Aetna Cas. & Sur. Co. v. Nationwide Mut. Ins. Co.

• Decision Date: 13 June 1990
• Docket Number: No. 383A89,383A89
• Court: North Carolina Supreme Court
• Parties: AETNA CASUALTY & SURETY COMPANY v. NATIONWIDE MUTUAL INSURANCE COMPANY, William T. Sawyer, Jr., John William Slater, Jr., and Ralph Landon McLean.

Page 377

392 S.E.2d 377

326 N.C. 771

AETNA CASUALTY & SURETY COMPANY v. NATIONWIDE MUTUAL INSURANCE COMPANY, William T. Sawyer, Jr., John William Slater, Jr., and Ralph Landon McLean.

No. 383A89.

Supreme Court of North Carolina.

June 13, 1990.

Poisson, Barnhill & Britt by James R. Sugg, Jr., Wilmington, for plaintiff-appellant.

Murchison, Taylor, Kendrick, Gibson & Davenport by Vaiden P. Kendrick, Wilmington, for defendants-appellees Nationwide Mut. Ins. Co. and Ralph Landon McLean.

FRYE, Justice.

Plaintiff appeals from the Court of Appeals' decision reversing summary judgment in its favor. Resolution of this appeal depends upon the proper interpretation of section A.8 of an automobile insurance policy issued by plaintiff which excludes liability coverage for any person "using a vehicle without a reasonable belief that that person is entitled to do so."

On 3 October 1986, John William Slater, Jr., was involved in a motor vehicle collision with Ralph Landon McLean. McLean was injured and brought action against Slater. At the time of the collision, Slater was driving a truck owned by William T. Sawyer, Jr. Sawyer was insured by plaintiff Aetna Casualty and Surety Company (Aetna). McLean was insured for underinsured motorist coverage by Nationwide Mutual Insurance Company (Nationwide). Sawyer's policy with Aetna provided liability coverage in the amount of $50,000 for one in lawful possession of a covered vehicle. Plaintiff Aetna contends that Slater is not an insured under the terms of the policy issued to Sawyer since Slater did not have Sawyer's permission to drive the truck. Aetna further contends that N.C.G.S. § 20-279.21(b)(2) does not cover Slater because at the time of the accident Slater knew he was improperly driving without a license. In the alternative, Aetna contends that if any coverage is allowed, then it is the minimum amount required by N.C.G.S. § 20-279.21(b)(2), which provides for $25,000 coverage of a person operating a vehicle with express or implied permission or a person in lawful possession. See N.C.G.S. § 20-279.21(b)(2) (1989).

On the day of the accident, Sawyer gave Gary Fall, his employee, permission to drive Sawyer's company truck from the jobsite to Fall's home. Sawyer further instructed Fall that no one else was to drive the truck. On that same day, Fall, while giving Slater a ride home, stopped at Slater's brother's house to play cards. While at the house, Fall asked Slater to drive the truck to the store for a case of beer. Slater, while in route to the store and while driving without a license, was involved in the accident with McLean. McLean seeks to recover from Sawyer's policy with Aetna.

Plaintiff Aetna filed this action against defendants Nationwide, Sawyer, Slater, and McLean seeking declaratory judgment to determine that plaintiff owed no coverage beyond the amount provided for in N.C.G.S. § 20-279.21(b)(2). Defendants McLean and Nationwide answered, and plaintiff subsequently filed a motion for summary judgment. Upon call of the case for hearing, defendants moved to allow oral testimony from Slater; the motion was allowed.

During the summary judgment hearing, Slater testified that on the night of the accident he was employed by Sawyer and Fall who operated as F & S Builders; that Fall customarily drove the truck home every night; that both he and Fall lived in Carolina Beach, and Fall would give Slater a ride to and from work; that on the day of the accident, Fall stopped at Slater's brother's place to play cards and that Fall was going to take him home later that evening; that Fall asked him to take the truck, go to the store, and get some beer; and that the accident occurred on that occasion.

In response to the question of whether he believed he was entitled to operate the truck on that occasion, Slater responded as follows:

A. No, not really, because I know that it's wrong to be driving a car without a license regardless of what goes on, so I cleared that off the air. I got in the truck because I didn't want them driving. In fact, I wouldn't have let him drove (sic) me home anyways since he was already drinking. In fact, he had already made his mind up to stay at my dad's house that evening.

Q. So the reason you didn't think you should be driving was because you didn't have a license; is that correct?

A. Right, I didn't tell him that. No, I didn't tell him.

Slater later testified that, at the time of the accident, he thought Fall was a part owner of the company.

The trial court determined that there was no genuine issue of material fact and entered summary judgment in favor of plaintiff, granting the declaratory relief sought in the complaint. Defendants McLean and Nationwide appealed to the Court of Appeals from the order granting summary judgment. A divided panel of the Court of Appeals reversed, holding that the trial court erred in granting plaintiff's motion for summary judgment. Aetna Casualty & Surety Co. v. Nationwide Mut. Ins. Co., 95 N.C.App. at 181, 381 S.E.2d at 876. We affirm the decision of the Court of Appeals.

The issue on appeal is whether summary judgment was properly granted in favor of plaintiff. The underlying question is whether a person knowingly operating a motor vehicle without a driver's license may nevertheless have a reasonable belief that he was entitled to operate the vehicle on a given date and time. This is a question of first impression before this Court. We have previously held that where the driver is required by the insured's policy to have permission from the insured and does not, then the driver is not covered by the insured's policy. See Bailey v. Insurance Company, 265 N.C. 675, 144 S.E.2d 898 (1965). We have not, however, dealt with the question where the policy excludes coverage for persons who do not have a reasonable belief that they are entitled to drive an insured's vehicle. Although the factual situation in the present case is the same as in Bailey--A, the insured, loans the vehicle to B; B then loans the vehicle to C, without A's permission--nonetheless, a different result may be reached because liability coverage depends on the language of the policy, and summary judgment should be granted or denied accordingly.

"Summary judgment is granted when, viewing the record in the light most favorable to the non-moving party, there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law." Beckwith v. Llewellyn, 326 N.C. 569, 573, 391 S.E.2d 189, 191 (1990). The burden is upon the party moving for summary...