subject matter of the false statement was material to the risk.
Since Nationwide is able to avoid the policy with respect to the use of the bus during which the accident occurred, no coverage is provided by it to the church, or to the driver of the bus, Robert Stewart, or to the use of the bus, Overland, for any loss arising out of the accident.
Having concluded that Nationwide did not act improperly in denying policy coverage to the church, we turn to an examination of the Transit policy and consider whether that policy provides coverage to the church, the driver, and Overland. We find that under its terms, the policy covers Overland and Stewart, the driver, but does not cover the church.
One issue may be disposed of immediately. The Nationwide policy states that it provides "primary insurance", while the Transit policy states that it is only "excess insurance over any other valid and collectible insurance available to the insured." Nevertheless, because the Nationwide insurance policy may legally be avoided, there is no "other valid and collectible insurance available to the insured", Overland, so that the Transit policy is not merely excess, but is primary insurance for Overland.
There can be no doubt that coverage under the Transit policy is provided to Overland, as a "named insured", and that the bus is a "hired automobile." According to the terms of the policy, a "hired automobile" is one "contracted in behalf of, or loaned to the named insured." Thus, we need not decide whether the bus was for hire rather than loaned to Overland. Consequently, we need not deal with the alleged applicability of ICC law and regulations with regard to vehicles for hire, nor need we examine those sections of the Transit policy which may have effect in the event such law did apply.
Moreover, no matter what the characterization, it is clear that the bus was at the time of the accident being used by Overland, for its business, and was not being used by the church for church business, because the church, through Reverend Thompson, had agreed to permit Overland to use the bus. The same conclusion was reached in the analagous case of Walter v. Dunlap, 368 F.2d 118 (3d Cir. 1966), where the court in interpreting two insurance policies, found that at the time of an accident involving a leased tractor-trailer, the vehicle was being used exclusively in the business of the lessee, not the lessor. We believe the same reasoning to be sound in the case sub judice regardless of whether the bus was leased or loaned to Overland. Furthermore, the church, as "owner ... of a hired automobile or ... of a non-owned automobile ..." is not an insured under the Transit policy.
Transit is correct in its interpretation of its policy, issued to Overland, as not providing coverage to the church. Nevertheless, Transit is not correct in its conclusion that Robert Stewart, the driver of the bus, is likewise not covered under the Transit policy. From our reading of the policy we determine that it clearly provides coverage to Overland with respect to Overland's use of the bus, for Overland is a named insured, and that it consequently provides coverage to Stewart, the driver, as he was driving the bus as Overland's agent.
Transit apparently attempts to exclude Stewart from coverage on the theory that he was operating as an agent of the church which is not covered under the policy, yet that argument misses the point, for so long as Stewart was an agent of Overland, coverage under the Transit policy is applicable as to him. There is no doubt that Stewart was an agent of Overland, despite Transit's attempt to disavow any such relationship, for regardless of whether it was Reverend Thompson or someone from Overland who arranged for the services of Stewart, Overland surely consented to the use of his services by allowing him to use the bus with its permission, and for its business. There is no reason to believe that Stewart's operation of the bus was not within the scope of the permission granted him by Overland, and no such allegation to the contrary has ever been made. Thus, Overland's acceptance of Stewart as driver of the bus, in furtherance of Overland's business, leads us to recognize him as Overland's agent, and thus covered under the terms of Transit's policy.
It is important to note that our finding that Nationwide owes no coverage to the church due to the church's failure to supply Nationwide with highly relevant information concerning the use of the bus, but that Transit's policy provides coverage to Overland and Stewart, although not to the church, with respect to Overland's use of the bus on the occasion in question, in no way gives Transit cause to complain that it is being unfairly treated. Transit is not the least bit prejudiced by the decision we reach, for the result of that decision is merely that a vehicle liability policy issued to an insured provides coverage to that insured for an accident arising out of the insured's use of a vehicle not otherwise covered by another liability policy.
We have concluded that as a result of the church's misrepresentation, Nationwide may legally avoid with respect to any loss arising out of the accident involving the bus, the policy issued by it to the church. Consequently, it owes the church no insurance coverage or legal defense, nor does it provide coverage under that policy to the driver, Stewart, or the user of the bus, Overland. We have also concluded that Transit, under its policy issued to Overland, provides insurance coverage to both Overland and Stewart for use by Overland, of the bus owned by the church, but provides no coverage under that policy to the church.
The above constitutes this Court's findings of fact and conclusions of law, pursuant to Rule 52(a) of the Federal Rules of Civil Procedure.
Also before the Court is the motion of the church for an award of attorneys fees and costs. The church contends that it is entitled to reimbursement of such fees and costs if Nationwide is found to owe it, as an assured, a duty of legal representation. Since we have concluded otherwise, with regard to Nationwide's policy coverage we must reject this argument. The church further asserts that Transit is liable for such reimbursement because it owes the church, as an assured, a duty of legal representation. We have determined though that no policy coverage is provided to the church by Transit, so that this contention too is without merit.
Finally, the church argues that its joinder as a defendant by Transit was not "necessary or proper in this Declaratory Judgment action in which the dispute was solely between the two insurance companies and no relief was sought from or could be sought from defendant Garden of Prayer Church." Under Pennsylvania law:
"The following participants shall be entitled to a reasonable counsel fee as part of the taxable costs of the matter:
(9) Any participant who is awarded counsel fees because of the conduct of another party in commencing the matter or otherwise was arbitrary, vexatious or in bad faith."