In this little declaratory drama, neither of two insurance companies wanted to play the part of primary insurer. Nonetheless, the District Court cast them both in that role and they appeal. We affirm.

At approximately 10:00 p. m. on February 21, 1973, Amos Williamson was backing a tractor-trailer into the driveway of his home. During this operation, the trailer extended across Georgia State Route 54, and an automobile driven by Kenneth Randall Smith collided with that unsubtle object. Smith was killed; his wife and a second passenger were injured.

Shortly thereafter, Mrs. Smith brought a diversity suit in the Northern District of Georgia alleging negligence of the driver Williamson and the defective condition of both tractor and trailer. She sought $1.5 million in damages for her injuries and the wrongful death of her husband. The cast of characters named as defendants and their alleged interrelationships were as follows:

J.R.J. Trucking, Inc. (JRJ): owner and lessor of tractor

Rentco Division Fruehauf Corp. (Rentco): owner and lessor of trailer

International Transportation Services, Inc. (ITS): lessee of tractor and trailer

International Bakerage, Inc. (Bakerage): sublessee from ITS of tractor and trailer

Williamson was alleged to be the agent of all four defendants.

At the time of the accident, JRJ was the named insured under a policy issued by Carolina Casualty Insurance Company (Carolina). That policy covered both the tractor owned by JRJ and the trailer owned by Rentco. ITS and Bakerage were named insureds under a policy issued by Underwriters Insurance Company (Underwriters). Both policies were in full force and effect on February 21, 1973.

During the pendency of Mrs. Smith's action, Carolina brought a declaratory judgment action against Underwriters, Rentco, ITS, Bakerage, and Mrs. Smith. It sought an adjudication of the respective rights and liabilities of the parties under the Carolina and Underwriters policies and a stay of the Smith action. Like the policies, also central to this dispute was the leasing agreement between JRJ and ITS.1

Under the terms of this contract, JRJ, owner-lessor of the tractor, undertook, inter alia, the following obligations: (i) to keep the leased equipment in first-class condition and repair and to pay all operating expenses;2 (ii) to assume responsibility for and pay wages to the drivers;3 (iii) to assume full responsibility for drivers as JRJ's employees, and to hold ITS-lessee harmless from drivers' claims against ITS;4 (iv) (a) to provide and keep in force property damage and public liability insurance, (b) to furnish a certificate of insurance showing ITS as the named insured and providing for notice of cancellation, and (c) to assume the expense in the event JRJ was unable to furnish evidence of insurance and ITS procured insurance on behalf of JRJ.5

ITS, an ICC carrier, assumed as required by applicable regulations6 exclusive possession, control and use of the leased equipment and full responsibility to the public, shippers, and all state and federal agencies.7

In order that the reader can more readily understand and compare the critical provisions of the two policies, they are numbered in brackets and set forth below in table form. The provisions will be referred to throughout using these numbers.

Carolina argued below that its policy did not cover ITS or Williamson.10 Its fallback position was if such coverage existed, it was excess only and ITS' coverage was primary as a matter of law.11 Underwriters urged that its policy did not cover Williamson, that JRJ's coverage was primary and extended to both Williamson and ITS. Underwriters further contended that because any liability of ITS was vicarious, it was subrogated to the right of ITS to seek indemnity from Williamson and ultimately Williamson's insurer, Carolina. Alternatively, Underwriters asserted that if any coverage were found to exist, it was excess only and not primary.

On cross-motions for summary judgment, the District Court held that (i) ITS was not an additional insured under Carolina's policy by virtue of exclusion (2) of the Truckmen's endorsement; (ii) the driver Williamson was an additional insured under definition (1) of Carolina's policy by virtue of the lease which made Williamson a JRJ employee and permissive user; (iii) Williamson was an additional insured under ITS' Underwriters policy definition (4) by virtue of the lease which made him a permissive user;12 Underwriters clause (5) was ineffective to exclude him from that definition under Trinity Universal Ins. Co. v. Farmers Mutual Auto. Ins. Co.;13 (iv) a finding that Williamson was an additional insured under ITS' policy negated any possibility of subrogation and indemnity; and (v) because the "other insurance" provisions (3) and (6) were mutually repugnant, Carolina and Underwriters were primary insurers with respect to Williamson. Delighted not to have been the only one cast in a primary role, but definitely unhappy with equal billing, both companies appeal.14

That Which They Giveth They Also Taketh Away?

Carolina limits its attack to one aspect of the District Court's decision:15 the implicit rejection16 of the contention that Underwriter's coverage was not primary as a matter of law. Carolina's theory proceeds along the following lines. ITS is a common carrier certified by the Interstate Commerce Commission and the Georgia Public Service Commission. The rig, in charge of Williamson, was operating under ITS' certificate of authority when the collision occurred. Underwriters filed on behalf of ITS certificates of insurance with the ICC and the Georgia PSC. The Underwriters policy is subject to the "Endorsement for Motor Carrier Policies of Insurance for Automobile Bodily Injury and Property Damage Liability under Section 215 of the Interstate Commerce Act"17 (ICC endorsement).18

According to Carolina, the fact that the Underwriters policy does not actually bear the ICC endorsement is of no moment. The Interstate Commerce Act and regulations promulgated pursuant thereto have the effect of stamping the endorsement on the policy, with the concomitant effects of nullifying the "other insurance" clause (6) and making Underwriters the primary insurer. In support of this argument, Carolina relies principally on two Tenth Circuit decisions, Argonaut Ins. Co. v. National Indemnity Co., 10 Cir., 1971, 435 F.2d 718, and Hagans v. Glens Falls Ins. Co., 10 Cir., 1972, 465 F.2d 1249. In rebuttal, Underwriters relies on yet another Tenth Circuit case, Carolina Casualty Ins. Co. v. Transport Indemnity Co., 10 Cir., 1973, 488 F.2d 790. We shall discuss these opinions in chronological sequence.

In Argonaut, Executive Car Leasing hired a driver (Blankenship) from Auto Driveaway to transport an Executive car from Oklahoma to California. En route, Blankenship struck a car driven by Seymour who died as a result. Seymour's estate sued Blankenship and Auto Driveaway; Executive Car Leasing was not joined as a defendant. Executive's insurer National refused to defend the action. Driveaway's insurer Argonaut defended, settled for $55,000, paid the judgment, and sued National on the basis that National had primary coverage. Both the National and Argonaut policies contained "other insurance" clauses. The Argonaut policy, however, contained the ICC endorsement, as to which the Court concluded as follows:

Blankenship had possession of the car under authority from Driveaway and drove negligently. The ICC endorsement, although not expressly referring to the "other insurance" provisions, says that no condition, provision, stipulation, or limitation of the policy "shall relieve the Company (the insurer) from liability hereunder." If the Argonaut position is accepted, it will be relieved from any liability except for excess coverage. We believe that the effect of the endorsement was to make Argonaut the primary insurer.

Whatever may be the liability of National under its policy, we agree with the trial court that " * * * Argonaut cannot escape the plain terms of its insuring agreement in this case." The ICC endorsement imposes primary liability and eliminates any need for consideration of the effect of the identical "other insurance" clauses. We have no question of excess because the recovery was within the limits of the Argonaut policy.

435 F.2d at 720-21 (emphasis added).

The facts in Hagans were slightly different. There the lessor Ryder (insured by Liberty Mutual) agreed to provide insurance covering Far-Go (lessee/ICC carrier) as an additional insured. Far-Go (insured by Glens Falls) agreed to indemnify Ryder. The driver Hagans was a Far-Go employee on Far-Go business at the time the accident occurred. Both policies covered Far-Go and its employees. Apparently the Glens Falls policy did not contain the ICC endorsement, but "all parties proceed(ed) on the premise that the policy of Glens Falls contain(ed) such." 465 F.2d at 1252. The Court ignored the terms of the lease by which Ryder agreed to provide public liability insurance, and on the basis of Argonaut held that Glens Falls' coverage of Far-Go (lessee) was primary.

	Carolina v. Transport maps out as follows:
            Carolina/Andico-Lessor          Transport/Ringsby-Lessee
            ------------------------------  -------------------------
Lease       Lessor agreed to indemnify      Lessee assumed control of
provisions  lessee                          driver
            Lessor agreed to supply driver
            who was not to be considered
            employee of lessee
            Lessor agreed to obtain public
            liability insurance
Policy      ICC endorsement                 ICC endorsement
provisions
            Omnibus insurance clause        No comparable clause
            Excess only clause              Excess only clause

On these facts the Court ignored the lease agreement except to the extent that the contract was considered to have established permissive use for purposes of the omnibus insurance clause. It distinguished Argonaut and Hagans on the basis that both policies contained the ICC endorsement and went on to hold first, that Ringsby-lessee19 and the driver were additional insureds under the Carolina policy. Second, the driver was not an additional insured under the Transport policy because it lacked an omnibus insurance clause (equivalent to Underwriters provision (4) here). Third, the driver was a "special employee" of Ringsby-lessee because it had full control over the tractor-trailer. Finally,

Ringsby's (lessee's) liability, if any, is vicarious; if Ringsby should be found liable it would have the right to proceed by indemnification against Freeze (the driver). As Ringsby's subrogee, Transport (Indemnity) could then sue Freeze, a permissive user under Carolina's policy, ultimately recovering against Carolina. Based on the above, and to avoid circuity of action, we hold Carolina's policy to be primary.

488 F.2d at 794 (emphasis added).

Argonaut, Hagans and Carolina v. Transport are not dispositive here. First, there are factual distinctions. In Argonaut, the estate did not sue Executive Leasing and the negligence action went to judgment only against Driveaway and Blankenship. While the Court clearly recognized the possibility that Executive and National had potential liability, such liability had not been established, and there is no indication in the opinion that an action against Executive was either filed or contemplated. As to Hagans, the Glens Falls policy held to be primary insured a lessee who had expressly agreed to indemnify its lessor. In those circumstances, there was nothing inequitable in making Glens Falls the primary insurer. Carolina v. Transport involved a situation where the lessee's policy contained no omnibus clause.

But we approach it more fundamentally. Even if we assume arguendo that the Underwriters policy bears the ICC endorsement, and assume that in this trilogy the Tenth Circuit is saying that such an endorsement makes insurance coverage primary in all circumstances and for all purposes as a matter of law, we decline to follow such a rule.

The purpose of § 215 of the Interstate Commerce Act and regulations is to assure to members of the public and shippers that a certificated carrier has independent financial responsibility, with the dollar limits prescribed, to pay for losses created by its carrier operations. On the face of the endorsement this is accomplished by reading out "other insurance," "excess," or similar clauses insofar as the amount available to a third party victim would be reduced. But there is no need for or purpose to be served by this supposed automatic extinguishment of the clause insofar as it affects the insured or other insurers who clamor for part or all of the coverage. Indeed the last sentence of the endorsement (see note 18, supra ) prescribes that as between insurer and insured all terms of the policy are to remain in effect.

This is substantially the same approach we took in Consolidated Systems, Inc. v. Allstate Ins. Co., 5 Cir., 1969, 411 F.2d 157. There, Allstate insured Consolidated, the lessor; Citizens insured Alterman, the common carrier/lessee. Despite the fact that certificates of insurance were filed on Alterman's behalf with the ICC and the equivalent state authority, Citizens never issued a policy to Alterman. Allstate argued that Alterman was estopped to deny primary coverage to Consolidated because of the ICC requirements. Judge Thornberry's opinion answered the estoppel argument for us:

The question . . . raised by this conclusion of law is whether Citizens' filings with the ICC and the Public Service Commission, either or both, constitute representations of the existence of insurance which estop Citizens from denying primary coverage to Consolidated. Preliminarily, we focus on the fact that the party asserting the estoppel is Allstate, not the person injured in the collision. We make this point because we would clearly have a different case if this were a suit brought by the injured person, if Alterman were judgment proof, if a bond were not on file with the ICC, and if Citizens denied liability to the injured party on the ground that it never issued the insurance policy referred to in the certificate. In this hypothetical situation, the injured person could argue with considerable force that the public relied on the existence of insurance attested to by Citizens and that Citizens was estopped to deny liability since Alterman would never have made the trip resulting in a collision if the certificate had not been filed. But in the case actually before us Allstate is asserting that Citizens is estopped to deny the existence of insurance covering Consolidated. Whereas the Florida citizen injured in a collision with an Alterman vehicle would have little difficulty arguing as against Citizens that the public relied on the representation that Alterman had insurance, reliance by Allstate on other insurance for Consolidated is not so easily perceived.

411 F.2d at 161 (emphasis added). See also Allstate Ins. Co. v. Liberty Mutual Ins. Co., 3 Cir., 1966, 368 F.2d 121, 125 (where construction of policy is not required to protect the public, ICC considerations are not determinative). Cf. Wellman v. Liberty Mutual Ins. Co., 8 Cir., 1974, 496 F.2d 131, 139 (ICC regulations may not be read into policy to impose liability upon insurer in contravention of precise terms of policy); Vance Trucking Co. v. Canal Ins. Co., D.S.C., 1966, 249 F. Supp. 33, 39, aff'd, 4 Cir., 1968, 395 F.2d 391, cert. denied, 393 U.S. 845, 89 S. Ct. 129, 21 L. Ed. 2d 116 (Interstate Commerce Act and regulations are not designed to excuse a party from liability which he might otherwise have).

Therefore, assuming without deciding that the Underwriters policy contains an ICC endorsement,20 we hold that the endorsement does not make Underwriters the primary insurer as a matter of law. Williamson was a paid employee of JRJ at the time of the accident, and the leasing agreement granted Williamson permissive use of JRJ's equipment. Carolina insured the risk that a JRJ permissive user might incur liability. Carolina cannot disavow its primary insurer status on the theory that public policy demands that this be pushed off onto Underwriters. ICC policy factors are frequently determinative where protection of a member of the public21 or a shipper is at stake, but those factors cannot be invoked by another insurance company which has contracted to insure a specific risk and which needs no equivalent protection.

Underwriters takes the same stance here as it did below with one exception: it has apparently abandoned and with good cause the contention that ITS was an additional insured under the Carolina policy.22 Otherwise, it maintains that under Simmons v. King, 5 Cir., 1973, 478 F.2d 857, ITS' liability for Williamson's acts is vicarious only and that under principles of indemnity and subrogation, it would be entitled to proceed against Williamson and ultimately his insurer Carolina. Thus, in order to avoid circuity of action, we are urged to follow Carolina v. Transport, supra, 488 F.2d 790, and hold Carolina primary.

The fallacy in Underwriters' position of course is that Williamson was an additional insured under ITS' policy. We believe that the District Court's analysis of this issue was absolutely correct23 and that it properly applied Simmons.24

Underwriters contends that by reason of the terms of the lease imposing substantial obligations on the lessor (see notes 2-5, supra ) Carolina's coverage should be primary. It is well settled that disputes of this sort hinge principally on the express terms of the policy and an insurer's contractual obligations cannot ordinarily be altered by collateral agreements between its insured and third persons. E. g., Transport Indemnity Co. v. Home Indemnity Co., 3 Cir., 1976, 535 F.2d 232, 235; Carolina v. Transport, supra. However, it is equally well settled that a Court can look to outside sources such as lease agreements and ICC regulations to define the status of persons who are covered by the insurance contract. E. g., Wellman, supra, 496 F.2d at 137; Carolina v. Transport, supra, 488 F.2d at 794; Allstate Ins. Co. v. Alterman Transport Lines, Inc., 5 Cir., 1972, 465 F.2d 710, 714-15; Transport v. Home, supra, 535 F.2d at 237; Pacific National Ins. Co. v. Transport Ins. Co., 8 Cir., 1965, 341 F.2d 514, 518. Cf. Transamerican Freight Lines, Inc. v. Brada Miller Freight Systems, Inc., 1975, 423 U.S. 28, 40, 96 S. Ct. 229, 235, 46 L. Ed. 2d 169, 179 (recognizing that Interstate Commerce Act and regulations can impose liability as a matter of law). And probably more significant, when one insurer lashes out against another insurer with whom there is not the slightest shadow of a suggestion of a contractual relationship on the equitable concept of subrogation, the relationship between the insureds may have decisive consequences.

Underwriters insists that provision (5), which excludes an owner of a hired or non-owned automobile or any agent or employee of such owner, operates to exclude Williamson from the omnibus definition (4) as an insured. The District Court properly held that Trinity Universal Ins. Co. v. Farmers Mutual Auto. Ins. Co., 7 Cir., 1962, 309 F.2d 283, is dispositive on this score. The "definition of insured" and "owner-agent" exclusion clauses in Trinity were substantially identical to the equivalent provisions (4) and (5) in the Underwriters policy. Moreover, the Eighth Circuit in Wellman, supra, construed almost identical "definition of insured" and "owner-agent" exclusion clauses in the same fashion as Trinity. 496 F.2d at 136.25 Under Trinity and Wellman when provisions (4) and (5) are read together, it is clear that the exclusion applies only to agents or employees of the owner (JRJ) who are not employees of the named insured ITS in this instance.

Coming around full circle, the lease which, pursuant to ICC regulations, mandated that Williamson be under the control of ITS, established that the driver was a permissive user within Underwriters provision (4). Underwriters conceded at oral argument without risking any possible reflection on professional competence that an insurer cannot subrogate against its own insured and Trinity so held. As stated in American Surety Co. v. Canal Ins. Co., 4 Cir., 1958, 258 F.2d 934, 937, there is no right of subrogation where an insurance company, in derogation of its contract, seeks to be subrogated in the right of its named assured against an additional insured under the omnibus clause, for the additional insured, except as limited in the contract, is entitled to the same protection as the named insured.

Finally, Underwriters argues that under Georgia law,26 where liability policies issued to the owner and driver of a vehicle each covers an injury, and one or both policies contain an excess insurance clause pertaining to nonownership coverage, the policy issued to the owner is held to be the primary policy, the insurer being liable up to the limits of the policy without apportionment. According to this theory, only after the primary policy has been exhausted is there recourse to the policy providing nonownership coverage. In support of this contention, Underwriters cites the well-reasoned opinion of Judge Hall in Chicago Ins. Co. v. American Southern Ins. Co., 1967, 115 Ga.App. 799, 156 S.E.2d 143. However, the facts in that case differ vastly from those before us. In Chicago, the accident occurred while the owner was a passenger in his own car, the driver having operated the car with the owner's permission. The driver's and the owner's policies contained "other insurance" provisions. The Georgia Court held that the owner seeking damages for his injuries from the driver could look to his own insurer for primary coverage up to the limits of the policy. Once that policy was exhausted, the driver's insurer was liable up to the limits of its policy. Chicago is thus plainly inapposite as is clear from State Farm Fire & Casualty Co. v. Holton, 1974, 131 Ga.App. 247, 205 S.E.2d 872, 874, which stated the Georgia rule which is applicable to the present facts: where both insurers attempt to limit their liability to excess coverage if there is other insurance, "then the clauses are irreconcilable, cancel each other out, and the liability is to be divided equally between them".

The District Court correctly relied on Bradshaw v. St. Paul Fire & Marine Ins. Co., N.D.Ga., 1964, 226 F. Supp. 569 in holding Carolina and Underwriters to be co-primary.27 Bradshaw, which started as an Erie prediction, by time, tide and these intervening Georgia decisions, has become an Erie fact. Holton, supra; Southern Home Ins. Co. v. Willoughby, 1971, 124 Ga.App. 162, 182 S.E.2d 910.

AFFIRMED.