Whaley v. Great American Insurance Company , 259 N.C. 545 ( 1963 )

131 S.E.2d 491 (1963) 259 N.C. 545

Lillian H. WHALEY, Administratrix of the Estate of William Charles Whaley, Deceased, and Firestone Tire and Rubber Company,
v.
GREAT AMERICAN INSURANCE COMPANY and Insurance Company of North America.

No. 313.

Supreme Court of North Carolina.

June 14, 1963.

Taylor, Allen & Warren, Scott B. Berkeley and John H. Kerr, III, Goldsboro, for plaintiffs.

Braswell & Strickland, Goldsboro, for defendant Great American Ins. Co.

T. Lacy Williams, Raleigh, for defendant Insurance Co. of North America.

BOBBITT, Justice.

In the Burgess (consent) judgment it was agreed that, upon payment thereof by Firestone, "an action may be brought by it, as subrogee of the William Charles Whaley estate, or in the name of Lillian H. Whaley, Administratrix of the estate of William Charles Whaley v. Great American Insurance Company and North American Insurance Company (sic), to determine their liability on the policies referred to." Firestone paid the judgment. This action was instituted solely for its benefit. It is not an insured under either policy. It must recover, if at all, as subrogee. It stands in the same position as that in which the administratrix of Whaley's estate would stand if she had paid the judgment and were the plaintiff and real party in interest herein.

Plaintiffs' Appeal.

Plaintiffs' appeal is from the portion of the judgment providing that they "have and recover nothing of the defendant Insurance Company of North America."

When the accident occurred, Whaley was driving Firestone's Ford. He was not driving the automobile specifically described in the policy, to wit, his Plymouth.

The liability, if any, of Insurance Company of North America must be based on Paragraph V ("Insuring Agreements") of its policy, which, in pertinent part, provides:

"V. Use of Other Automobiles: If the named insured is an individual or husband and wife and if during the policy period such named insured, or the spouse of such individual if a resident of the same household, owns a private passenger automobile covered by this policy, such insurance as is afforded by this policy under coverages A, B, division 1 of coverage C and E with respect to said automobile applies with respect to any other automobile, subject to the following provisions:

"(a) * * *

"(b) * * *

"(c) * * *

"(d) This insuring agreement does not apply:

"(1) to any automobile owned by or furnished for regular use to either the named insured or a member of the same household other than a private chauffeur or domestic servant of such named insured or spouse; * * *."

Was Firestone's Ford "furnished for regular use to" Whaley within the intent and meaning of (d) (1)?

The "Use of Other Automobiles" clause "extends the driver's regular insurance to casual driving of automobiles other than his own without the payment of an extra premium, and usually excludes from coverage other cars owned by the insured or by members of his household as well as cars furnished for regular use of the insured or used in his business." 7 Am.Jur. 2d, Automobile Insurance § 105; Annotations: 173 A.L.R. 901, 83 A.L.R. 2d 926, 86 A.L.R. 2d 937; 7 Appleman, Insurance Law and Practice, § 4455.

"The obvious purpose of the ``other car' provisions, with the exceptions, as to provide coverage to a driver without additional premiums, for the occasional or infrequent driving of an automobile other than his own. They are not to take the place of insurance on automobiles which are furnished for the regular use of the insured. (Citations) The purpose is not to insure more than one car on a single policy." Wyatt v. Cimarron Insurance Company, 10 Cir., 235 F.2d 243; Home Insurance Company v. Kennedy (Del.), 2 Storey 42, 152 A.2d 115.

In Campbell v. Aetna Casualty and Surety Co., 4 Cir., 211 F.2d 732, the Court of Appeals, in opinion by Soper, J., quotes with approval, as in accord with the great weight of authority, the following from the opinion of Chestnut, J., in Aler v. Travelers Indemnity Co., D.C., 92 F. Supp. 620, viz.: "The general purpose and effect of this provision of the policy is to give coverage to the insured while engaged in the only infrequent or merely casual use of an automobile other than the one described in the policy, but not to cover him against personal liability with respect to his use of another automobile which he frequently uses or has the opportunity to do so." In Leteff v. Maryland Casualty Company, La.App., 91 So. 2d 123, the court, after an exhaustive review of earlier decisions, approves the interpretation given in Judge Chesnut's opinion in Aler. Later decisions of like import include Home Insurance Company v. Kennedy, supra; O'Brien v. Halifax Insurance Co. of Massachusetts, Fla.App., 141 So. 2d 307.

"No absolute definition can be established for the term ``furnished for regular use'. Each case must be decided on its own facts and circumstances." Home Insurance Company v. Kennedy, supra; Miller v. Farmers Mutual Automobile Insurance Co., 179 Kan. 50, 292 P.2d 711.

During 1959 and prior thereto, Firestone's Ford "was stationed" at its place of business at Goldsboro "for the regular use of its manager, William Charles Whaley, and five other employees in the conduct of the company's business." Clearly, the policy on Whaley's own individual car, the Plymouth, would provide no coverage if Whaley, when the accident occurred, had been engaged "in the conduct of the company's business." Farm Bureau Mut. Automobile Ins. Co. v. Boecher, Ohio App., 48 N.E.2d 895; Farm Bureau Mutual Automobile Ins. Co. v. Marr, D.C., 128 F. Supp. 67; Voelker v. Travelers Indemnity Company, 7 Cir., 260 F.2d 275; Home Insurance Company v. Kennedy, supra. Of like import, but relating to medical payments coverage rather than liability coverage: Dickerson v. Millers Mutual Fire Ins. Co. of Texas, La.App., 139 So. 2d 785; Moore v. State Farm Mutual Automobile Ins. Co., 239 Miss. 130, 121 So. 2d 125; O'Brien v. Halifax Insurance Co. of Massachusetts, supra.

When the accident occurred, Whaley was using the Ford "for his own personal business or pleasure without the knowledge, permission or consent" of Firestone. Firestone's regulations provided, inter alia, that "(n)o one, under any circumstances (was) to use or operate company vehicles for personal affairs or pleasure." When employed by Firestone in 1941, Whaley agreed (in writing) to comply with Firestone's instructions concerning the use of company cars by an employee, including the following: "Under no circumstances is the Company car to be used or operated by you in the interest of your personal affairs or pleasure and not upon the business of the Company and the carrying out of Company duties you were employed to perform."

Whaley had, "on numerous occasions between January 8, 1959 and June 13, 1959, and prior thereto," used the Ford "for his own personal business and pleasure." (Our italics) Firestone had no actual notice or knowledge of Whaley's use of its Ford for his own personal business and pleasure until the trial of the Burgess case in October, 1960. Whaley was manager of Firestone's Goldsboro store; and, as manager, Whaley's authority in Goldsboro with reference to the use of Firestone's Ford was final. In fact, Firestone's Ford was available for Whaley's use for his own personal business and pleasure and was so used by him "on numerous occasions."

The contention that the policy provides coverage because, when the accident occurred, Firestone's Ford was being used by Whaley for his own business and pleasure rather than "in the conduct of the company's business," is untenable. The fact that Whaley was using the Ford in violation of Firestone's regulations and instructions cannot enlarge the coverage provided Whaley by the policy on his own individual car, a Plymouth. To hold otherwise would permit Whaley to benefit from his own wrongful conduct. A different basis of decision must be found.

In Iowa Mutual Insurance Company v. Addy, 132 Colo. 202, 286 P.2d 622, the "Use of other automobiles" clause under consideration provided, inter alia, it did not apply to any other automobile furnished for regular use to the named insured. The question was whether the policy, which specifically described an Oldsmobile owned by the insured, provided coverage to the insured with reference to a liability he incurred while operating his employer's Chevrolet. The employer, a casualty company, had provided the Chevrolet for the insured's use as a claim adjuster. The insured used the Chevrolet daily in his employer's business and, with his employer's knowledge and consent, kept it at his home overnight. On Thanksgiving Day the insured was involved in an accident while en route to the home of friends "across the City of Denver," with whom the insured, his wife and their children were to have dinner. The court held the policy did not cover the insured's liability and reversed the judgment the plaintiff (insured's wife) had obtained in the trial court. The opinion of Holland, J., states: "It is undisputed and undenied that the automobile in which plaintiff was riding was furnished her husband for his regular use in his employment. Such automobile by a provision of paragraph V(b) (1) of the policy is excluded, because the provisions are clear that the insuring agreement did not apply to any automobile ``furnished for the regular use to the named insured.'" This Colorado decision is discussed in Ransom v. Fidelity & Casualty Co., 250 N.C. 60, 108 S.E.2d 22, with particular reference to the "Temporary Substitute Automobile" clause. Here it was stipulated Firestone's Ford "was not a temporary substitute automobile as that term is used in the policies issued by the defendants" to Whaley.

In our view, coverage depends upon the availability of the Ford for use by Whaley and the frequency of its use by Whaley. Rodenkirk for Use of Deitenbach v. State Farm Mut. Automobile Ins. Co., 325 Ill.App. 421, 60 N.E.2d 269; Vern v. Merchants Mut. Casualty Co., 21 Misc. 2d 51, 118 N.Y.S.2d 672. It was "furnished" to Whaley by Firestone in the sense it was placed and continued under Whaley's authority and control. It was available for use by Whaley over an extended period and was used by him "on numerous occasions." The stipulated facts dispel any suggestion that Whaley's use of the Ford "for his own personal business and pleasure," was casual, occasional or infrequent. The stipulated facts establish that Whaley regularly used the Ford "for his own personal business and pleasure" as well as "in the conduct of the company's business." It is our opinion, and we so decide, that Firestone's Ford was "furnished for regular use to" Whaley within the meaning of the policy.

The factual situation is quite different from those considered in Miller v. Farmers Mutual Automobile Insurance Co., supra, and Comunale v. Traders & General Ins. Co., 116 Cal. App. 2d 198, 253 P.2d 495, where it was held the evidence sustained the trial court's findings that the car the insured was driving at the time of the accident was not furnished for his regular use.

Decisions cited and stressed by plaintiffs, discussed below, are factually distinguishable. We perceive no conflict between these decisions and our present decision. In this jurisdiction, the question appears to be one of first impression.

In Pacific Automobile Ins. Co. v. Lewis, 56 Cal. App. 2d 597, 132 P.2d 846, the accident occurred when Wells, by express permission of the sales manager, was driving his employers' car from San Diego to Pomona to make a personal visit. Wells, a salesman for a San Diego automobile agency, had been permitted to use his employers' cars as demonstrators and at times for personal purposes in the San Diego area. He had not on any previous occasion taken an automobile belonging to his employers away from the vicinity of San Diego. It was held that Wells' liability to Lewis, an injured party, was covered under the "drive other cars" provision in policies which provided principal coverage for automobiles not involved in the accident. The basis of decision is indicated by this excerpt from the opinion: "* * * But when a car thus furnished for such a use is driven to a distant point on one occasion, with the special permission of the one furnishing the car, that particular use would hardly seem to be a ``regular use' of the car. It cannot be said, as a matter of law, that such a use on a particular occasion, which is a departure from the customary use for which the car is furnished, is a regular use within the meaning of these clauses of the policies. * * *" (Our italics)

In Palmer v. Glens Falls Insurance Company, 58 Wash.2d 88, 360 P.2d 742, the opinion, referring to Pacific Automobile Ins. Co. v. Lewis, supra, states: "There, a salesman, who regularly drove a company automobile in his employment, was held not to be engaged in the regular use of it on a special occasion when, by special permission for one occasion only, he was permitted to take it for a private purpose on a personal visit." In accord with Pacific Automobile Ins. Co. v. Lewis, supra, it was held: "An agreement for a regular use of an automobile does not, in fact, preclude a special use of a different nature if it is specifically authorized for one occasion only." (Our italics)

In Schoenknecht v. Prairie State Farmers Ins. Ass'n, 27 Ill.App.2d 83, 169 N.E.2d 148, the policy involved specifically insured the plaintiff's Buick. The accident occurred May 2, 1957, about 11:00 p. m., when plaintiff was driving his employer's Chevrolet. The employer furnished plaintiff the Chevrolet for use in the performance of the duties of his employment. When the accident occurred plaintiff, in violation of his duty to return the Chevrolet to his employer's shop at the conclusion of each day's work, was using the Chevrolet for personal purposes. It was held the plaintiff's liability was covered by the "Use of Other Automobiles" clause in his policy. This excerpt from the opinion indicates the basis of decision: "Plaintiff was furnished this car (the Chevrolet) for his sole use in connection with the business of his employer during his working hours. He had never used the car to take him anywhere except upon the business of his employer and during his working hours. The only time he had ever used it was during his working hours and in furtherance of his employer's interest except on the occasion in question. The use of this car at this time was under the authorities, an isolated, casual, unauthorized use of an automobile other than his own and comes within the insuring agreements of this policy designated ``use of other automobiles'."

In Sperling v. Great American Indemnity Company, 7 N.Y.2d 442, 199 N.Y.S.2d 465, 166 N.E.2d 482, the policy issued to Mrs. Nystrom specifically covered her Buick. A Chevrolet, parked on a public street, was stolen by Christine, Mrs. Nystrom's 16-year-old daughter; and an accident occurred while Christine was operating the stolen car. In a wrongful death action, the plaintiff recovered a judgment against Christine for approximately $125,000.00. The plaintiff contended Christine was an insured under the following provisions (under the heading "Persons Insured") of the policy:

"The following are insureds under Part I [Liability]:

"(a) With respect to the owned automobile, (1) the named insured and any resident of the same household, (2) any other person using such automobile, provided the actual use thereof is with the permission of the named insured;

"(b) With respect to a non-owned automobile, (1) the named insured, (2) any relative, but only with respect to a private passenger automobile or trailer not regularly furnished for the use of such relative."

The term "non-owned automobile" was defined as meaning "an automobile or trailer not owned by the named insured or any relative, other than a temporary substitute automobile."

The Court of Appeals, in a four to three decision, held the judgment debtor was covered while operating a stolen car because she was a relative and driving a private passenger car not regularly furnished for her use. As stated by Hastie, J., in Home Indemnity Company v. Ware, 3 Cir., 285 F.2d 852, "* * * the dissenters derived a contrary meaning from the language of the policy. In their view the expression ``not regularly furnished' for the use of a relative means ``occasionally furnished' for his use, and no more than that. Under this analysis a stolen car, which is not ``furnished' at all, is excluded entirely from the coverage of the policy." The majority view was that the manner in which Christine acquired the Chevrolet was irrelevant. The majority opinion states: "The exclusion of coverage for relatives driving nonowned automobiles was, by its terms, concerned with regularity of use, not permissiveness of use, and was designed to protect the company from being subjected ``to greatly added risk without the payment of additional premiums' (Vern v. Merchants Mut. Cas. Co., 21 Misc. 2d 51, 52, 118 N.Y.S.2d 672, 674)."

Whatever the correct view with reference to the policy provisions and facts considered in Sperling, the stolen (Chevrolet) car was operated by Christine only on one occasion. It had not been regularly used by her nor had it been available for her use. It would seem such a policy would not provide coverage if the "non-owned automobile," although a stolen car, had been available for regular use and had been so used.

Upon the stipulated facts it is our opinion, and we so decide, that the policy issued by the Insurance Company of North America to Whaley, providing principal coverage for Whaley's Plymouth, did not cover the liability incurred by Whaley while operating Firestone's Ford on the occasion of the collision. Hence, the portion of the judgment providing that plaintiffs "recover nothing of the defendant Insurance Company of North America," is affirmed.

Great American's Appeal.

Great American's appeal is from the portion of the judgment providing that plaintiffs "have and recover of Great American Insurance Company the sum of $7,770.00," together with interest and costs.

The liability, if any, of Great American must be based on the following provisions of its policy:

"Persons Insured. The following are insureds under Part 1:

"(a) With respect to the owned automobile,

"(1) * * *

"(2) * * *

"(b) With respect to a non-owned automobile,

"(1) the named insured,

"(2) any relative, but only with respect to a private passenger automobile or trailer,

provided the actual use thereof is with the permission of the owner;

"(c) * * *."

The term "non-owned automobile," as used in (b) under "Persons Insured," and as defined in the policy, "means an automobile or trailer not owned by or furnished for the regular use of either the named insured or any relative, other than a temporary substitute automobile." It was stipulated Firestone's Ford "was not a temporary substitute automobile."

The "owned automobile" referred to in (a) was Whaley's Plymouth. The policy provided coverage if, but only if, Firestone's Ford operated by Whaley was a "non-owned automobile" as defined in the policy. Kirk v. Nationwide Mutual Insurance Co., 254 N.C. 651, 655, 119 S.E.2d 645, and cases cited. A "non-owned automobile" was an automobile "not * * * furnished for the regular use" of Whaley.

Upon the stipulated facts, and for the reasons stated in connection with our consideration of plaintiffs' appeal, we are of opinion, and so decide, that Firestone's Ford was furnished for the regular use of Whaley within the intent and meaning of the policy; and that Great American's policy, providing principal coverage for Whaley's Plymouth, did not cover the liability incurred by Whaley while operating Firestone's Ford on the occasion of the collision. Hence, the portion of the judgment providing that plaintiffs recover from Great American must be and is reversed.

In view of the conclusion(s) reached, we do not discuss other defenses asserted by defendants or the evidence pertinent thereto.

On plaintiffs' appeal: Affirmed.

On Great American's appeal: Reversed.