Indiana Lumbermens Mutual Insurance Co. v. Janes

• Decision Date: 23 February 1956
• Docket Number: No. 15609.,15609.
• Citation: 230 F.2d 500
• Parties: INDIANA LUMBERMENS MUTUAL INSURANCE COMPANY, Appellant, v. J. D. JANES, Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

230 F.2d 500 (1956)

INDIANA LUMBERMENS MUTUAL INSURANCE COMPANY, Appellant, v. J. D. JANES, Appellee.

No. 15609.

United States Court of Appeals Fifth Circuit.

February 23, 1956.

COPYRIGHT MATERIAL OMITTED

Phil Stone, James Stone & Sons, Oxford, Miss., for appellant.

Chester L. Sumners, Smallwood, Sumners & Hickman, Oxford, Miss., Smith & Hurdle, Holly Springs, Miss., for appellee.

Before HUTCHESON, Chief Judge, and JONES and BROWN, Circuit Judges.

BROWN, Circuit Judge.

On a standard liability insurance policy issued in Virginia to J. L. Forbes, record title owner, as the named assured, the District Court held the insurer liable under the Omnibus Clause¹ and the Clause Paramount of the Virginia Statute² for an accident in which the insured vehicle was being driven by Cavanaugh with the permission and consent of George Forbes, for whose use the car had been purchased by J. L., his brother.

The decisive facts found by the District Court are simple: in 1950 when the automobile was acquired, J. L., a resident of Newport News, Virginia, purchased it, in his name, for the use of his brother, George, then a minor and, as such, not able to finance it. Title was in J. L. Forbes with a chattel mortgage by him to a Virginia bank. George was to, and did, make the finance payments on the car while J. L. paid for the insurance with the understanding that George was to repay him for this when he could. In January 1952, when the original policy on the car was issued by appellant, and George had since become of age, J. L. advised the insurer's agent that the car was going to be used by his brother, George, and would be kept by him on the Marine Base near Memphis. In August 1952, to comply with rules of the Marine Base, J. L. gave a specific written permission³ to his brother.

A second, renewal policy was issued in January 1953. On March 6, 1953, George loaned the automobile to his fellow-marine Cavanaugh, with the resulting collision in Mississippi with Janes' truck and judgment⁴ against Cavanaugh.

Arguing first that the insurance contract was void for fraud of J. L. in misrepresenting that (a) George was an adult, and (b) J. L. was the true owner of the vehicle, the insurer also stoutly contends that J. L. was not the owner, hence had no insurable interest, so that no insurance was available to George regardless of the permission which J. L. might have given him; and, in any case, if J. L. was an assured, he did not clothe George with authority to permit others to use the vehicle and thereby extend coverage to successive users. We think none of these has merit.

First, the purchase of this automobile under these circumstances was a perfectly legitimate, good faith transaction. Since J. L. was liable, personally, on the financing notes and contract, and had himself a personal liability to pay the insurance premiums, it was a proper thing for him to retain the record title and legal ownership of the vehicle. This gave him an ample insurable interest.

It is equally plain that J. L. was purchasing the car for the use of his brother, George, and it was placed under his control. The nature of the permission impliedly granted by J. L., the legal owner of the vehicle, is, therefore, to be measured in the light of the purpose for which the car was turned over to George. Here, with ample grounds, the District Court found that J. L. intended that George was to use the car as though it were his own. Of course, in this automobile age, a common thing for an automobile owner is to loan the car to friends, business associates, acquaintances, and others for personal use of the permittee wholly unrelated to the business or interest of the vehicle owner. Since it was intended that George should use the car freely as though it were his, it was a normal and expected thing for him to lend it to his fellow-marine.

If this is to extend coverage to permittees, third or fourth removed, the insurer need but recall that the policy is its contract in words chosen by it, the scope of which is sufficient to clothe the named insured with full authority automatically to make the insurance available to all who might use the car, provided only that his intention is adequately reflected concerning the right of the permittee and successive permittees to allow others to use the vehicle. The permission can be implied as well as expressed. Procuring the car for George to enjoy as his own and permitting him to use it freely at a Base 900 miles away, is quite sufficient to justify the conclusion that George had J. L.'s consent to permit anyone he chose to use or drive the automobile. Nor, do we think, that the written permission either did, or was intended to, restrict or withdraw the full scope of this permission. It was to satisfy the requirements of the military, presumably for instances such as this in which the serviceman desired to operate, on the base, a vehicle owned by and registered in the name of another.

Applying, as we must, Virginia principles, these conclusions are fully supported⁵ by Virginia decisions giving full voice to the statutory Clause Paramount.

There was no basis at all for the charge of fraud based on George's minority, nor, under the findings, was there a misrepresentation as to the ownership which in fact existed in J. L. J. L. claimed to be the owner. He was in law the owner and so he was in fact. As an owner for reasons entirely sufficient and legitimate, he purchased the automobile for the use of his brother who was expected to pay the cost of it, but it began, it continued, and it terminated as his, not George's property. Moreover, after all of these facts were fully known to the insurer as a consequence of the investigation of the Janes collision in March 1953, and after notice to J. L. Forbes of cancellation of the policy in April had become effective, the insurer, by paying a substantial amount to him as the collision loss sustained by the insured vehicle, affirmed the...