USCA1 Opinion
UNITED STATES COURT OF APPEALS
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
FOR THE FIRST CIRCUIT
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No. 94-2129
CANAL INSURANCE COMPANY,
Plaintiff, Appellee,
v.
CAROLINA CASUALTY INSURANCE COMPANY,
Defendant, Appellant.
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APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Michael A. Ponsor, U.S. District Judge]
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Before
Torruella, Chief Judge,
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Aldrich, Senior Circuit Judge,
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and Cyr, Circuit Judge.
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Jeffrey S. Stern with whom Sugarman, Rogers, Barshak & Cohen was
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on brief for appellant.
George R. Suslak with whom Stanton & Lang was on brief for
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appellee.
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July 13, 1995
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ALDRICH, Senior Circuit Judge. By stipulation it
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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
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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.
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Searls v. Standard Accident Co., 316 Mass. 606, 608 (1944);
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Lee v. New York Life, 310 Mass. 370, 373; Bi-Rite Enterprises
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v. Bruce Miner Co., Inc., 757 F.2d 440, 443 (1st Cir. 1985).
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The ICC endorsement, of course, must be governed by federal
law.
The Carolina Policy
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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.
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The Canal Policy
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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
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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
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National Ins. Co., 868 F.2d 357, 363 (10th Cir. 1989) (cases
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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
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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
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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.
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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.
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Co., 134 N.H. 315, 318 (1991). Correspondingly, in fairness
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to the insurer, beyond this the excluding policy terms should
stand. Id. (Policy provision that all liability in certain
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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.
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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.;
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Gay v. Preferred Risk Mutual Ins. Co., 114 N.H. 11 (1974).
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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
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consistent herewith. No costs.
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