United States District Court, Eastern District of Pennsylvania
November 3, 1952
AMERICAN AUTO. INS. CO.
INDEMNITY INS. CO. OF NORTH AMERICA.
The opinion of the court was delivered by: Kirkpatrick, Chief Judge.
This is an action for a declaratory judgment. The plaintiff,
American Automobile Insurance Company, which had issued a
liability insurance policy to Sharples Corporation paid a loss
arising out of an accident in which Cope, an employee of
Sharples, while driving an automobile in the course of his
employment caused personal injuries and property damage. Cope
had a liability insurance policy with the defendant, Indemnity
Insurance Company. The plaintiff is asking the Court, in this
action, to declare that the defendant is liable to pay to the
plaintiff the money which the plaintiff paid in partial
settlement of the damage claims, as well as such other damages
as may be recovered against either Sharples or Cope as a result
of the accident.
Since the plaintiff has no contractual relations with the
defendant, whatever rights it may have can only arise by way of
subrogation under a clause in its policy to Sharples, by which
it is subrogated, "all the insured's rights to recovery * * *
against any person or organization." The first question,
therefore, is, What right of Sharples' is the plaintiff
The personal injury and damage claims arising out of the
accident were asserted by the injured parties against both
Sharples and Cope. However, the policy which the plaintiff
issued to Sharples did not insure Cope. It provided only that
the word "insured" included the named insured and also "any
person while using an owned automobile or a hired automobile."
Unquestionably, "hired automobile" means, in this connection,
an automobile hired by the named insured, Sharples. The fact
is, as alleged in the complaint, that the automobile involved
in the accident was hired by Cope in his own name. Without
qualification (and there is none) this must be taken to mean
that he hired it on his own responsibility and not for or in
behalf of his employer. Consequently, had the claim been made
against Cope alone, the plaintiff would have been under no
obligation to pay it and it follows that its settlement of the
claim was in discharge of its policy obligation to Sharples to
pay claims which Sharples was legally obligated to pay.
Since it had not insured Cope, the only right which the
plaintiff can assert against Cope or against the defendant as
Cope's insurer under its subrogation clause is the common law
liability to Sharples of Cope, its agent, whose wrongful act
subjected his principal to the liability for the loss which
resulted therefrom. See Restatement, Agency, Sec. 401(c). The
undisputed allegation of the complaint is "As employer of the
said J. Morris Cope, The Sharples Corporation is, under
Louisiana law, responsible for the personal injuries and
property damage caused by J. Morris Cope in the operation of
the automobile rented by him from U-Drive-It Car Co., Inc." and
it follows that Cope is personally liable to the plaintiff for
the amounts which it has paid or may be compelled to pay.
This action, however, is not against Cope but against Cope's
insurer. The next question therefore is, Does the defendant's
policy to Cope cover such liability?
The insuring clause of the defendant's policy to Cope is
broad enough to cover it. It is "To pay on behalf of the
insured all sums which the insured shall become legally
obligated to pay as damages because of bodily injury * * *
caused by accident and arising out of the * * * use of the
automobile." "The automobile", by Section V of the Insuring
Agreements of the policy, includes "any other automobile" not
hired or owned by some other person or organization legally
responsible for its use. The automobile involved in the
accident was not owned or hired by Sharples, which was the
organization responsible for its use. Thus Cope is covered as
against Sharples' claim, which the plaintiff is here asserting,
unless excluded by the "Other Insurance" clause of his policy,
Paragraph 15 of the conditions. That clause provides that "If
the insured has other insurance against a loss covered by this
policy the company shall not be liable under this policy" for
more than a proportional share of liability, but with the added
proviso that "with respect to * * * other automobiles under
Insuring Agreement V (that is,
automobiles not owned by the insured) shall be excess insurance
over any other valid and collectible insurance available to the
None of this is applicable to Sharples' claim against Cope
because, as has been seen, as to that, the policy which the
plaintiff issued to Sharples does not cover Cope and, so far as
appears, Cope has no other insurance which would bring the
"Other Insurance" clause of the defendant's policy into play.
It may be true that Sharples comes within the definition of the
insured in Cope's policy but that fact has no bearing upon the
question presented in this action.
The result is that the insurance company which insured the
driver who did the damage pays for it — a result which
certainly involves no unfairness or injustice.
This motion for summary judgment comes from the defendant.
The plaintiff has not moved for summary judgment. In the
defendant's motion, however, it is asserted that there is no
genuine issue as to any material fact and I agree that there is
none. In view of the Court's finding that on the undisputed
record the defendant is liable to the plaintiff, the sensible
and practical thing to do is to enter a summary judgment in
favor of the plaintiff. This is in accord with the practice
approved in Northland Greyhound Lines, Inc., v. Amalgamated
Ass'n of Street, Electric Railway and Motor Coach Employees of
America, Division 1150, D.C., 66 F. Supp. 431, 433, where the
Court said, "where the case is properly disposable by summary
judgment the court should enter whatever judgment is proper in
the circumstances. This should be particularly true where the
relief asked is a declaration of the rights of the parties to
a contract under the Declaratory Judgment statute. While it may
be the better practice to file a cross-motion I do not think
that Rule 56(c) proscribes the court's power to enter judgment
because of the mechanical failure of one of the parties to file
a motion. This view finds support in 3 Moore's Federal
Practice, Sec. 56.02 page 3183".
Judgment may be entered for the plaintiff.
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