American Motorists Ins. Co. v. LaCourse

• Court: Supreme Judicial Court of Maine (US)
• Citation: 314 A.2d 813
• Parties: AMERICAN MOTORISTS INSURANCE COMPANY v. Rodney LaCOURSE et al.
• Decision Date: 30 January 1974

Page 813

314 A.2d 813

AMERICAN MOTORISTS INSURANCE COMPANY v. Rodney LaCOURSE et al.

Supreme Judicial Court of Maine.

Jan. 30, 1974.

Richardson, Hildreth, Tyler & Troubh, by Harrison L. Richardson, Robert E. Noonan, Portland, for plaintiff.

Franklin F. Stearns, Jr., Bennett & Schwartz, P. A., by John N. Kelly, Portland, for defendants.

Before DUFRESNE, C. J., and WEATHERBEE, POMEROY, WERNICK, ARCHIBALD and DELAHANTY, JJ.

WEATHERBEE, Justice.

This was originally an action for a Declaratory Judgment and cross-claim and involved requests by two insurance companies to have determined their obligations under separate policies of liability insurance which each has written. This controversy arises from litigation now pending in the York County Superior Court growing out of a collision between two automobiles. The automobile with which we are here concerned was owned by Forest City Motor Company. The original Plaintiff, Maine Bonding and Casualty Company, had issued to Forest City Motor Company a policy of liability insurance covering the operation of this vehicle under certain circumstances. At the time of the collision the car was being driven by a young man whose father owned an automobile insured for liability by an original Defendant (and cross-claim Plaintiff) American Motorists Insurance Company. This policy contained a provision giving coverage to members of the insured's family while driving nonowned vehicles under certain circumstances. The Defendant Couillard claims to have been injured by the negligent operation of this vehicle.

Forest City Motor Company had permitted one of its salesmen, a Mr. Porterfield, to drive this car, a demonstrator, to his home in nearby Cape Elizabeth with instructions that it was not to be used by members of the Porterfield family except in cases of emergency. In violation of this instruction, Porterfield permitted his son, Glenn, home on leave from the Navy, to take the car back to Portland to pick up Mrs. Porterfield at her place of employment. While the junior Porterfield was in Portland with the car, he met a former high school classmate, the Defendant Rodney LaCourse. It was decided by the two boys that they should drive the car over to South Portland to pick up a girl friend whom Rodney had promised to drive to work. Rodney asked Glenn to let him drive the car in the hope that a favorable impression would be made upon the girl. Glenn let Rodney drive, and while Rodney was driving the Forest City Motor Company car taking the girl to work, the car collided with the Couillard vehicle. Couillard has sued Rodney and his father, Roland LaCourse, and that action is pending.

Maine Bonding and Casualty Company brought its action to determine its obligations, if any, under Forest City Motor Company's policy as to defense of Rodney in the Couillard action. American Motorists Insurance Company cross-claimed as to its obligations, if any, under the policy it had written for Roland LaCourse, Rodney's father.

Maine Bonding and Casualty Company's complaint was heard before a Justice of the Superior Court, and the cross-claim of American Motorists Insurance Company was tried before another Justice a few months later. Both policies undertook to insure the policyholders against liability for damage caused by the operation of certain automobiles owned by the policyholders, and each policy contained the standard extended coverage provisions which included coverage of certain persons other than the policyholders while driving under certain specific situations. The pertinent parts of these provisions read:

'Persons Insured

The following are insureds under Part I:

(a) With respect to the owned automobile,

(1) the named insured and any resident of the same household,

(2) any other person using such automobile with the permission of the named insured, provided his actual operation or (if he is not operating) his other actual use thereof is within the scope of such permission, and

(3) any other person or organization but only with respect to his or its liability because of acts or omissions of an insured under (a)(1) or (2) above;

(b) With respect to a non-owned automobile,

(1) the named insured,

(2) any relative, but only with respect to a private passenger automobile or trailer,

provided his actual operation or (if he is not operating) the other actual use thereof is with the permission, or reasonably believed to be with the permission, of the owner and is within the scope of such permission, and

(3) any other person or organization not owning or hiring the automobile, but only with respect to his or its liability because of acts or omissions of an insured under (b)(1) or (2) above.' (Emphasis added.)

Clause (a) is commonly referred to as the 'omnibus clause' and Clause (b) is called the 'non-owned automobile clause'.

The issue raised by the complaint of Maine Bonding and Casualty Company was whether Rodney LaCourse was an 'additional insured' under Forest City Motor Company's policy as described in clause (a). The Justice who heard this matter found that at the time of the collision Rodney LaCourse was operating the Forest City Motor Company vehicle without the permission of the owner or of anyone authorized to give him permission and that Rodney was not, therefore, an additional insured under the Maine Bonding and Casualty Company policy and was not entitled to defense or insurance under that policy. There was no appeal and so the absence of responsibility of Maine Bonding and Casualty Company is determined finally. Maine Bonding and Casualty Company and Forest City Motor Company have been ordered stricken as parties. Only the cross-claim of American Motorists Insurance Company (hereinafter, the Plaintiff) against the original Defendants, and now cross-claim Defendants, Rodney and Roland LaCourse and Raymond J. Couillard remains.

The second Justice, who tried the cross-claim of American Motorists Insurance Company, heard the testimony of Rodney LaCourse. He construed the policy to require subjective-but reasonable-belief that the borrower has the owner's permission and found that Rodney

'actually and reasonably believed that he had the owner's consent, through a permittee, to drive the automobile owned by Forest City Motor Company and that he was, therefore, entitled to coverage under the non-owned clause of his father's insurance policy.'

The Justice adjudged that the Plaintiff American Motorists Insurance Company is obligated to appear, defend and pay on behalf of Rodney and Roland in the action brought against them by Mr. Couillard.

The appeal of the Plaintiff American Motorists Insurance Company raises two issues-(1) Did the Justice correctly interpret the non-owned automobile clause of the standard extended coverage provision, and (2) If so, does the evidence support the Justice's conclusion that Rodney actually and reasonably believed that he had the owner's consent to drive the car?

Interpretation of the non-owned automobile clause

It is the contention of the Plaintiff that the phrase 'reasonably believed' should be construed in the light of previous case law of those jurisdictions which have construed the omnibus clause to extend coverage to a permittee as a result of an implied permission but only when there is

'an inferential permission, in which a presumption is raised from a course of conduct or relationship between the parties in which there is mutual acquiescence or lack of objection signifying consent.' 7 J. Appleman, Insurance Law & Practice § 4365 (1942).

We cannot agree with the Plaintiff's interpretation of the language of the policy.

The purposes of extending coverage to additional insureds in the two clauses suggest that they were intended to have different interpretations. Under the omnibus clause the insured, after securing protection for himself and residents of his household, elects to purchase coverage for such other persons to whom he chooses to entrust the use of his automobile. His premium includes a charge for this extended coverage and he cannot be expected to intend to pay for coverage of persons who use his vehicle without his consent. E. g., Savage v. American Mutual Liability Ins. Co., 158 Me. 259, 182 A.2d 669 (1962).

On the other hand, the purchaser of liability insurance wishes to be assured that he and members of his family are covered if they are permitted to drive other people's automobiles upon which the owners may not maintain liability insurance. We must assume that such a purchaser of liability insurance does not contemplate driving such a car without the consent of the owner-but both the insured and the insurer recognize the insured's need to be protected in situations where the insured's honest belief that he has the owner's permission turns out to be mistaken.

The Justice here agreed with the holding of the Pennsylvania Superior Court in Carlsson v. Pennsylvania General Ins. Co., 214 Pa.Super. 479, 257 A.2d 861 (1969) which similarly distinguished the purposes of the two clauses in holding that coverage extended to the son of an insured who drove a non-owned automobile with the consent of the owner's son who in turn had the father-owner's permission to use the car in the Pittsburgh area but who had been refused permission to take it to Meadville where the accident occurred. The non-owned clause of the policy provided coverage only if the 'actual use is with the permission of the owner'. There was no reference to reasonable belief of permission as there is in our policy.

After considering the purposes of the two clauses (in the light of a Pennsylvania statute requiring all policies to insure the named insured against damages resulting from the use of 'any motor vehicle, not owned by him'), the Court construed the policy to provide coverage to the driver of the non-owned vehicle if he had the owner's consent or if he actually and reasonably believed under the circumstances that he had the owner's consent.

In our opinion ...