The opinion of the court was delivered by: MARSH
This diversity action was initiated as a jury trial
by Ohio Fast Freight, Inc. (Ohio), plaintiff, against Darrell G. Cradlebaugh and E. W. Allison, defendants, for indemnity or contribution involving the sum of $65,000 paid by Glens Falls Insurance Company (Glens Falls), Ohio's insurance carrier, to the estate of the deceased victim of a motor vehicle accident. Counsel for Ohio also represented Glens Falls (T., p. 6). Counsel for Allison also represented Nationwide Mutual Insurance Company, his insurance carrier (T., p. 8). The appearance entered for the defendant Cradlebaugh by Weis and Weis, attorneys, was withdrawn pursuant to motion and order of court. No answer was filed on behalf of Cradlebaugh, but the other parties stipulated that no judgment by default should be entered against him. At the pretrial conference, because it seemed that the real contest was between the respective insurers, the parties were requested to negotiate with respect to an amendment bringing into the case the insurers of Ohio and Allison and report to the court. The request was not acted upon.
At trial, it appeared from the Pretrial Stipulation, § IV, para. 29 (see Appendix), and the admission of counsel (T., p. 15), that Ohio's insurer, Glens Falls, had paid the entire amount in controversy in settlement of the suit brought in the state court against Ohio. Thereupon, the court again proposed that the parties consider substituting the insurance companies as the litigants, and voiced its opinion that since Glens Falls was the real party in interest, if it were not substituted as plaintiff, pursuant to Rule 17(a), Fed.R.Civ.P. (see also, Rules 8(a)(2) and 21), in place of Ohio, who had not sustained any monetary loss, that judgment should be entered in favor of the defendants. After extensive consideration by counsel and the court (T., pp. 1-9, 69-82), it was finally agreed that Glens Falls be substituted as plaintiff in place of Ohio and that Allison and Cradlebaugh remain as defendants (T., pp. 80, 82).
The court adopts the facts stipulated by the parties in their Pretrial Stipulation. Upon consideration of these facts, the testimony adduced at the non-jury trial, oral argument,
and the briefs, it is the opinion of the court that judgment should be entered in favor of the defendants and against Glens Falls, the substituted plaintiff.
Pursuant to the terms of the lease
entered into between Ohio and Allison, the owner of the tractor-trailer, at the time of the accident on November 23, 1963, the leased equipment was in Ohio's "exclusive possession, control, use and responsibility" (see lease, para. 2). No breach or termination had occurred within the meaning of para. 3 of the lease, although Cradlebaugh had delivered his cargo to the U. S. Gypsum Company in Staten Island, New York, and was returning empty to New Castle, Pennsylvania, where Allison's garage was located, and "where the truck [tractortrailer] was customarily kept when not hauling a load for Ohio * * *".
The driver, Cradlebaugh, and the equipment were still in the exclusive service of Ohio. Plaintiff did not prove any breach of the lease on the part of Allison. The fact that Allison intended to change the tires on the vehicle after its arrival in New Castle is irrelevant.
Under the Union contract, accepted by Ohio in August, 1963, Cradlebaugh at the time of the accident was exclusively the employee of Ohio. At that time Ohio had the exclusive right to control him with respect to the manner, means, and details of driving the leased equipment.
Allison acquiesced in that employment (T., pp. 57, 61, 98-99, 102-104, 117-118). Only when the equipment would be in Allison's garage at New Castle or at some other place where Allison resumed actual possession to make repairs could Cradlebaugh come under the direction and control of Allison.
Even if effect is given to para. 12 of the lease,
and, as between Ohio and Allison, to the presumption, urged by plaintiff,
that Cradlebaugh remained in the control of the owner rather than shifting to the control of the lessee (although the asserted presumption seems to be overwhelmingly overcome by evidence that Ohio in fact had the exclusive right to control the driver and the manner, means and details of his performance of Ohio's work), the plaintiff insurance company is liable nevertheless for the damages which resulted from the accident. The insurance policy (defendant's Ex. C)
issued by plaintiff to Ohio provided coverage for the liability of the driver of hired vehicles, as well as any person legally responsible for the use thereof, when engaged in the exclusive business of Ohio under its authorized Interstate Commerce Commission certificate.
At the time of the accident, the leased equipment, although empty, was in the possession of and on the exclusive business of Ohio, driven by its employee on a route in Pennsylvania authorized by its Interstate Commerce Commission certificate. Before and after delivery of the cargo at Staten Island, Cradlebaugh complied with all instructions of Ohio. No cargo was available for him to transport back to Ohio on the return trip to his home base. On the return trip the equipment was not in the business of service of Allison. Allison's business was leasing trucks, - not interstate transportation. Cf. Walters v. Dunlap, 250 F. Supp. 76, 78-79 (W.D.Pa.1966).
The $65,000 which the plaintiff insurance company paid in settlement of all claims in the action brought in the Court of Common Pleas of Bedford County, Pennsylvania, was within the limit of its policy
and was its legal obligation.
The insurance policy issued by Nationwide Mutual Insurance Company to Allison (defendant's Ex. B) was admitted in evidence only to show that Allison complied with the terms of the lease (T., pp. 96-97). Even if the policy had been admitted generally, it is doubtful that defendants were entitled to coverage for the fatal accident. (See Allison's Amended Request for Findings of Fact, No. 35, received August 9, 1966.)
This opinion shall be deemed to embody findings of fact and conclusions of law required by Rule 52, Fed.R.Civ.P., 28 U.S.C.A.
An appropriate order will be entered.
It is stipulated between the parties that:
This is an action for indemnity or contribution and damages for breach of contract in connection with a motor vehicle accident that happened November 23, 1963 in Bedford County, Pennsylvania and a compromise settlement made by plaintiff in regards thereto.
The contested issues are:
(a) Whether defendant E. W. Allison is liable, either solely, or jointly with plaintiff, for the negligence and liability of defendant Darrell G. Cradlebaugh arising out of or in connection with the accident.
(b) Whether plaintiff is entitled to damages for breach of contract by defendant E. W. Allison, for failure to insure against the claims of third persons occasioned by the negligence of Allison or defendant Darrell G. Cradlebaugh.
(c) Whether Cradlebaugh, the tortfeasor primarily liable, was covered by the insurance policy furnished by plaintiff through ...