Court Opinion

ID: 2963482
Source: CourtListenerOpinion
Date Created: 2015-09-21 21:10:36.129108+00
Date Added: 2024-06-11T12:38:25.760888
License: Public Domain

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

                                
            ____________________

            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
                                 ___________________

                      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.

                                         -4-

            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).
            ___     _______________________________

                                         -5-

            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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