Case Title: Ohio Casualty Ins. Co. v. Travelers Indemnity

Citation: 493 S.W.2d 465

Docket Number: 

State: tennessee

Court: Tennessee Supreme Court

Date: 1973-04-16T00:00:00Z

Document:
493 S.W.2d 465 (1973) The OHIO CASUALTY INSURANCE COMPANY v. The TRAVELERS INDEMNITY COMPANY. Supreme Court of Tennessee. April 16, 1973. *466 W.P. Ortale, Ortale, Kelley, Herbert & Crawford, Nashville, for appellant. Fred E. Cowden, Jr., Glasgow, Adams & Taylor, Nashville, for appellee. McCANLESS, Justice. This case comes before us on direct appeal from the Chancery Court of Davidson County by stipulation of facts pursuant to T.C.A. § 16-408. It involves a question of conflict of laws growing out of a dispute between the plaintiff, Ohio Casualty, and the defendant, Travelers, over the construction of the "other insurance" provisions in their respective policies. The problem arose from an automobile collision occurring in Trousdale County. Ohio Casualty had a policy covering the owner of the liable vehicle, and Travelers had a policy insuring the driver of that vehicle. Both policies were contracted and delivered in Kentucky, and both contained similar "other insurance" provisions. The plaintiff, Ohio Casualty, settled all claims arising out of the accident, and these payments were stipulated by the defendant. Ohio Casualty made demand upon Travelers for proration which was denied on the ground of confliction "other insurance" provisions. Ohio Casualty then brought suit against Travelers for indemnity and contribution. On the date of trial the parties stipulated, among other things, that if the trial court applied Kentucky law in resolving the conflict in the other insurance clauses, the plaintiff would recover nothing since it was agreed that under the law of the Commonwealth of Kentucky, the plaintiff's policy would be considered primary insurance, and the defendant's would be considered excess. Conversely, if Tennessee law applied, the defendant would prorate the amounts paid in settlement. The Chancellor held that the law of Kentucky, the lex loci contractus, applied. The sole issue for our determination is which state's law should apply. The issue before us is one of contract and not one of tort. The stipulation in the Chancery Court has determined the issue of tort liability. The question presented this Court is one of contract construction, and the interpretation to be given conflicting "other insurance" provisions. It is a familiar rule in Tennessee that the construction and validity of a contract are governed by the law of the place where the contract is made. Sloan v. Jones, 192 Tenn. 400, 241 S.W.2d 506 [1951]. The Tennessee rule was well stated by the United States Court of Appeals, Sixth Circuit, in First American National *467 Bank of Nashville v. Automobile Insurance Company, 252 F.2d 62 [1958], as follows: Relying on the First American case, supra, in a case involving a factual situation almost identical to the one presently before us, the Court held: Both policies of insurance were made and delivered in Kentucky, and in view of the foregoing authorities we are of the opinion that the conflicts rule of lex loci contractus applies with the result that the substantive law of Kentucky governs the interpretation and construction of the conflicting provisions of the insurance contracts. The holding of the court below is affirmed. DYER, C.J., CHATTIN and HUMPHREYS, JJ., and WILSON, Special Judge, concur.