Iowa National Mutual Insurance Co. v. Broughton

196 S.E.2d 243 (1973) 283 N.C. 309

IOWA NATIONAL MUTUAL INSURANCE COMPANY
v.
Edna Christine BROUGHTON et al.

No. 25.

Supreme Court of North Carolina.

May 9, 1973.

Perry C. Henson and Joseph E. Elrod, III, Greensboro, for plaintiff-appellee.

Bryant, Lipton, Bryant & Battle by Victor S. Bryant, Jr., Durham, for Van Hook.

Stewart & Hayes, P. A. by Gerald W. Hayes, Jr., Dunn, Anderson, Nimocks & Broadfoot, by Henry L. Anderson, Fayetteville, for Broughtons and Stone.

HIGGINS, Justice.

The appeal presents this question: Does the plaintiff's automobile liability insurance policy No. FCA 10-389-011 issued to Budget Rent A Car, which leased the insured vehicle to Victor Barlow Carraway, afford coverage to Elijah Z. Massey to whom Carraway surrendered it in violation of his leasing agreement with the owner?

By the stipulations of the parties and the findings of Judge Seay, who tried the case without a jury, these pertinent facts were established: (1) The plaintiff issued its policy of automobile liability insurance on a 1971 Chevrolet owned and operated in the lessor's rental business. (2) The coverage extended to the named insured, Budget Rent A Car, and any person or organization legally responsible for the use of the Chevrolet provided the actual use is by named insured or with the permission of the named insured. (3) By written agreement the lessor rented the insured vehicle to Carraway. The written leasing agreement provided that Carraway would not surrender possession to any person unless over twenty-one and a licensed driver. (4) Carraway, in violation of the agreement and without the knowledge or consent of the lessor, surrendered the vehicle to Massey. (5) While operating the vehicle on the highway, Massey inflicted injuries and damages.

The written rental contract between the owner and Carraway provided: "All authorized drivers must be 21 or older and licensed." A sound legal reason existed for the limitation. At the date of the policy, the date of the leasing agreement, and the date of the accident, age twenty-one was fixed by law as the age at which one became legally responsible for his contractual obligations. The lessor, therefore, might hope to recoup any damages resulting from a breach of the rental contract. The purpose of requiring that the permittee be a licensed driver is obvious.

In violation of the agreement and without the knowledge or consent of the lessor, Carraway surreptitiously surrendered the insured vehicle to Elijah Z. Massey, age nineteen. The defendants contend that the terms of the policy afford coverage for injuries inflicted by Massey and in the alternative if the policy does not provide such coverage, the North Carolina Statutes, G. S. § 20-279.21 and G.S. § 20-281, when construed together, became parts of the insurance contract and extended coverage to any driver who was in lawful possession at the time of the injuries. They contend that Massey was not shown to be in unlawful possession.

Actually, G.S. § 20-279.21 applies to the operation of motor vehicles generally and requires coverage for "[T]he person named therein and any other person, as insured, using any such motor vehicle . . . with the express or implied permission of such named insured . . . ." By Chapter 1162, Session Laws of 1967, the General Assembly amended G.S. § 20-279.21 (b)(2) by adding as insured "or any other persons in lawful possession." In the preamble to the amendment the General Assembly declared: "[T]he owner of every motor vehicle has the absolute authority under the law to allow or not to allow anyone else to operate his vehicle . . ." But when lawful possession is shown, further proof is not required that the operator had the owner's permission "to drive on the very trip and occasion of the collision." Section 2 of the amendment provides: "It shall be a defense to any action that the operator of a motor vehicle was not in lawful possession on the occasion complained of."

In this case the owner (Budget Rent A Car) surrendered possession of its vehicle to Carraway on written condition that Carraway not permit possession to pass to a person under twenty-one years of age or unlicensed driver. The owner obligated itself to be responsible for Carraway's negligence but Carraway could not, in violation of his own agreement, make the owner responsible for Massey's negligence. No provision is made for owner's liability either by the policy or by G.S. § 20-279.21, as amended, until lawful possession is first established. This may be done by express or implied permission of the owner.

The rule is stated in Bailey v. General Insurance Company, 265 N.C. 675, 144 S.E.2d 898: "``Where express permission is relied upon it must be of an affirmative character, directly and distinctly stated, clear and outspoken, and not merely implied or left to inference. On the other hand, implied permission involves an inference arising from a course of conduct or relationship between the parties, in which there is mutual acquiescence or lack of objection under circumstances signifying assent.' . . . Ordinarily, one permittee does not have authority to select another permittee without specific authorization from the named insured." Torres v. Smith, 269 N.C. 546, 153 S.E.2d 129; Wilson v. Indemnity Co., 272 N.C. 183, 158 S.E.2d 1; Rhiner v. Hartford Insurance Co., 272 N.C. 737, 158 S.E.2d 891; International Service Insurance Co. v. Iowa Nat. Insurance Co., 276 N.C. 243, 172 S.E.2d 55.

The trial court concluded as a matter of law that Elijah Z. Massey was not a person in lawful possession of the rented 1971 Chevrolet automobile and was not insured by the terms of the policy. Likewise, Massey was not within the coverage required by G.S. § 20-281. G.S. § 20-281 required coverage for the owner, rentee, lessee and their agents and employees while in the performance of their duties. There is neither evidence nor finding that Massey at any time was a rentee or lessee or an agent or employee and hence was not performing duties as such. The coverage required by this section extended coverage to Carraway, but not to Massey.

Judge Seay was correct in adjudging that neither the plaintiff's insurance policy nor the requirements of State law provided coverage for personal injuries and property damage caused by Massey's operation of the 1971 Chevrolet automobile No. 0912, License No. 1666-C. The judgment in the Superior Court of Guilford County is

Affirmed.

BRANCH, Justice (concurring in result).

I agree with the conclusion of the majority that plaintiff's policy did not provide coverage for the personal injuries and property damages caused by Massey's operation of the leased automobile. However, I think the sole basis for this conclusion should be that the vehicle was being operated without the insured's permission.

G.S. § 20-279.21 applies to motor vehicles generally and defines a "motor vehicle liability policy." Referring to such policy, the statute in part provides that it "Shall insure the person named therein and any other person, as insured, using any such motor vehicle or motor vehicles with the express or implied permission of such named insured, or any other persons in lawful possession, against loss . . ." G.S. § 20-279.21 is found in Article 9A.

G.S. § 20-281 is a statute found in Article 11 which specifically applies to persons engaged in the renting of automobiles. It requires that "Each such motor vehicle leased or rented must be covered by a policy of liability insurance insuring the owner and rentee or lessee and their agents and employees while in the performance of their duties against loss . . ."

One of the recognized rules of statutory construction is that "Where one statute deals with the subject matter in detail with reference to a particular situation and another statute deals with the same subject matter in general and comprehensive terms, the particular statute will be construed as controlling in the particular situation unless it clearly appears that the General Assembly intended to make the general act controlling in regard thereto, especially when the particular statute is later enacted." 7 Strong's N.C. Index 2d Statutes § 5; National Food Stores v. N. C. Board of Alcoholic Control, 268 N.C. 624, 151 S.E.2d 582.

It should be noted that G.S. § 20-281 does not include as an insured "any other persons in lawful possession."

Plaintiff's policy, in excess of the statutory requirements of G.S. § 20-281, defined an insured to include the named insured and any person using the automobile or legally responsible for the use, provided that the use of the automobile be with the permission of the named insured.

I am of the opinion that only G.S. § 20-281 is applicable to the facts of this case and that it was not necessary or proper that we consider whether Massey was in "lawful possession" at the time of the collision.