Allstate Insurance Co. v. Aetna Casualty & Surety Co.
| Decision Date | 21 January 1964 |
| Docket Number | Docket 28166.,No. 70,70 |
| Citation | 326 F.2d 871 |
| Parties | ALLSTATE INSURANCE COMPANY, Plaintiff-Appellant, v. AETNA CASUALTY & SURETY COMPANY, Dawn McCall and Alan McCall, Defendants-Appellees, and County of Wyoming, New York, Mildred Stepien, Beverly Pfeiffer, Gerald Pfeiffer, and Orten Rindell, Defendants. |
| Court | U.S. Court of Appeals — Second Circuit |
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Lowell Grosse, Buffalo, N. Y. (Miles, Cochrane, Grosse, Rossetti & Lord, Buffalo, N. Y., on the brief), for plaintiff-appellant.
John E. Leach, Buffalo, N. Y. (Vaughan, Brown, Kelly, Turner & Symons, Buffalo, N. Y., on the brief), for defendant-appellee, Aetna Cas. & Surety Co.
Luther Ira Webster, Rochester, N. Y. (Lamb, Webster, Walz & Telesca, Rochester, N. Y., on the brief), for defendants-appellees, Dawn McCall and Alan McCall.
Before MEDINA, HAYS and MARSHALL, Circuit Judges.
The controversy between the parties to this declaratory judgment action arose out of an automobile accident in Wyoming County, New York, on September 19, 1958. Several insurance policies are involved and the issues litigated concern the specific question of which insurance company is obligated to pay the whole or part of a balance of $26,500 agreed to be paid to one of the persons injured in the accident, pursuant to a stipulation of settlement made in open court just as certain actions pending in the Supreme Court of the State of New York, County of Wyoming, were about to go to trial. Judge Henderson filed his findings and opinion, which are not reported, and concluded that Allstate Insurance Company must pay the entire $26,500. Allstate appeals and we affirm.
The individuals and the insurance companies involved are: (1) Alan and Dawn McCall, husband and wife, who severally owned two automobiles, a Renault, the property of the husband, and a Cadillac, owned by the wife. (2) Dawn McCall was employed as a Supervisor at Wyoming Community Hospital, operated by the County of Wyoming, and she was driving the Renault on the morning when the accident occurred, the other passengers in the car being nurses in the Hospital who were being driven to the University of Buffalo for the purpose of registering for courses in the fall semester. Mildred Stepien, one of the nurses, was severely injured. She sued the McCalls and the County of Wyoming in the New York Supreme Court, and the stipulation above referred to, which will be discussed later in some detail, contained the agreement to pay her, in addition to other sums, the $26,500 that lies at the center of this declaratory judgment action. (3) Allstate issued three policies to the McCalls: (a) to Alan McCall, on the Renault, a liability policy with coverage for bodily injury to one person limited to $10,000; (b) to Dawn McCall, two policies on the Cadillac, a liability policy with coverage for bodily injury to one person limited to $50,000, and a collision policy. Aetna Casualty & Surety Company issued to the County of Wyoming a policy insuring against any liability of the County arising out of the operation of a "non-owned" vehicle by an employee of the County, for bodily injury to one person limited to $200,000.
In limine we must decide the question whether the Renault was a "temporary substitute automobile," within the meaning of the Allstate policy on the Cadillac, for this policy covers the wife when driving her husband's car only if it is a "temporary substitute automobile," defined as follows:
"`temporary substitute automobile\' means any automobile, including a a trailer, while temporarily used as a substitute for the owned automobile or trailer when withdrawn from normal use because of its breakdown, repair, servicing, loss or destruction."
If the Renault is not a "temporary substitute automobile" as thus defined, Allstate is completely exonerated, and we need not examine the other rulings by Judge Henderson.
Allstate contends that Judge Henderson's findings of fact on this phase of the case are clearly erroneous, and that, even if these findings are not clearly erroneous, the Renault, as matter of law was not a "temporary substitute automobile."
We turn to the evidence and the findings. In substance the trial judge found that the husband and wife changed cars for the day for the sole purpose of permitting the husband to take the Cadillac to the Valley Cadillac Corporation, the nearest authorized Cadillac Agency for the service of Cadillac automobiles, in Rochester to have a broken leaf in the left rear spring repaired and for servicing, as the car was badly in need of lubrication. This is an inference fairly to be drawn from the testimony of the McCalls. It is true that the Valley Cadillac Corporation in Rochester refused to repair a single broken leaf in the spring, and that the actual repairs were not consummated until after the accident to the Renault, which occurred on the very morning the husband was to have the spring repaired in Rochester. The lubrication, however, was attended to that morning at another service station in the vicinity, but a spare leaf was apparently not immediately available, and in any event, the work of repairing the spring could not be done that day.
We think the intention of the parties and what was done to carry out such intention is controlling rather than the course of subsequent events. Nor is a contrary finding compelled by the circumstance that the husband took with him to Rochester friends employed at his place of business there, nor by proof that the husband and wife at times drove one another's cars, even when there was to be no repairing and no servicing. Other details of the evidence are discussed in the briefs but we shall not pursue the subject further, as all questions of credibility and the drawing of inferences of fact were for the trial judge's determination. Where there is substantial evidence to support a finding of fact it is not within our province to set it aside.
Jurisdiction is based on diversity of citizenship and the controlling law is that of New York. As no New York authorities construing the "temporary substitute automobile" clause have been drawn to our attention, and we have found none, we must use "all the available data" and resort to the customary judicial process to determine and apply the state law in the case before us. Merritt-Chapman & Scott Corp. v. Public Utility District No. 2, 2 Cir., 1963, 319 F.2d 94, cert. denied, 1964, 84 S.Ct. 488.
Allstate's argument is that there can be no "temporary substitute automobile" unless the "owned" car is completely disabled and out of all use or is actually being repaired. For the reasons stated below, we do not think the New York courts would so construe the temporary substitute automobile clause.
The first step in the legal analysis of the problem is to ascertain the purpose of the "temporary substitute automobile" clause in the context of the insurance policy as a whole.
The broad language on the first page of the insurance policy states that the named insured is protected under the policy "with respect to the owned or a non-owned automobile." This language appears to include any automobile that the named insured may happen to drive. A close reading of the Definition section, however, reveals that an automobile owned by a relative who is a resident of the named insured's household is deemed to be neither the owned automobile nor a non-owned automobile, and coverage is not provided to the named insured when driving such an automobile unless it is a temporary substitute as defined. Evidently, this exception to the broad coverage is made with an eye to the situation in which relatives residing together own two or more automobiles which are used interchangeably. Were it not for this exception relatives residing together could own several automobiles and purchase coverage on all of them by insuring only one and paying only one premium; or, alternatively, if a separate policy were taken out on each, the combined limits of two policies would be available whenever one owner operated the automobile of the other. Any such state of affairs would necessitate a significant upward adjustment of the premiums to be paid. This is a far cry, however, from cases where one member of the family uses the automobile of another because his or her automobile is temporarily withdrawn from use because of its "breakdown, repair, servicing, loss or destruction." In other words, in those instances disclosed in the evidence where Mr. and Mrs. McCall exchanged cars for the day merely for their own personal convenience the temporary substitute clause would clearly be inapplicable.
Thus the basic purpose of the substitute clause is in no way nullified by a ruling permitting the use of a substitute car while the owned car is being driven to a repair shop or service station for repairs or servicing. Moreover, the very wording of the clause itself all but compels a construction permitting a withdrawal from normal use while the owned car is in such a condition that it can be operated. To require a total breakdown, which would mean having the car towed to a repair shop or service station, seems to us to be an unreasonable if not absurd construction. We think, on principle, the McCalls were entitled to select a convenient time and appropriate facilities for the needed repair and servicing.
It has been repeatedly held that the terms of the "temporary substitute automobile" clause may be satisfied even though the owned automobile is not immobilized, totally disabled or completely out of commission. Mid-Continent Casualty Co. v. West, Okl., 1959, 351 P.2d 398; Allstate Insurance Co. v. Roberts, 1958, 156 Cal.App.2d 755, 320 P.2d 90; Canal Insurance Co. v. Paul, Tenn.Ct. App., 1962, 369 S.W.2d 393; see Fullilove v. United States Casualty Co., 1961, 240 La. 859, 125 So.2d 389, 392; 21 La.L. Rev. 835, 839-40 (1961).
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