Aetna Casualty & Surety Co. v. De Maison

• Decision Date: 07 June 1954
• Docket Number: No. 11168.,11168.
• Citation: 213 F.2d 826
• Parties: AETNA CASUALTY & SURETY CO. v. DE MAISON.
• Court: U.S. Court of Appeals — Third Circuit

213 F.2d 826 (1954)

AETNA CASUALTY & SURETY CO. v. DE MAISON.

No. 11168.

United States Court of Appeals, Third Circuit.

Argued January 22, 1954.

Decided June 7, 1954.

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Lynn L. Detweiler, Philadelphia, Pa. (Swartz, Campbell & Henry, Philadelphia, Pa., on the brief), for appellants.

Robert E. Jones, Philadelphia, Pa. (Rawle & Henderson, Thomas F. Mount, Joseph W. Henderson, Philadelphia, Pa., on the brief), for appellee.

Before McLAUGHLIN, KALODNER and STALEY, Circuit Judges.

KALODNER, Circuit Judge.

In Pennsylvania, is a person who is allowed to drive an automobile by one who has been given the owner's permission to use the car for a specific purpose, an additional insured under the terms of the owner's public liability automobile policy which extends coverage to "any person while using the automobile * * * provided the actual use of the automobile is by the named insured or with his permission?" (Emphasis supplied.)

That is the issue presented by the instant appeal — novel in the sense that the precise question has never been decided by the appellate courts of Pennsylvania nor any of its inferior courts as far as our research and that of counsel has revealed. The facts are detailed in the opinion of the court below.¹ They may be summarized as follows:

Emil Schick, Sr. (Senior), owned an automobile. Once or twice a week he granted permission to use the car to his son, Emil Schick, Jr. (Junior), who lived with him. Junior did not own an automobile. He was obliged to obtain permission whenever he wanted to use Senior's car; he never used it without permission; he had never been given permission, express or implied, to allow anyone else to drive the car; he never considered that he had such permission.

On the evening of January 6, 1950, Junior asked for and received permission to use the automobile to go to the Yorktown Theatre in Jenkintown, a suburb of Philadelphia. He then drove to Messina's Inn in Ardsley, Pennsylvania, about three miles beyond Jenkintown.² There he met a group of friends including Mr. and Mrs. DeMaison. After a time they decided to drive to a diner in Willow Grove, some three or four miles distant. Junior told Mrs. DeMaison to "go ahead and drive" Senior's car and she proceeded to do so.³ He sat alongside her. After the car had travelled about two and a half miles there was an accident. The other car was damaged and Junior was injured. The owner of the damaged car and Junior each brought suit against Mrs. DeMaison in the state courts.

At the time of the accident Senior carried a public liability policy with the Merchants Indemnity Corporation of New York (Merchants). The policy contained an omnibus clause which provided:

"Definition of Insured: With respect to the insurance for bodily injury liability and for property damage liability the unqualified word `insured\' includes the named insured and also includes any person while using the automobile and any person or organization legally responsible for the use thereof, provided the actual use of the automobile is by the named insured or with his permission." (Emphasis supplied.)

Mrs. DeMaison's husband owned an automobile which was insured by the plaintiff, The Aetna Casualty and Surety Company (Aetna). The Aetna policy also contained a clause insuring both Mr. and Mrs. DeMaison in the event either of them was involved in an accident while driving another car. As to the latter, the Aetna policy applied only as excess insurance above whatever public liability insurance might cover such other car.

Aetna filed a Petition for Declaratory Judgment in the District Court,⁴ seeking a decree defining the respective coverage or coverages, if any, of its policy and Merchants' policy. At the conclusion of the testimony and arguments, the District Court found that Mrs. DeMaison's operation of the car was with the permission of the named insured (Senior), and held, therefore, that Mrs. DeMaison was an additional insured under Merchants' policy. Accordingly, it further decreed, (1) the policy of insurance issued by Merchants constituted the primary coverage for the accident; (2) the policy of Aetna constituted only excess insurance, effective only when the monetary limits of Merchants' policy had been consumed; and (3) Merchants had the obligation of defending all actions brought against Mrs. DeMaison arising out of the accident.

The District Court made it clear in its opinion that it regarded its disposition to be dictated by the ruling of the Superior Court of Pennsylvania, (an intermediate appellate court) in Conrad v. Duffin, 1945, 158 Pa.Super. 305, 44 A.2d 770.⁵ It construed that case to lay down the broad and inflexible rule that "insurance companies * * * are not relieved from liability where a permitted driver uses a car by allowing another person to drive it."⁶

It was on that premise that the District Court held that Mrs. DeMaison had "permission" to drive even though it had made the specific finding of fact, 114 F.Supp. at page 108 of its opinion, "* * * that Emil, Sr. had given Mrs. DeMaison no permission to drive and that he would not have given anyone other than Emil, Jr. permission to drive, had he been asked this permission."⁷ In that connection it may be observed that the District Court made it clear that it considered immaterial, under Conrad v. Duffin, supra, the fact that Senior had not, nor would he have, given permission to Mrs. DeMaison to drive.

Under these circumstances the District Court's finding that Mrs. DeMaison was driving with the "permission" of Senior must be regarded as an ultimate finding of fact and on that score it is well-settled that an ultimate finding as to liability-creating conduct is but a legal inference from other facts which is reviewable free of the impact of the clearly-erroneous rule pertaining to findings of fact.⁸

On this appeal Merchants contends that the District Court erred in its interpretation of the holding in Conrad v. Duffin, supra; that there the facts were materially different; that the prevailing view in other jurisdictions is contra to that of the District Court and that Pennsylvania decisions on general insurance law indicate an accord with it.

Aetna urges to the contrary. It asserts Conrad v. Duffin controls and that the District Court's disposition is in accord with the majority rule throughout the United States.

Interestingly enough both parties have rallied to their battle standards 160 A.L.R.; Merchants cites Section IV "Authority of original permittee to delegate permission to `use' car", subsection d.1 at page 1210; Aetna cites Section V "Authority of original permittee to delegate permission to `operate' car", subsection b.1 at page 1213. The sections relied on and the cases cited therein will be subsequently discussed.

As we earlier stated, the Pennsylvania courts have never passed upon the precise issue presented by this appeal. That being so we are required to consider such approach to the problem as may be indicated by Pennsylvania cases in the general field and to resort to general applicable principles to reach a decision consistent with Pennsylvania law.⁹

It may be well to first consider general applicable principles before discussing the related Pennsylvania cases.

Before doing so it must be noted that we are not here concerned with the cleavage which exists with respect to gross deviation cases among the various jurisdictions giving rise to so-called "majority" and "minority" rules. With respect to these rules the majority view is that permission, in order to extend the protection of the policy, means "* * * a consent to use the car at a time or place, or for a purpose, authorized by insured, so that a different use is not within such protection";¹⁰ the minority view holds that once permission has been given it is immaterial that the car is subsequently operated in a manner not within the contemplation of the parties.¹¹

What we are here concerned with is the critical issue as to whether a third person is entitled to the status of an additional insured when he is allowed to drive a vehicle by one who has been authorized by the insured owner to use it but who has not been given express or implied permission to delegate his authority.

Applicable to the issue here are these generally accepted principles: "One to whom insured has given permission to use the car has no authority to delegate such permission to another so as to make the latter an additional insured; but insured's conduct, or the nature or scope of the permission granted by him, may be such as to indicate permission to such other";¹² mere "permission to use the auto does not in itself, by implication, include an authority to delegate such permission to a third person."¹³

The books abound with cases subscribing to these principles.¹⁴

The Supreme Court of Pennsylvania has had occasion to consider problems of insurance liability when an automobile is involved in an accident while being operated by one other than the insured owner.

In doing so it has laid down these principles: (1) "there is no * * * liability if at the time of the accident the car is being driven at a time or place or for a purpose not authorized by the insured";¹⁵ (2) permission by the insured owner to one to use his car may be express or implied;¹⁶ (3) the word "permission" is to be construed as permission to use the car in a specified manner and for a specified purpose and where the policy provides "`the actual use is with the permission of the Named Insured'" the words "actual use" are to be construed as "`the particular use'";¹⁷ (4) "The `use or operation * * * with the permission of the named assured' refers to the time of the casualty and not to the time of granting consent * * *" and "Where the owner allows another the use of his car for a specific purpose, restriction to such purpose is clearly implied. Express permission for a given purpose does not imply permission for all purposes."¹⁸ (...