Packer v. Travelers Insurance

221 S.E.2d 707 (1976) 28 N.C. App. 365

Jonell S. PACKER
v.
TRAVELERS INSURANCE COMPANY.

No. 7513SC674.

Court of Appeals of North Carolina.

January 21, 1976.

Marshall, Williams, Gorham & Brawley by A. Dumay Gorham, Jr., Wilmington, for plaintiff.

McLean, Stacy, Henry & McLean by Everett L. Henry, Lumberton, for defendant.

BROCK, Chief Judge.

The evidence offered by plaintiff failed to establish that James McCrimmon was operating the truck with the permission of the insured owner to drive on the very trip and occasion of the collision. We agree with the trial judge in his conclusion with respect to plaintiff's failure to show permission. Nevertheless, in our opinion the failure of plaintiff to offer evidence of permission to drive on the very trip and occasion of the collision is not fatal to plaintiff's case. Plaintiff's evidence was sufficient to justify a verdict finding that James McCrimmon was in lawful possession of the insured's vehicle at the time of the collision. We therefore hold that the trial judge erred in concluding that plaintiff had failed "to show . . . that James McCrimmon was in lawful possession of said vehicle." It follows that entry of judgment for defendant notwithstanding the verdict was error.

By Chapter 1162, Session Laws 1967, the legislature amended G.S. 20-279.21(b)(2) by adding to the persons insured under an owner's liability insurance policy "any other persons in lawful possession" of the insured's vehicle. Clearly the legislature intended a change in the liability insurance coverage previously required by statute. The preamble to Chapter 1162, Session Laws 1967, gives considerable insight into the legislative intent. The following portions of the preamble are instructive:

"WHEREAS, it is the established public policy of North Carolina to require as a prerequisite to the lawful licensing of a motor vehicle for use upon the public highways that the owner of the vehicle have and maintain in full force and effect a liability insurance policy; and

"WHEREAS, the owner of every motor vehicle has the absolute authority under the law to allow or not to allow anyone else to operate his vehicle, . . .; and

"WHEREAS, many innocent and blameless citizens who are victims of serious personal injuries and property loss are unable to receive any compensation whatsoever because of difficulty of proof under the terms of liability insurance policies, and it is difficult and often impossible for injured parties and operators to prove that one lawfully in possession of a vehicle had the express or implied permission of the owner to drive on the very trip and occasion of the collision; and

"WHEREAS, liability coverage under the laws of North Carolina is provided for an operator of a vehicle who has the ``express or implied permission' of the titled owner but does not extend to persons otherwise lawfully in possession of vehicles. . .: Now, therefore, . . ."

Thereafter in Section 1 the amendment adding as an insured "any other persons in lawful possession" is set forth. It is instructive also that Section 2 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." It seems clear to us that 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. See Insurance Co. v. Broughton, 283 N.C. 309, at 314, 196 S.E.2d 243 (1973), where the 1967 amendment is briefly discussed.

In a comprehensive annotation, 5 A.L.R.2d 600, three general rules of interpretation of the omnibus clause of liability insurance coverage are set forth at page 622.

(1) The strict rule: "For the use of the car to be with the permission of the assured within the meaning of the omnibus clause, the permission, express or implied, must have been given to the employee not only to the use of it in the first instance, but also to the particular use being made of the car at the time in question."

(2) The liberal rule: "The employee need only to have received permission to take the vehicle in the first instance, and any use while it remains in his possession is ``with permission' though that use may be for a purpose not contemplated by the assured when he parted with possession of the vehicle."

(3) The moderate or minor deviation rule: "A slight deviation from the scope of the authority or permission granted will not be sufficient to exclude the employee from the coverage under the omnibus clause, but a material deviation will be held to constitute a use of the automobile without the employer's implied permission."

The Motor Vehicle Safety and Responsibility Act of 1947 provided that insurance policies issued in conformity therewith must insure, as an insured, the person named and any other person using or responsible for the use of the motor vehicle with the permission, express or implied, of the named insured, "or any other person in lawful possession." Session Laws 1947, Chapter 1006, Section 4(2)(b). However, in 1953 the legislature repealed this provision and provided for insurance coverage for "the person named therein and any other person . . . using any such motor vehicle . . . with the express or implied permission of such named insured . . . ." Session Laws 1953, Chapter 1300, Section 21. The 1953 amendment deleted the coverage for "any other person in lawful possession."

The change made in the 1947 act by the 1953 amendment was considered significant by our Supreme Court in its opinion in Hawley v. Insurance Co., 257 N.C. 381, 126 S.E.2d 161 (1962). In construing the provision of the 1947 act the Court in Hawley at page 387, 126 S.E.2d at page 166 stated: "This provision was sufficiently broad to embrace the liberal rule. It required that policies of insurance insure all operators, irrespective of limits of permission, if in the lawful possession of the vehicle." In construing the 1953 amendment which effectively deleted the coverage for "any other person in lawful possession," the Court further stated at 257 Md. page 387, 126 S.E.2d page 167: "We interpret this statutory change to mean that the Legislature intended no more radical coverage than is expressed in the moderate rule of construction, i. e., coverage shall include use with permission, express or implied." Since the Hawley decision, our courts have applied the third rule set out above; i. e., the moderate or minor deviation rule.

We are now faced with a statutory amendment which is the reverse of the one considered by the Supreme Court in Hawley, supra. The legislature was cognizant of the interpretation of the 1953 amendment as compared to the interpretation of the provision of the 1947 act before the amendment. With this history of the legislative enactments and the interpretations placed thereon, the legislature in 1967 reinstated the provision which had been deleted in 1953. This 1967 amendment, when viewed in the light of the legislative and judicial history and in the light of the preamble to the 1967 amendment, leads to one rational conclusion. It was the intent of the legislature that North Carolina should follow no less than a liberal rule comparable to the second rule quoted above.

In Jernigan v. Insurance Co., 16 N.C.App. 46, 190 S.E.2d 866 (1972), this Court interpreted the 1967 amendment to signify that the legislature favors adoption of a liberal rule of construction in applying the coverage under the omnibus clause. However, a statement not necessary to a decision in that case was made that permission, express or implied, is an essential element of lawful possession. Such an interpretation would violate the clear intent of the legislature as expressed in the preamble to the 1967 amendment. The foregoing statement of this Court in Jernigan, supra, was dictum and should not be considered authoritative.

It is our opinion that the plaintiff, once having offered evidence tending to show lawful possession of the truck by James McCrimmon, was entitled to have the issue of lawful possession submitted to the jury. As stated above, the plaintiff in this case did offer evidence from which the jury could find James McCrimmon was in lawful possession of the insured's vehicle. The jury answered the issue, finding that James McCrimmon was in lawful possession. The evidence supports the verdict, and the verdict will support a judgment for the plaintiff.

The issue submitted to the jury in this case placed a heavier burden on plaintiff than was warranted under G.S. 20-279.21(b)(2), as amended in 1967. The issue required a finding of permission as well as lawful possession. It was the necessity of proof of permission that the 1967 amendment was designed to obviate. Although lawful possession by the operator may be shown by evidence of permission granted to the operator to take the vehicle in the first instance, the plaintiff is not required to show more than lawful possession at the time of the accident. However, the error in the issue in this case cannot be said to be prejudicial since the jury answered the issue in favor of the plaintiff.

The judgment for the defendant notwithstanding the verdict is reversed, and this cause is remanded for entry of judgment for the plaintiff upon the verdict.

Reversed and remanded.

BRITT and MORRIS, JJ., concur.