The opinion of the court was delivered by: MILLER
In this proceeding, an insured brought suit on a policy of liability insurance, seeking to recover for money damages which he has become legally obligated to pay as a result of suits brought in the Court of Common Pleas of Fayette County by personal injury claimants and representatives of a decedent. Defendant insurance company denies coverage. It is alleged that on May 13, 1955, a bus owned by plaintiff and operated by one Anthony L. Petro in connection with the business of plaintiff, trading as Keystone Auto Company, was involved in an accident resulting in personal injuries, property damage and a death. Plaintiff further alleges that defendant undertook the defense of the personal injuries action in Fayette County and the settlement of the death action without notifying plaintiff of its position with respect to lack of coverage. Plaintiff contends that the accident was within the coverage of the policy and that defendant is now estopped from asserting any defense of non-coverage.
This action having been tried by the court without a jury, the court makes the following findings of fact and conclusions of law.
1. The plaintiff is an individual residing in Greene County, Pennsylvania, trading and doing business as Keystone Auto Company, with his principal place of business in Millsboro, Washington County, Pennsylvania. The plaintiff also operates a school bus system under the name of Keystone Transit Company.
2. The Fidelity & Casualty Company of New York, defendant, is a stock insurance company having its principal place of business in New York City, New York, and regularly conducts business in Washington County, Pennsylvania.
3. The amount in controversy exceeds the sum of $ 10,000, exclusive of costs and interest.
5. Under the terms of the policy, in 'Coverage A and B' under Insuring Agreements the defendant agreed as follows:
'To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury, sickness or disease, including death at any time resulting therefrom, sustained by any person, caused by accident and arising out of the hazards hereinafter defined.
'To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of injury to or destruction of property, including the loss of use thereof, caused by accident and arising out of the hazards hereinafter defined.'
The limits of liability for personal injury under said policy were $ 25,000 for each person and $ 50,000 for each accident. The limits of liability for property damage was $ 5,000 for each accident.
6. Under the terms of said policy, in Division 1 under 'Definition of Hazards' the activities insured are as follows:
'The ownership, maintenance or use of the premises for the purpose of an automobile dealer, repair shop, service station, storage garage or public parking place, and all operations necessary or incidental thereto; and the ownership, maintenance or use of any automobile in connection with the above defined operations, and the occasional use for other business purposes and the use for non-business purposes of (1) any automobile owned by or in charge of the named insured and used principally in the above defined operations, and (2) any automobile owned by the named insured in connection with the above defined operations for the use of the named insured, a partner therein, an executive officer thereof, or a member of the household of any such person.'
7. Said policy further provides under 'Definition of Hazards, II Defense, Settlement, Supplementary Payments':
'As respects the insurance afforded by the other terms of this policy under coverages A, B and D the company shall:
'(a) defend any suit, against the insured alleging such injury, sickness, disease or destruction and seeking damages on account thereof, even if such suit is groundless, false or fraudulent; but the company may make such investigation, ...