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United States Fidelity & Guaranty Co. v. Koch

February 16, 1939

UNITED STATES FIDELITY & GUARANTY CO.
v.
KOCH ET AL.



Appeal from the District Court of the United States for the Western District of Pennsylvania; Nelson McVicar, Judge.

Author: Clark

Before MARIS and CLARK, Circuit Judges, and KALODNER, District Judge.

CLARK, Circuit Judge.

Our opinion in this case commences with an unusually detailed relation of the facts. In that recital special emphasis is directed to dates. This is done with a full realization that both the statement and decision of facts are in the normal course particularly the province of the trial court. Here, however, we think their recapitulation useful in illustration of our conclusions.

The Claims in Litigation.

On April 12, 1934, plaintiff-appellant, a casualty insurance corporation, issued a combination automobile policy to the nonresisting defendant-appellee, Seymour Ress, for his Plymouth two door sedan. He was an Associated Press reporter and lived at the Beacon Apartment-Hotel in Pittsburgh. On June 3, 1934, while driving this car, Ress was involved in an accident (presumably a collision) in which his three passengers suffered personal injuries. One of these passengers was Flora Koch, the defendant-appellee. She is attempting to sustain an order of the District Court for the Western District of Pennsylvania entered in her favor on May 18, 1938, four years after the accident.

The two other passengers (sex undisclosed) obtained settlements from the plaintiff insurance company. One settlement was entirely voluntary and the other after entry of suit against Ress and his transmittal of the suit papers to the plaintiff-appellant. A memorandum in the company's files indicated an offer of $500 on November 9, 1934 to defendant-appellee Koch's present attorney, Louis Caplan, and its rejection by him.

The Proceedings in the State Courts.

Thereafter, and on January 22, 1935, Flora Koch filed a negligence action in the usual form in the Common Pleas Court of Allegheny County. On January 29, 1935, the writ and statement of claim thereon were served on Ress by handing them to a clerk at the apartment-hotel at which he lived. This service seems to have been the ordinary substituted service (residence or place of abode) provided by statute in actions in personam where the defendant does not happen to be at home when the sheriff calls. 50 C.J. 490. Ress never appeared in this action, and on June 26, 1935, a default judgment was entered against him in favor of Flora Koch.

By November 15, 1935, Ress had received notice of the judgment of June 26th and of the empaneling of a sheriff's jury to assess damages thereon. On November 23, 1935, he advised the manager of suit preparation for the Pittsburgh District office of the appellant company of this notice. This was plaintiff-appellant's first knowledge of the Koch suit. The not unnatural reaction of plaintiff's manager was to consult counsel and the advice of a member of the firm now pressing this appeal was sought. That advice was of a Fabian character. Ress was told to employ his own counsel and make an effort to have the default judgment reopened. What reason he was expected to give for such a reopening is not revealed. As might be supposed, the statutes do not recognize caprice or indifference but require some sufficient reason for the omission to plead in due season, 34 C.J. 525. At any rate, the advice was not followed and the sheriff's jury liquidated damages in favor of Flora Koch for the sum of $3,359.75. The subsequent course of defendant-appellee's counsel leads us to believe that he now regrets the extra $360.

On a date undisclosed, except that it was at the January Term, 1936, defendant-appellee Koch issued a writ of execution (fi. fa.) upon her judgment as above and this writ was returned by the sheriff marked nulla bona. On some date again undisclosed except that it was after this return of execution and prior to March 31, 1936, Mr. Morris, another of the defendant Koch's attorneys now defending this appeal, telephoned plaintiff's preparation of suit manager already referred to and demanded payment of this unsatisfied judgment. Such payment was refused.

On another undisclosed date, but prior to November 5, 1936, defendant-appellee filed another negligence action in the Superior Court of New Haven County, Connecticut, based on the same accident in reparation of which judgment had been secured in the Common Pleas Court of Allegheny County. The papers in this suit were delivered to the plaintiff-appellant by persons unknown. On November 5, 1936, plaintiff-appellant through its attorneys filed an answer to this suit pleading specially the Pennsylvania judgment. On November 5, 1937, defendant-appellee issued a writ of execution attachment against the plaintiff-appellant alleging the unsatisfied judgment against Ress and the possession by it of certain monies, etc., of Ress. On November 12, 1937, defendant-appellee sued the plaintiff-appellant in the Common Pleas Court of Allegheny County in an action in assumpsit on the unsatisfied Pennsylvania judgment, the service being on the Insurance Commissioner.

The Proceedings in the United States Courts.

On March 31, 1936, the plaintiff-appellant filed a petition for declaratory judgment under the Act of Congress permitting such a procedure, U.S.C.A., Title 28, section 400. This petition is in the usual form and claims an "actual controversy" between the parties. On April 27, 1937, defendant-appellee requested dismissal of the petition on the grounds inter alia that there was no "actual controversy", that the action was prematurely brought, and that her constitutional right to a trial by jury was in jeopardy. No factual reason for the alleged untimeliness was given and there was no showing that plaintiff-appellant even wished to dispense with a jury. Defendant-appellee ...


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