Butler v. Maryland Casualty Company

These damage suits have all been compromised. There remains for adjudication only the counterclaim of the third party defendant, Charles L. Oakley, against the Maryland Casualty Company for attorneys’ fees expended by him in the defense of these actions as well as parallel actions filed in the state court.

Oakley was a student at Louisiana State University. At the suggestion of his instructor, his class in Administrative Procedures decided to make a field trip from the University grounds in Baton Rouge, Louisiana, to St. Francis-ville, Louisiana, to observe the work at a high school in that city. The class was transported on the field trip in cars owned by the students. Each student using his ear, to convey himself as well as other students, was promised and did receive from the University $6 for expenses. On the trip the car driven by Oakley was in a collision which resulted in two deaths and several personal injuries, all of which gave rise to the litigation out of which this claim for attorneys’ fees grew. 1

*393 In the damage suits filed iii the state eourt, Oakley and the Maryland Casualty Company were made defendants, the Maryland Casualty Company on the theory that it was the insurer of Oakley because it had issued a liability policy to *394 L. S. U. covering the drivers of vehicles owned or used by it. The petitions filed in state court 2 specifically alleged that Maryland Casualty Company was the insurer of Oakiey and as such was liable with Oakley for damages arising out of the wreck. 3

Maryland Casualty Company contends that it is not the insurer of Oakley and, consequently, owed him no defense to the personal injury or death actions. Oakley maintains, however, that he was an omnibus insured under the policy issued by Maryland to L. S. U. in that the car operated by him, but owned by his mother, was hired by L. S. U. and that, under the policy, the driver of such hired vehicle was covered except where the driver thereof was the owner of the vehicle or his employee. 4 Oakley also contends that *395 irrespective of actual coverage under the policy, he nevertheless was owed a defense by Maryland since the petitions in the personal injury cases charged that he was the assured of Maryland and the policy issued by Maryland to L. S. U. provides that a defense is owed an insured, named or omnibus, “even if such suit is groundless, false, or fraudulent.” 5

It is true that in Louisiana, as elsewhere, the obligation to provide a defense for an assured is determined by the allegations of the petition or complaint, irrespective of the fact that the suit may be entirely groundless. 6 But before that principle applies, it must be shown that the defendant in the personal injury action is in fact an assured, named or omnibus, under the policy. Obviously, the insurer’s obligation is not to provide a defense for a stranger merely because the plaintiff alleges that the strange defendant is an assured or alleges facts which, if true, would make him so. Conversely, the insurer may not renege on its obligation to provide a defense, even for an omnibus insured, merely because the allegations in the complaint are groundless. For example, where a person is driving the named insured’s car with his permission, the permittee is an omnibus assured under the policy and the insurer owes him a defense when sued even though the charge of negligence against him cannot be proved. On the other hand, if permission was not granted for the use of the car, the user thereof is not entitled to a defense under the policy irrespective of proof of negligence. In short, allegations in the plaintiff’s petition cannot create an obligation on the part of the insurer to defend where none previously existed. Unless Oakley is shown to be an assured under the policy, named or omnibus, no obligation whatever as to him arises, either as a party to the insurance contract or as the beneficiary of a stipulation therein pour autrui. See LSA-C.C. Arts. 1890 and 1902.

Here there is no such showing. Assuming, as Oakley contends, that the Oakley car comes within the policy definition of “hired automobile,” 7 which is in itself a broad assumption, Oakley is excluded from coverage under the policy by Article 111(d) which excludes the owner of the hired car or its employee. As shown in National Mutual Ins. Co. v. Liberty Mutual Ins. Co., 90 U.S.App.D.C. 362, 196 F.2d 597, 599, the obvious intent of Article 111(d) is to exclude cov *396 erage where a vehicle is hired by the named insured with a driver. Obviously, here Oakley, and his car, were in the class excluded from coverage. While it as true that Oakley was neither the registered owner of the car nor the employee of the registered owner, the fact remains, so far as the University knew, Oakley was the owner and dealt with him as such. He was, therefore, the agent of an undisclosed principal. As to the University as well as to its insurer, he was the principal. 8 He was the owner of the car pro hac vice. As such, he was not an assured under the policy and, consequently, Maryland Casualty Company owed Slim no defense.

Judgment accordingly.