The opinion of the court was delivered by: LUONGO
Defendant, Lumbermens Mutual Casualty Company (Lumbermens), has presented motions for new trial and for judgment n.o.v. following an adverse verdict in this declaratory judgment proceeding under 28 U.S.C.A. § 2201. The action involved the question of coverage of a policy of insurance issued by Lumbermens to one Edward S. Dutcher, the named insured. In addition to Dutcher, the policy insured '* * * any person using such automobile, provided the actual use thereof is with the permission of the named insured.' This action, resulting in directed verdicts in favor of two Estate plaintiffs (Provident Tradesmens Bank and Trust Company, Administrator of the Estate of John R. Lynch, and Sarah B. Smith, Administratrix of the Estate of Thomas W. Smith), and a verdict by the jury in favor of plaintiff John Landis Harris, against defendant Lumbermens, arose out of the following circumstances:
On January 17, 1958, John Lynch and Donald Cionci, driving the automobile of Edward Dutcher, picked up John Landis Harris in Media, Pennsylvania. On the way from Media to Bryn Mawr, the Dutcher vehicle, driven by Cionci, was involved in a collision with a truck operated by Thomas W. Smith. Lynch, Cionci and Smith were killed, Harris was injured.
As a result of the accident three trespass actions were commenced:
(a) Harris instituted suit in the Court of Common Pleas of Delaware County against Dutcher, the Lynch Estate and the Cionci Estate;
(b) The Smith Estate instituted suit in the Court of Common Pleas of Delaware County against the same defendants named in the Harris suit;
(c) The Lynch Estate commenced an action in this Court against the Cionci Estate.
When Lumbermens refused to defend the Cionci Estate in the action in this Court and to make available the coverage of the policy issued to Dutcher to satisfy any verdict or judgment in favor of the Lynch Estate, this declaratory judgment action was instituted by the Administrator of the Lynch Estate seeking a declaration that Cionci was driving with Dutcher's permission, that Cionci was, therefore, an insured under the policy in question, and that the policy is available to satisfy a verdict or judgment obtained by the Lynch Estate in its action against the Cionci Estate. Lumbermens joined, as an additional defendant, the Cionci Estate and, as additional plaintiffs, John Landis Harris and the Smith Estate. A subsequent motion by Lynch's Estate to sever Harris and the Smith Estate as plaintiffs was successfully resisted by Lumbermens.
At the trial of the declaratory judgment action plaintiffs proved the existence of the insurance policy, Dutcher's ownership of the car and the fact (conceded at the trial by Lumbermens) that Cionci was the driver of the car. This was a diversity suit with all operative facts occurring in Pennsylvania, hence Pennsylvania law was applicable. Lind v. Schenley Industries, Inc., 278 F.2d 79 (3rd Cir., 1960), cert. den. 364 U.S. 835, 81 S. Ct. 58, 5 L. Ed. 2d 60 (1960). Under Pennsylvania law proof of the above facts raises a presumption that Cionci was driving with Dutcher's permission, and, in the absence of credible testimony to rebut the presumption, justifies the entry of a directed verdict in favor of the plaintiff. Exner v. Safeco Insurance Company of America, 402 Pa. 473, 167 A.2d 703 (1961); Waters v. New Amsterdam Casualty Company, 393 Pa. 247, 144 A.2d 354 (1958).
Lumbermens' defense was that Cionci's use deviated substantially from the permission granted by Dutcher, that he was therefore operating without permission and the coverage of the policy was not available to him. Lumbermens offered to prove by the testimony of Dutcher that he had given permission to Lynch and Cionci to drive to Ardmore, Pennsylvania, a point a mile or two from Bryn Mawr, to enable one of the two to pay a bill and to return without delay. Timely objection was made by the two Estate plaintiffs to the offer of Dutcher's testimony. Dutcher was ruled incompetent, under the Pennsylvania Dead Man's Act, to testify against the two Estates but he was permitted to testify as to Harris. With Dutcher's testimony ruled out, there was no evidence, as to the two Estate plaintiffs, to rebut the presumption of permission and, on the authority of the Exner and Waters cases the jury was directed to return verdicts in favor of the lynch Estate and the Smith Estate. Harris' case was submitted to the jury which returned a verdict in favor of Harris.
1. Motion for a new trial as to the Lynch and Smith Estates:
Dutcher's competency to testify against the two Estate plaintiffs is controlled by the Pennsylvania Dead Man's Act, 28 P.S. § 322 which in pertinent part provides:
'Nor, where any party to a thing or contract in action is dead, * * * and his right thereto or therein has passed, either by his own act or by the act of the law, to a party on the record who represents his interest in the subject in controversy, shall any surviving or remaining party to such thing or contract, or any other person whose interest shall be adverse to the said right of such deceased * * *, be a competent witness to any matter occurring before the death of said party, * * *.'
Competency of a witness is the rule in Pennsylvania and incompetency the exception. In re Hendrickson's Estate, 388 Pa. 39, 44, 130 A.2d 143 (1957). One of the exceptions is the disqualification of surviving parties to a transaction and any other person whose interest is adverse to the interest of a decedent. In re Hendrickson's Estate, supra, 388 Pa. at page 45, 130 A.2d at pages 146-147. The test of adversity expressed in In re Gaston's Estate, 361 Pa. 105, 109, 62 A.2d 904, 906 (1949) and reiterated in Commonwealth Trust Co., Admr. v. Szabo, 391 Pa. 272, 281, 282, 138 A.2d 85, 89 (1957), is as follows:
'The true test of the interest of a witness is that he will either gain or lose, as the direct legal operation and effect of the judgment, or that the record will be legal evidence for or against him in some other action. It must be a present, certain and ...