213 F.2d 200 (8th Cir. 1954), 14960, Bettinger v. Northwestern Nat. Cas. Co.

Docket Nº:14960.
Citation:213 F.2d 200
Party Name:BETTINGER el al. v. NORTHWESTERN NAT. CAS. CO. et al.
Case Date:May 27, 1954
Court:United States Courts of Appeals, Court of Appeals for the Eighth Circuit
 
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Page 200

213 F.2d 200 (8th Cir. 1954)

BETTINGER el al.

v.

NORTHWESTERN NAT. CAS. CO. et al.

No. 14960.

United States Court of Appeals, Eighth Circuit.

May 27, 1954

Rehearing Denied July 1, 1954.

John J. McBrien, Farmington, Minn., for Marie Bettinger and Lawrence E. Bettinger.

Philip Stringer, St. Paul., Minn. (Robert O. Sulluvan, Arthur J. Donnelly, and R. Paul Sharood, St. Paul, Minn., on the brief), for Clara Egge and Lillian Hanson.

James E. Finley, St. Paul, Minn., for appellees.

Page 201

Before SANBORN, WOODROUGH, and THOMAS, Circuit Judges.

SANBORN, Circuit Judge.

This is an appeal from a judgment for the plaintiffs, Northwestern National Casualty Company and Northwestern National Insurance Company, in an action for a declaration of nonliability under their automobile liability policy No. 10925 issued to Marie Bettinger, of Dakota County, Minnesota, on August 14, 1951, for the term of one year. Jurisdiction is based on 28 U.S.C.A. 2201, there being the requisite diversity of citizenship and amount in controversy.

The policy insured Marie Bettinger against 'Loss of or damage to the Automobile (described in the policy), except by Collision or Upset but including Fire, Theft and Windstorm, ' and liability for bodily injury and property damage 'caused by accident and arising out of the ownership, maintenance or use of the automobile.' Bodily injury liability limits were '$25, 000 each person' and '$50, 000 each accident.' Property damage liability was limited to $5, 000. The policy covered 'any person while using the automobile * * * provided the actual use of the automobile is by the named insured or with his permission.' The policy provided that the Insurance Companies should defend any suit, 'even if such suit is groundless, false or fraudulent, ' against the insured for injury or damage caused by the automobile while being used by the assured or with her permission.

The automobile described in the policy was a used Studebaker purchased from an automobile dealer in Hastings, Minnesota, on August 11, 1951. Lawrence Bettinger, the seventeen year old son of Marie Bettinger, conducted the negotiations for its purchase. The automobile was purchased under a conditional sales contract signed by Marie Bettinger.

The dealer in Hastings from whom the automobile was purchased ordered insurance for it. He was not an agent of the Insurance Companies. The insurance was written by the Sontag Insurance Agency in Hastings upon information furnished by the dealer. The registered title to the automobile was transferred by the dealer to Marie Bettinger, and a 'registration card, ' showing her to be the owner, was issued to her by the Secretary of State of the State of Minnesota. On August 22, 1951, she transferred the title to the automobile to Lawrence Bettinger, using for that purpose the 'bill of sale' form on the reverse side of her 'registration card.' In executing the form she signed a statement that she sold the automobile to Lawrence, and he executed an application for transfer stating that he had purchased the automobile from her. The 'bill of sale' and 'application for transfer' both recite that the statements were subscribed and sworn to before a Notary Public. A 'registration card' was thereafter issued to Lawrence Bettinger as owner of the automobile.

At the time the automobile was purchased and until Lawrence went to work for the Faribault Canning Company in September, 1951, he was working for and living with a farmer named Delska, whose farm was less than a mile from the Bettinger home. While he was working for Delska, he had the automobile with him at the Delska farm. He was there a little over two weeks, when he and Delska went to work on farms for the Faribault Canning Company. No one but Lawrence ever drove the automobile.

On October 22, 1951, Marie Bettinger received a notice from the Agent of the Insurance Companies that the policy in suit would be cancelled five days from that date, or October 27, 1951.

On October 26, 1951, the automobile, while being driven by Lawrence in connection with his work, collided with another automobile in which Lillian Hanson and Clara Egge were passengers. They were both injured.

In May of 1952 each of them brought an action against Marie Bettinger andher

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son Lawrence to recover damages for bodily injuries, based upon the claim that Marie Bettinger was the owner of the automobile, that it was being operated by Lawrence with her consent, and that his negligence in the operation of the automobile caused the collision and the resulting injuries. Section 170.54, Minnesota Statutes Annotated provides that 'Whenever any motor vehicle * * * shall be operated upon any public street or highway of this state, by any person other than the owner, with the consent of the owner, express or implied, the operator thereof shall in case of accident, be deemed the agent of the owner of such motor vehicle in the operation thereof.'

On May 26, 1952, the Insurance Companies received from Marie Bettinger the summons and complaint in each of the personal injury actions, together with a demand that the Companies assume the defense.

On May 29, 1952, counsel for the Insurance Companies returned the complaint and the summons in each of the cases with a letter stating that the Companies refused to defend her in the actions 'for the following reasons':

'1. That at the time of the issuance, August 14, 1951, of Policy No. 10925, you were not the owner of the automobile therein referred to and insured.

'2. That in the 'Declarations, ' Item No. 7, you represented that you were the sole owner of the insured automobile. This was a misrepresentation.

'3. That on or about August 22, 1951, the registered title to said automobile was transferred to Lawrence Bettinger. That there was no assignment of said policy and that subsequent to that date, and in particular, on October 26, 1951, you had no insurable interests in the automobile insured by said policy and therefore, said policy was not in effect on October 26, 1951.'

The Bettingers retained counsel, who filed answers in the personal injury actions, denying liability.

On July 8, 1952, the depositions of Marie Bettinger and Lawrence Bettinger were taken by counsel for Clara Egge and Lillian Hanson, plaintiffs in the personal injury actions brought by them. The substance of Marie Bettinger's testimony was that she had purchased the automobile with money furnished her by one of her sons who was in the Army; that she never drove it herself, but owned it at all times; and that on August 22, 1951, she transferred the title to Lawrence to avoid the danger of having the automobile taken by her husband's many creditors.

In his deposition Lawrence testified, with respect to the ownership of the automobile, that on October 26, 1951, he was living at home with his mother; that he drove the automobile for her when she wanted to go somewhere; that he was driving it to work on the day of the accident, with his mother's consent.

The depositions of the Bettingers were filed in the District Court on July 21, 1952.

On August 6, 1952, the Insurance Companies brought the instant action against Marie Bettinger and Lawrence E. Bettinger to secure an adjudication of nonliability, claiming (1) that at the time the policy was issued Marie Bettinger was not the sole owner of the automobile as she represented, that she actually had no insurable interest in it, and that Lawrence was the owner, (2) that on August 22, 1951, Marie Bettinger executed a bill of sale transferring the registered title to the automobile to Lawrence, and that upon his application the Secretary of State of the State of Minnesota transferred the title to him, and (3) that on October 26, 1951, she had no insurable interest in the automobile, and that the policy was not in force and effect.

The Bettingers, in their answer to the complaint of the Insurance Companies, asserted that Marie Bettinger was at all

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times the owner of the automobile and that on or about August 21, 1951, for personal reasons and without intending to transfer any right, title or interest in the automobile, she transferred the registration of it to Lawrence. The Bettingers further alleged that, with full knowledge of all pertinent facts, the Insurance Companies estopped themselves from denying that the policy was in force on October 26, 1951, by mailing to Marie Bettinger notice of cancellation effective October 27, 1951. The Bettingers asked that the policy be declared to have been in force on the day of the accident.

The interveners, Clara Egge and Lillian Hanson, also filed an answer to the complaint of the Insurance Companies, asserting that they were liable under the policy, and asking that the policy be adjudged to be in full force on October 26, 1951.

On September 22, 1952, the Insurance Companies moved the District Court to advance the instant case for trial so that it might be tried and determined before the personal injury actions against the Bettingers were tried. After a hearing, the motion was denied. This case and the two personal injury cases were on the trial calendar of the District Court for the term commencing November 4, 1952.

The personal injury cases against the Bettingers were first reached for trial, and were tried together before Judge Bell and a jury. On the trial of those cases Marie Bettinger testified that she was at the time of the accident the owner of the automobile and that it was being driven by Lawrence with her consent. The...

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