Branch v. United States Fidelity & Guaranty Co.

• Decision Date: 19 September 1952
• Docket Number: No. 11466.,11466.
• Citation: 198 F.2d 1007
• Parties: BRANCH v. UNITED STATES FIDELITY & GUARANTY CO.
• Court: U.S. Court of Appeals — Sixth Circuit

198 F.2d 1007 (1952)

BRANCH v. UNITED STATES FIDELITY & GUARANTY CO.

No. 11466.

United States Court of Appeals Sixth Circuit.

September 19, 1952.

John R. Gilliland, Memphis, Tenn. (John R. Gilliland, Charles G. Black, Memphis, Tenn., on the brief), for appellant.

Charles G. Morgan, Memphis, Tenn. (Charles G. Morgan, Memphis Tenn., on the brief), for appellee.

Before MARTIN, McALLISTER and MILLER, Circuit Judges.

MILLER, Circuit Judge.

In this action against the Appellee, under the "omnibus clause" of an automobile liability insurance policy, the District Judge, trying the case without a jury, found for the Appellee and dismissed the action on its merits.

Prior to November 28, 1948, the Appellee, United States Fidelity and Guaranty Company, issued to Silvio Lucchesi its automobile liability insurance policy insuring against liability arising out of the ownership and operation of his automobile, which was subsequently involved in the accident hereinafter referred to. The policy named Lucchesi as the person insured and further provided in its so-called "omnibus clause" that it also included as insured under it "any person while using the automobile and any person or organization legally responsible for the use thereof, provided the actual use of the automobile is with the permission of the named assured."

While in Lucchesi's store on the night of November 27, 1948 as a customer, Willie Carr, an employee at Gee Brothers Garage, in Memphis, Tennessee, made an arrangement with Lucchesi by which he was to pick up Lucchesi's automobile early the next day at the Lucchesi home and take it to Gee Brothers Garage, about 2½ miles distant, for washing and simonizing. Accordingly, the automobile was turned over to Carr about 7:00 A.M. on November 28, 1948, with the understanding that it was to be taken to the garage to be worked on as stated and returned to Lucchesi's home by two o'clock that day. After working on the automobile for a while at the garage, rain interrupted Carr's work about 11:15 A.M. He then drove the car to the railroad station to meet his wife, and upon it developing that his wife was not on the train which he met, Carr drove the automobile first to his home on Simpson Street and then started to drive to Tunica, Mississippi, about 35 miles South of Memphis, to pick up his wife there. About 1:30 P.M. near the Mississippi State line on Highway 61 in Shelby County, Tennessee, and at a point some 14 miles distant from Gee Brothers Garage, he met with a serious accident involving the car of the appellant, Oliver Branch, which resulted in a judgment in favor of Branch against Carr in the sum of $8,432.27. An execution issued on the judgment was returned wholly unsatisfied. Branch thereafter filed this action to recover from the Appellee the amount of the judgment, claiming that Carr was included as an assured under the omnibus clause contained in the liability insurance policy. It is the contention of the Appellee that Carr was not "an additional assured" under the policy which contention the District Judge sustained in dismissing the action.

The construction and application of the omnibus clause in automobile liability insurance policies have been the subject of much litigation throughout the country. The Courts are divided in their holdings into three general groups; (1) the so-called strict rule, which denies coverage if the driver departs from the intended purposes of the owner; (2) the minor deviation rule holding that the policy covers the driver of the car if the deviation is slight; and (3) the so-called liberal rule which holds that the policy covers the driver although he deviates from the intended purposes of the owner, if he originally obtained possession with the owner's permission. Annotation 5 A.L.R.2d 600, 624-643; Vezolles v. Home Indemnity Co., D.C.W.D.Ky., 38 F.Supp. 455, 457, Id., 6 Cir., 128 F.2d 257; Yorkshire Indemnity Co. v. Collier, 6 Cir., 172 F.2d 116. This case is controlled by the law of Tennessee, which State adopted the so-called liberal view in 1928. Stovall v. New York Indemnity Co., 157 Tenn. 301, 8 S.W.2d 473, 474, 72 A.L.R. 1368.

Appellant contends that the present case is controlled by the ruling in Stovall v. New York Indemnity Co., supra. In that case, a wholesale dry goods firm in Memphis purchased an automobile which it assigned to its salesman for his use in covering his territory. The salesman was specifically instructed that he should not use the automobile for his own pleasure or private purposes. The salesman brought the automobile with him to Memphis in attending a convention, and at three o'clock one afternoon, before the completion of his duties for the day, he left without notice to his superior to drive to Sardis, Mississippi to visit a young lady. Sardis was not in his territory. The car was involved in an accident in Mississippi on the trip to Sardis. The insurance policy covering the automobile contained an omnibus clause which covered any person legally operating the automobile, "`providing such use or operation is with the permission of the named assured'". The injured parties secured judgments totaling $3,000 against the salesman and following a nulla bona return of the executions against him, suit was instituted against the insurer under the omnibus clause of the policy. Judgments for the plaintiffs were affirmed by the Supreme Court of Tennessee. In doing so, the Court, after discussing the question, stated — "It is our opinion that the words, `providing such use or operation is with the permission of the named assured,' were intended to exclude from the protection of the policy a person who should take the automobile and use it without permission or authority in the first instance. If, however, the automobile covered by the policy is delivered to another for use, with the permission of the owner or insured, his subsequent use of it is with the permission of the insured, within the meaning of the policy, regardless of whether the automobile is driven to a place or for a purpose not within the contemplation of the insured when he parted with possession." This Court followed that ruling in Preferred Accident Insurance Co. v. Barker, 6 Cir., 104 F.2d 424.

Appellant concedes, however, that there are some limitations to the broad rule as stated in Stovall v. New York Indemnity Co., supra. In American Automobile Ins. Co. v. Jones, 163 Tenn. 605, 45 S.W.2d 52, decided in January 1932, it was held that the ruling did not apply to a case in which one in possession of the car with the permission of the owner permits a third party stranger to operate the car, or in a case where the particular misuse of the car was expressly prohibited. This Court has likewise held that the rule did not apply in a case where the actual use of the car at the time of the accident had been specifically forbidden by the owner. Caldwell v. Standard Accident Ins. Co., 6 Cir., 98 F.2d 364.

The Appellee contends that the broad rule as stated in Stovall v. New York Indemnity Co., supra, has been further limited by the rulings of the Supreme Court of Tennessee in Romines v. The Preferred Accident Ins. Co., decided Nov. 26, 1932 and unreported, but referred to and discussed in Hubbard v. U. S. Fidelity & Guaranty Co., 192 Tenn. 210, 215-216, 240 S.W.2d 245, 248, and by the decision in the Hubbard case, handed down on May 14, 1951. In both of those cases possession of the insured car was obtained by the driver with permission of the owner for a specific purpose, and the driver without authority from the owner used the car for other purposes of his own, in the course of which an accident occurred. In both cases the Court held that the use of the car at the time of the accident was not with the permission of the named assured, and rendered judgment for the defendants. In both cases the ruling in the Stovall case was referred to and the case distinguished. In Hubbard v. U. S. Fidelity & Guaranty Co. the Court made this distinction — "In the present case, Baker was employed to use a motorcycle with very limited authority. He had no permission to use the vehicle except on business of his employer and during his hours of duty. In the Stovall case, the salesman was given possession of the automobile with broad permission and wide discretion as to its use. In the cause now before us, Baker was given no discretion as to the use of the motorcycle except for a specified purpose." The Court in closing its...