Petition — American Interinsurance Exchange v. Commercial Union Assurance Co.

‘Supreme Court, U. &,

79-1119 Midler:

IN THE JAN 18 1989

SUPREME COURT OF THE UNITED BAMMEER)DAK Jp. CLERK

OCTOBER TERM, 1979«

=

No. 79==

AMERICAN INTERINSURANCE EXCHANGE,

Petitioner,

<

versus

T. P. HILDEBRAN, RONALD P. HILDEBRAN,

WALKER TRUCKING COMPANY, INC., COMMERCIAL

UNION ASSURANCE COMPANY, ROSEMARY MAZUR,

and CARLTON DEANE, Respondents,

of whom COMMERCIAL UNION ASSURANCE

COMPANY was Appellant.

a te oe

PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

HAWKINS & MORRIS

By P. Michael Duffy

141 East Bay Street

Charleston, S.C. 29401

Attorney for Petitioner.

INDEX

Petition for a Writ of

Certiorari . ‘

Opinions Below .

SUPSeGLee LON 6c 's

Questions Presented . .

Statutes, Federal Rules and

Regulations Involved .

I, eg ge ae gle iA

Reasons for Granting V

the Writ . etme ee oe

Conclusion .

Appendix I .

eee Bee eee

Appendix III .

Appendix IV.

Page

wo W --

TABLE OF CITATIONS

CASES

Aetna Casualty and Surety Co.

Vi Beeely (hoe. caes L973) . « 18,

Allstate Insurance Co. v.

~ Federal “Insurance Co.,

23 Md.App. 105, 326 A.2d

29 (1974); modified on other —

grounds 341 A.2d 399 (1975). .18,

American Interinsurance Exchange

v. Hildebran, 605 F.od 731

COOR. Gab. L970) wns. . 12, 19,

Argonaut Insurance Co. v.

National Indemnity Co.

w35 F.2d 718 (10th cir.

Ss 8 8 a a ee ; Ries 18,

saroh ena Casualty Insurance Co.

The ahaupence £0. of North

eee fecsscdiy od V1d8 Crd CL Cir.

Carolina Casualty Insurance v.

nderwriters Insurance Co.,

Cth Cir. 1978) .

sagans v. Glens Falls Insurance

O.;

., 465 F.od 1249 (l0th Cir.

De oe cate a a ata Oe ee

he

Page

19

19

20

19

20

20

19

Marwell Construction, Inc. ve

ree peters at Lloyds, London,

: (Alaska 1970)

National Mutual Insurance Co. ve

Liberty Mutual ~ Insurance Co.

196 roa 5907 (D.c. Cir. 1952)

Pennsylvania Threshermen &

armers Mutual Casualty

Insurance Cc Co.

v. Hartford

aosacent & Indemnity Co., ane

(ate cir, 1902)... .

Ryder Truck Lines, Inc. Ve

ue ea Sue-: Insurance

Co., 305

49° (Ind. 1979).

STATUTES AND REGULATIONS

49 C.F.R. Section 1043. eine

Gert cs

Commerce

204(e), 49 U.S.C. nani

304(e)

Act, Section

ee. D

Regulations o 2 Public Service

Commission of the

vomit SSion

Carolina.

e State = oe

S.C. Code Annotated, Section

58-23-40 (197

-iii-

20

20

25

16

49 U.S.C. Section 315 (1977).

SUPREME COURT RULE

| Supreme Court Rule 19.

-iv-

eo 0.5.0, Section.1254-€1) (1977) .. 2

van, 25

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1979

No. 79<=-

AMERICAN INTERINSURANCE EXCHANGE,

Petitioner,

versus

T. P. HILDEBRAN, RONALD P. HILDEBRAN,

WALKER TRUCKING COMPANY, INC. COMMERCIAL

UNION ASSURANCE COMPANY, ROSEMARY MAZUR,

and CARLTON DEANE, Respondents,

of whom COMMERCIAL UNION ASSURANCE

COMPANY was Appellant.

PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

THE PETITIONER PRAYS that a Writ of

Certiorari be issued to review the

Opinion of the United States Court of

Appeals for the Fourth Circuit entered

oh &

in the above case on September 12, 1979.

OPINIONS BELOW

The judgment of the District Court

for the District of South Carolina is

unreported but is printed in

Appendix —_t hereto. The Opinion of

the Court of Appeals for the Fourth

Circuit is reported at 605 F.24 Lak

(Appendix II_) The opinion of the

Court of Appeals for the Fourth Circuit

was made and entered on September 12,

1979. A Petition for Rehearing was

denied on October 23, 1979. (Appen-

dix III )

JURISDICTION

The jurisdiction of this Court is

invoked under 28 U.S.c. 1254. (1).

QUESTIONS PRESENTED

(1) Did the Court below err in not

holding that the applicable South

<-

Carolina Public Service Commission

Regulations, South Carolina Public

Servi.ce Commission Rules; Section 9

(Appendix IV_); and the Lease entered

into pursuant to said Regulations,

operate to make the insurance policy of

Commercial Union Assurance Company

(Lessee's insurance) primary as a matter

of law?

‘) (2) Did the Court below err in

failing to address exclusion (c) of the

American Interinsurance Exchange policy

in light of its finding that Walker is

an additional insured under the American

Interinsurance Exchange (hereinafter

"AIE") policy and thereby leave un-

answered the ultimate question of

whether American Interinsurance Exchange

policy affords any coverage under these

circumstances?

ai

(3) Did the Court below err in not

addressing the exact nature of Commer-

clal Union's obligations to Ronald P.

Hildebran as an insured under its policy,

in light of Commercial Union's negotia-

tion of Covenants Not To Sue excluding

Ronald P. Hildebran from the protection

of those agreements?

(4) Did the Court below err in

finding that AIE must indemnify Commer-

cial Union for sums that it has expended

in defending Walker and for the sum, up

to the limits of the AIE policy, which

Commercial Union has paid or will pay to

settle the pending tort actions against

the Lessee? This question arises

because Commercial Union has failed to

obtain releases for Ronald P. Hildebran

in the various tort actions pending in

the State and Federal Courts, and the

oo

ordered indemnification would exhaust

the policy limits of American Interinsur-

ance Exchange's coverage.

STATUTES , FEDERAL RULES AND

REGULATIONS INVOLVED

This Petition is not based upon any

Federal Regulations per se, as it

involves the Regulations of the Public

Service Commission of the State of South

Carolina; but the Court's attention is

invited to the Regulations of the Inter-

state Commerce Commission. 49 U.S.C.

Section 315 (1977); 49 C.F.R. Section

1043.1(a) (1977).

: | STATEMENT

There are suits pending in the

Court of Common Pleas for the State of

South Carolina and in the United States

District Court for the State of South

Carolina arising out of a three-vehicle

ee

collision in 1975. One such vehicle was

a 1975 Kenworth Tractor (truck) owned by

T. P. Hildebran and leased to Walker

Trucking Company, Inc. (Walker), which

was pulling a trailer owned by Walker.

The Lease was entered into pursuant to

and in satisfaction of the Public Service

Commission Regulations for the State of

South Carolina. As provided in the

Lease, the driver of the truck had been

furnished to Walker by the Lessor, but

his wages were paid and his activities

were directed by Walker.

At the time of the collision,

T. P. Hildebran carried a liability

insurance policy on the truck. Issued

by AIE, the policy had limitations of

Fifteen Thousand and No/One-Hundredths

($15,000.00) Dollars bodily injury to

oS

EO LE

any one person, Thirty Thousand and

No/One-Hundredths ($30,000.00) Dollars

for bodily injury sustained in any one

accident, and Five Thousand and

No/One-Hundredths ($5,000.00) Dollars

for property damage.

The American Interinsurance Exchange

policy defined "an insured" to include

"the named insured", T. P. Hildebran, as

well as

... any person while using the

automobile and any person or orga-

nization legally responsible for

the use thereof, provided the

actual use of the automobile is by

the named insured or... with.

[his] . . . permission .

The policy’ furtner provided that:

If the insured has other insurance

against a loss covered by this

policy ... [AIE] .. . shall not

be liable under this policy for a

greater proportion of such loss

than the applicable limits of

liability stated in the declara-

tions bears to the total applicable

ute

ee ee ee ee Co a Leen TN nmNCH ONAN

does

limit of liability of all valid and

collectible insurance against such

loss.

The policy further provided that it

not apply;

(ec) Under coverages A and B, while

the automobile is used for the

towing of any trailer owned or

hired by the insured and not

covered by like insurance in the

company; or while any trailer

covered by this policy is used with

any automobile owned or hired by

the insured and not covered by like

insurance in the company;

The Commercial Union policy defined

an insured to include Walker Trucking

Company, Inc., and

. any other person while using

a hired automobile with per-

mission of the named insured, pro-

vided his actual operat‘on...

thereof is within the scope of such

permission . ‘ e

The policy further excluded from

the coverage thereof "the owner .. . of

a hired automobile .. . or any agent or

employee of such owner ... ." The

policy also provided that "with respect

to a hired automobile ... this in-

Surance shall be excess insurance over

any other valid and collectible insur-

ance available to the insured."

American Interinsurance Exchange

instituted this action for declaratory

judgment as to the responsibilities of

the two insurance carriers relative to

the negligence actions filed by the °

occupants of the car. Since that time,

actions have been filed on behalf of the

owner and driver of the second truck

involved in the three-vehicle collision.

A stipulation was entered into narrowing

the questions presented to the District

Court as follows:

1. Which policy of insurance

Should provide the liability for

T. P. Hildebran, Ronald P. Hildebran

(the driver) and Walker Trucking Com-

pany, Inc., and

2.. Should the "Covenant Not To

Sue" executed between two of the Plain-

tiffs in the tort. actions and Walker

Trucking Company, Inc. be allowed to

stand as valid and binding in light of

the possible prejudicial effect upon

T. P. Hildebran and American Interinsur-

ance Exchange resulting from their lack

of opportunity to participate in settle-

ment negotiations.

The District Court concluded that

there was no basis upon which the tort

Plaintiffs could establish any liability

on the part of T. P. Hildebran, owner of

the truck; that American Interinsurance

Exchange was relieved of any duty to the

wiG~

remaining tort Defendants by reason of

certain Regulations of the South Caro-

lina Public Service Commission and

certain provisions of the written Agree-

ment for the lease of the truck; that by

the express terms of its policy issued

to Walker, Commercial Union was exclu-

sively responsible for the coverage of

the Lessee and the driver.

As to the second question, the

District Court ruled that the "Covenants

Not To Sue" protected only Walker, the

Lessee of the truck, with the result

that Commercial Union was not relieved

of its duty to defend the truck driver.

Commercial Union appealed to the —

Court of Appeals for the Fourth Circuit

which held that both American Interin-

surance Exchange and Commercial Union

tie

Owe coverage to the driver of the truck

for any liability which may be assessed

against him; moreover, the Lessee,

Walker, is entitled to coverage under

American Interinsurance Exchange's

policy as an additional insured; American

Interinsurance Exchange's coverage of

both the driver and the Lessee is primary

and that of Commercial Union is excess.

The Court of Appeals further held that

American Interinsurance Exchange must

indemnify Commercial Union for the sums

that it has expended in defending anes

and for sums up to the limits of the

American Interinsurance Exchange policy,

that Commercial Union has paid or will

pay to settle the negligence actions

against the Lessee. The Appeals Court

affirmed the District Court in its

finding that the "Covenants Not To Sue"

-l2-

are only binding between the parties

thereto and thus Commercial Union is not

relieved of its duty to defend the

driver of the truck.

REASONS FOR GRANTING THE WRIT

1. The decision below should be

reviewed because it ignores the clear

intent of the Public Service Commission

Regulations of the State of South Caro-

lina which had the force and effect of

Statutory law; it further ignores the

clear intent of the lease agreement be-

tween T. P. Hildebran and Walker, and it

ignores the circumstances and facts

Surrounding the issuance of Commercial

Union's policy. Accordingly, the Fourth

Circuit Court of Appeals has decided an

important State question in a way con-

trary to the policies outlined in State

law. Therefore, the Court should

-13-

review the decision pursuant to

Supreme Court Rule 19.

The Rules and Regulations issued by

the South Carolina Public Service Com-

mission pursuant to the South Carolina

Motor Vehicle Carrier Law which were in

effect at the times material to this

controversy provided in part:

Rule 99.(e) Any lease of motor

vehicle equipment by any person

Shall comply with the following

conditions:

(6) Every lease shall provide

for the exclusive possession,

control, and use of the equip-

ment and for the complete

assumption of responsibility

in respect thereto by the

Lessee for the duration of

Said Lease.

Rule 99.(d) Every vehicle Subject

to lease shall be covered by ade-

quate insurance as required by

these rules:

Such insurance shall be in the

+ name of the Lessee and evi-

dence of coverage must be

filed with the Commission.

(See Appendix IV ]

«thy

\

The Motor Equipment Lease and

Agreement, dated October 28, 1974,

between T. P. Hildebran, owner-Lessor of

the 1975 Kenworth Tractor, and Walker

Trucking Company, Inc., Lessee, reads,

in relevant part, as follows:

3. During the period of this Lease

the said motor vehicle equipment

[tractor] shall be solely and

exclusively under the direction and

control of the Lessee [Walker

Trucking Company, Inc.], and the

Lessee shall be liable .. . for

any property damage that may be

caused by the operation of the said

motor vehicle equipment by the

Lessee, and for any public liability

resulting from said operation by

the Lessee ‘

4, It is mutually agreed and

understood by Lessor [T. P. Hilde-

bran] and the Lessee [Walker Truck-

ing Company, Inc.] that whenever

the motor vehicle equipment [trac-

tor] is disengaged from Lessee's

trailer equipment [tank] the Lessor

Shall become an independent contrac-

tor no longer under the control or

direction of Lessee, and it is

further agreed and understood that

during the time that said equipment

-15-

is separated, as aforesaid, that

the Lessee's Public Liability and

Property Damage Insurance shall not

cover Lessor's motor vehicle equip-

ment [tractor]. However, the above

does not apply when Lessor is in-

structed to do so by Lessee.

Before a tractor owner may haul a

trailer for commercial purposes in the

State of South Carolina, he must obtain

a Certificate of Public Convenience and

Necessity. South Carolina Code Anno-

tated, Section 58-23-40 [1976].

T. P. Hildebran had no such Certificate

but Walker Trucking Company, Inc. did.

Walker operating pursuant to the Certifi-

cate of Public Convenience and Necessity

was responsible for insuring all ve-

hicles operating as part of its fleet

and had to provide a Certificate of

Insurance to the Public Service Commis-

Sion as evidence of that fact. Thus,

-16=

Walker had to procure: insurance to cover

the leased vehicle. T. P. Hildebran in

the Lease Agreement was called upon as

part of the basis of the bargain to do

those things necessary to keep in force

the insurance coverage of Commercial

Union.

The Lease Agreement discloses that

Walker Trucking Company, Inc. was aware

of all the requirements of both the

Interstate Commerce Commission and the

South Carolina Public Service Commission

and that the Lease Agreement was drafted

to comply with those Regulations. It is

axiomatic that the Regulations of the

Public Service Commission for the State

of South Carolina and the Interstate

Commerce Commission have the same objec-

tive, this is, protection of the public.

oh

Accord. Interstate Commerce Act, Section

204(e), 49 U.S.C.A. Section 304(e).

Consequently, the cases that make

insurers of truck lessees primarily

liable as a matter of public policy and

law are directly on point to the ques-

tion herein. See Hagans v. Glens Falls

Insurance Co., 465 F.2da 1249 (10th Cir.

1972); Argonaut Insurance Co. v.

National Indemnity Co., 435 F.2d 718

(lOth Cir. 1971); Aetna Casualty And

Surety Co. v. Arkin (N.D. Ill. 1973);

Allstate Insurance Co. v. Federal

Insurance Co., 23 Md.App. 105, 326 A.2qd

29 (1974) modified On other grounds 341

A.2d 399 (1975).

The very compelling reason that the

decision below should be reviewed is

that there is a difference of opinion

«tts

among the Supreme Courts of the vaiwous

States and the various Circuit Courts of

Appeal as to the effect to be given to

Public Service Commission Regulations

and Interstate Commerce Commission

Regulations in cases such as this.

Compare, Hagans v. Glen Falls

Insurance Co., 465 F.2d 1249 (10th Cir.

1972); Argonaut Insurance Co. v.

National Indemnity Co., 435 F.2d 718

(10th Cir. 1971); Aetna Casualty And

Surety Co. v. Arkin, (N.D. Ill. 1973);

Allstate Insurance Co. v. Federal

Insurance Co., 23 Md.App. 105, 326 A.2a

29 (1974) modified on other grounds 341

A.2d 399 (1975); [all holding regulations

and public policy make the insurance for

the truck lessee primary as a matter of

law]; with American Interinsurance

-19-

Exchange v. Hildebran, 605 F.2d 731

(4th Cir. 1979); Carolina Casualty

Insurance Co. v. The Insurance Co.

of North America, 595 F.2d 128 (3rd Cir.

1979); Carolina Casualty Insurance v.

Underwriters Insurance Co. (5th Cir.

1978); National Mutual Insurance Co.

vV. Liberty Mutual Insurance Co., 196

F.2d 597 (D.C. Cir. 1952); Marwell

Construction Inc. v. Underwriters

At Lloyds, London, 465 P.2da 298

(Alaska 1970); ana Ryder Truck Lines

Inc. v. Carolina Casualty Insurance

Co., 385 N.E.2d 449 (Ind. 1979); [all

holding regulations and public policy do

not make lessee's insurance primary as a

matter of law].

2. The Court below was inconsis-

tent and created an entirely new issue

to be resolved. The Court first found

‘oS.

that none of the exclusions in the

American Interinsurance Exchange policy

relieved its insured of liability. The

Court thereafter found that Walker was

afforded coverage under the AIE policy

as an additional insured and in so

doing, has made a finding of fact which

clearly comes within the exclusion (c)

of the AIE policy. Exclusion (c)

provides that the policy does not apply

while the automobile (Hildebran's truck)

is used for towing of any trailer owned

or hired by the insured (Walker's

trailer) and not covered by like insur-

ance in the company; or while any

trailer covered by the policy is used

with any automobile owned or hired by

the insured and not covered by like

insurance in the company. )

It is clear from the record that

w 2%

AIE did not issue a polisy of insurance

on Walker's trailer and it is a trailer

owned bY an insured under the Court's

—e that Walker is an insured. The

Court has therefore breathed life into

exclusion (c) of the AIE policy and the

Court by holding that exclusion (c) is

inapplicable has ignored the policy

definition of "insured." This same

exclusion was dealt with by the Fourth

Circuit in Pennsylvania Threshermen

& Farmers Mutual Casualty Insurance

Co. v. Hartford Accident & Indemnity

Co., 310 F.2d 618 (4th Cir. 1962).

Although the earlier Fourth Circuit

Opinion did not find the exclusion

applicable to the facts therein, it

appears that the present facts would

trigger the exclusion. Thus, the lower

22a

court has departed from earlier case

law on this point.

3. The Court avoided the question

inherently raised by its finding that

Commercial Union owed a duty to defend

Ronald P. Hildebran. The Court did not

address the obligations that arise |

therefrom in light of Commercial Union's |

negotiation of "Covenants Not To Sue"

excluding Ronald P. Hildebran from the

protection of those agreements. There

can be no authority offered by Commercial

Union to support its reckless disregard

of the rights of Ronald P. Hildebran as

an insured under its policy. This is

particularly significant because Commer-

cial Union has paid its policy limits to

“one of the Plaintiffs in the personal

injury suits (Mazur) while leaving at

a2 9a

risk Ronald P. Hildebran, one of its

insured. It cannot be denied that

Ronaid P. Hildebran is entitled to the

Same protections under Commercial

Union's policy as the named insured,

Walker Trucking Company, Inc.

4. The Court below failed to in-

struct the Petitioner as to how it could

indemnify Commercial Union up to the

Petitioner's policy limits and still

afford protection for Ronald P. Hilde-

bran as an insured in the various tort

actions pending. Since the Court of

Appeals held that both policies of

insurance were in effect at the time of

the collision, Commercial Union should

not be entitled to any indemnification

for monies paid under the Covenants

negotiated solely by Commercial Union

without participation by AIE, all in

=24.

derogation of the duties and obligations

owed to the insured, Ronald P. Hildebran.

This lack of clear guidance from

the lower court as to the respective

duties and obligations of the parties

herein requires that this court

exercise its power of supervision pur-

suant to Supreme Seman’ Rule 19(1)p.

CONCLUSION

The question presented by this case

as to the effect to be given conflicting

provisions in insurance policies in

light of Public Service Commission and

Interstate Commerce Commission Regula-

tions is of great and recurring signifi-

cance in the various jurisdictions. In

addition, there is a serious question of

public policy involved, which is the

frustration of the legislative intent,

m25e

expressed in the passage of the various

Regulations.

For these reasons and those set

forth above, it is respectfully sub-

mitted that this Petition for Writ of

Certiorari should be granted.

HAWKINS & MORRIS

ay: GML

P. Michael Duf

141 East Bay Street

Charleston, S. C. 29401

\ Attorney for Petitioner

Of Counsel:

Michael A. Scardato

141 East Bay Street

Charleston, S. C. 29401

January 16, 1980.

=26<

APPENDIX I

IN THE DISTRICT COURT OF THE

UNITED STATES

FOR THE DISTRICT OF SOUTH CAROLINA

CHARLESTON DIVISION

Civil Action No. 76-10

AMERICAN INTERINSURANCE EXCHANGE,

Plaintiff,

versus

T. P. HILDEBRAN, RONALD P. HILDEBRAN,

WALKER TRUCKING COMPANY, INC.,

COMMERCIAL UNION ASSURANCE COMPANY,

ROSEMARY MAZUR, and CARLTON DEANE,

Defendants.

ORDER

The Plaintiff's Complaint in this

cause of action seeks a declaratory

judgment as to the responsibilities of

two insurance carriers arising out of

two separate causes of action docketed

on the Jury Calendar of this Court; one

case being Civil Action No. 75-2200 in

atts

which Rosemary Mazur is the plaintiff,

and Ronald P. Hildebran, T. P. Hildebran

and Walker Trucking Company, Inc., are

defendants; and the other case being

Civil Action No. 75=+2198 in which Carl-

ton Deane is the plaintiff and Ronald P.

Hiidebran, T. P. Hildebran and Walker

Trucking Company, Inc., are defendants.

Both of those plaintiffs are non-resi-

dents of this State and seek damages

arising out of the three-vehicle colli-

sion in which Rosemary Mazur was the

Owner=-passenger in an automobile being

driven by Carlton Deane. Both allegedly

Sustained injuries as a result of a

collision with a 1973 White Truck driven

by one Tommy C. Kinard which had pre-

viously collided with a 1975 Kenworth

truck leased and operated by Walker

Trucking Company, Ince. The lessor was

-28—

T. P. Hildebran. Ronald P. Hildebran

(working for Walker Trucking Company,

Inc., pursuant to the lease agreement),

was the driver or operator of said

vehicle at the time of the collision.

As a result of the claims of the

plaintiffs, Mazur and Deane, the plain-

tiff in this action, American Interin-

surance Exchange (hereinafter referred

to as "AIE") filed its Complaint dated

January 2, 1976, joining as defendants

the parties to the initial causes and

Commercial Union Assurance Company,

(hereinafter referred to as "Commercial

Union"), which is the liability in-

Surance carrier for Walker Trucking Com-

pany, Inc. The plaintiff "AIE" is the

liability insurance carrier for the

lessor, T. P. Hildebran.

a2G.

The defendants, Rosemary Mazur and

Carlton Deane, have filed their Answer

dated January 27, 1976. The defendant,

Commercial Union, filed its Answer on

March 25, 1977.

At the request of counsel for the

parties involved, stipulations were

filed in this case and the case is

presently before this court for final

disposition without the necessity of a

jury trial. The Stipulations of Fact

were filed on September 19, 1977, and

are attached as Exhibit "A". AIE,

through its counsel, had previously

filed its brief in the form of a pro-

posed Order. On October 19, 1977, a

hearing was held in this cause in

Charleston, South Carolina, at which

time the following attorneys were pre-

~ 30,

sent: Falcon B. Hawkins for AIE; James

A. Bell for Mazur and Deane; and Thorn-

well F. Sowell, III, for Commercial

Union. At that hearing Mr. Sowell

requested the opportunity to file a

brief. That brief was filed on

October 31, 1977 and the court has also

received a letter from Mr. Sowell dated

December 28, 1977, which supplemented

his brief. Mr. Bell has stated he has

no desire to file a brief.

One error in the Stipulation of

Facts must be pointed out for clarifi-

cation. The Stipulation reads, in

paragraph 1, as follows: "The first

Civil Action is No. 75-220 in which

Rosemary Mazur is the plaintiff and

Ronald P. Hildebran and Walker Trucking

Company, Inc., are defendants." It is

-31l-

clear from the case file in that cause

of action that T. P. Hildebran is also a

defendant in that case and he will be so

considered in this Order.

As a preliminary matter the court

finds as follows:

1. That this action is properly

before the court pursuant to 28 U.S.c.

Sec. 2201 to determine various rights,

duties and liabilities of the parties

under the terms and provisions of two

respective insurance policies.

2. That all parties are properly

within the jurisdiction of the court as

is the subject matter of this action.

3. That the matter in controversy,

exclusive of interests and costs,

exceeds the sum of Ten Thousand

($10,000.00) Dollars.

As per the Stipulations of Fact,

mr ee

the first question presented for determi-

nation is:

1. Which policy of insurance should

provide the liability insurance coverage

for T. P. Hildebran, Ronald P. Hildebran

and Walker Trucking Company, Inc.?

This court finds that the responsi-

bility for providing liability insurance

coverage and the responsibility for

defending claims against Ronald P.

Hildebrar and Walker Trucking Company,

Inc., lies exclusively with the defen-

dant, Commercial Union.

In the case of Walker Trucking it

appears without question that both the

Public Service Commission Rules and Reg-

ulations, as well as the terms of the

lease, would dictate this result.

The Rules and Regulations in effect

~33-

at the times material to this contro-

versy issued by the South Carolina Pub-

lic Service Commission, pursuant to the

“South Carolina Motor Vehicle Carrier

Law, Chapter 13, Sections 58-1401 through

1501, and Section 58-1536 (Volume 12)

Code of Laws of South Carolina 1962 (now

58 S. C. Code, Sec. 23-10, et seq.

(1976)) provide in part:

Rule 99.(d) Every vehicle subject

to lease shall be covered by ade-

quate insurance as required by

these Rules: such insurance shall

be in the name of the lessee and

evidence of coverage must be filed

with the Commission. (Emphasis

added).

Rule 99.(@) Any lease of motor

vehicle equipment by any person

Shall comply with the following

conditions:

(6) Every lease shall provide

for the exclusive possession, con-

trol, and use of the equipment and

for the complete assumption of

responsibility in respect thereto

by the lessee for the duration of

eke

Said lease. (Emphasis added).

These Rules and Regulations of the

Public Service Commission have the force

and effect of statutory law. See 1962

S. C. Code, Sec. 58-1461; 58 S. Cc.

Code, Sec. 23-1010 (1976); see,

Heyward v. South Carolina Tax

Commission, 126 S.E. 2d 15, 19, 20; 240

S.C. 347 (1962).

The Motor Equipment Lease and

Agreement, dated October 28, 1974, made

between T. P. Hildebran, owner-lessor of

the 1975 Kenworth tractor, and Walker

Trucking Company, Inc., lessee, read in

relevant part as follows:

3. During the period of this lease

the said motor vehicle equipment

(tractor) shall be solely and ex-

Clusively under the direction and

control of the Lessee (Walker

Trucking Company, Inc.), and the

Lessee shall be liable ... for

any property damage that may be

=39=

caused by the operation of the said

motor vehicle equipment by the

Lessee, and for any public liability

resulting from said operation by

the Lessee ... . (Emphasis

added).

4. It is mutually agreed and under-

stood by Lessor (T. P. Hildebran)

and Lessee (Walker Trucking Co.,

Inc.) that whenever the motor ve-

hicle equipment (tractor) is

disengaged from Lessee's trailer

equipment (tank) the Lessor shall

become an independent contractor

and no longer under the control or

direction of Lessee, and it is

further agreed and understood that

during the time that said equipment

is separated, as aforesaid, that

the Lessee's Public Liability and

Property Damage Insurance shall not

cover Lessor's motor vehicle equip-

ment (tractor). However, the above

does not apply when Lessor is

instructed to do so by Lessee.

(Emphasis added).

Read in connection with paragraph 3

of the lease, paragraph 4 of the lease

Says by negative implication that Lessee

Walker's Public Liability and Property

Damage Insurance will cover Lessor

o%Ge

Hildebran's tractor when the tractor and

trailer are engaged.

The clear command of the above

Rules and the assumption in the lease of

total control and responsibility by the

Lessee Walker lead this court to con-

clude that Walker and Commercial Union

have the responsibility to compensate

any persons injured by the use of the

1975 Kenworth tractor-trailer combina-

tion. It is also concluded that AIE has

no coverage of, nor owes any defense to

Walker Trucking.

Commercial Union also has coverage

over aS well as a duty of defending

Ronald P. Hildebran, as a person using a

hired automobile with the permission of

the named insured. He is thus an in-

sured under the Omnibus Clause of Com-

=37<

mercial Union's policy, which provides

as follows:

II. Persons Insured

Each of the following is an

insured under this insurance to the

extent set forth below:

(a) the named insured

(b) (inapplicable)

(c) any other person while

using an owned automobile or a

hired automobile with the

permission of the named in-

sured, provided his actual

operation or (if he is not

operating) his other actual

use thereof is within the

scope of such permission .

None of the following is an

insured:

(11) the owner... ofa

hired automobile .. . or any

agent or employees of any such

owner .

Commercial Union asks this Court to

determine that its policy affords no

coverage to Ronald P. Hildebran because

of the exception set forth above and

then

cites Canal Insurance Co. v. Liberty

Mutual Insurance, 395 F.Supp. 962 (N.D.

Ga. 1975). Even assuming arguendo that

Ronald P. Hildebran was an employee of

T. P. Hildebran, and not an employee of

Walker Trucking, the decision cited by

Commercial Union is not properly

addressed to our present inquiry. The

district court decision in Canal that

liability insurance coverage was not

afforded to the driver of the truck

involved in an accident was predicated

on the court's conclusion that the

"truck was not a ‘hired automobile’

under the terms of the Liberty Mutual

policy because there was no separate

hiring contract." There is no dispute

in the facts of the instant case and

thus the Canal Insurance Company

3Qa

decision loses any persuasion it might

have in reference to the issue here.

From the facts of this case, the

court finds that Ronald P. Hildebran was

an employee of Walker Trucking at the

time of the accident and he is therefore

afforded coverage and owed a defense by

Commercial Union under the provisions of

its policy. This court also finds that

AIE owes no defense and has no coverage

over Ronaid P. Hildebran because of the

previously-mentioned Public Service

Commission Regulations and the lease

agreement entered between Walker Truck-

ing and T. P. Hildebran.

The court finds no basis under the

facts of this case upon which the two

plaintiffs in the two tort actions

pending in this court could establish

-4o-

resulting from their lack of Opportunity

any liability on the part of T. P.

to participate in Settlement negotia-

Hildebran, the owner of the 1975 Ken- P Pp g

tions?"

worth truck. The Public Service Com- ss

The court concludes that the Cove-

mission Rules and Regulations, Supra,

nants Not to Sue are bindi Only be-

and paragraph 3 of the Lease between nding ¥

tween the parties who ecuted them, and

T. P. Hildebran and Walker Trucking, P seat ; j

these covenants do not relieve Commercial

Supra, completely absolve T. P. Hilde-

Union of the duty under its policy to

bran from any liability to Mazur and y D ¥

defend any insureds includi Ronald P.,

Deane under the facts of this case. | y » including Ronal

Hildebran, who was driving the truck in

The second question presented in % ie

uestion with the ermission of, and

the Stipulation for this court's con= q DP ’

While acting within the Scope of his

Sideration is:

employment with, Walk ki ~

"2. Should the Covenants Not to ray » Walker Trucking Com

an the named insured in said Olicy.

Sue executed between Rosemary Mazur, sated Pp y

Theref Lt hereby ORD :

Carlton Deane and the Walker Trucking C825 is hereby ORDERED

1) That th ity f

Company, Inc., be allowed to stand as (1) the responsibility for

4 :

valid and binding in light of possible providing liability insurance coverage

and the res 3 ty f£

prejudicial effect upon T. P. Hildebran . esponsibility for defending

Claims against Ronald P. Hildebran and

and American Interinsurance Exchange é 2

~4j. ~420

Walker Trucking Company, Inc., lies ex-

clusively with the defendant, Commercial

Union.

(2) The defendant AIE owes no

coverage over nor does it owe any de-

fense to Walker Trucking Company or

Ronald P. Hildebran.

(3) That under the facts of this

case there is no liability on the part

of T. P. Hildebran for the damages in-

curred by Mazur and Deane.

(4) The Covenants Not to Sue are

Dinding only between the parties who

executed them and do not relieve Commer-

cial Union of its duty to defend any

insureds under its policy.

AND IT IS SO ORDERED.

s/Charles E. Simons, Jr.

UNITED STATES DISTRICT JUDGE

Charleston, S. C.

January 30, 1978.

‘oh Sac

a a EE AO EN

APPENDIX II

AMERICAN INTERINSURANCE

EXCHANGE, Appellee,

Vv.

COMMERCIAL UNION ASSURANCE

COMPANY, Appellant,

and

T. P. Hildebran, Ronald P. Hildebran,

Walker Trucking Company, Inc., Rose-

mary Mazur and Carlton Deane, Defend-

ants.

No. 78-1196

United States Court of Appeals,

Fourth Circuit.

Argued Jan. 9, 1979,

Decided Sept. 12, 1979.

FIELD, Senior Circuit Judge:

A 1975 Kenworth tractor (truck)

owned by T. P. Hildebran and leased by

him to Walker Trucking Company, Inc.

(Walker), was involved in a collision

with an automobile in South Carolina in

1975 while pulling a trailer owned by

ies:

Walker. As provided in the lease the

driver of the truck had been furnished to

Walker by the lessor, but his wages were

paid and his activities were directed by

Walker. Alleging that the truck had been

negligently operated, two occupants of

the car brought diversity actions for

damages against the driver, the truck |

owner, and the lessee,!

At the time of the collision,

T. P. Hildebran carried a liability

insurance policy on the truck. Issued by

American Interinsurance Exchange (ATE),

the policy had limitations of $15,000 for

bodily injury to any one person, $30,000

for bodily injury sustained in any one

accident, and $5,000 for property damage.

The AIE policy defined "an insured" to

include "the named insured," T, P. Hilde-

bran, as well as

-45..

any person while using the auto-

mobile and any person or organi-

zation legally responsible for the

use thereof, provided the actual use

of the automobile is by the named

insured or * * * with * * * [his] #

* * permission * * #,

The policy further provided that

[i]Jf the insured has other insurance

against a loss covered by this

policy * * * [AIE] * # * spall not

be liable under this policy for a

greater proportion of such loss than

the applicable limit of liability

Stated in the declarations bears to

the total applicable limit of lia-

bility of all valid and collectible

insurance against such loss * * #,

Liability insurance was also carried

by Walker, the lessee. Issued by Com-

mercial Union Assurance Company (Com-

mercial Union), this insurance has bodily

injury limits of $100,000 per person and

$300,000 per accident, with a property

damage limit of $100,000. The Commercial

Union policy defined "an insured" to

include Walker Trucking Company, ine.,

and

wie

any other person using * * * a hired

automobile with. the permission of

the named insured, provided his

actual operation * * * thereof is

within the scope of such per-

mission * * #,

Expressly excluded from the coverage of

the:Commercial Union policy was "the owner

# * # of a hired automobile * * * or any

agent or employee of any such owner * * #*,"

The policy further stated that "[wlith

respect to a hired automobile * * *, this

insurance shall be excess insurance over

any other valid and collectible insurance

available to the insured."

AIE brought this action for a declar-

atory judgment as’ to the responsibilities

of the two insurance carriers relative to

the negligence actions filed by the occu-

pants of the car. A stipulation between

the parties narrowed the questions

presented for the district court's

wilt Fie

determination as follows: (1) Which

Ppulicy of insurance should provide the

liability for T. P. Hildebran, Ronald

Hildebran [the driver] and Walker Trucking

Company, Inc., and (2) Should the

"Covenants Not to Sue" executed between

Rosemary Mazur, Carlton Deane [plaintiffs

in the tort action] and the Walker Truck-

ing Company, Inc., be allowed to stand as

valid and binding in light of the possible

prejudicial effect upon T, P. Hildebran

and American Interinsurance Exchange

resulting from their lack of opportunity

to participate in settlement negotiations.

Upon agreed facts, the district

court concluded, as to the first ques-

tion, that there was no basis upon which

the tort plaintiffs could establish any

liability on the part of the owner of the

Ce aR

truck; that AIE was relieved of any duty

to the remaining tort defendants by

reason of certain regulations of the

South Carolina Public Service Commission

and certain provisions of the written

agremeent for the lease of the truck; and

that by the express terms of its policy

issued to Walker, Commercial Union was

exclusively responsible for the coverage

of the lessee and the driver. With

respect to the second question, the court

ruled that the "Covenants Not to Sue"

protected only Walker, the lessee of the

truck, with the result that Commercial

Union was not relieved of its duty to

defend the truck driver, |

From a memorandum order incorporat-

ing these rulings,< Commercial Union

ieceaie.” It is appellant's position

that the court below should have dis-

-49-

regarded the Public Service Commission

regulations and the terms of the lease,

and should have found from the express

terms of the policies of insurance that

AIE, not Commercial Union, is exclusively

responsible for the truck driver's

liability. Alternatively, Commercial

Union maintains that even if it must

afford the driver some coverage, that

coverage is excess which ts not to come

into play until the limits of liability

Stated in the AIE policy are exhausted.

Finally, appellant contends that the

policy issued by AIE to the truck's owner

covers Walker also. Commercial Union,

therefore, seeks indemnity from AIE, as

the primary insuror, for expenses incurred

in defending the lessee and for sums, up

to the limits of the AIE policy, ~ that

Commercial Union has paid or will pay to

-50-

settle the negligence actions against the

lessee.

[1] We hold that both AIE and Com-

mercial Union owe coverage to the driver

of the truck for any liability which may

be assessed against him. Moreover, the

lessee, Walker, is also entitled to

coverage under AIE's policy as an addi-

tional insured .? AIE's coverage of both

the driver and the lessee is primary and

that of Commercial Union is excess.

Therefore, AIE must indemnify Commercial

Union for the sums it has expended in

defending Walker, and for sums, up to the

limits of the AIE policy, that Commercial

Union has paid or will pay to settle the

negligence actions against the lessee.

Furthermore, we agree with the district

court that the "Covenants Not to Sue" are

only binding between the parties thereto,

-5l-

A a SO 8 AEE Rt SO te a -

and, thus, Commercial Union is not re-

lieved of its duty to defend the driver

of the truck. Accordingly, we affirm the

court below on the latter point, but

remand the case for the entry of a declara-

tory judgment which incorporates our

conclusions on the other issues.

es

[2,3] When a dispute arises as to

whether an insurance company shall be

required to cover a given loss, the

written insurance contract must first be

consulted to ascertain the precise con-

tours of the duties undertaken by the

insurer. Like contracts in general, the

insurance agreement must be enforced

according to its terms. Torrington Co.

v. Aetna Casualty & Surety Co., 264 S.c.

636, 216 S.E.2d 547, 550 (1975); Quinn v.

State Farm Mutual Automobile Insurance

wS2~

Nee an a

Co., 238 S.C. 301, 120 S.%.24° 15 €1962)., } the insured of the liability it contractually

C4] Upon a fair reading of the | assumed for damages resulting from the

tele of the insurance policies issued driver's negligence.

by AIE to T. P. Hildebran and by Com- | {[5] A closer question is whether,

mercial Union to Walker Trucking Company, | by its terms, the Commercial Union policy

Inc., it is clear that each policy affords | issued to the trucking company also

liability coverage to the driver of the | protected the driver. There is no doubt

truck. For its part, AIE conceded as | that the driver fit the description of

much at oral argument. ! The AIE policy ~ "an insured" under the omnibus clause

expressly insured persons using the truck providing for coverage of persons using a

with the permission of the named insured, hired automobile with the permission of

and it is undisputed that T. P. Hildebran the named insured; the truck was admit-

himself appointed the man who was oper- tedly a hired automobile, and counsel for

ating the vehicle for Walker at the time Commercial Union conceded in oral argu-

of the jeisent .” While the insurance ment that the driver was an employee of

agreement contained certain exclusions Walker, and subject to its direction and

from coverage upon which AIE relied in control when the collision seme =

the court below,” no such argument is As previously noted, however, the Com-

raised on appeal. Nevertheless, none of mercial Union policy also expressly

the exclusions, fairly construed, relieve stated that an "agent or employee” of the

-53- =-54-

owner of a hired vehicle was not to be

considered an insured under the contract

of insurance. Appellant argues that by

virtue of this exclusionary provision the

driver was outside the protection of the

Commercial Union policy. Even though he

was an employee of Walker, Appellant

contends that certain provisions of the

written agreement for the lease of the

truck show that at the time of the acci-

dent the driver was the employee of

T. P. Hildebran as well. Specifically,

Commercial Union emphasizes that the

truck's owner agreed in the lease to

choose the driver, maintain coverage for

him under Workmen's Compensation, and to

accept some reimbursement for his ser-

vices.

Even if the driver was an employee

of the owner, however, we are of the

-55-

Opinion that the exclusionary provision

of the Commercial Union policy does not

exclude him from coverage. As written,

the exclusionary provision can reasonably

be construed to apply only where the

owner, and not the lessee, is the driv-

er's employer. See Carolina Casualty

Insurance Co. v. Underwriters Insurance

Co., 569 F.2d 304 (5 Cir. 1978); Wellman

v. Liberty Mutual Insurance Co.,

496 F.2d 131 (8 Cir. 1974); Trinity

Universal Insurance Co. v. Farmers Mutual

Automobile Insurance Co., 309 F.2d 283

(7 Cir. 1962); and O41 Base Inc. v.

Transport Indemnity Co., 143 Cal.App.2d

453, 299 P.2d 952 (1956). We are of the

opinion that where, as here, the driver

is also the employee of the lessee, the

"hired auto” exclusion is inapplicable.

This construction is consistent with the

~56—

policy of construing ambiguities in favor

of coverage. Gaskins v. Blue Cross-Blue

Shield of S. C., 245 S.E.2d 598, 600

(S.C. 1978); Beckett v. Jefferson Standard

Life Insurance Co., 165 S.C. 481, 164 S.E.

130 (1932).

In regard to the lessee of the

truck, it is undisputed that Commercial

Union owes coverage to Walker as its

named insured. In addition, a review of

the policy issued by AIE reveals that it

covers the lessee as well. As stated

earlier, the definition of "an insured"

includes "any person or organization

legally responsible for the use * * * [of

the automobile]." By virtue of the lease

agreement between T. P,. Hildebran and

Walker te and the regulations of the

1

Public Service Commission, 3 Walker is

vicariously liable for the negligent use

-57-

of the truck, Accordingly, it is ines-

capable that the lessee is an insured

under the AIE policy.

a

[6] Since both AIE and Commercial

Union afford coverage to the driver and

the lessee, it is necessary that we

determine which policy shall provide

primary coverage and which shall be

excess. As recited earlier, the Com-

mercial Union policy states that with

respect to a hired automobile such

insurance shall be excess. On the other

hand, the policy issued by AIE provides

that its coverage be pro rated with other

valid and collectible insurance. [fn an

identical situation, we have held that

the policy containing the excess clause

does not constitute other valid and

collectible insurance, and thus the pro

~58.

rata policy shall be primary. American

Surety Company of New York v. Canal

Insurance Co., 258 F.2d 934 (4 Cir. 1958)

(See cases cited therein)”

The appellee contends, however, that

the Public Service Commission regulations

requiring the lessee to obtain liability

insurance in his name operates to make

the lessee's insurance primary as a

matter of law. We cannot agree. The

regulations in question merely insure

that viable insurance will be available

to innocent victims of automobile acci-

dents. They in no way require that such

‘insurance shall be primary over other

available insurance. We conclude, there~

fore, that Canal is controlling and as

such AIE's coverage is primary and Com-

mercial Union's is excess.

AFFIRMED IN PART: REVERSED IN PART,

AND REMANDED.

-59-

FOOTNOTES TO OPINION

The negligence actions are

apparently still pending. They are

only tangentially related to this

appeal and we, of course, intimate no

view as to their merits.

American Interinsurance Exchange

vs. Hildebran, 444 F.Supp. 1246

(D..8 .C. 1975) «

All parties to the tort actions

were also parties to this declaratory

judgment, but none of them has ap-

pealed.

These points were raised in the

district court by Commercial Union's

answer to AIE's amended complaint.

Commercial Union, of course,

owes coverage to Walker as its named

insured.

Appellant does not contest the

district court's determination that

the owner-lessor of the truck cannot

be found liable for any damages

suffered by the tort plaintiffs, and

we do not address that aspect of the

judgment.

The appellee conceded to this

court that the driver was covered by

its policy and thus the only issue as

to him is which policy provides

-60-

10

primary coverage.

The lease provides:

Lessor will furnish one or more

competent drivers which will meet all

requirements of the Interstate Com-

merce Commission, Public Service

Commission, State and Federal law

enforcement agencies and Insurance

Companies as may be required by

Lessee.

Exclusion (b) provides that the

policy does not apply to the lia-

bility assumed by the insured under

any contract or agreement, etc.

Exclusion (c) provides that the

policy does not apply while the

automobile is used for towing of any

trailer owned or hired by the insured

and not covered by like insurance in -

the company; or while any trailer

covered by the policy is used with

any automobile owned or hired by the

insured and not covered by like

insurance in the company.

Exclusion (f) provides that the

policy does not apply to injury to or

destruction of property owned or

transported by the insured, or pro-

perty rented to or in charge of the

insured other than a residence or

private garage injured or destroyed

by a private passenger automobile

covered by the policy.

Exclusion (b) is inapplicable

because the insured has not "assumed"

-6l-

Feat. ae es

11

any liability under any contract or

agreement. Any liability on the part

of the owner or the driver could only

arise as a result of the latter's

negligence.

Exclusion (c) is inapplicable

because the tractor was not used for

the towing of a trailer owned or

hired by the insured since the trailer

in question was owned not by the

insured, T. P. Hildebran, but by

Walker Trucking. As to the second

clause of exclusion (c), even if AIE's

policy covers trailers, the trailer

would be used with an automobile

"owned by the insured" and the auto-

mobile would be specifically covered

by the AIE policy, and thus would not

fulfill the "and not covered by like

insurance in the company" require-

ment.

Exclusion (f) is inapplicable

because it only refers to property

owned, transported, rented to or in

charge of the insured. It does not

apply to property of third persons.

The lease provides:

During the period of this lease the

Said motor vehicle equipment shall be

solely and exclusively under the

direction and control of the

Lessee * # #

The lease further provides:

It will be mutually understood and

agreed that the above specified

~-62-

12

13

equipment shall be operated in accord-

ance with Lessee's safety regulations

and under its safety supervision.

Moreover, the appellant. conceded

that the driver might very well. have

been a statutory employee of the

lessee.

The lease provides:

During the period of this lease the

said motor vehicle equipment shall be

solely and exclusively under the

direction and control of the Lessee,

and the Lessee shall be liable * * *

for any public liability resulting

from said operation by the Lessee.

The regulations provide in part:

Rule 99(e). Any lease of motor

vehicle equipment by any person shall

comply with the following conditions:

(6) Every lease shall provide

for the exclusive possession,

control and use of equipment and

for the complete assumption of

responsibility in respect there-

to by the lessee for the duration

of said lease.

Rule 99(d) Every vehicle subject to

lease shall be covered by adequate

insurance as required by these

Rules; such insurance shall be in the

name of the lessee and evidence of

coverage must be filed with the

Commission.

a6.3~

APPENDIX III

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 78-1196

American Interinsurance Exchange,

Appellee,

versus

Commercial Union Assurance Co.,

Appellant,

and

T. P. Hildebran; Ronald P. Hildebran;

Walker Trucking Co., Inc.; Rosemary

Mazur and Carlton Deane,

Defendants.

ORDER

Upon consideration of the petition

for rehearing received October 1, 1979,

IT IS ORDERED that:

: leave to file petition for

rehearing out of time is

-6§4—

GRANTED;

a. petition for rehearing is

DENIED.

Entered at the direction of Judge

Field for a panel consisting of Judge

Winter, Judge Field and Judge Widener.

For the Court,

/s/ William K. Slate, II

Clerk

Filed

October 23, 1979

U.S. Court of Appeals

Fourth Circuit

~65-

APPENDIX IV

REGULATIONS OF SOUTH CAROLINA

PUBLIC SERVICE COMMISSION

SECTION 9. Lease and Subcontracts

Rule 92. The term "the trans-

portation of property for compensation"

shall mean any agreement, lease, sub-

contract or other device by which prop-

erty is transported over the public

highways of the State of South Carolina

and under which any person or persons

other than a private carrier shall have

any right to control, direct or dominate

such shipment or under which any person

or persons, in substance, is engaged in

the business of intrastate transporta-

tion of property and for which such

person or persons shall receive payment

in connection with the transportation of

Such property by a motor vehicle or for

the use of a motor vehicle.

-66-

Rule 93. The term "private carrier"

shall mean a person hauling his own

products in his own motor vehicles or in

motor vehicles which are leased in

compliance with the terms of Rules Nos.

95 and 99.

Rule 94. The term "owner" shall

include a person (1) to whom title to

equipment has been issued, or (2) who as

lessee, shall have the right to exclusive

use of equinment, for a period of longer

than 30 days, or (3) who has lawful

possession of equipment and has the same

registered and licensed in any State or

States or the District of Columbia in

his or its name.

Rule 95. No lease or subcontract

shall preclude the parties thereto from

complying with the provisions of Title

ee

58, Chapter 13 of the Code of Laws of

South Carolina (1962) or from the Rules

and Regulations adopted pursuant thereto

unless, by the terms thereof, such lease

or subcontract shall comply with the

following provisions:

(a)

(b)

Any lease shall transfer sole

control, direction and domina-

tion of the motor vehicle and

the shipment or shipments

involved to a private carrier,

or to a carrier certificated

by this Commission, or by the

Interstate Commerce Commission.

Any subcontract shall provide

for services beyond those

ordinarily and normally per-

formed by common or contract

carriers.

Rule 96. The following factors

-68-

shall be considered in determining

whether sole control of a motor vehicle

and the shipment or shipments involved

have been transferred.

(a)

(b)

Supervision--That person who,

directly or indirectly, shall

supervise or regulate the man-

ner and method of shipment and

the use of the motor vehicle

or vehicles involved shall be

presumed to have a right to

control, direct or dominate

such shipment.

Employment and compensation of

drivers--That person who,

directly or indirectly, shall

employ, discharge and/or com-

pensate the drivers of any

motor vehicle or vehicles, or

-69-

who shall have the right to

influence the employment or

compensation thereof, shall be

presumed to have a right to

control, direct or dominate

any shipments transported

thereby, except, that this

presumption will not apply in

the case of a long-term lease

entered into by a common

carrier of mobile homes.

Rule 97. (Omitted). .

Rule 98. If any of the provisions

of Rule 96 or Rule 97 create presumptions

as specified therein, then the following

additional factors shall be considered:

(a) Insurance--It shall be presumed

that the party in whose name

public liability and property

oT Ga

|

(bd)

(c)

damage and/or cargo insurance

is issued on any motor vehicle

shall have a right to control,

direct or dominate such motor

vehicle and/or any shipments

transported by it.

Maintenance--It shall be pre-

sumed that the party who has

the obligation and duty to

maintain any motor vehicle or

vehicles shall have a right to

control, direct or dominate

such motor vehicle. — /

Number of Vehicles--The amount

and type of vehicle equipment,

owned directly or indirectly,

will be regarded as evidence

of whether or not any person

is engaged in the business of

intrastate transportation of

etin

aE

property for compensation.

Any pérson owning in excess of

five pieces of such equipment

Shall be presumed to be en-

gaged in such transportation.

Rule 99. (a) No common or contract

carrier may have more than one lease

covering a specific piece of equipment

in effect at a given time.

(b) No common or contract carrier

Shall lease vehicles to shippers or re-

ceivers.

(c) Each lessee shall properly

identiv-y each piece of equipment with

appropriate external markings during the

period of the lease as specified in

these Rules.

(d) Every vehicle subject to lease

shall be covered by adequate insurance

as required by these Rules; such insur-

mo

ance shall be in the name of the lessee

and evidence of coverage must be filed

with the Commission.

(e) Any lease of motor vehicle

equipment by any person shall comply

with the following conditions:

(1) A copy of the lease must be

carried in the leased equip-

ment at all times; or an

appropriate Certificate or

card, the form of which has

been approved by the Commission,

Signifying that the equipment

is leased and referring to the

date and location of the

lease, may be carried in lieu

of said lease.

(2) Every such lease, certificate,

or card, shall identify each

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(3)

(4)

(5)

(6)

piece of equipment leased

thereunder.

Every such lease must be in

writing and signed by the

parties thereto or their

regular employees or agents

duly authorized to act>for

them.

Every lease shall specify the

time the lease begins and the

time or circumstances on which

it ends.

Every lease shall set out the

specific consideration or

method of determining compen-

sation.

Every lease shall provide for

the exclusive possession,

control, and use of the equip-

ae

ment and for the complete

assumption of responsibility

in respect thereto by the

lessee for the duration of

said lease.

(7) Every such lease shall require

for safety purposes, the

inspection of the equipment

involved at the time of

surrender of possession thereof

by the lessor and lessee

jointly, or their agents.

Rule 100. (Omitted).

Rule 101. (Omitted).

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