Cohen v. Erie Indem. Co.
| Decision Date | 29 May 1981 |
| Citation | 288 Pa.Super. 445,432 A.2d 596 |
| Parties | Richard I. COHEN v. ERIE INDEMNITY COMPANY, Appellant. |
| Court | Pennsylvania Superior Court |
Argued Dec. 1, 1980.
Charles P. Menszak, Jr., Philadelphia, for appellant.
Richard A. Weisbord, Philadelphia, for appellee.
Before PRICE WATKINS and MONTGOMERY, JJ.
The Appellant, Erie Indemnity Company, appeals from an Order entered by the lower court granting a Petition for Declaratory Judgment. The Judgment was sought by the Appellee, Richard I. Cohen, after the Appellant disclaimed coverage under an automobile insurance policy for Cohen, who was the listed insured under the policy, after his involvement in an accident on January 1 1975.
The essential facts are not in dispute. The Appellee was involved in the accident while operating a vehicle owned by his father. It was stipulated in the lower court that while the vehicle was not stolen, the Appellee did not have his father's permission to operate the vehicle at the time of the accident. The Appellee was the "named insured" in an automobile liability insurance policy which had been issued to him by the Appellant. The Appellant first disclaimed coverage by a letter dated September 17, 1975 which cited two sections of the insurance policy which are not relevant to the instant proceedings. Subsequent to the Appellee's filing of this action seeking to compel the insurer to extend coverage, the Appellant defended on the ground that the Appellee was not insured at the time of the accident because of the following clause of his insurance policy, which is set forth in its exact typographical form:
In this appeal we are presented with the issue of whether the Appellee, a "named insured" was covered under the insurance policy in question when he was involved in an accident while driving a vehicle without the owner's express or implied permission. This issue must be resolved by reference to the above-quoted provision of the policy. The Appellee has argued in the lower court, and again on appeal, that the policy provision set forth above does not exclude coverage because the proviso clause pertains only to subsection (b)(2), and not to subsection (b)(1). In the alternative, the Appellee has contended that the clause is ambiguous, and that such ambiguity must be resolved against the Appellant insurer. The Appellant contends that the policy provision is unambiguous in precluding coverage for the Appellee, the "named insured", as the operation of the vehicle was not with the permission of the owner.
The law is clear in our Commonwealth that where a contract of insurance is to be construed, any ambiguity in the language of the document is to be read in a light most strongly supporting the insured. Mohn v. American Casualty Co. of Reading, 458 Pa. 576, 326 A.2d 346 (1974); Burne v. Franklin Life Insurance Co., 451 Pa. 218, 301 A.2d 799 (1973); Adelman v. State Farm Mutual Automobile Insurance Co., 255 Pa.Super. 116, 386 A.2d 535 (1978). This Court has held that if it determined that the language of a policy prepared by an insurer is either ambiguous, obscure, uncertain or susceptible to more than one construction, the language must be construed most strongly against the insurer, and the construction most favorable to the insured must be adopted. See Blocker v. Aetna Casualty & Surety Co., 232 Pa.Super. 111, 332 A.2d 476 (1975). It has also been held that if a policy is reasonably susceptible of two interpretations, it will be construed in favor of the insured in order not to defeat, without necessity, the claim to indemnity which the insured seeks to obtain. Armon v. Aetna Casualty & Surety Co., 369 Pa. 465, 87 A.2d 302 (1952).
The question of the proper construction of the particular policy provision at issue in the present case appears to be a question of first impression in the appellate courts in Pennsylvania. However, both the Appellant and the Appellee cite several cases from other jurisdictions, each involving a question of coverage in situations in which very similar or identical insurance provisions were relied upon by insurers, seeking to avoid the extension of coverage to the insured. A brief review of some of these decisions is appropriate.
The Appellant insurer first cites the case of Gray v. International Service Insurance Co., 73 N.M. 158, 386 P.2d 249 (1963). That case apparently represents the first appellate decision in which a similar provision in an insurance policy was considered. In Gray, the facts were similar to those presented in this case, except that the named insured was driving a stolen vehicle. The provision in that policy, similar to the one in dispute in this case, appeared as follows:
The New Mexico Court reached the conclusion that permission for the use of a non-owned automobile was a condition of coverage as to both the "named insured" and to "any relative" of the named insured and held for the insurer. The Appellant also cites Indiana Lumbermen's Mutual Insurance Co. v. Hartford Accident and Indemnity Co., 454 S.W.2d 781 (Tex.Civ.App. 1970). In that case, the named insured was involved in an accident while driving a car without the permission of the owner. The policy provision in dispute read as follows:
(2) any relative, but only with respect to a private passenger automobile or trailer, provided his actual operation * * * is with the permission, or reasonably believed to be with the permission, of the owner and is within the scope of such permission".
The Appellant points out that while the typography of that provision is more supportive of an interpretation that the permission proviso applied only to section (b)(2) and not to section (b)(1), the Texas Court nevertheless concluded that the proviso clause applied to both sections and held that the policy did not provide coverage because the owner did not give permission for the use of the vehicle at the time of the accident. The Appellant further relies upon the following cases, arguing that they also support its position in this case: Insurance Co. of North America v. Black, 606 F.2d 650 (5th Cir. 1979); State Automobile Mutual Insurance Co. v. Williams, 268 Md. 535, 302 A.2d 627 (1973); and Bright v. Ohio Casualty Insurance Co., 444 F.2d 1341 (6th Cir. 1971).
The Appellee also cites several analogous decisions which support his position in this case. He first directs this Court's attention to the decision of the Court of Common Pleas of Beaver County in the case of Shaw v. Sabo & Buckeye Union Casualty Co., 43 D. & C.2d 645 (1967). The lower court in the Shaw case, viewing a policy provision containing similar but not identical phrasing and typography as is presented in the instant case, simply applied the rule of grammar that a limiting clause which follows several expressions is restricted to its last antecedent, and held that the proviso modified only the second subsection of the paragraph. The Appellee also relies upon the case of McMichael v. American Insurance Co., 351 F.2d 665 (8th Cir. 1965), where the Court reviewed the following proviso:
"Persons Insured
The following are insured under Part I:
(2) any other person using such automobile, provided the actual use thereof is with the permission of the named insured;
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