Allstate Ins. Co. v. Lyons

Decision Date10 April 1979
PartiesALLSTATE INSURANCE COMPANY v. Richard K. LYONS et al.
CourtMaine Supreme Court

Solman, Page & Hunter by Richard N. Solman, Caribou (orally), for plaintiff.

Barnes & Sylvester by Torrey A. Sylvester (orally), Robert F. Ward, Houlton, for defendants.

Before POMEROY, ARCHIBALD, DELAHANTY, GODFREY and NICHOLS, JJ.

POMEROY, Justice.

In this declaratory judgment action, Allstate Insurance Company seeks relief from a Superior Court judgment holding Allstate responsible for the defense of, and such damages as may be recovered in, a negligence action instituted by Richard K. Lyons, and his father John R. Lyons, against the administrator of the estate of Victor B. MacArthur.

That action arose out of an accident involving an automobile upon which Allstate has issued a liability policy. At the time of the accident Victor B. MacArthur had been permitted to drive the car by Wayne Barrett, the son of the named insured and owner. Such permission was given notwithstanding an express prohibition by Wayne's father not to let anyone else drive the car.

The issue presented to us is whether, given the circumstances surrounding the accident, Victor B. MacArthur was an additional "insured" under the terms of the liability policy issued by Allstate.

We deny the appeal.

On the evening of August 29, 1975, on a road near Moro, an automobile operated by Victor B. MacArthur left the road and struck a tree. The crash caused MacArthur's death and that of one of his passengers, Wayne Barrett, as well as personal injuries to a third passenger, Richard K. Lyons. At the time of the accident the three young men, after a visit to a local recreation center, were en route to pick up Barrett's mother.

The trial Justice made the following express findings:

First, that Wayne Barrett had general permission from his father to use the Dodge automobile and at the time and place of the accident, the use was within the scope of that permission with the exception of its operation by Victor MacArthur. The Court finds factually that Wayne was under a continuing express restriction against permitting others to drive his father's car. Although since his father had given no express permission for this particular trip, there was no express permission as to this particular trip. This finding relates to a continuing restriction. The Court finds as a fact that Victor MacArthur had Wayne Barrett's permission to operate the automobile. That Victor MacArthur was unaware of the owner's express restriction and that Victor MacArthur reasonably believed his operation of the vehicle was consented to by the owner. In other words, that Wayne had authority to give him permission. The Court further finds that at the time of Victor MacArthur's operation there was no emergency existing which warranted disregard of the owner's restriction and that Victor MacArthur's operation was in violation of that express restriction.

From these facts the presiding Justice concluded that MacArthur was an additional insured as defined in the Omnibus Clause of Allstate's liability insurance policy. That clause provides in pertinent part:

Allstate will pay for an insured all damages which the insured shall be legally obligated to pay because of:

1. bodily injury sustained by any person, and

2. injury to or destruction of property,

Arising out of the ownership, maintenance or use, including loading and unloading, of the owned automobile or a non-owned automobile.

Allstate will defend, at its own expense and with counsel of its choice, any lawsuit, even if groundless, false or fraudulent, against any insured for such damages which are payable under the terms of this Section, but may make such settlement of any claim or suit as it deems expedient.

The following persons are insured under this Section

1. The named insured with respect to the owned or a non-owned automobile provided the use of such non-owned automobile is with the permission, or reasonably believed to be with the permission, of the owner and is within the scope of such permission;

2. Any resident of the named insured's household with respect to the owned automobile 3. Any other person with respect to the owned automobile, provided the use thereof is with the permission of the named insured and within the scope of such permission; (emphasis supplied)

4. Any relative with respect to a non-owned private passenger automobile or trailer not regularly furnished for use of such relative, provided the use by such relative is with the permission, or reasonably believed to be with the permission, of the owner and is within the scope of such permission; and

5. Any other person or organization, but only with respect to his or its liability because of acts or omissions by a person who is insured under any of the four preceding paragraphs; provided the automobile, if a non-owned automobile, is not owned or hired by such other person or organization.

Definitions of words used under this Section

(a) "insured" Means any person or organization listed as insured in this Section;

(b) "named insured" Means the individual named in the declarations, and his spouse if a resident of the same household; . . .

Every party seeking declaratory relief must address at the threshold a question of justiciability. Jurisdiction under the Uniform Declaratory Judgments Act, 14 M.R.S.A. §§ 5951 Et seq., turns upon the presence of a real controversy. The plaintiff must set forth a claim of right or obligation buttressed by a sufficiently substantial interest to warrant judicial protection and assert it against a defendant having an adverse interest in contesting it. Jones v. Maine Highway Comm., Me., 238 A.2d 226, 229 (1968); See also, American Motorists Insurance Co. v. LaCourse, Me., 314 A.2d 813, 818 n. 4 (1974).

Such a controversy clearly exists in this case. MacArthur's estate asserts it is an additional "insured" under the policy issued by Allstate to William Barrett. Allstate, in turn, denies that assertion. A substantial interest buttresses each party's claims in support of or in opposition to, the relief sought by Allstate in the action. The rights of MacArthur's estate flow directly from the insurance contract. 1 See Langley v. Home Indemnity Co., Me., 272 A.2d 740, 742-43 (1971).

The central issue presented by this appeal is purely one of law, that is, was MacArthur an additional "insured" within the terms of the policy?

We conclude that he was.

The Superior Court Justice, in coming to the same conclusion we now reach, based his conclusion on his previous finding that MacArthur reasonably believed that he had permission to drive the car. Allstate now argues that the application of such a finding to the question of coverage was erroneous in that section 3 of the Omnibus Clause, the applicable section here, requires the Actual permission of the named insured, not just the reasonable belief of the party seeking coverage that such permission has been given.

We agree.

The Omnibus Clause expressly extends coverage to the Named insured when he uses a non-owned automobile in the reasonable belief that he has permission to do so. A similar provision applies to "any relative" of the named insured. At no point, however, is such coverage extended to persons other than the named insured and his relatives. We, therefore, hold that it was erroneous for the trial Justice to consider MacArthur's beliefs, reasonable or otherwise, in construing the policy.

Notwithstanding such error, the Superior Court Justice's determination will be upheld if it is in fact the correct result. See Laferriere v. Paradis, Me., 293 A.2d 526, 529 (1972); Estabrook v. Webber Motor Co., 137 Me. 20, 29, 15 A.2d 25 (1940).

The parties have joined issue as to the proper interpretation of the third category of persons insured under the Omnibus Clause. Any person is an "insured" under that provision as long as the Use of the named insured's vehicle is "with the permission of the named insured and within the scope of such permission." Allstate now argues that because the owner of the vehicle had specifically told his son not to let anyone else drive the car, MacArthur's use of the vehicle was beyond the scope of the permission granted, thereby precluding coverage.

We disagree.

Under the terms of the Omnibus Clause

Any other person (is insured) With respect to the owned automobile, provided the use thereof is with the permission of the named insured and within the scope of such permission.

...

To continue reading

Request your trial
30 cases
  • Baybutt Const. Corp. v. Commercial Union Ins. Co.
    • United States
    • Maine Supreme Court
    • 4 de janeiro de 1983
    ...been reached by an incorrect process of legal reasoning. Laferriere v. Paradis, 293 A.2d 526, 529 (Me.1972); Allstate Insurance Company v. Lyons, 400 A.2d 349, 352 (Me.1979). B. Applicable The issue in this case is whether Commercial Union Insurance Company's comprehensive general liability......
  • Jackson v. Inhabitants of Town of Searsport
    • United States
    • Maine Supreme Court
    • 18 de fevereiro de 1983
    ...reasoning may have been in error, but so long as its conclusion was correct, the judgment must be affirmed. Allstate Insurance Company v. Lyons, 400 A.2d 349, 352 (Me.1979). The entry, therefore, Appeal denied. Judgment affirmed. All concurring. * Again we point out that in naming a town as......
  • State Farm Mut. Auto. Ins. Co. v. Ragatz
    • United States
    • South Dakota Supreme Court
    • 9 de setembro de 1997
    ...permission, even when the first permittee was instructed not to let anyone else use the named insured's vehicle. See Allstate Ins. Co. v. Lyons, 400 A.2d 349 (Me.1979); State Farm Mut. Auto. Ins. Co. v. Lanoha, 553 N.W.2d 736, 250 Neb. 901 (1996); United Services Auto. Ass'n v. National Far......
  • Mueller v. Penobscot Valley Hosp.
    • United States
    • Maine Supreme Court
    • 8 de março de 1988
    ...it achieves the correct result. Procise v. Electric Mutual Liability Insurance Co., 494 A.2d 1375, 1381 (Me.1985); Allstate Insurance Co. v. Lyons, 400 A.2d 349, 352 (Me.1979). We find that summary judgment was in fact the correct result in Count III for breach of contract as it applies to ......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT