Case Name: SAINT PAUL-MERCURY INDEMNITY COMPANY, Appellant, v. Calvin T. RUTLAND, doing business as Rutland Contracting Company, Appellee
Court: United States Court of Appeals for the Fifth Circuit
Jurisdiction: United States
Decision Date: 1955-08-24
Citations: 225 F.2d 689
Docket Number: No. 15184
Parties: SAINT PAUL-MERCURY INDEMNITY COMPANY, Appellant, v. Calvin T. RUTLAND, doing business as Rutland Contracting Company, Appellee.
Judges: 
Reporter: Federal Reporter 2d Series
Volume: 225
Pages: 689–705

Head Matter:
SAINT PAUL-MERCURY INDEMNITY COMPANY, Appellant, v. Calvin T. RUTLAND, doing business as Rutland Contracting Company, Appellee.
No. 15184.
United States Court of Appeals Fifth Circuit.
Aug. 24, 1955.
Rehearing Denied Oct. 3, 1955.
Motion to Vacate and for Rehearing Denied Nov. 1, 1955.
R. Emerson Gardner, Atlanta, Ga., and James B. Donovan, New York City, James E. Clark, Birmingham, Ala., J. Carlisle DeHay, Jr., Dallas, Tex., amici curiae, for appellant.
Thomas B. Branch, Jr., Atlanta,» Ga., J. A. McCurdy, Decatur, Ga., for appel-lee.
Watters & Donovan, New York City, for Association of Casualty and Surety Companies.
A. Walton Nall, Atlanta, Ga., Nall, Sterne, Miller, Cadenhead & Dennis, Atlanta, Ga., of counsel, amicus curiae.
Before RIVES and CAMERON, Circuit Judges, and DAWKINS, District Judge.

Opinion:
DAWKINS, District Judge.
This appeal was originally submitted to a panel consisting of Judges Holmes, Borah and Tuttle. A majority and a dissenting opinion were filed, but before the majority opinion became effective, it was withdrawn and the appeal was placed on the rehearing docket. Upon re-argument, it fell to the present panel.
The facts are stipulated and show: On April 1, 1951, appellant issued to appellee its "Multiple Coverage Policy" counter-signed in Atlanta, Georgia, wherein it provided to stated limits coverage for, inter alia, bodily injury and property damage liability. During the policy period one of appellee's trucks, being operated in a negligent manner by his employee and in furtherance of his business, collided with a freight train of Charleston & Western Railway Company in Richmond County, Georgia, derailing the train and causing damage to sixteen cars, to the contents of those cars and to the roadbed of the railway company. The railway company subsequently instituted a civil action in United States District Court against appellee, seeking to recover the sum of $75,000 as damages sustained by the railway company and by the owners of the damaged cars and contents. Appellant undertook to defend the railway company's action and, by .written agreement between appellant and appellee, that action was compromised and settled for the sum of $30,000; and a consent judgment to that effect was entered.
In the written agreement, it was provided that appellee should contribute $25,000 to the payment of the judgment and appellant should contribute $5,000. It was further agreed that such contributions or payments should be made without prejudice to any of appellee's rights under the policy to insist that appellant was obligated to pay up to the sum of $5,000 for the damages done to the property of each of the owners of any of the railway cars involved in the collision, the contents thereof and the roadbed of the railway company, and without prejudice to any of appellant's rights to insist that its maximum liability under the policy was the sum of $5,000 for the entire damage done to all the property damaged in the collision, irrespective of whether or not property of more than one party was damaged.
It was further stipulated that as finally contended by the railway company, the sixteen damaged railway cars belonged to fourteen separate owners and sustained damages in amounts ranging from $349.-63 to $4,015.67, total damage to the railway cars being $41,371.31. The contents of the railway cars, belonging to numerous shippers, were damaged in the total amount of $7,638.91; and damages to the roadbed were determined to be $9,000.
Following the payment of the judgment in the railway company's suit, ap-pellee instituted this action against appellant for the recovery of the $25,000 paid by him to the railway company, alleging appellant was legally obligated to pay the full amount of the judgment "because under a proper interpretation of said policy, as shown by the decision of the United States Court of Appeals, Fifth Circuit, in the case of Anchor Casualty Co. v. McCaleb, 178 F.2d 322, there was a separate accident as to each owner of property damaged in said collision and defendant was legally liable to pay up to the sum of $5,000.00 on account of the property of each owner whose property was damaged in said collision."
The facts being stipulated, the trial court decided the case upon appellee's motion for summary judgment and, without opinion, entered judgment for appellee as prayed for. The appeal from that judgment raises the sole issue of the proper interpretation of the phrase "$5,000.00 each accident" as the stated limit of liability for automobile property damage (see footnote 1).
We first turn to the law of Georgia for guidance in approaching the solution to this problem. We find no cases expressly deciding the issue, but in that state, as in most jurisdictions, insurance contracts must, in the final analysis, be construed so as to carry out the true intentions of the parties. Georgia Code, § 56-815; Hulsey v. Interstate Life & Accident Ins. Co., 207 Ga. 167, 60 S.E.2d 353. It is true that Georgia also follows the general rule which decrees that all ambiguities in an insurance contract shall be construed most favorably to the assured. However, the words used must be given their usual and ordinary meaning, and we may not strain their construction in order to perceive ambiguities. Hulsey v. Interstate Life & Accident Ins. Co., supra; Nichols v. Ocean Accident & Guarantee Corp., 70 Ga.App. 169, 27 S.E.2d 764; Hartford Fire Ins. Co. v. Wimbish, 12 Ga.App. 712, 78 S.E. 265; Aetna Life Ins. Co. v. Padgett, 49 Ga.App. 666, 176 S.E. 702.
The only limit expressed in the policy for automobile property damage liability is the disputed phrase "$5,000.00 each accident." It can hardly be denied that when ordinary people speak of an "accident" in the usual sense, they are referring to a single, sudden, unintentional occurrence. They normally use the word "accident" to describe the event, no matter how many persons or things are involved.
Were the matter being presented to us without reference to the cases cited, we should be obliged to conclude it was the intention of the parties to this policy that the word "accident" be given that meaning. In Section A, bodily injury coverage is provided to limits expressed both in relation to thé victim or injured party ("$100,000.00 each person") and the event ("$300,000.00 each occurrence"). Thus, it would appear, one "occurrence" resulting in bodily injury to three persons could expose the insurer to liability up to $300,000.00. Further, in explaining this coverage, the policy speaks of injuries "sustained by any person or persons." (See footnote 2.) However, no such intention to consider liability in relation to the individual claimants is expressed in Section B, providing automobile property damage coverage. We must consider such a distinction in approach to have been deliberate, and it seems evident that the purpose could only have been to express the limits of property damage liability without regard to the number of .owners or items of property'involved.- This is made abundantly clear in the later policy definition of automobile property damage liability, when it is said that the company agrees to indemnify liability for "damage to or destruction of property caused by accident (Emphasis supplied.)
If further, support for this construction is needed it may be found when it is observed that the disputed phrase appears in the column headed "Limits of Liability" which follows the sentence having as its subject, "The limit of the Company's liability." Manifestly, it was intended that the policy have monetary limits of coverage; but consideration of the amount stated in relation to the claimants damaged rather than the event causing the damage would make the policy potentially limitless. Moreover, it is well known that the premium rates for liability insurance are based upon the risk insured and the potential amounts of liability covered. Such a system of computing rates is simply incompatible with the idea of virtually limitless liability depending solely upon the number of claimants.
Considering only the policy involved here without reference to previous judicial interpretations, we think it clear that the word "accident" as used in the disputed phrase was intended to be construed from the point of view of the cause rather than the effect. Hence, unless the doctrine of stare decisis requires another interpretation, the limit of appellant's liability would be $5,000.00, since all property damage occurred in the single, sudden and unintentional collision.
Of -course, the existing law, including judicial precedents,- must be read into all contracts; and we must now consider the present policy in the light of prior cases. The two cases relied upon by appellee to alter the construction plainly indicated by the bare words of the policy are South Staffordshire Tramways Co., Ltd. v. The Sickness and Accident Assurance Assn., Ltd., 1 Q.B. 402 (1891), and Anchor Casualty Co. v. McCaleb, 5 Cir., 178 F.2d 322.
We need not discuss the English case at length. Not only- do its origin and vintage detract from its value as a legal precedent, but we think it more favorable to appellant than to appellee. The court there considered the policy as a whole and reached the conclusion that when the limits were expressed in terms of "accidents caused by vehicles", the word "accident" in that policy meant, as one judge put it, "the mischief suffered by a person injured to his person or property." Precisely the same approach leads to exactly the opposite result here, as previously shown.
After thorough study of the record and the opinion of this court in Anchor Casualty Co. v. McCaleb, supra, we are convinced that case is also distinguishable and therefore does not prevent our construction of the policy in suit. In Anchor, there was a multiple coverage policy indemnifying the insured against liability arising from, among other hazards, the operation, maintenance or use of described premises where the insured was drilling an oil well. Property damage liability coverage was stated to be $5,000.00 "each accident" and $25,000.00 "aggregate". The well blew in and was wild for a period of fifty hours, and damage to the properties of several persons resulted. The insurer sought to limit its liability for all property damage to the sum of $5,000.00, contending that all damages resulted from one "accident", namely, the blowout. However, in commenting upon the facts, Judge 'Holmes' opinion discloses the following circumstances which we think clearly distinguishable from those presented here:
" The blowing-out of the well was not a single accident but a series of events, a catastrophe. Numerous accidents were the product of this motivating force and the wind as a supervening force. The eruptions continued intermittently for over two days; and during this period the wind changed from time to time, blowing mud and sand on different properties. (Emphasis supplied.) 178 F.2d 324.
Confronted with such a factual situation, this court then held that the damages had resulted from a "series of events" rather than an "accident" and that the limit of the insurer's liability was expressed by the phrase "$25,000 aggregate." We think the opinion leaves little room for doubt that this was its true basis, and the "series of events" or continuing and spreading "catastrophe" there involved is not at all comparable to the single, sudden collision with which we are concerned here.
Moreover, although we think the facts as there stated by the court sufficient to distinguish Anchor, we also point out the substantial difference in the wording used in that policy to express the limits of property damage liability. By providing "aggregate" coverage far in excess of that for "each accident", the policy gave rise to a necessity for construction not present here. There was at least some basis for reasoning that the parties to that policy might have had in mind something other than the ordinary meaning of the word "accident". Here, there is nothing in the policy indicating such an intention.
We are convinced that the language in Anchor to the effect that a separate accident occurs with respect to each owner of damaged property was not necessary in the opinion. We believe that the conclusion was based upon the court's appreciation of the facts and its construction of the policy provisions as applied to those facts, and accordingly we do not consider the opinion dispositive of the issue presented here. The single, sudden and unintentional collision involved here was one accident, and the insurer's liability for all property damage resulting therein is $5,000.00.
For these reasons, the judgment appealed from is reversed and the cause is remanded with instructions to enter judgment for the defendant-appellant.
Reversed.
CAMERON, Circuit Judge. '
I dissent.
. "No insurance is provided under any of the following Sections unless so indicated by entries showing the Company's limit of liability.
"The limit of the Company's liability under each such Section shall be as stated therein, subject to all of the terms of this Policy and Insuring Agreement having reference thereto.
. "I. Section A — Bodily Injury Liability (Including Automobile)
"The Company agrees to pay on behalf of the Insured all sums which the Insured shall become obligated to pay by reason of the liability imposed upon him by law or contract for damages, including damages for care and loss of services, because of bodily injury, sickness or disease, including death at any time resulting therefrom, sustained by any person or persons.
"II. Section B — Automobile Property Damage Liability
"The Company agrees to pay on behalf of the Insured all sums which the Insured shall become obligated to pay by reason of the liability imposed upon him by law or contract for damages because of damage to or destruction of property, including the loss of use thereof, caused by accident and arising out of the ownership, maintenance or use of any automobile.
"HI. Section C — Property Damage Liability Other Than Automobile
"The Company agrees to pay on behalf of the Insured all sums which the Insured shall become obligated to pay by reason of the liability imposed upon him by law or contract for damages because of damage to or destruction of property, including the loss of use thereof, caused by accident."
. In Willingham v. Life & Casualty Ins. Co., 216 F.2d 226, 227, this court referred with approval to "the principle that ordinarily the same words used in different clauses of a contract will be understood to have been used in the same sense." See also 29 Am.Jur., Verbo "Insurance", Sec. 159; 44 C.J.S., Insurance, § 294, p. 1155.
. For interesting discussions of the South Staffordshire case, see the opinions in Hyer v. Inter-Insurance Exchange, 77 Cal.App. 343, 246 P. 1055.
. There is some dispute as to whether the record in the Anchor case contains anything to substantiate the statement in the opinion that there were intermittent eruptions of the well. We consider this immaterial for two reasons. First, we think the unquestioned facts of continued eruption and changing winds sufficient to constitute what occurred in Anchor a "series of events" and to distinguish that ease from the instant suit. Second, the conclusion there reached was necessarily the result of consideration of the facts as there understood and stated J>y the court. It is upon the written opinion that we base our consideration of the decision as a legal precedent. See 14 Am. Jur. 289.