Arndt v. Davis

• Decision Date: 17 January 1969
• Docket Number: No. 37033,37033
• Parties: Harold H. ARNDT, Administrator of the Estate of Sharon Arndt, Appellee, v. Clyde DAVIS, Appellee, Aetna Casualty & Surety Company, Granishee-Appellant.
• Court: Nebraska Supreme Court

Page 886

163 N.W.2d 886

183 Neb. 726

Harold H. ARNDT, Administrator of the Estate of Sharon Arndt, Appellee, v. Clyde DAVIS, Appellee Aetna Casualty & Surety Company, Granishee-Appellant.

No. 37033.

Supreme Court of Nebraska.

Jan. 17, 1969.

Syllabus by the Court

1. The word 'permission' as used in the ordinary omnibus clause of an insurance policy means permission 'express or implied.'

2. The meaning of the word 'permission' as used in the omnibus clause of an insurance policy and in the Nebraska Motor Vehicle Safety Responsibility Act is synonymous.

3. Nebraska is committed to a broad rather than a narrow interpretation of the word 'permission' and to a liberal construction of the omnibus clause to effectuate its purpose.

4. In interpreting the omnibus clause of an insurance policy, Nebraska is committed to the 'liberal or initial permission' doctrine.

5. Once initial permission has been given by the insured to the use of his motor vehicle by another, the person so using such motor vehicle becomes an insured under the terms of an ordinary omnibus clause contained in the insured's policy and remains such until such permission is terminated.

Maupin, Dent, Kay, Satterfield & Gatz, Donald E. Girard, Gary L. Scritsmier, North Platte, for garnishee-appellant.

Baskins, Baskins & Schneider, North Platte, for appellee.

Heard before WHITE, C.J., SPENCER, BOSLAUGH, SMITH, McCOWN, and NEWTON, JJ., and MORAN, District Judge.

NEWTON, Justice.

This is a garnishment proceeding. One Clyde Davis was employed by Armour & Company as an outside salesman. In his capacity as salesman, Armour & Company furnished him with an automobile. Davis was offered a contract pertaining to the use of the automobile whereby he could, if he so elected, maintain full-time possession of the automobile and use it for personal as well as business purposes. If he used it for personal purposes, he was to be assessed with certain minimum charges for such use. On the other hand, he could elect not to use the automobile for his personal use and, if he so elected, the automobile was to be retained at the headquarters point of the company during all nonbusiness hours except when Davis was traveling overnight away from the headquarters point. Davis elected the second alternative and signed a contract accordingly.

On September 5, 1962, Davis was in Broken Bow, Nebraska, on the business of his employer. That evening, after working hours, he became intoxicated and made use of the automobile for social purposes. Sharon Arndt, plaintiff's decedent, was a guest passenger in the automobile. An accident occurred and she was killed. The administrator of her estate brought action against Davis and his employer Armour & Company. The case was dismissed as to Armour & Company on the ground that Davis was not acting within the scope of his employment at the time of the accident, but judgment was obtained against Davis.

Armour & Company carried automobile insurance on the fleet of automobiles used by it with the defendant Aetna Casualty and Surety Company. The policy contained an omnibus clause as follows: 'The unqualified word 'Insured' includes * * * (2) under Coverages A and B, any person while using an owned automobile or a hired automobile and any person or organization legally responsible for the use thereof, Provided the actual use of the automobile is by the named Insured or with his permission * * *.' (Emphasis supplied). The primary question for decision is whether or not under this insurance policy defendant is liable to the plaintiff for payment of the judgment against Davis. In other words, was Davis, at the time of the accident, an insured under this policy? The trial court ruled that defendant was liable and entered judgment accordingly.

There is a considerable volume of law dealing with the interpretation of omnibus clauses such as the one presented in this case. It appears, generally speaking, that three different rules have been followed. The first is the so-called strict or conversion rule to the effect that the exact use of the automobile at the time and place of the accident must have been with the express or implied permission of the employer. The second is the moderate or minor deviation rule which permits recovery when the deviation from the permission granted is of a minor nature. The third is the liberal or initial permission rule to the effect that if permission to use the automobile was initially given, recovery may be had regardless of the manner in which the automobile was thereafter used. Proponents of this rule justify it on the ground that it is good public policy to protect persons injured in automobile accidents against uninsured motorists. They further justify the rule of the theory that the purpose of the omnibus clause is to broaden the coverage of the policy to cover all persons operating the insured automobile with the knowledge and consent of the insured owner and insist that once the owner has placed the automobile in the possession of the driver and consented to his operating the automobile, any deviation from the purposes for which the automobile was entrusted to the operator is immaterial. The first two rules mentioned appear to limit the insurer's liability primarily to the liability of the insured. The third or liberal rule goes beyond this and holds the insurer liable even in cases where the owner is not liable on the theory of respondeat superior, family purpose doctrine, etc. See Annotation, 5 A.L.R.2d 600.

In regard to Nebraska law, it does not appear that any one rule has been strictly adhered to, but at the outset it should be recognized that resort for the determination of such cases need not be had to the Nebraska Motor Vehicle Safety Responsibility Act which, under certain circumstances, renders the insured liable when the motor vehicle is used by another with the express or implied permission of the insured. The word 'permission' found in the ordinary omnibus clause is generally construed to include implied permission. See, 7 Am.Jur.2d, Automobile Insurance, § 113, p. 425; State Farm Mutual Automobile Ins. Co. v. Kersey, 171 Neb. 212, 106 N.W.2d 31. The statute is not always applicable and in any event, in view of the generally accepted definition of the word 'permission' to include implied permission, the omnibus clause and the statute are synonymous.

In the case of Witthauer v. Employers Mutual Casualty Co., 149 Neb. 728, 32 N.W.2d 413, an employee who had deviated from the scope of his employment to the extent of driving his employer's truck to a cafe for lunch was ruled not to be covered by the omnibus clause contained in the employer's insurance policy. This case appears to have followed the strict or conversion rule.

In State Farm Mutual Automobile Ins. Co. v. Kersey, supra, the owner's daughter, who was a minor without an operator's license, had frequently requested permission to drive the family automobile and had been refused on all but two occasions. She was not specifically instructed not to drive the automobile, but knew that permission for her to do so was usually denied. She took the automobile and an accident ensued. In this case the court said that since neither express nor implied permission had been given the daughter to drive the automobile, she was not covered by the omnibus clause in her father's...