Canal Insurance v. Carolina Casualty

• Court: Court of Appeals for the First Circuit
• Decided: July 13, 1995
• Docket: 94-2129
• Status: Published

Opinion

USCA1 Opinion

UNITED STATES COURT OF APPEALS
                            UNITED STATES COURT OF APPEALS

                                FOR THE FIRST CIRCUIT
                                FOR THE FIRST CIRCUIT



                                 ____________________



        No. 94-2129



                               CANAL INSURANCE COMPANY,



                                 Plaintiff, Appellee,



                                          v.



                         CAROLINA CASUALTY INSURANCE COMPANY,



                                Defendant, Appellant.


____________________


APPEAL FROM THE UNITED STATES DISTRICT COURT



                          FOR THE DISTRICT OF MASSACHUSETTS



                    [Hon. Michael A. Ponsor, U.S. District Judge]
                                             ___________________



                                 ____________________



                                        Before



                                Torruella, Chief Judge,
                                           ___________



                            Aldrich, Senior Circuit Judge,
                                     ____________________



                               and Cyr, Circuit Judge.
                                        _____________



                                 ____________________


Jeffrey S. Stern with whom Sugarman,  Rogers, Barshak & Cohen  was
            ________________           __________________________________

        on brief for appellant.

            George R.  Suslak  with whom  Stanton  &  Lang  was on  brief  for
            _________________             ________________

        appellee. 



                                 ____________________



                                    July 13, 1995

                                 ____________________



ALDRICH, Senior Circuit  Judge.  By stipulation  it
                               _____________________



            appears that in August  1988 a tractor-truck, hereinafter the



            accident  truck, owned by Jean L. Burnell, but leased to R.H.



            Graves  Trucking Company  (Graves) and  operated by  a Graves



            employee,  John Rowe,  Jr.,  on Graves  business, struck  and



            injured one  Jeanne Wing,  a citizen of  Massachusetts, where



            the accident occurred.   Graves was  a New Hampshire  company



            and had a so-called package liability insurance policy issued



            by  Carolina Casualty  Insurance Company  (Carolina) covering



            all listed trucks and,  under certain terms, unlisted trucks.



            In  August 1988,  when  the accident  occurred, the  accident



            truck was unlisted.   It was, however, insured by  Burnell by



            Canal   Insurance  Company   (Canal).      There  were   many



            endorsements  on both  policies, including,  on the  Carolina



            policy,  only,  an  endorsement  required by  the  Interstate



            Commerce Commission.



                      Canal brought a declaratory judgment  proceeding in



            the Massachusetts  District Court against all  of the above.1



            In due course Wing  settled all claims for $55,000.  This was



            paid, one half each, by Canal and Carolina under an agreement



            that  their respective  claims against  each other  should be



            resolved  by the  court.    Each  company moved  for  summary



            judgment.  The  court ruled that the  full $55,000 obligation



            was owed by Carolina because of the ICC endorsement, and that



                                
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            1.  Strictly, Wing was added by Carolina.



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it  should pay Canal for its  advance.  Carolina appeals.  We



            reverse in part.



                      The insurance companies are from Florida and  South



            Carolina;  the policies  for  some not  apparent reason  were



            written  in Maine,  and  the present  action  was brought  in



            Massachusetts.    Graves was  a  New  Hampshire company,  and



            Burnell  was  a New  Hampshire  resident,  and doubtless  the



            trucks were registered there.  We believe Massachusetts would



            consider  the policies  to be  New Hampshire contracts.   Cf.
                                                                      __



            Searls v. Standard Accident  Co., 316 Mass. 606,  608 (1944);
            ______    ______________________



            Lee v. New York Life, 310 Mass. 370, 373; Bi-Rite Enterprises
            ___    _____________                      ___________________



            v. Bruce Miner Co., Inc., 757 F.2d 440, 443  (1st Cir. 1985).
               _____________________



            The ICC  endorsement, of course, must be  governed by federal



            law.



                                 The Carolina Policy
                                 ___________________



                      The Carolina policy covered unlisted trucks  for 30



            days after Graves acquisition, and then longer, under certain



            conditions, one of which was notice within the 30 days.  None



            had been given for the accident truck.  It is irrelevant that



            it   might  otherwise   have   qualified;   lack  of   notice



            conclusively  excluded it,  except for  the ICC  endorsement,



            post.
            ____



                                   The Canal Policy
                                   ________________



                      The Canal  policy, by an  endorsement, purports not



            to  cover lessees.  By  a second endorsement, hereinafter the


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New  Hampshire endorsement, it does cover them.  Of this more



            later.2



                                 The ICC Endorsement
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                      The   ICC  Insurance  Branch  requires  a  licensed



            interstate  hauler's  insurer,  such as  Carolina,  to assume



            liability  for  all  its  hauler's  truck  accidents  (up  to



            $750,000) irrespective of the policy coverage, or whether the



            hauler has  paid  individual premiums  on  that truck.    The



            various  circuits have  taken three  different views  of this



            situation.  See  Empire Fire  & Marine Ins.  Co. v.  Guaranty
                        ___  _______________________________     ________



            National  Ins. Co., 868 F.2d 357, 363 (10th Cir. 1989) (cases
            __________________



            collected).   We have taken none.  On reflection, we consider



            the  ICC  endorsement to  be,  in effect,  suretyship  by the



            insurance  carrier to protect the  public -- a  safety net --



            but  not insurance relieving Canal, or any other insurer.  On



            the contrary, it simply covers the public when other coverage



            is lacking.  The question comes, did Canal supply any?



                                   Canal Revisited
                                   _______________



                      For Canal's liability we are presented with two, on



            their face conflicting, endorsements, one  embracing coverage



            for  lessees, one excluding them.  In her application for the


____________________



            2.  Carolina's claim  that acts of the  lessee imposed direct

            liability on Burnell as  owner is meritless.  Its  attempt to

            invoke Mass. Gen. L. c. 231   85A, that any operator is prima

            facie  an agent of the owner's, even if applicable to foreign

            owners  and  registrants,  is  conclusively  answered  by the

            stipulated facts.



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policy  Burnell  had  denied  an  intention to  lease.    The



            excluding  endorsement recited that  in consideration  of the



            premium  -- presumably  reduced premium  -- lessees  were not



            included in  the policy.  At the  same time the New Hampshire



            Financial  Responsibility Law,  N.H. RSA  259:61  I, provided



            that  motor vehicle coverage (to the  extent of $25,000) must



            be  extended  to  all  operators excepting  those  acting  in



            violation of the owner's rights.



                      Obligations imposed by  the New Hampshire Financial



            Responsibility Law prevail over  any contrary language in the



            policy.   Universal  Underwriters Ins.  Co. v.  Allstate Ins.
                      _________________________________     _____________



            Co., 134 N.H. 315, 318  (1991).  Correspondingly, in fairness
            ___



            to the insurer, beyond this the excluding policy terms should



            stand.   Id.  (Policy provision that all liability in certain
                     __



            instances would  be considered  "excess" invalid as  to first



            $25,000 (only) called  for by New Hampshire law).  So here we



            resolve the conflict by holding that after  the New Hampshire



            $25,000 payment the endorsement excluding lessees takes over.



            The  New Hampshire rule is the same whether the injured party



            is  claiming or  the  issue is  between insurance  companies.



            Universal Underwriters, 134 N.H. at 317.
            ______________________



                      It might be asked  whether New Hampshire law should



            apply where  the  claiming event  occurred in  Massachusetts.



            The  New Hampshire court has held  location immaterial.  Id.;
                                                                     __



            Gay  v. Preferred Risk Mutual  Ins. Co., 114  N.H. 11 (1974).
            ___     _______________________________


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The facts in these cases are  distinguishable, but we decline



            to  initiate   the   question  whether   the  New   Hampshire



            legislature has power to compel a New Hampshire citizen to be



            financially responsible to  an out-of-state resident  injured



            out of state.



                      It follows that Canal was responsible for this risk



            to  the extent of $25,000,  but as Carolina's ICC endorsement



            requires it to pick  up the balance it must  recompense Canal



            to the extent of $27,500 less $25,000, or $2,500.



                      Reversed  and  remanded  for   further  proceedings
                      ___________________________________________________



            consistent herewith.  No costs.
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