automobile.' (Emphasis supplied)
'2. Application of Insurance.
'(a) The insurance applies only to (1) the named insured, and (2) any executive officer of the named insured, as insured, except as stated in divisions (a)(1) and (2) of the Definition of Insured agreement of the policy and except with respect to any automobile owned by such officer or by a member of the same household.
'(b) The insurance applies only to the use, by any person other than the named insured, of any non-owned private passenger automobile in the business of the named insured as stated in the declarations, and to the use in such business, by any employee of the named insured, of any nonowned automobile of the commercial type if such use of such automobile is occasional and infrequent.'
Paragraph one specifically excludes a loaned vehicle from the purview of the definition of a non-owned automobile.
McCullough was president of T. & C., a small, closely-held corporation and he had authority to act for the corporation. He accepted a loan of his wife's car to use it on T. & C.'s business. This use had continued for more than a month so it could not be designated as an infrequent or casual use.
Paragraph 2(a) excludes McCullough because he was an executive of T. & C. and the car which he was driving was owned by his wife. Paragraph 2(b) broadens the non-ownership endorsement to cover any person using a nonowned automobile on the business of the named insured. But, as we have already found, the plain words of this policy exclude a loaned automobile from coverage under this endorsement.
We must give effect to every word if possible and we cannot conjure a doubt where none exists. Therefore, we hold that American Hardware Mutual is not liable for contribution or indemnity regarding the settlement because the vehicle used by McCullough was excluded from the ambit of its policy. However, we do find that American Hardware Mutual is liable for contribution to American Motorists Insurance Company for the legal expenses incurred by McCullough in defending the plaintiff's claim.
An insurance policy embodies two promises to the insured: First, to indemnify the insured against any liability covered by the policy, and secondly, to defend the insured against any suit alleging an injury covered by the policy. Lee v. Aetna Casualty and Surety C., 178 F.2d 750 (2 Cir. 1949).
American Hardware's policy in Paragraph II
of the insuring agreement contains a promise to defend the insured against any suit alleging injury no matter how groundless. A determination of the insurer's duty to defend is made from the contents of the complaint. Lee v. Aetna Casualty and Surety Co., supra, 178 F.2d at p. 753.
In the instant case, the contents of the complaint allege an injury covered by the policy. Under the policy, McCullough was an additional insured because he was President of T. & C. It was only his use of the loaned vehicle which was excluded from the coverage of the policy.
None of the pleadings filed in this case clearly showed that American Hardware had no duty to defend McCullough. It was only after this Court conducted a hearing and made a searching analysis of the policy that we reached the conclusion McCullough was driving a vehicle not covered by the contract.
As Judge Learned Hand said in the Lee case, supra, 178 F.2d at p. 753:
'* * * When, however, as here, the complaint comprehends an injury which may be within the policy, we hold that the promise to defend includes it.'
This is the law of Pennsylvania
and, therefore, the law of this Circuit.
All facts and conclusions of law set out in this Opinion shall constitute the Court's findings as agreed by all the parties.
And now, this 24th day of April, 1963, it is the judgment of this court that:
1. William A. McCullough, Jr., was personally insured by the American Motorists Insurance Company and this insurer alone is liable for the full amount of the.$ 4190.00 settlement of the plaintiff's claim.
2. Judgment is entered in favor of William A. McCullough, Jr., in the sum of $ 400.00 against both insurers for his legal expenses.
3. Judgment is entered in favor of the American Motorists Insurance Company on its cross-claim for contribution as to the $ 400.00 legal expenses only.