393 F.2d 204 (7th Cir. 1968), 16351, Indiana Ins. Co. v. Fidelity General Ins. Co.

Docket Nº:16351.
Citation:393 F.2d 204
Party Name:INDIANA INSURANCE COMPANY, Plaintiff-Appellee, v. FIDELITY GENERAL INSURANCE COMPANY, Defendant-Appellant.
Case Date:March 13, 1968
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit
 
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Page 204

393 F.2d 204 (7th Cir. 1968)

INDIANA INSURANCE COMPANY, Plaintiff-Appellee,

v.

FIDELITY GENERAL INSURANCE COMPANY, Defendant-Appellant.

No. 16351.

United States Court of Appeals, Seventh Circuit.

March 13, 1968

Page 205

Jay A. Canel, Erwin I. Katz, and Theodore J. Cooper, Canel & Canel, Chicago, Ill., for appellant.

William S. Dunning, Frank J. Pause, John M. Beverly, Chicago, Ill., Beverly & Pause, William S. Dunning, Chicago, Ill., of counsel, for appellee.

Before SCHNACKENBERG, FAIRCHILD and CUMMINGS, Circuit Judges.

CUMMINGS, Circuit Judge.

In this diversity action, the Indiana Insurance Company ('Indiana'), an Indiana corporation, sued Fidelity General Insurance Company ('Fidelity'), an Illinois corporation, to recover what Indiana expended in disposing of a lawsuit against James A. Baum.

Baum, a resident of Hammond, Indiana, had an Indiana Family Automobile Policy covering a 1959 Ford station wagon which he had purchased in 1963 from Tri State Motors, a Chicago used car business. In May 1964, Baum's wife returned the 1959 Ford to Tri State for repairs. While the station wagon was being repaired, Tri State lent the Baums a 1961 Ford which was being held for sale on its used car lot. Tri State had obtained the 1961 car from Southside Ford Truck Sales, and it was billed to

Page 206

Tri State although the certificate of title was not then assigned.

On May 6, 1964, Baum was driving the 1961 Ford 'loaner' and was involved in an accident in Hammond, Indiana, resulting in a $75,000 lawsuit against Baum in the Superior Court of Lake County, Indiana. Two months after the accident the certificate of title to the 1961 Ford was assigned to Tri State by Southside Ford Truck Sales.

Indiana undertook to defend the suit against Baum, while Fidelity contended that its Garage Liability Policy issued to Tri State did not provide coverage as to the 1961 Ford. The Fidelity policy covered the use for nonbusiness purposes of any automobile 'owned' by Tri State 'and used principally in garage operations.' The policy defined 'garage as including an automobile sales agency.

In settling the personal injury suit against Baum for $25,000, Indiana incurred other miscellaneous expenses. Pursuant to the subrogation clause in the policy between Indiana and Baum, Indiana claimed $27,733.41 from Fidelity in the present lawsuit.

In response to interrogatories propounded by the District Court, the jury found that Tri State was the owner of the 1961 Ford at the time it was loaned to Baum and that the loan was not for the purpose of business operations or other occasional business use of Tri State Motors 1 within the meaning of the liability part of the Fidelity policy.

Thereafter, the District Court concluded as a matter of law that the 1961 Ford was 'used principally in garage operations' within the meaning of the Fidelity policy, 2 and judgment was entered in favor of Indiana.

On appeal, Fidelity first urges that the jury found the automobile was owned by Tri State due to two assertedly erroneous instructions.

Indiana's Instruction 2A provided as follows:

'There was in force in the State of Illinois at the time that the 1961 Ford was delivered by Southside Ford Truck Sales, Inc. to Tri-State Motors a certain Statute which provided that:

"Unless otherwise explicitly agreed title passes to the buyer at the time and place at which the seller completes his performance with reference to the physical delivery of the goods, despite any...

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