Maryland Casualty Co. v. Pacific Coal & Oil Co.

312 U.S. 270 (1941)

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Nature of the Case

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Facts

Maryland (P) issued a conventional liability policy to the insured, Pacific Coal & Oil Co (D)., in which it agreed to indemnify the insured for any sums the latter might be required to pay to third parties for injuries to person and property caused by automobiles hired by the insured. P also agreed that it would defend any action covered by the policy which was brought against the insured to recover damages for such injuries. A collision occurred between an automobile driven by Orteca (D1) and a truck driven by an employee of the insured. D1 sued D in state court to recover damages. P then brought this action against the Ds. At the time of the collision, the employee of the insured was driving a truck sold to him by the insured on a conditional sales contract. P claimed that this truck was not one 'hired by the insured,' and hence that it was not liable to defend the action by D1 against D or to indemnify the latter if D1 prevailed. P sought a declaratory judgment to this effect against the Ds, and a temporary injunction restraining the proceedings in the state court pending final judgment in this suit. D1's demurrer on the ground that it did not state a cause of action against him was sustained and affirmed by the Circuit Court of Appeals. The Supreme Court granted certiorari.