Thompson v. Amalgamated Cas. Ins. Co., Inc

207 F.2d 214

• Court: Court of Appeals for the D.C. Circuit
• Decided: October 13, 1953
• Docket: 11279_1
• Status: Published

Opinions

PRETTYMAN, Circuit Judge.

The G & M Motors, Inc., owned and operated taxicabs in the District of Columbia. It rented a cab to one Davis, a hacker. While the cab was being used by a group upon a lump-sum payment to Davis for a trip into Virginia,, an accident occurred near Charlottesville, in which one Howard Carter, a passenger, was killed. One Fleming, a licensed hacker, and a James Carter, not a licensed hacker, were the drivers of the car on the trip. The arrangement by Davis with Fleming, Carter, et al., was without permission of G & M Motors, Inc., and contrary to an agreement between him and it. Howard Carter’s administrator sued in the Virginia circuit court. That court found as facts that Fleming and James Carter were acting as agents of Davis and that they were guilty of negligence. It found that no agency relationship was proven to exist between Davis and any of the corporate defendants, among which was G & M Motors, Inc. It rendered judgment for $7,500 against Davis, Fleming, and James Carter. The judgment having become final but not satisfied, the administrator brought suit in the District Court here against the appellee Insurance Company upon the basis of a local statute and a policy under which appellee Company allegedly issued insurance in respect to this cab. The District Court gave judgment for the Company. This appeal followed.

The statute provides in pertinent part as follows:

“The Public Utilities Commission of the District of Columbia is hereby directed to require any and all corporations, companies, associations, joint-stock companies or associations. partnerships, and persons, their lessees, trustees, or receivers, appointed by any court whatsoever, operating, controlling, managing, or renting any passenger motor vehicles for hire in the District of Columbia * * * to file with the Commission for each motor vehicle to be operated a bond or bonds, policy or policies, of liability insurance or certificate of insurance in lieu thereof in a solvent and responsible surety or insurance company authorized to do business in the District of Columbia, conditioned for the payment to any person of any judgment recovered against such corporations, companies, associations, joint-stock companies or associations, partnerships, and persons, their lessees, trustees, or receivers, appointed by any court whatsoever, or renters of their cabs, for death or for injury to any person or injury to any property, or both, caused in the operation, maintenance, use, or by reason of the defective construction of such motor cabs or other vehicles. Any such bond or undertaking or policy of liability insurance shall be in such form and on such terms or conditions as the Commission may direct: * * * . The Superintendent of Insurance shall be empowered to make reasonable rules and regulations governing the writing of such insurance and the making of such bonds and the business of- insuring or bonding such risks, including the expenses of management, administration, and acquisition of business and the rates to be charged. * * * It shall be unlawful to operate any vehicle subject to the provisions of this paragraph unless such vehicle shall be covered by an approved bond' or policy of liability insurance as provided herein. The Public Utilities Commission shall have the power to make all reasonable rules and regulations which, in its opinion, are necessary to make effective the purposes of this section.”¹

Important to the present problem are the following provisions from the foregoing statute: (1) that every person operating, managing or renting taxicabs in the District of Columbia must file under the statute with the Public Utilities Commission; (2) that he may file either a bond, an insurance policy, or a certificate of insurance; (3) that the condition of the bond, policy or certificate is for the payment of any judgment recovered against such person or renters of his cabs for death or injury to any person caused in the operation or use of the cab; (4) that the undertaking shall be on such terms and conditions as the Commission may direct; (5) that the Superintendent of Insurance is empowered to make rules and regulations governing the writing of such insurance; and (6) that it is unlawful to operate a taxicab in the District of Columbia unless the cab is covered by an approved bond or policy as provided in the statute.

G & M Motors, Inc., did not file with the Commission a bond or a policy. Instead it filed, as the statute permitted and the Commission required, a certificate of insurance. That certificate was in the form of a card. It was addressed to the Commission, described the cab, stated that G & M Motors, Inc., was insured under a policy, No. 5452, in the form approved by the Superintendent of Insurance, referred to an endorsement printed on the reverse side, and was signed by the Insurance Company. The pertinent paragraph of the endorsement read as-follows:

“Any and all conditions and/or provisions in said policy to the contrary notwithstanding, the liability of the company within the limits of liability stated in said policy shall, in contemplation of and in compliance with the provisions of Public 775 — 75th Congress, Chapter 809— 3d Session, approved June 29, 1938, and/or Acts amendatory thereof, become and be absolute for damages-adjudged against the insured on account of injuries to or death of persons or damage to or destruction of property resulting from said insured’s ownership, maintenance or use of the motor vehicle or vehicles herein described, regardless of whether such motor vehicle or vehicles be owned wholly or in part by the insured.”

The Insurance Company contends that its liability is determined by the terms of the policy, No. 5452. It says that the policy covered only liability for damages, occurring while the cab was being used (a) with the permission of the “named insured” (which it says is G & M Motors, Inc., alone) and (b) within the District, of Columbia. It says that the policy was approved by the Commission and the statute required no greater coverage. It says that, even if the policy did not conform to the statute, the mandate of Congress was addressed to the Commission and the court cannot rewrite a policy approved by the Commission. It says that the policy covered only accidents within the District of Columbia and that, a local statute could not govern liability outside the District.

A copy of Policy No. 5452 is in the record as an exhibit. It does indicate that for its purposes “named insured” means just what it says and in this case means G & M Motors, Inc. It does provide further that for liability to attach the actual use of the cab in question must be with the permission of the “named insured”. It does also provide that it applies only to accidents while the cab is within the District of Columbia. It is clear that those provisions of the policy are in flat disagreement with the statute. The statute is about as clear and as broad as language could make it, in so far as the operation of the automobile as a cab is concerned. It provides that the policy must be for payment to “any person” of “any judgment” for death to “any person” arising from the operation of the cab. Moreover it specifically requires that the policy must cover not only the operators and managers but also “renters of their cabs”.

Davis was a renter of this G & M Motors, Inc., cab. A final judgment has been secured against him on account of a death caused by the use of this cab while it was on hire by Davis. That much is beyond dispute. We are not here concerned with the problem of liability for the accident. A judgment of a court of competent jurisdiction on that matter has become final. We are concerned only with an action brought to satisfy that judgment. The key fact here is that the appellant administrator has a final judgment against Davis, the renter of the cab, on account of damages arising from operation of the cab.

The problem is whether under the circumstances the Insurance Company can be heard to plead the limited scope of its policy. The answer depends upon the Company’s actions in respect to its customer (G & M Motors, Inc.), the Commission, and the public. It signed the “certificate of insurance” which we have described. That certificate was, as we have said, addressed to the Public Utilities Commission, which is the official body having in charge the regulation of public taxicabs on the streets of this District. It was filed for the purpose of securing for the owner of the automobile a license to operate the car as a cab. It referred specifically, in the printed endorsement, to the statute requiring liability insurance on the part of taxicabs. It mentioned that statute by name and by date. So there can be no doubt upon two scores. The Insurance Company knew that the purpose of the certificate was to satisfy the regulatory authorities, and it knew the provisions of the statute.

The Insurance Company is bound by the endorsement which it signed and filed. The paragraph above quoted from the endorsement begins “Any and all conditions and/or provisions in said policy to the contrary notwithstanding”. It thus appears at that point that a commitment apart from the policy is about to be made. The policy itself seems put to one side at this point and for this purpose. The sentence continues: “ * * * the liability of the company within the limits of liability stated in said policy * » That the phrase “limits of liability” refers to the amounts of liability and not to terms or conditions is made clear by the policy itself, which contains two paragraphs (Nos. 8 and 9) entitled “Limits of liability”. The sentence then continues: “ * * * shall, in contemplation of and in compliance with the provisions of” the statute “become and be absolute for damages adjudged against the insured * * *.” Under the statute the “insured” must be the renter as well as the owner. The endorsement did not say that the policy does not cover renters of the cabs from the owner who is the “named insured”. The endorsement did not mention a required actual permission of the G & M Motors, Inc., or of a geographical limit to the District of Columbia.

In sum, then, the endorsement recited that, any condition in the policy to the contrary notwithstanding, the liability of the Insurance Company would, in compliance with the statute, be absolute for damages adjudged against the insured on account of use of the cab. The Insurance Company says that “insured” means what the term is defined to mean in the policy, not what it is required to mean by the statute. The argument does appellee little good. The statute includes as the insured not only the owner but the renter of its cab. And the policy defines “insured” to include not only the named insured but also any person using the automobile or legally responsible for its use. To be sure, a proviso is added to the policy definition, the proviso being that the actual use is with the permission of the named insured. But that proviso is clearly a condition or provision in the policy, and the endorsement signed and filed by the Insurance Company provides that, any condition or provision in the policy to the contrary notwithstanding, the liability of the Company is absolute for damages adjudged against the insured. We think the Commission meant the endorsement to make the coverage as broad as the statute required. We also think the Insurance Company intended the Commission to believe that the coverage was as broad as the statute; otherwise the policy would have been valueless to the operator in so far as securing official permission to operate the cab was concerned.

We have indicated that the provisions of the statute dealing directly with the filing of a bond, policy or certificate for each motor vehicle to be operated required the broadest coverage for the operation of the cab. Later provisions in the statute support that meaning. They deal with an alternate method of compliance, the filing of blanket bonds or policies and the creation of sinking funds. Those later provisions do not relate directly to the matter now before us, but they shed light on the meaning of the statute. The section provides that if an owner elects one of these alternate methods of compliance “such owner shall first file with the Public Utilities Commission an admission of liability, in conformity with the principle of respondent [sic] superior for the tortious acts of the driver or drivers of such vehicle or vehicles aforesaid as shall be driven with the trade name or identifying design of such owner.”² We think Congress could not have intended to require less protection against damage when the owner elected to file ordinary bonds or policies than was required when he elected to file a blanket bond or create a sinking fund. Congress could not have intended that the cab owner could elect whether to furnish much or little protection. It must have had in mind the same coverage in all cases.

Although we think the point immaterial we note, in view of appellee’s insistence, that it is by no means clear that Policy No. 5452 was ever seen or approved by the Commission or the Superintendent. The clerk to the Commission was explicit in her testimony that the Commission had no concern with policies but required in lieu thereof the certificate signed by the Insurance Company. The Superintendent testified that he issued certificates of authority to companies but was not concerned with risk coverage. As we pointed out in the Bennett case, infra, the statute requires the Commission to prescribe the terms and conditions of this insurance. It did so when it prescribed the certificate which recited that pursuant to the statute, conditions in a policy to the contrary notwithstanding, liability was absolute for damages adjudged against the insured.

There is ample authority for a decision that, where a carrier secures a license to do business upon the basis of an insurance policy purportedly in fulfillment of a statutory requirement, the statute governs the liability and any terms of the policy at variance with the statute are void.³ But we need not go so far in the present case. We hold two things. First, we hold that, by its signature on the certificate of insurance filed with the Commission and embodying the endorsement we have described, this Company assumed the full liability required by the statute in respect to this cab. Second, we hold that, where an insurance company aids a taxicab owner to secure a license to operate on the streets of Washington under a statute which requires insurance coverage upon specified conditions, and files with the Commission representations that it has issued a policy pursuant to that statute, it will not be heard to say when suit is brought against it that its policy was less effective than the statute required.

A measure of important public interest was effectuated by this statute. Common carriage by taxicabs had become one of the most ordinary features of daily urban life. Scores of operators of greatly varying responsibility sought licenses. Congress intended to protect the people who hailed those cabs. The legislative history of the statute shows that the insurance companies were deeply interested in the enactment.⁴ Every possible consideration impels a strict requirement that the full measure of the clear terms of the act be met precisely.

We find no merit in the contention which the Company bases upon the fact that the accident occurred outside the District of Columbia. Congress covered the subject when it provided that the insurance must cover any judgment for injury to any person arising from operation of the cab. Terms of limitation are conspicuously absent from the statute. So the only possible question is one of congressional power, and the answer to that question is patent. In the

first place, Congress has power to legislate in respect to interstate as well as to intra-District commerce. In the second place, the contention misconceives the statute. This act prescribes the conditions upon which a common carrier may operate on the streets of Washington. It provides, in effect, that before a cab owner can pick up passengers on those streets he must assure the public authorities that such passengers will be protected against damage so long as they are in that cab. That cab operates under District authority. Congress, as the legislature for the District, had ample authority to prescribe that a license to operate as a common carrier on District streets be premised upon an assurance of protection to passengers picked up under authority of that license.⁵ This concept of the nature of such a statute, and the validity of the measure from that viewpoint, have been sustained repeatedly.⁶ Our reasoning on the point parallels that employed by the Supreme Court in respect to workmen’s compensation statutes.⁷ The relationship between the cab and the passenger, the contract, is established within the District. A sentence in the Alaska Packers case⁸ expresses the matter succinctly. “Obviously the power of a state to effect legal consequences is not limited to occurrences within the state if it has control over the status which gives rise to those consequences.” The Supreme Court quoted the Supreme Court of California: “The contract creates a relationship under the sanction of the law and the same law attaches as an incident thereto an obligation to compensate for injuries sustained abroad amounting to a sort of compulsory insurance.” It is, of course, common knowledge that a considerable proportion of the taxicab business initiated at points inside the few square miles of the District terminates outside — trips to the immediately surrounding suburbs, to the National Airport, and to nearby historic sites such as the Amphitheater, and so on. Congress has power to require protection of those people, relying as they must upon District regulatory measures.

Statutes which require private motorists to carry liability insurance, or to obtain it, such as our local statute,⁹ require such insurance to be against liability arising either within or without the licensing jurisdiction. The Uniform Motor-Vehicle Safety Responsibility Act,¹⁰ sponsored by the Public Roads Administration among others, contains such provisions (Sec. 21(b) 2), and all the forty-eight states appear to have provisions of like effect. There is a dearth of judicial opinion upon the precise point,¹¹ but we have found none which hold the extraterritorial coverage invalid. If a state cannot require that a private citizen be thus insured as a condition to the use of the streets by his motor vehicle, all those statutes are invalid. If it can do so in respect to its private citizens, a fortiori it has power to require operators of common carriers on its streets to carry such insurance.

Certainly the universally accepted idea in respect to the regulation of insurance is that the authorities in a given jurisdiction regulate the insurance written in that jurisdiction, not merely or directly the insurance covering accidents there.¹² The regulation by District authorities of accident insurance policies written in the District is not deemed an extraterritorial action.

In the Bennett case¹³ the driver of the cab was on a pleasure trip, and the injured person was his personal guest, not a passenger for hire. We held that the insurance did not apply. This statute did not provide an all-inclusive liability insurance for the vehicle as such or the driver as such; it was a provision imposed upon the operation of taxicabs as common carriers.¹⁴

It is true that Davis agreed with G & M Motors, Inc., that he would not take the cab out of “the metropolitan area of Washington”. But that was a matter between him and the company. No such agreement could limit the requirements imposed by the statute for the operation of the cab as a common carrier. Moreover no definition of the “metropolitan area of Washington” appears. Presumably it means to include an undefined area in suburban Maryland and Virginia as well as the District of Columbia. But that concept does not fit any legal theory advanced here as the meaning of the statute. The utmost claimed is that the statute applies to the geographical District of Columbia.

There is no merit in the Company’s contention that the terms and conditions of cab insurance are limited to those adopted by the Commission, even if short of or contrary to the terms of the statute. The statute gives the Commission authority to prescribe terms and conditions, but that provision confers no power to nullify a condition prescribed by the statute itself. It means terms and conditions consistent with the statute, not in contradiction to it.¹⁵ It is a familiar rule that rules and regulations pursuant to statutory law and consistent with its provisions are valid as law but that those inconsistent with a statute are null.

In its brief the Company says that it never actually signed the endorsement which was printed on the reverse of the signed certificate filed with the Commission. It argues that for that reason it never made the admission incorporated in the endorsement. But over its signature on the certificate the Company told the Commission: “There is attached to the policy copy of endorsement printed on the reverse side of this certificate. The policy and endorsement will remain in full force and effect until canceled as provided in the said endorsement.” So the contention that it never in fact executed the endorsement is not now available to the Company.

The judgment of the District Court is reversed and the case remanded with instructions to enter judgment for the plaintiff, within the limitations on amount in the policy.

Reversed and remanded.

1 . 52 Stat. 1233 (1938), 56 Stat. 1051 (1942), D.C.Code § 44-301 (1951).

2 . Supra note 1.

3 . Utilities Ins. Co. v. Smith, 10 Cir., 1942, 129 F.2d 798; Liberty Mut. Ins. Co. v. McDonald, 6 Cir., 1938, 97 F.2d 497; Sa-very v. Kist, 1943, 234 Iowa 98, 11 N.W. 2d 23; Utilities Ins. Co. v. Potter, 1940, 188 Okl. 145, 105 P.2d 259, 154 A.L.R. 512; Fidelity & Casualty Co. of New York v. Jacks, 1936, 231 Ala. 394, 165 So. 242; Dunn v. Jones, 1936, 143 Kan. 218, 53 P.2d 918; Ott v. American Fidelity & Casualty Co., 1931, 161 S.C. 314, 159 S.E. 635, 76 A.L.R. 4; Curtis v. Michaelson, 1928, 206 Iowa 111, 219 N. W. 49; Enders v. Longmire, 1937, 179 Okl. 633, 67 P.2d 12; Devlin v. New York Mutual Casualty T. Ins. Co., 1925, 213 App.Div. 152, 210 N.Y.S. 57; Engelson v. Commerce Casualty Co., 1933, 149 Misc. 886, 269 N.Y.S. 453.

4 . 83 Cong.Rec. 6495-6496 (1938).

5 . Utilities Ins. Co. v. Potter, 1940, 188 Okl. 145, 105 P.2d 259, 154 A.L.R. 512.

6 . Packard v. Banton, 1924, 264 U.S. 140, 44 S.Ct. 257, 68 L.Ed. 596; Hodge Drive-it-Yourself Co. v. City of Cincinnati, 1932, 284 U.S. 335, 52 S.Ct. 144, 76 L.Ed. 323; Reitz v. Mealey, 1941, 314 U.S. 33, 62 S.Ct. 24, 86 L.Ed. 21.

7 . Alaska Packers Ass’n v. Industrial Acc. Comm., 1935, 294 U.S. 532, 541, 55 S. Ct. 518, 79 L.Ed. 1044; Bradford Elec. Co. v. Clapper, 1932, 286 U.S. 145, 157, 52 S.Ct. 571, 76 L.Ed. 1026.

8 . Supra note 7.

9 . 49 Stat. 166 (1935), D.C.Code § 40-401 et seq. (1951).

10 . Uniform Motor Vehicle Act 4 — 1944 (G.P.O. 1945).

11 . Nulter v. State Road Commission of West Virginia, 1937, 119 W.Va. 312, 193 S.E. 549, 553, 194 S.E. 270; Goodwin v. Superior Court of Yavapai County, 1948, 68 Ariz. 108, 201 P.2d 124.

12 . See in this connection Hutchins Mut. Ins. Co. v. Hazen, 1939, 70 App.D.C. 174, 105 F.2d 53.

13 . Bennett v. Amalgamated Cas. Ins. Co., 1952, 91 U.S.App.D.C. 279, 200 F.2d 129.

14 . See also Foster v. Commercial Standard Ins. Co., 10 Cir., 1941, 121 F.2d 117.

15 . Savery v. Kist, 1943, 234 Iowa 98, 11 N.W.2d 23; Fidelity & Casualty Co. of New York v. Jacks, 1936, 231 Ala. 394, 165 So. 242; Dunn v. Jones, 1936, 143 Kan. 218, 53 P.2d 918; Ott v. American Fidelity & Casualty Co., 1931, 161 S.C. 314, 159 S.E. 635, 76 A.L.R. 4; Curtis v. Michaelson, 1928, 208 Iowa 111, 219 N.W. 49; Engelson v. Commerce Casualty Co., 1933, 149 Misc. 886, 269 N.Y.S. 453.