
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.                                         -2-            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                                         -3-            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.            _______________________________                                         -6-
