The opinion of the court was delivered by: Mercer, Chief Judge.
The United States filed a third-party complaint against
State Farm Mutual Automobile Insurance Company. The
third-party complaint alleged that State Farm had issued a
policy of liability insurance to Glatthaar upon the automobile
involved in the collision, that the United States was "an
insured" under the provisions of that policy and that State
Farm had refused to defend the Adams suit upon the request of
the United States. The complaint prays a judgment that the
United States be indemnified by State Farm for any judgment
which might be rendered against it and for the reasonable
value of attorney's fees expended in the defense of the suit.
State Farm has moved to dismiss the third-party complaint in
reliance upon the provision of the 1961 amendment to the Tort
Claims Act which provides that the remedy of the Act
permitting a suit against the United States is an exclusive
remedy. 28 U.S.C. § 2679(b)-(e). The effect of the 1961
amendment is to insulate an employee from personal liability
for injuries to others arising out of his employment by the
United States. In such circumstances, a suit for damages lies
against the United States, not against the employee. Uptagrafft
v. United States, 4 Cir., 315 F.2d 200; Santoro v. United
States, N.D.Ill., 229 F. Supp. 707. State Farm's position in a
nutshell is that the statutory insulation of Glatthaar against
personal liability for the occurrence also insulates State Farm
as Glatthaar's insurer. It contends, as a matter of law, that
it has no obligation to defend the pending suit and is not
liable under its policy of insurance for any judgment which
might be rendered against the United States.
In every reported case in which this question has arisen
under the omnibus clause of an insurance policy identical or
similar to the omnibus clause here involved, the courts have
held that the United States is "an insured" under the
employee's policy of insurance. McCrary v. United States,
E.D.Tenn., 235 F. Supp. 33; Patterson v. United States,
E.D.Tenn., 233 F. Supp. 447; Barker v. United States, N.D.Ga.,
233 F. Supp. 455; Gahagan v. State Farm Mut. Auto. Ins. Co.,
W.D.La., 233 F. Supp. 171; Nistendirk v. McGee, W.D.Mo.,
225 F. Supp. 883; Vaughn v. United States, W.D.Tenn., 225 F. Supp. 890.
The only dissent from that result is expressed in
McCrary, wherein Judge Neese expounds his disagreement with
the principle of coverage for the United States, though he
held that the United States was an insured upon the authority
of Vaughn and Patterson. Compare, Gipson v. Shelley,
E.D.Tenn., 219 F. Supp. 915, 916.
The omnibus clause of the policy of insurance issued by
State Farm to Glatthaar defines the word "insured" in the
following language: "* * * the unqualified word `insured'
includes (1) the named insured and also includes * * * (4)
under coverages (A) and (B) any person or organization legally
responsible for the use thereof [the automobile] by an insured
as defined" above.
Under coverages A and B of this policy State Farm agreed by
its policy "(1) to pay all damages which the insured shall
become legally obligated to pay because of (A) Bodily injury
sustained by other persons, and (B) Injury to or destruction of
property of others, caused by accident arising out of the
ownership, maintenance or use * * * of the owned automobile",
and, inter alia, "to defend any suit" against "the insured".
State Farm is presumed to have used the word "organization"
to include all that that word is commonly understood to
include. "Organization" means, inter alia, "State or manner of
being organized; organic structure, purposive systematic
arrangement; constitution." Webster's New International
Dictionary, 2nd Ed., Unabridged. "Constitution" is defined,
inter alia, as "The fundamental organic law or principles of
government of a nation, state, society, or other organized
body of men, embodied in written documents, or implied in the
institutions and customs of the country or society; * * *"
Those definitions certainly include governments within the
class of organizations. Only by thinking of the United States
as an expanse of land within fixed boundaries, and nothing
more, could we deny it status as an organization. That
physical factor is not the nation. Within our experience
nations have been recognized as existing organizations though
they lacked dominion and control over the land area with which
their existence was commonly associated. That was true because
the people of those nations looked to the constituted
authority of government, not to land mass, for their identity
as a nation. In like manner, the United States is its people
organized in a specific way for the purpose of constituting a
system of government. It is an organization pure and simple,
despite our sometimes inclination to lose sight of that humble
birth and seek for it a more exalted state.
Moreover, the indicated definition of the word
"organization" is not new. Interpreting essentially identical
policy clauses two courts held prior to the 1961 amendment
that the United States was an insured under policies of
liability insurance issued to its employees. Irvin v. United
States, D.S.Dak., 148 F. Supp. 25; Rowley v. United States,
D.Utah, 140 F. Supp. 295. The 1961 amendment to the act did not
derogate from the authority of those decisions.
Though State Farm is chargeable with knowledge of the fact
of prior judicial interpretation of the word "organization",
it issued its policy without any change in its omnibus
definition of "an insured." It has no cause to complain that
the word is now given its common meaning and the definition
previously judicially applied.
Though there is logic in much said through the dissenting
voice of Judge Neese in McCrary relative to the potential
conflicts between the duties of the Attorney General to defend
and the policy provision which gives the insurer complete
control of the defense of claims, I do not see these conflicts
as insurmountable obstacles. Such potential conflicts
certainly cannot operate to exclude the United States from
insurance coverage under the policy.
I hold that the United States is an insured under the State
Farm policy. State Farm's motion to dismiss the third ...