Carlsson v. Pennsylvania General Ins. Co.

• Decision Date: 13 June 1969
• Citation: Carlsson v. Pennsylvania General Ins. Co., 257 A.2d 861, 214 Pa.Super. 479 (Pa. Super. Ct. 1969)
• Court: Pennsylvania Superior Court
• Parties: Erik W. CARLSSON, Appellant, v. PENNSYLVANIA GENERAL INSURANCE COMPANY, Appellee.

Page 861

257 A.2d 861

214 Pa.Super. 479

Erik W. CARLSSON, Appellant, v. PENNSYLVANIA GENERAL INSURANCE COMPANY, Appellee.

Superior Court of Pennsylvania.

June 13, 1969.

Application for Allocatur Denied Sept. 10, 1969.

Paul D. Shafer, Jr., Thomas, Shafer, Walker, Dornhaffer & Swick, Meadville, for appellant.

Paul E. Allen, Allen & Truax, Meadville, for appellee.

Before WRIGHT, P.J., and WATKINS, MONTGOMERY, JACOBS, HOFFMAN, SPAULDING and CERCONE, JJ.

HOFFMAN, Judge.

This action of assumpsit was tried before a judge sitting without jury. The court found for the defendant and this appeal followed. The court found the following facts.

William K. Unverzagt, a resident of Pittsburgh, owned a 1960 automobile. His son, William S. Unverzagt, was a student at Allegheny College in Meadville. The father had given the son permission to operate the automobile in the Pittsburgh area, and had affixed no restriction as to its operation there. He had, however, refused his son permission to take the car to Meadville. In spite of this express prohibition, the son took the auto to Meadville at a time when his parents were not at home, and when his father was under the impression that the car remained in Pittsburgh. The son loaned the car to Allen Glick and Erik Carlsson.

Subsequently, Erik Carlsson, while driving the automobile was involved in an accident. A lawsuit was instituted against Carlsson resulting in judgments against him totaling $10,000.

At the time of this accident, Erik Carlsson was a member of the household of his father, Henry Carlsson and was covered by an automobile policy issued by defendant insurance company. When the above suits were instituted, defendant refused to defend the actions brought against plaintiff. As a result plaintiff retained his own attorneys to defend him which resulted in attorneys fees and costs of $1530.08.

Plaintiff, in this action, now seeks to recover from the defendant insurance company:

(1) the amount of the judgments against him, and

(2) the attorneys fees and costs incurred in defending the actions against him. ¹

Defendant's insurance policy provided insurance coverage under the 'non-owned automobile' provisions as follows:

'The following are insureds under Part I * * *

(b) With respect to a non-owned automobile

(1) the name insured

(2) any relative but only with respect to a private passenger automobile or trailer provided the actual use thereof is with the permission of the owner.'

The defendant insurance company contends that at the time of the accident Erik Carlsson was not operating the Unverzagt automobile with the permission of William K. Unverzagt, the actual owner. Plaintiff argues, on the other hand, that he had the permission of the actual owner's son who had possession and control of the vehicle that he was unaware of the territorial restrictions imposed by the father, and that he drove the automobile under the reasonable assumption that the son had the right to lend it to others.

Many courts have considered the effect on insurance coverage of the use of an automobile by a second permittee with the consent of the first permittee but without the consent of the title holder. The decisions in the various jurisdictions in this regard have been conflicting. See 'Omnibus Clause of Automobile Liability Policy as Covering Accidents Caused by Third Person Who Is Using Car with Consent of Permittee of Named Insured' 4 A.L.R.3rd 10 et seq. The law in Pennsylvania would appear to be that there is no basis for finding implied permission to the second permittee to drive the automobile where the first permittee has been specifically denied the right to lend the auto to another. Helwig v. Easterly, 205 Pa.Super. 185, 208 A.2d 10 (1965) and even where the first permittee is not specifically prohibited from lending the automobile, Volk v. Cacchione, 395 Pa. 636, 150 A.2d 849 (1959).

Virtually all of these cases, however, have arisen under the 'omnibus' clause which is designed to afford protection to any who might drive the automobile mentioned in the policy itself. The statute underlying this coverage specifically contemplates that the driver should only be covered when he is driving 'with the express or implied permission of (the) named insured * * *.' Act of April 29, 1959, P.L. 58 § 1421(b)(2), 75 P.S. § 1421(b)(2). Such coverage would appear to be so limited on the theory that the insurer is only prepared to cover those driving the automobile with permission; its exposure should not be extended to cover those who have not paid an insurance premium, and do not have the express or implied consent of the named insured. In such circumstances, the driver cannot reasonably be thought to have known of or relied upon the existence or extent of such coverage.

Few cases, however, have considered these situations where the 'non owned automobile' coverage is involved. No reported case on this question in Pennsylvania has been brought to our attention either by our research or the research of the parties. It becomes necessary, therefore to consider whether different standards should be applied to the non-owned automobile coverage than are applied to the omnibus clause.

Non owned auto insurance is required in motor vehicle liability policies by the Act of April 29, 1959, P.L. 58 § 1421, 75 P.S. § 1421 which similarly requires the omnibus coverage mentioned earlier. Under that statute a policy of insurance to be valid must 'insure the person named, as insured, therein against loss from the liability imposed upon him by law for damages arising out of the use, by him, of Any motor vehicle, not owned by him, within the same territorial limits, and subject to the same limits of liability as are set forth above with respect to an owner's policy of liability insurance.' (Emphasis added)

The purpose of such legislation would appear to be clear. The Commonwealth seeks to provide protection for the insured and members of his family whenever they are driving automobiles. This provision allows them to drive a non-owned automobile without fear that the title owner may not have adequate insurance. It assures sufficient protection without regard to the insurance of the title owner. Thus, it suggests to the driver that he, and the people who might be injured by him, are protected, even if he does not fall within the provisions of the title owner's omnibus coverage.

It is significant to note that the legislature apparently recognized that broader coverage was necessary when one is seeking protection under his own policy. Thus, the 'omnibus' provision in the statute makes specific reference to the need for the express or implied permission of the named insured. The 'non-owned automobile' section, however, quoted above makes no such reference to permission but provides coverage when driving 'any motor vehicle, not owned by him.'

The policy, in this case, therefore, introduces the element of consent which was omitted under the provisions of the statute itself. Since this additional element has been added, it becomes necessary for us to determine the purpose and intent of this 'consent' clause, and whether it should be or was intended to be applied in our case.

When insurance companies first provided non-owned auto insurance, policies were silent as to permission. The policies simply stated: 'With respect to a non-owned automobile * * * (2) any relative, but only with respect to a private passenger automobile or trailer not regularly furnished for the use of such relatives.'

Cases then arose where children of insured persons stole automobiles and were involved in accidents. Of course, there could be no coverage under the omnibus clause in their parents' policies. The courts held, however, that the non-owned auto coverage in the policies did afford coverage. Sperling v. Great American Indemnity Co., 7 N.Y.2d 442, 199 N.Y.S.2d 465, 166 N.E.2d 482; Bowman v. Preferred Risk Mutual Ins. Co., 348 Mich. 531, 83 N.W.2d 434; State Farm Mutual Auto Ins. Co. v. Walker (Tex.Civ.App.) 334 S.W.2d 458, 78 A.L.R.2d 1395; Home Indemnity Co. v. Ware, 183 F.Supp. 367 (D.C.Delaware).

As a result, the insurers added the limitation as to consent, so that they would not be liable for injuries caused by persons stealing cars. The issue to be decided by us, however, is whether the consent provisions were intended to include and should include those situations where the insured is driving unaware that he is doing so without the consent of the title owner.

In deciding this question we turn first to Phillips v. Government Employees Insurance Company, 258 F.Supp. 114 (E.D.Tenn.S.D.1966).

In Phillips, the wording of the insurance policy was identical with the policy in the present case; the factual situation was also virtually indistinguishable. There, the father had given permission to his son to use the automobile but had instructed him not to permit anyone else to drive it. The son, however, allowed another boy to use the automobile who was involved in an accident.

The District Court determined that the single issue was whether the word 'owner' could include not only the holder of the legal or equitable title to the automobile but anyone in lawful possession of the automobile and capable of transferring lawful possession to the plaintiff. In this regard it points out that the word 'owner' is never defined in the policy. It then quotes the following provision from 73 C.J.S. Property § 13(a): 'The term 'owner' is a general term having a wide variety of meanings depending on the context and the circumstances in which it is used. Broadly, an 'owner' is one who has dominion over property which is the subject of ownership. * * * 'The term 'owner' may also be synonymous with 'holder' or 'possessor'.''

The court further points out that the word 'owner' may be ambiguous when used without further definition in the policy. In this regard it quotes Powell v. Home Indemnity Co., 343 F.2d 856 (C.C.A....