Before KALODNER and HASTIE, Circuit Judges, and MODARELLI, District Judge.
This is an action by an insurance company, under the Federal Declaratory Judgment Act, 28 U.S.C. § 2201, for an adjudication of its liability under a policy of automobile insurance.
The facts giving rise to the appeal are as follows:
On January 20, 1948, the Lumbermens Mutual Casualty Company ("Lumbermens") issued a policy of automobile liability insurance to Laura V. Sutch. The policy contained a standard omnibus clause whereby the insurer bound itself, subject to certain stated exceptions, to provide the same coverage for anyone operating the car "with the permission of the named insurer" as it was bound to furnish the named insured.*fn1 Mrs. Sutch was 78 years old at the time the policy was issued, and incapable of driving; to enjoy the use of the car, she employed one Dorothy Scheer as companion-chauffeur. Attached to the policy was an endorsement which readas follows:
"It is hereby understood and agreed that the coverage under this policy will become Null and Void if the car is driven by Mrs. Laura V. Sutch.
"Car is operated by Dorothy Scheer, age 35, employed by insured and lives with insured."
On February 27, 1948, while Mrs. Sutch was out of town, Dorothy Scheer ("Scheer") drove the car to a friend's home where she spent the evening playing cards. Shortly before 2:30 A.M. the next morning she left the house in the company of two friends, William F. Hayden and Harriet Rehfeld, whom she had offered to drive home. While the car was being operated for this purpose it became involved in an accident, as a result of which the two passengers, Hayden and Rehfeld, were injured. Hayden and Rehfeld instituted suits in the Common Pleas Court of Philadelphia County against Scheer to recover damages for the injuries sustained in the accident. Scheer made demand upon Lumbermens to defend her in these two actions, whereupon Lumbermens brought the instant suit in the District Court for the Eastern District of Pennsylvania for an adjudication that it was not obligated to Scheer under the policy issued to Mrs. Sutch.Lumbermens named Mrs. Sutch, Scheer, Hayden and Rehfeld as defendants. In the court below the cause was submitted to a jury for a determination of the single factual issue as to whether at the time of the accident Scheer was operating the car "with the permission of the named insured", Mrs. Sutch. Lumbermens introduced in evidence a statement signed by Scheer five days after the accident, in which she said that prior to the accident she had not been using the car for her personal use, and that she took it on the evening of the accident without asking Mrs. Sutch. On the basis of this statement, and the testimony of the insurance adjuster who obtained it, the District Judge submitted the following interrogatory to the jury:
"At the time of the accident was Miss Scheer operating the car with the permission of Mrs. Sutch?"
The jury answered in the negative. Defendants then filed a motion for judgment on the whole record on the ground that, by virtue of the above endorsement, Scheer was the named insured on the policy, and hence coverage extended to her whether or not she had Mrs. Sutch's permission to drive. This motion was granted by the District Judge, who stated:
"The policy must be construed against the insurance company which wrote it. Every sentence in a contract is presumed to have been inserted for some purpose and it is also presumed that parties do not insert words in a contract intending that they shall have no effect whatever upon the rights and obligations created. Unless it was intended that Dorothy Scheer was to be insured when she drove the car, with or without Mrs. Sutch's permission, the * * * (endorsement) would be wholly without any legal effect. She, as well as any other person driving the car without the owner's permission, was excluded from the body of the policy. The only useful purpose the endorsement could have had was to make an exception in her case."
We cannot agree with the conclusion of the learned District Judge that Scheer became the insured on the policy by virtue of the endorsement naming her as the one who drove the car.
The policy was written and countersigned at Philadelphia. Therefore, the law of Pennsylvania applied. Faron v. Penn Mutual Life Ins. Co., 3 Cir., 1949, 176 F.2d 290.
It is true that a typewritten endorsement must be given effect to the exclusion of any conflicting printed provision in the policy, Newman v. Massachusetts Bonding & Insurance Company, 1949, 361 Pa. 587, 65 A.2d 417; Morris v. American Liability & Surety Company, 1936, 322 Pa. 91, 185 A. 201; Stallani v. The Belt Automobile Indemnity Association, 1925, 85 Pa.Super. 224; that all ambiguities in a policy of insurance are resolved against the insurer as the party responsible therefor, Gnagey v. Pennsylvania Threshermen & Farmers' Casualty Insurance Co., 1938, 332 Pa. 193, 2 A.2d 740; Janney v. Scranton Life Insurance Company, 1934, 315 Pa. 200, 173 A. 819; Brams v. New York Life Insurance Co., 1930, 299 Pa. 11, 148 A. 855; and that every word in a policy of ...