation other than the named assured has valid and collectible insurance against any claim or loss, then such person, firm or corporation shall not be covered under this policy."

As the freight company is a corporation other than the named assured, and has valid and collectible insurance in the Maryland Company, it is excluded by this language from any benefit under this provision of the Bankers policy. Under this provision of the policy it would seem that it was not intended to protect the insured borrower or to relieve the borrower's insurer from its liability.

Maryland asserts that it is not liable by reason of the last paragraph of its hired car endorsement, which is as follows:

"It is also understood and agreed that the condition of the policy reading as follows: `If the named assured carry other insurance covering concurrently a claim covered by this policy he shall not recover from the company a larger proportion of any such claim than the sum hereby insured bears to the whole amount of valid and collectible concurrent insurance', shall not include as other or concurrent insurance within the meaning of said condition any insurance covering the named assured by virtue of any policy taken out by the owner and/or operator of any hired automobile and/or trailer covered by this endorsement, but the coverage of the named assured by this endorsement shall be an excess coverage as to such insurance, and if the named assured is covered by valid and collectible insurance taken out by the owner and/or operator against a claim otherwise covered by this endorsement, no interest under this endorsement shall be applicable to such claim."

Before Maryland can take advantage of this provision it must show that its assured is covered for this loss by the Bankers policy. The Bankers policy does not cover any one for the first $1,000 loss, and it also excludes from its omnibus protection any person other than its own named assured who carries insurance against loss in his own name. The Bankers policy applies only to situations and conditions which fall within its terms. By reason of the omnibus protection it excludes persons, firms or corporations who carry insurance in their own name.

The legal questions presented have not often been before the courts. Facts raising legal questions similar to the principles involved in this case were before the United States Circuit Court of Appeals in the case of Penn v. National Union Indemnity Co.,68 F.2d 567, and that court announced the conclusion herein reached.

Counsel for the Bankers Company have cited the case ofCommercial Casualty Ins. Co. v. Hartford Accident IndemnityCo., 190 Minn. 528, 252 N.W. 434, and assert that the case under review falls within the case cited. We think, however, that there is a distinction. In the Minnesota case the truck was being operated by an employee of the owner, while in this case the truck was being operated by an employee of the freight company. In the Minnesota case the question of primary and secondary liability is discussed.

Here we have a situation where each policy contains a provision in substantially the same language, which seeks to exclude its own company from liability under the established facts in the case. The collision having occurred while the freight company was operating in the course of its business a truck borrowed by one of its employees, the freight company is primarily liable, while the transfer company is not primarily liable. The freight company is covered by the borrowed car provision of the Maryland policy. Under these circumstances there is more reason to hold Maryland liable than Bankers.

For the above reasons the Maryland Casualty Company should be held liable for the amount of the loss, and the judgment of the Court of Common Pleas should be affirmed.

Judgment affirmed.

MIDDLETON, P.J., and McCURDY, J., concur.

MIDDLETON, P.J., BLOSSER and McCURDY, JJ., of the Fourth Appellate District, sitting by designation in the Eighth Appellate District.