.This is аn action for declaratory judgment brought under the provisions of Title 28, Section 2201, U.S.C.A. Plaintiff is an Iowa corporation. The defendants are citizens of the states of Minnesota, South Dakota, New York and Connecticut, respectively, and the amount in controversy exclusive of interest and costs exceeds the sum of $3000.
The State Automobile Insurance Association, hereinafter referred to as State Auto, issued an automobile liability insurance policy to defendant William P. Kooiman effective March 26, 1953, for a six .month period, which рolicy was renewed in substantially the same form on September 26, 1953, again on March 26, 1954, and on September 26, 1954. Kooiman is a farmer and cattle dealer residing at Edgerton, Minnesota. The policy covered a number of trucks and automobiles owned by the insured. Limits of liability were $25,000/$50,000/-$5,000. The agent who obtained this insurance for the assured and who countersigned the policy was Elmer Kooiman of Edgerton, Minnesota, a nephew of the assured.
The defendant Henry J. Broekhouse is a farmer and trucker living at Edgerton, Minnesota. The defendant Hartford Accidеnt and Indemnity Company, hereinafter referred to as Hartford, issued to him a liability policy with limits of $20,000/$40,000/$5,000 covering a Ford truck and Diamond “T” tractor and a Fruehauf semi-trailer. This coverage became effective December 12, 1953, for a period of one year.
On or about October 11, 1954, the defendant Kooiman desired to transport some hay from Jerauld County, South Dakota, to his farm near Edgerton, Minnesota. Kooiman also owned a farm in Jerauld County, South Dakota, but it appears from the evidence that this particular hay had been purchased by him from other farmers in the vicinity of his South Dakota farm. Kooiman’s semitrailer was an enclosed livestock trailer not suitable for hauling hay. The defendant Brockhouse’s semi-trailer was a flat-bed of the type well adapted for hay hauling. At this particular time Brock-house’s tractor was broken down. Brock-house wanted to haul some flax straw to Windom, Minnesota. Kooiman and Broekhouse relate conflicting stories as to the details of the arrangement they made, but in any event, there is no dispute that on October 11, 1954, Brock-house took his employee, the defendant Gerrit Koster, over to the Kooiman farm, where they picked up Kooiman’s tractor, drove it back and hooked it onto the Broekhouse flat-bed semi-trailer and transported the load of flax straw to Windom. They returned to Edger-ton, and later that day Koster started on his first trip to Jerauld County, South Dakota, to bring back a load of hay for Kooiman. One load was hauled on October 11th, and another load on October 12th. On October 13, 1954, *617 while Koster was driving the Kooiman tractor pulling the Brockhouse sеmitrailer back to the South Dakota farm for another load of hay, at a point in Jerauld County, South Dakota, 121% miles from Edgerton, Minnesota, by highway, or 114 miles in a straight line, the truck collided with an oncoming car owned by the defendant Sunshine Biscuits, Inc., and then being operated by Sunshine’s salesman, Melbourne E. Lundeen. Lundeen was killed and Sunshine’s car was badly damaged. Lundeen’s administratrix has brought a wrongful death action against Kooiman, Koster and Brockhouse in the state court of Jerauld County, South Dakota, and Sunshine Biscuits, Inc., has brought another action in the samе court to recover its property damage. With these actions thus pending, State Auto has brought this declaratory judgment action asking this Court to declare the rights and other legal relations existing between and among the parties hereto.
State Auto claims that it is not liable under the policy issued to Kooiman for two reasons: (1) because the accident occurred beyond the 50 mile radius from Edgerton, Minnesota, and there was no payment of an additional premium; (2) because the Kooiman tractor was being used for towing a trаiler hired by the insured and was not covered by like insurance in State Auto.
It is conceded by all parties that the accident occurred 121% road miles or 114 air miles from Edgerton, Minnesota, the town stated in the policy as the address of the insured.
As a basis for its first claim of non-liability herein, State Auto relies upon an endorsement forming a part of the policy which reads as follows:
“It is agreed that such insurance as is afforded by the policy does not apply to any accident, loss or damage arising out of the ownership, maintenance or use of any automobile to which such insurance applies unless such accident, loss or damage occurs within an area within a 50 mile radius of the city or town stated as the address of the named insured in the declarations except * * * upon payment of additional premium.”
It should be noted that this endorsement does not prohibit trips beyond a 50 mile radius of the city or town stated as the address of the insured, so that the question of such provision being contrary to public policy is not here present. The endorsement merely prediсates coverage upon the payment of additional premium if the automobile is used beyond the 50 mile radius. No additional premium was ever paid for this particular trip. Point 2 raised by State Auto will be discussed later in connection with a similar claim and policy provision contained in Hartford’s policy.
Defendant Kooiman contends that State Auto is estopped to deny liability under the above quoted endorsement because the agent told him that the tractor would be, and was, covered at all times and in all places аnd under all conditions. State Auto’s policy contains the following standard provision:
“20. Changes — Notice to any agent or knowledge possessed by any agent or by any other person shall not effect a waiver or a change in any part of this policy or estop the Association from asserting any right under the terms of this policy; nor shall the terms of this policy be waived or changed, except by endorsement issued to form a part of this policy, signed by the Attorney.”
Here State Auto has expressly excluded coverage beyond a 50 mile rаdius except upon payment of additional premium. The general rule is that parties to an insurance contract may stipulate that its terms cannot be waived or changed except in a writing attached to or endorsed upon the policy, and such provisions are generally considered valid and binding upon the insured. Hartford Fire Insurance Co. v. Nance, 6 Cir., 12 F.2d
*618
575; Adalian’s, Inc., v. Fidelity-Phenix Fire Ins. Co., 5 Cir.,
In C. E. Carnes & Co. v. Employers’ Liability Assurance Corp., 5 Cir.,
“It is well settled that conditions going to the coverage or scope of a policy of insurance, as distinguished from those furnishing a ground for forfeiture, may not be waived by implication from conduct or action.”
In the instant case the coverage is sought to be extended by the insured to include liability beyond the 50 mile radius without payment of additional premium. This risk was not included or contemplated by the terms of the policy, and the coverage may not be extended on the basis of waiver or estoppel because of knowledge by the agent of use beyond the express terms of the policy. C. E. Carnes & Co. v. Employers’ Liability Assurance Corp., supra; Aetna Casualty & Surety Co. v. Hanna, 5 Cir.,
We therefore find and hold that at the time of the accident involved herein, the Kooiman tractor was being used beyond the 50 mile radius of Edgerton, Minnesota, and that no payment of additional premium was made as required by the terms of the policy to extend the coverage beyond such radius, and that therefore such policy provided no coverage to Kooiman at the timе of the accident here involved.
We pass now to a determination of the legal relationship between the defendant Hartford and the defendant Brock-house as it existed at the time of the accident. In this determination, four questions must be answered:
(1) Was the Hartford “these units will be used exclusively for hauling the assured’s own farm equipment and products” endorsement being violated at the time of the accident?
(2) Is Hartford estopped to deny liability by reason of certain knowledge of its agents acquired prior to the issuance of the policy?
(3) Is there any ambiguity in the endorsement when compared with the other provisions of the policy?
(4) Has Hartford by its conduct after receiving notice of the commencement of the action in state court waived its right to claim non-liability?
(1)
Under Question No. 1 above, Hartford’s policy contains the following typewritten endorsement:
“It is understood and agreed that, in consideration of the premium charged for insurance on the 1948 Ford tractor (M)8EQ 11441 and the 1954 Fruehauf semi-trailer, (S) SF14863, these units will be used exclusively for hauling the assured’s own farm equipment and products.”
It is undisputed that the Brockhouse trailer was being used to haul the hay which was the property of Kooiman, so that it was not being “used exclusively for hauling the assured’s own farm equipment and products.” This endorse
*619
ment by its clear terms stated that coverage as to the tractor and trailer therein described would be provided only while they were being used exclusively for hauling the assured’s own farm equipment and products. Where a policy limits the insurer’s liability to a designated use of the insured’s automobile, the insurance does not cover other uses. Giacomo v. State Farm Mutual Auto. Ins. Co.,
Counsel for defendants Lundeen and Sunshine contend that because at the time of the accident the trailer was empty this endorsement was not violated, and they cite in support thereof the case of Nichols v. Hawkeye Casualty Co.,
(2)
Brockhouse claims that the agents of Hartford knew of his occasional hauling for hire, and that therefore thе company has waived the exclusive use provision of the endorsement and is estopped from denying liability by reason thereof. The Hartford policy contains the following provision:
“Changes. Notice to any agent or knowledge possessed by any agent * * * shall not effect a waiver * * * or estop the Company from asserting any right, except by endorsement issued to form a part of this policy * *
There is no evidence to the effect that the agents of Hartford knew what equipment, which was covered by the policy, Brockhоuse occasionally used to haul for hire. It should be noted that only the tractor and semi-trailer are included in the endorsement limiting their use to hauling the assured’s own farm equipment and products. The policy also covered a Ford truck. Therefore, the policy provisions designating the “automobile” as “commercial” and the “occupation or business” of the assured as “livestock transit” still applied to the Ford truck. Thus we believe that considering all of the provisions of the policy together, the coverage provided was that coverage which the agents understood was desired by Brockhouse. We hold that there has been no waiver or estoppel by reason of any notice or knowledge of Hartford’s *620 agent. See cases hereinbefore cited re State Auto.
(3)
Brockhouse further contends that there is such an ambiguity in the endorsement when compared with the oth- ■ er provisions of the policy as to require such ambiguity to be resolved in favor of the insured. On the face of the policy, the occupation or business of the insured is stated to be “livestock transit.” And the purpose for which the “automobilе” is to be used is designated as “commercial.” Commercial is defined:
“(b) The term ‘commercial’ is defined as use principally in the business occupation or the Named Insured as stated in Item 1, including occasional use for personal, pleasure, family and other business purposes.”
The typewritten endorsement heretofore quoted under Point (1), attached to and forming a part of the policy, states in plain and unequivocal language that as to the tractor and semi-trailer, “these units will be used exclusively for hauling the assured’s own farm equipment and products.” We think that an ordinary businessman could not fail to understand by a fair reading of these provisions that this endorsement limited the use of these two units to hauling the assured’s own farm equipment and products. We find no ambiguity in these provisions of the policy, and this Court cannot strain to find an ambiguity which does not exist. In Gorman v. Fidelity & Casualty Co. of New York, 8 Cir.,
“Courts should not be ‘cunning and astute to evade, rather than quick to perceive and diligent to apply, the meaning of the words,’ as manifestly intended by the parties.”
In urging that the contract is ambiguous, counsel for Brockhouse rely upon the case of Birnbaum v. Jamestown Mutual Ins. Co.,
“ ‘Where an insurance contract is so drawn as to be manifestly ambiguous, so that reasonable and intelligent men on reading it would honestly differ as to its meaning, the doubt should be resolved against the company.' ”
In our determination here, we hold that the endorsement, considered in the light of the other provisions of the policy above mentioned, is not so manifestly ambiguous that reasonable men would honestly differ as to its meaning. In a later case of Cooney v. Liberty Mutual Insurance Co.,
“We have given consideration to the rule that any exception to a general coverage in an insurance policy must be so stated as to be clear and unequivocal and written in such terms as to be intelligible to an ordinary businessman. [Cases cited.] We reach the conclusion, however, that as applied to the circumstanсes present here the exception containing the words ‘abandoned or unused materials’ are not ambiguous or likely to mislead the ordinary businessman.”
(4)
Defendant Brockhouse further contends that Hartford by its conduct after receiving notice of the accident has waived its right to deny liability herein. Specifically, he charges that he was deprived of his right to remove the state court actions to the United States District Court because Hartford did not notify him of its denial of liability within the time which would have permitted him to remove the cases tо this Court.
On this point it is necessary to reconsider some of the facts. The accident occurred on October 13, 1954. Hartford was notified immediately thereafter and presumably made an investigation. On December 6, 1954, one of Hartford’s claim representatives sent to the defendants Brockhouse and Koster a letter denying any liability under the policy because of: (1) the limitation of use endorsement. and (2) the exclusion deny *621 ing any coverage because the trailer and tractor involved in the accident were not both insured with Hartford. On September 29, 1955, the two suits hereinbefore mentioned were instituted in state court, process being served on the defendants as provided by SDC 33.0809. On October 3, 1955, the defendant Broekhouse, with his attorney, came to the claim office of Hartford in Sioux Falls and talked to the Hartford claim representative, Mr. O. M. Langehough. Pursuant to the request of Langehough, the pleadings were forwarded to the defendant Hartford. Thereafter, neither the defendant Broekhouse nor his attorney heard anything further until October 27, 1955, on which date an attorney for Hartford requеsted Broekhouse and Koster to sign a non-waiver of rights agreement.
Considering tlie fact that Hartford had once denied liability under the policy, it would appear that as much of a duty rested with Broekhouse to inquire into Hartford’s disposition of the cases during the 20 day period when application for removal could have been made, as there was a duty upon Hartford to notify Broekhouse within such 20 day period of its intentions regarding the defending of such actions. It must be conceded that an insurance company may in the first instance disclaim liability under such a policy of insurance as is here involved, and by subsequently taking complete charge of the defense of an action against its insured, waive its right to deny liability. Such a ease is Consolidated Electric Co-op. v. Employers Mutual Liability Ins. Co., D.C.,
In the case of Security Ins. Co. v. Jay, supra, the insurer took eleven months to investigate a case and also attempted a nuisance settlement. The Court said in that сase that it was true that the plaintiff had taken an unseemly length of time to finish its investigation and reach a conclusion, but the delay did not cause any loss of evidence nor impede the defendant’s preparation for trial. In the instant case the time element has not hindered the defendant Brock-house’s preparation for trial, and he has suffered no prejudice of any substantial *622 right by reason of the acts and conduct of Hartford.
There has been some contention made in this case that liability should be imposed upon Hartford by reason of the Minnesota Warehouse Endorsеment Act. The endorsement for Minnesota Motor Carrier Policies, forming a part of the Hartford policy, contains the following provision:
“ * * * The liability of the company extends to such losses, damages, injuries, or deaths occurring within the state of Minnesota.”
The accident involved herein occurred in South Dakota. Therefore, the endorsement does not apply.
There has been some contention that the existing statutes in regard to financial responsibility laws of South Dakota and Minnesota extend the coverage of thе policies. Each policy contains the following similar provision:
“Financial Responsibility Laws: Coverages A and B: Such insurance as is afforded by this policy for bodily injury liability or property damage liability shall comply with the provisions of the motor vehicle financial responsibility law of any state or province which shall be applicable with respect to any such liability arising out of the ownership, maintenance or use of the automobile during the policy period, to the extent of the coverage and limits of liability required by suсh law, but in no event in excess of the limits of liability stated in this policy. The Insured agrees to reimburse the Association for any payment made by the Association which it would not have been obligated to make under the terms of this policy except for the agreement contained in this paragraph.”
Both the Minnesota Financial Responsibility Act, M.S.A. § 170.21 et seq. and the South Dakota Act, SDC 44.0504, may be termed “second bite” laws. A motorist is not required to carry liability insurance as a prerequisite to driving in Minnesota until he has had his first accident, nor in South Dakota until final judgment has been obtained against him. Nothing appears in the record that either condition existed in this case. Nor does the Minnesota law have extraterritorial effect, and as this accident occurred in South Dakota, it cannot apply.
It has also been contended in this case that the Hartford policy provided coverage for the Kooiman tractor as a temporary substitute automobile. The policy provision reads as follows:
“Temporary Substitute Automobile — an automobile not owned by the Named Insured while temporarily used as the substitutе for the described automobile while withdrawn from normal use because of its breakdown, repair, servicing, loss or destruction.”
The rule applicable to this situation is stated in the Annotation
“One of the basic elements of a ‘substitution’ provision is that the automobile claimed to be covered be actually used as a ‘substitute’ for the described automobile.
“Thus, for example, it must be shown that, absent one of the specified circumstances, the described vehicle would have been used for the trip on which the accident occurrеd.”
In this case not only is evidence entirely lacking that the Brockhouse tractor would have been used for hauling this hay for Kooiman, but the evidence is affirmatively to the contrary. The only Brockhouse equipment that Kooiman needed for the hauling of this hay was the Brockhouse semi-trailer. The Brock-house tractor did not require any substitute when the trailer was obtained for use with the Kooiman tractor for the hauling of this hay.
The insurance policies of both Hartford and State Auto contain the following exclusion:
“This policy does not apply:
(c) under coverages A аnd B, while the automobile is used for the tow- : *623 ing of any trailer owned or hired by the Insured and not covered by like insurance in the Company; (association) 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; (association) .”
It is undisputed that neither Kooiman nor Brockhouse owned both the trailer and the tractor involved in this action. One was owned by each. But the question does arise, “Was there a hiring of the tractor by Brockhouse?” or “Was there a hiring of the trailer by Kooiman?”. Counsel for Kooiman contends that Brockhouse was an independent contractor in the hauling of this hay, and counsel for Brockhouse contends that Koster was a loaned servant at the time of the accident when he was driving the Kooiman tractor towing the Brockhouse trailer. There is considerable dispute in the testimony as to the exact arrangements between Kooiman and Brock-house. This Court in its discretion elects not to decide the relationship existing between Kooiman, Brockhouse and Kostеr at the time of the accident. Washington-Detroit Theatre Co. v. Moore,
Counsel for State Auto and Hartford may jointly prepare and submit to the Court proposed Findings of Fact, Conclusions of Law and Judgment in accordance with this opinion, upon five days notice to counsel for the other parties.