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CONTINENTAL CASUALTY CO. v. AM. FIDELITY & CAS.

March 19, 1959

CONTINENTAL CASUALTY COMPANY, A CORPORATION, PLAINTIFF,
v.
AMERICAN FIDELITY AND CASUALTY COMPANY, A CORPORATION, DEFENDANT.



The opinion of the court was delivered by: Mercer, Chief Judge.

This cause arose on a complaint by plaintiff, Continental, against defendant, American, for judgment in the amount of $35,000, the demand representing amounts paid by the plaintiff to satisfy three judgments entered in the Circuit Court of Fulton County, Illinois, and costs and attorney fees incurred by plaintiff in defending the action in the latter court. The facts of the case are set forth fully in an opinion by the court filed February 7, 1958, 159 F. Supp. 311, and will herein be briefly summarized only.

Defendant issued its policy of liability insurance to T.A. Kirchner, said policy covering a certain 1949 International Tractor and 1949 Fruehauf Semi-trailer owned by Kirchner. Plaintiff is liability insurer of Southwest Freight Lines, Inc., hereinafter referred to as Southwest, and as such its policy of insurance was, at all pertinent times, in full force and effect.

On April 8, 1952, said tractor-trailer was involved in a collision in Fulton County, Illinois, with an automobile driven by one Frank L. Moon. Said tractor-trailer was owned by Kirchner and, on said date, was being operated and driven by one Carl Page, an employee of Kirchner, in transporting merchandise for Southwest pursuant to a single-trip lease by Southwest of said vehicle. Moon and two passengers who had been riding in his automobile, Lawson Shryack and Leslie Cameron, filed suit in the Circuit Court of Fulton County, Illinois, against Kirchner, Page and Southwest, for damages for personal injuries sustained as a result of said collision. Defendant was requested to defend said suit and refused. Plaintiff defended and after trial judgments were entered in favor of Moon, Shryack and Cameron in the aggregate amount of $21,050. The judgments were paid and satisfied by the plaintiff.

Thereafter plaintiff commenced this action against defendant for the amount paid by it in satisfaction of the Fulton County judgments, and the costs and attorney fees incurred in defending the suit in Fulton County. Thereafter plaintiff and defendant filed cross-motions for summary judgment. On February 7, 1958, 159 F. Supp. 311, the court entered an opinion and judgment order allowing plaintiff's motion for summary judgment and denying defendant's cross-motion.

Upon the basis of the facts as summarized above, the court concluded that the provisions of the single-trip lease providing that Southwest should take control of the vehicle and that Southwest should carry liability insurance covering the trip were not sufficient to excuse Kirchner from liability because of the circumstances existing at the time of the accident involved in the Fulton County case; that Kirchner was an independent contractor and had complete control of the vehicle at the time of collision and therefore, was primarily liable; that Southwest was liable upon the basis of its ownership of the Interstate Commerce Commission Permit under which the trip was being made and its consonant responsibility to the public generally; and that the liability established by the Fulton County judgments was the liability of both plaintiff and defendant and was an equal one. The court concluded, also, that "The insurance protection involved here with both companies was primary coverage and in the opinion of the Court a question of excess coverage need not be considered." Accordingly, judgment in the amount of $10,525 with interest thereon from March 17, 1955 to date of judgment.

Thereafter on February 14, 1958 defendant filed its motion to alter and amend the judgment in its favor, which motion is now before the court. That motion is predicated upon two contentions. One of these contentions, viz., that the court misconstrued the law of agency in finding primary liability against Kirchner is adequately considered in the February 7 opinion. The court sees no reason to disturb its prior findings and conclusions in this respect.

Alternatively defendant contends that the court in its prior opinion overlooked the "other insurance", provisions of the respective policies of insurance. Thus it contends that the court's finding of concurrent coverage on the application thereto of the other-insurance provisions of the two policies, requires that the Fulton County judgments be apportioned between the plaintiff and defendant in the proportion which the maximum coverage of each of the respective policies bears to the total amount of available and enforceable coverage under the two policies.

I agree that the court did overlook the "other insurance" provisions of the two policies and that, if the finding of concurrent primary coverage be correct, defendant's contention that apportionment of liability is necessary is correct. Zurich General Accident & Liability Insurance Co. v. Clamor, 7 Cir., 124 F.2d 717. Upon consideration of those provisions of the two policies, however, it appears that the overlooking of such provision led to the erroneous conclusion that this is a case of concurrent primary liability and that no question of excess coverage is presented.

Condition 13 of plaintiff's policy and Condition 12 of defendant's policy, to which the court's attention is directed by this motion, provide, as follows, respectively:

    "13. Other Insurance. 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 collectible
  insurance against such loss; provided, however,
  the insurance under this policy with respect to
  loss arising out of the use of any non-owned
  automobile shall be excess insurance over any
  other valid and collectible insurance available
  to the insured, either as an insured under a
  policy applicable with respect to such automobile
  or otherwise."
    "12. Other Insurance. Coverages A and B If the
  insured has any other insurance against a loss
  covered by this policy the company shall not be
  liable under the 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
  temporary substitute automobiles under Insuring
  Agreement IV or other automobiles under Insuring
  Agreement V shall be excess insurance over any
  other valid and collectible insurance available
  to the insured, either as an insured under a
  policy applicable with respect to said
  automobiles or otherwise."

In addition to the above Condition 13, plaintiff's policy of insurance contains an "other insurance" endorsement in the following language:

    "It is agreed that such insurance as is
  afforded by the policy for Bodily Injury
  Liability, for Property Damage Liability and for
  Medical Payments with respect to a loss arising
  out of the use of a hired automobile shall not be
  considered contributory, but shall be excess
  insurance over any other valid and collectible
  insurance available to the insured, either as an
  insured under the policy applicable with respect
  to such automobile or otherwise."

A "hired automobile" is defined in plaintiff's policy as "an automobile used under contract in behalf of, or loaned to, the named insured" provided such automobile is not ...


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