Concord General Mutual Insurance Company v. Hills

• Citation: 345 F. Supp. 1090
• Decision Date: 30 June 1972
• Docket Number: Civ. No. 12-153,12-158.
• Parties: CONCORD GENERAL MUTUAL INSURANCE COMPANY, Plaintiff, v. Arthur R. HILLS et al., Defendants. The TRAVELERS INSURANCE COMPANY, Plaintiff, v. Buddy J. LAPHAM, Jr., et al., Defendants.
• Court: United States District Courts. 1st Circuit. United States District Court (Maine)

345 F. Supp. 1090

CONCORD GENERAL MUTUAL INSURANCE COMPANY, Plaintiff, v. Arthur R. HILLS et al., Defendants.

The TRAVELERS INSURANCE COMPANY, Plaintiff, v. Buddy J. LAPHAM, Jr., et al., Defendants.

Civ. Nos. 12-153, 12-158.

United States District Court, D. Maine, S. D.

June 30, 1972.

Jack H. Simmons, Lewiston, Me., for Concord General.

John J. Flaherty, John Paul Erler, Portland, Me., for Travelers.

Peter L. Murray, Portland, Me., for Hills.

Charles H. Abbott, Lewiston, Me., for Laphams.

Louis Scolnik, Lewiston, Me., for Emerson.

Irving Friedman, Lewiston, Me., for Henley.

MEMORANDUM OF OPINION AND ORDER OF THE COURT

GIGNOUX, District Judge.

By these declaratory judgment actions Concord General Mutual Insurance Company (Concord) and The Travelers Insurance Company (Travelers) seek declarations as to the extent of their obligations to defend any suits arising out of an automobile accident which occurred on February 12, 1971 at Woodstock, Maine. Defendants in the Concord action are Edwin A. Emerson, Jr., the owner of the automobile and the named insured in the Concord policy; his 16-year old stepson, Randall Henley, whom Emerson had permitted to use the insured automobile; Buddy J. Lapham, Jr., whom Henley had in turn allowed to drive the automobile and who was the operator at the time of the accident; and Arthur R. Hills, who has filed suit in this Court against Emerson, Henley and Lapham for the personal injuries sustained by him and for the death of his wife, Eleanor J. Hills, in the accident.¹ Defendants in the Travelers action are Arthur R. Hills; Buddy J. Lapham, Jr.; and Buddy J. Lapham, Sr. (whose correct name is Willard F. Lapham), the named insured in the Travelers policy. The principal issue in both cases is the interpretation of the so-called "omnibus clause" in an automobile liability insurance policy.

The actions have been combined for trial and were tried to the Court without a jury on April 12, 1972. Diversity jurisdiction is conceded, and there is no substantial dispute as to the relevant facts.

I. THE FACTS

Emerson, a resident of Norway, Maine, was the owner at all relevant times of a 1965 Ford ¾-ton pickup truck, which he used both for personal purposes and for business purposes in connection with his rubbish collection business. For several weeks prior to the February 12, 1971 accident, Emerson had permitted Henley, who had recently obtained a driver's license, to use the pickup truck whenever it was not being used by his stepfather or other employees of the business. Emerson had allowed Henley to drive the truck to and from school, to do errands, and for social purposes in the evenings and on weekends. Each time Henley took the truck he was required to ask permission of his stepfather, and he was repeatedly cautioned both by Emerson and by his wife to keep out of trouble, not to drink, and not to loan the truck to anyone. Unknown to the Emersons, however, on at least four occasions prior to the accident, Henley had permitted his young friend, Buddy J. Lapham, Jr., to use the truck alone, mostly at night, to pick up a girl or to go to the store. On at least three other occasions Henley had allowed Lapham to drive the truck while Henley was with him. The Emersons were also unaware that the two boys had been drinking beer while using the truck, and that on several occasions Lapham had been seen driving the truck, with Henley as a passenger, on the main street of South Paris and in other public places. Henley had made it clear, and Lapham understood, that Emerson had prohibited Henley's loaning the truck to anyone.²

Early on the evening of February 12 Emerson gave Henley permission to take the truck to Bethel to visit a girl friend. Emerson and his wife once again instructed Henley to stay out of trouble, not to drink, and not to "loan the truck to anyone." Henley left the Emerson house between 5 and 6 p. m. He picked up Lapham and two other boys. The foursome drove around South Paris for awhile; purchased a case of beer at a local market; drove around South Paris again, drinking beer; and visited some girls in Bryant Pond, where they left one of the boys. Henley, Lapham, and the other boy then drove to Bethel to see Henley's girl friend. They arrived at the girl friend's home around 8 p. m. Henley and the third boy decided to stay at the girl friend's house. Henley turned over the truck to Lapham with the understanding that he would return in a few hours to pick up Henley and the other boy. Lapham drove off to rejoin the other members of the group at Bryant Pond. A short time later, in Woodstock, not far from Bryant Pond, he was involved in an accident, in which Arthur R. Hills sustained serious personal injuries and his wife, Eleanor J. Hills, was killed.

II. THE CONCORD POLICY

A. The Omnibus Clause.

Concord seeks a declaration by this Court that neither Henley nor Lapham was an insured under its policy.

The Concord policy in effect at the time of the accident listed Emerson as the named insured and contained a standard omnibus clause, which defined the word "insured" as follows:

III. Definition of Insured: (a) With respect to the insurance for bodily injury liability and for property damage liability the unqualified word "insured" includes the named insured and, if the named insured is an individual, his spouse if a resident of the same household, and also includes 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 by the named insured or such spouse or with the permission of either. . . . (Emphasis supplied.)

The question presented is whether Henley and Lapham were additional insureds of Concord under this omnibus clause. The answer to that question turns upon whether the "actual use" of Emerson's automobile at the time of the accident was "with the permission of" Emerson within the meaning of the policy provision. Both parties agree that the construction of the policy is to be governed by the law of Maine and that there is no Maine case precisely in point. For the reasons to be stated, however, the Court is persuaded that the Maine court would hold that Concord's policy did not, under the circumstances of this accident, extend coverage to Henley and Lapham.

The law is well established that when the named insured expressly prohibits the use of his automobile by any person other than his permittee, a second permittee using the car solely for his own benefit does not do so with the permission of the named insured. Western Casualty & Surety Co. v. Grice, 422 F.2d 921 (10th Cir. 1970); Farmer v. Fidelity & Casualty Co. of N. Y., 249 F.2d 185 (4th Cir. 1957); Royal Indemnity Company v. Clingan, 238 F.Supp. 448 (E.D. Tenn.1965), modified on other grounds, 364 F.2d 154 (6th Cir. 1966); 7 Appleman, Insurance Law and Practice § 4361, Anno. 4 A.L.R.3d 10, 40, 61; 7 Am.Jur.2d Automobile Insurance § 116. Cf. Duff v. Alliance Mutual Casualty Co., 296 F.2d 506 (10th Cir. 1961); Horn v. Allied Mutual Casualty Co., 272 F.2d 76 (10th Cir. 1959).³ The present case falls squarely within this general rule. While Emerson gave Henley permission to use the insured car for his own social purposes, both Emerson and his wife had explicitly instructed Henley that he was not to permit anyone else to use the car. It is clear that Henley disobeyed this instruction by permitting Lapham to take the car. It is equally clear that at the time of the accident Lapham was using the car for his own benefit and was not serving any purpose of Henley.

Defendants seek to bring this case within one or more of the exceptions to the general rule which have been held not to preclude recovery under an omnibus clause. But they can point to no exception which is here applicable. This is not a case where coverage may be permitted because the original permittee was riding in the car with the second permittee at the time of the accident. Compare, e. g., Standard Accident Insurance Co. v. New Amsterdam Casualty Co., 249 F.2d 847 (7th Cir. 1957); Maryland Casualty Co. v. Marshbank, 226 F.2d 637 (3rd Cir. 1955); Protective Fire and Casualty Co. v. Cornelius, 176 Neb. 75, 125 N.W.2d 179 (1963); Brooks v. Delta Fire and Casualty Co., 82 So.2d 55 (La. App.1955); Loffler v. Boston Insurance Co., 120 A.2d 691 (Mun.Ct.App.D.C. 1956). This is not a case where recovery may be allowed because the second permittee was serving some purpose of the first permittee. Compare, e. g., National Farmers Union Property & Casualty Co. v. Lukins, 329 F.2d 564 (8th Cir. 1964); National Farmers Union Property & Casualty Co. v. State Farm Mutual Auto Insurance Co., 277 F.Supp. 542 (D.Mont. 1967). Nor is this a case where the use of the car by the second permittee may come within the protection of the omnibus clause because the named insured has granted the first permittee such "unfettered dominion" over the automobile that he may be said to have impliedly granted permission to allow others to use the car. Compare, e. g., Standard Accident Insurance Co. v. Allstate Insurance Co., 72 N.J.Super. 402, 178 A.2d 358 (1962). The undisputed facts are that Henley was not in the car at the time of the accident; that Lapham was using the car solely for his own purposes when the accident occurred; and that, far from having "unfettered dominion" over his stepfather's car, Henley was always required to seek permission before each use of the car and was repeatedly instructed by his parents never to lend it to anyone. This Court is aware of no case holding that an omnibus clause extends coverage to a second permittee under the circumstances here presented.

As earlier stated, the Maine courts have never passed upon the precise issue presented by this case. But related Maine cases leave little doubt that the Maine courts would follow the general rule denying coverage in these circumstances. The Supreme Judicial Court of Maine has twice been confronted...