Allstate Ins. Co. v. Hartford Acc. & Indem. Co., 7573

CourtCourt of Appeal of Missouri (US)
Citation311 S.W.2d 41
Docket NumberNo. 7573,7573
PartiesALLSTATE INSURANCE COMPANY, a corporation, Plaintiff-Appellant, v. HARTFORD ACCIDENT & INDEMNITY COMPANY, a corporation, J. H. Lynn and J. H. Moore, d/b/a Lynn-Moore Pontiac Sales, Defendants-Respondents.
Decision Date14 February 1958

Hyde & Purcell, George R. Wilhoit, Jr., Poplar Bluff, for plaintiff-appellant.

John S. Marsalek, Moser, Marsalek, Carpenter, Cleary, Jaeckel & Hamilton, St. Louis, for defendants-respondents.

RUARK, Judge.

In this case two insurance companies fight over the unappetizing bone of which is liable to indemnify against a damage suit. Plaintiff-appellant, Allstate Insurance Company, has sued defendant-respondent Hartford Accident & Indemnity Company to recover the sum of $5,078.06, representing the amount paid in satisfaction of a judgment and $1,480.25 expended for attorney's fees and incidental expense in defending the suit which culminated in such judgment. Allstate was denied relief by the court which tried the case below and has appealed.

The Facts.

Prior to the occurrence here mentioned, Lynn-Moore Pontiac Sales was an automobile dealer at Dexter, Missouri. It had at some time previous sold to one Akins a 1942 Ford on which it took back a mortgage to secure part of the purchase price. Certificate of title was obtained in the name of Akins, but Lynn-Moore retained possession of such certificate as additional security for the payment of its lien. Akins, however, did not assign this certificate.

On February 19, 1954, Akins went to Lynn-Moore's place of business and there entered upon a transaction respecting a 1946 Pontiac which was one of Lynn-Moore's stock of cars kept on its lot and held for sale or trade. This 1946 Pontiac had been acquired from a Missouri resident. Akins entered into negotiation with one Brown, the salesman in charge (Brown also happened to be Akins's son-in-law), and the upshot was that Akins agreed to trade in his 1942 Ford, at an allowance of $100, to pay $127 in cash, and to give a chattel mortgage to secure a total balance of $283.92. Having so agreed, Akins signed a mortgage in ordinary form pledging the 1946 Pontiac as security for the unpaid balance. No other papers were executed or delivered at that time. The Pontiac required some tune-up work and remained at the garage of the dealer. Akins drove his Ford on home. The Missouri certificate of title (for either of the vehicles) was not signed, acknowledged, and delivered at the dealer's office, nor did Lynn-Moore sign (as mortgagee) the newly executed mortgage which Akins had given on the Pontiac. The owner-dealer, Mr. Lynn, was absent. He does not recall whether he signed the certificate of title to the Pontiac that day or the next morning, but the evidence is clear that such certificate was not delivered to Akins until the next morning. Neither was the $127 cash difference paid at the office of the dealer. Akins says that Brown, the salesman son-in-law, 'picked it up' from his (Skins') wife later, but he does not know whether it was that day or the next morning. Brown says that Lynn signed (on the seller-mortgagee's line for signature) the chattel mortgage either that night or the next morning, and that either that night or the next morning he took the certificate of title (for the Ford) to Akins and procured his assignment of such title. Since the parties are positive that the Pontiac certificate was not delivered until the next morning, we think a fair conclusion to be drawn from all the evidence is that Brown, who was a notary, took the Pontiac certificate to Akins the next morning and at the same time secured Akins's assignment of the certificate of title to the Ford and collected the $127 down payment. At any rate, the title to the vehicles had not exchanged hands prior to the occurrences from which the liability involved in this case arose.

Now let us go back to the physical possession of the automobiles: The transaction at the garage had occurred about 4:00 p.m. At some time between 5:00 and 6:00, the work on the Pontiac being completed, Brown drove it out and delivered it to Akins, got the Ford, and drove it off. Akins says no papers were delivered to him, nor did he sign any at this exchange of possession. Brown says no papers were delivered except possibly an invoice. Within approximately fifteen minutes after delivery of the Pontiac, Akins had put himself, his wife, his daughter, and a neighbor girl in the newly possessed Pontiac, was driving up the road, and was involved in a collision with a car owned by Phillips. Paul and Joyce Phillips sued Akins in Count I for $650 property damage to Paul, in Count II for $1,000 personal injuries to Paul, in Count III for $5,000 medical expense and loss of consortium to Paul, and in Count IV for $10,000 injuries to Joyce; and eventually they got judgment for $5,078.06.

At the time of these doings Akins had liability coverage with plaintiff-appellant Allstate. The policy provided for indemnity in connection with the operation of the 1942 Ford and of substitute non-owned cars, but further provided that in respect to any non-owned automobile the coverage should be excess insurance over any other collectible liability insurance available to the insured. The policy contained subrogation provisions.

Lynn-Moore had coverage with defendant-respondent Hartford in the amount of $15,000 for each person and $30,000 for each accident, plus $5,000 property damage. Under the Definition of Hazards the policy covered 'the ownership, maintenance or use of the premises for the purpose of an automobile dealer * * * and all operations necessary or incidental thereto; and the ownership, maintenance or use of any automobile in connection with the above defined operations.' Under its Definition of Insured, 'the unqualified 'Insured' includes the Named Insured and also includes * * any person while using an automobile covered by this policy * * *, provided the actual use of the automobile is by the Named Insured or with his permission.'

The marrow of the bone in controversy is whether or not Akins at the time of the collision with Phillips was driving the Pontiac with permission of the dealer, Lynn-Moore. If so, Lynn-Moore's insurer, Hartford, is primarily liable, and Akins' insurer, Allstate, is liable only for the excess beyond such coverage, which excess does not exist in this case. (At least there is no contention to the contrary in respect to the legal effect of the policies.) Allstate contends that no sale had been consummated under the Missouri law and that consequently Akins was driving the Pontiac with permission of Lynn-Moore. Hartford contends that Akins was driving the Pontiac by virtue of his own right and authority as purchaser and mortgagor entitled to possession.


The word 'permission' as used in an omnibus clause has a flexible meaning depending upon the sense in which it is used. Under the definitions ordinarily given, it carries with it the necessary aspect of the right, power, or privilege to give or to withhold the grant of license embodied in the term. Thus one who has the right and power to use engages in such use by virtue of his own right and not by permission of another. 1 Hence it is held that user by conditional vendee who has acquired the possession and is the real and beneficial owner is by virtue of his own right and not by permission of the vendor, even though the legal title is withheld by the vendor; this on the theory that the conditional vendor has no right to control the use even though he may be the legal owner. 2 It is, however, significant of these cases so holding that the expression frequently used is 'after consummation of the sale' the use is by virtue of ownership. In those cases the consummation of the transaction was not prevented by the operation of statutes relating to the sale of motor vehicles. 3

In other instances the word 'permission' has a broader meaning. Thus in Royal Indemnity Co. v. Markley, 116 Colo. 84, 178 P.2d 672, 673, where the user was under a written lease for a period of not less than six months, which provided that the leased vehicle 'should be under the complete control of the lessee,' the court discussed the Latin origin of the word and said, 178 P.2d loc. cit. 674:

'The most that can be said for insurer's contention is that the word 'permission' might be used in the narrow sense of authority terminable at will, or that it might be used in the more inclusive sense of authority of contractual or legal basis. Such being the case, under common rules of construction as applies to an insurance policy, it must be construed against the company and in favor of the insured.'

In Switzer v. Merchants Mutual Casualty Company, 2 N.Y.2d 575, 161 N.Y.S.2d 867, 141 N.E.2d 904, 907, a dealer sold a car to a purchaser and the parties failed to comply with the Vehicle and Traffic Law in respect to transfer and registration of motor vehicles. The dealer loaned the buyer a set of dealer's plates. The court said that 'his [the dealer's] act in lending the license plates was responsible for making possible the use of the truck by [the buyer] after the sale. That act constituted permission * * *', and the dealer's insurer was held.

In Stovall v. New York Indemnity Co., 157 Tenn. 301, 8 S.W.2d 473, 72 A.L.R. 1368, an employee who had obtained a garage check to use his employer's car on the employer's business returned the car to the garage and thereafter wrongfully and without authority took the garage check back and got possession of and used the car for his own ends. He was held to be driving with 'permission' of the employer under the definition of the omnibus clause.

In Votaw v. Farmers Automobile Inter-Insurance Exchange, 15 Cal.2d 24, 97 P.2d

958, 126 A.L.R. 538, it was held that one of the purposes of the omnibus clause was to broaden the terms of the policy to meet present automobile driving conditions and to protect the insured...

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