In these companion cases judgments were rendered against the insurance companies upon policies of liability insurance theretofore issued to Vernita Mason, defendant below. The actions arose out of an automobile accident which occurred November 7, 1940, in the Village of Westlake, Ohio.
The plaintiffs, Jean U. Felgemaker and her husband, Joseph A. Felgemaker, were injured in a collision with an automobile operаted by Mrs. Mason. Suits in the state court were removed to the federal court, and the plaintiffs recovered judgments of $2,000 and $10,000 respectively, upon which only $400 has been paid. Neither judgment having been satisfied after thirty days, and both judgments having become final, the plaintiffs each filed in the original action an amended and supplemental complaint praying for judgment against the insurance companies in accordance with Section 9S10-4, General Cоde of Ohio.
The policy issued by Ocean Accident and Guarantee Corporation, Limited hereinafter called Ocean, was issued in compliance with the compulsory motor vehicle liability insurance act of the State of Massachusetts, of which state Mrs. Mason was a resident at the time the policy was issued. Massachusetts requires of its residents a coverage insuring all automobile operation on highways within the state. The policy issuеd also included an optional coverage insuring against liability for damages arising out of operation of the automobile in the United States and Canada.
Shortly prior to the accident Mrs. Mason moved from Massachusеtts to Chicago, Illinois, and desiring to secure local automobile insurance, she wrote a letter on October 4, 1940, in which she returned her policy to Ocean’s home office with the request that it be cancelled effective October 1, 1940. At about the same time Mrs. Mason took out a policy of liability insurance with Inter Insurance Exchange of the Chicago Motor Club, hereinafter called Inter Insurance, which was in force at the time of the accident. This policy obligated Inter Insurance to pay on behalf of the insured all sums which the insured should become obligated to pay by reason of the liability imposed upon the insured by law, for damages because of bodily injury, death or property damage sustained by any person, caused by accident and arising out of the ownership, maintenance or use of the automobile described in the policy. The policy also included the follоwing provision : “The Exchange, after rendition of final judgment against the Insured, shall be liable to the person entitled to recover for such death or for any such injury to the person or property when caused by the Insured, in the same manner and to the same extent that said Exchange is liable to the Insured.” It also obligated Inter Insurance to defend in the name and on behalf of the insured any suit brought against the insured to enforce a claim, whether groundless or not, fоr damages alleged to have been suffered in such automobile accident. When the suits were filed the defense was assumed and conducted by the Cleveland attorneys of Inter Insurance, who exercised full control of the case.
The plaintiffs each filed a motion to subject Inter Insurance to the jurisdiction of the District Court under Rule 4 of the Rules of Civil Procedure, 28 U.S.C.A. following section 723c, and summons was served upon the company by a deputy marshal of the Northern District of Illinois, in
The sole defense of Ocean was'that the' policy issued by it under the provisions of the Massachusetts compulsory insurance law had been cancelled prior to the acci-' dent; but the court held that no effective cancellation of the policy had been made, and that' hence Ocean was liable under the optional coverage for its share of the judgments.
As to Inter Insurance, we think that the judgment must be affirmed. Inter Insurance is a resident of Illinois and does no business in,Ohio. While no jurisdiction, was obtained by the attempted service and the court correctly sustained the motion to quash, it rightly held that Inter Insurance voluntarily subjected itself to the jurisdiction when it entered a general appearance by conducting the defense. Counsel for Inter Insurance at the hearing stated that it had no defense outside of the jurisdictional question, and the sole contention here is that jurisdiction of the person was not conferred because Inter Insurance conducted the defense not for itself, but for its insured. Concededly Intеr Insurance took every action in the case which it could have taken if it had itself been the defendant, and in fact it exercised absolute and complete control over the proceedings. It had the right to crоss-examine, to present testimony, and if it desired, to appeal. It also had a substantial interest in the controversy, for Inter Insurance had insured Mrs. Mason against any automobile accident occurring in North America or the possessions of the United States, and was directly concerned, under the express provision of its policy, to prevent the rendition of a judgment against her which would create liability against itself. While ostensibly serving only its insured in the defеnse of the personal injury suits, it was. in fact serving its own concurrent interest. The policy provided for control of the defense by Inter Insurance, not only because of the premium paid, but also because of the immediatе importance to Inter Insurance of the outcome of cases arising thereunder. Under its agreement, after rendition of the final judgment against Mrs. Mason, it was liable to Jean U. Felgemaker and Joseph A. Felgemaker in the sаme manner and to the same extent that it was liable to the insured. Therefore when Inter Insurance conducted the defense, it was defending itself.
It has often been held that a person not technically a party to a judgment mаy be so directly connected with it by his interest in the result of the litigation and by his active participation in the suit as to be bound by the judgment. Inter Insurance contends that it is not a party to the case; but the term “parties” frequently connоtes more than merely parties to the record of an action. Thus the doctrine of res judicata has been applied to persons who were not designated parties to-the action, but had control of the prosecution or defense and exercised it in support of their own interest. Lovejoy v. Murray,
As a development of the same doctrine,, it is also frequently held that а judgment may be rendered directly against one who-although not a formal party in the case, has-assumed or participated in the defense.. Eagle Mfg. Co. v. Miller, C.C.,
Thе case of Bidwell v. Toledo Consolidated Street Ry. Co., C.C.,
The judgment against Ocean, however, must be rеversed. Its policy was written in Massachusetts, and governed by Massachusetts law. In an unbroken line of ■decisions of that state it has been held that a policy of this sort, providing both for the compulsory statutory coverage and fоr optional extraterritorial coverage, is to be treated as though the two distinct kinds of insurance were embodied in separate policies. Cormier v. Hudson,
The judgment as to Ocean is reversed.
The District Court correctly held that Inte- Insurance was liable, but gave judgment only for a proportionate share of the liability because it held Ocean also liable. In view of our reversal as to Ocean, a judgment different in amount is required against Inter Insurance. The judgment against Inter Insurance is therefore set aside, and the case is remanded to the District Court for entry of another judgment against Inter Insurance, and for furthei proceedings in accordance with this opinion.
Notes
Inasmuch as each of the insurance companies in these actions is both appellant and appellee, the parties will be designated plaintiffs and defendants as in the court below,
«* * * an(j; except as provided in sections 113-118 of this title,, no civil suit shall be brought in any district court against any person by any original process or proceeding in any other district than that whereof he is an inhabitant * * * »