Emick v. Dairyland Ins. Co.

• Decision Date: 06 August 1975
• Docket Number: Nos. 75-1015,75-1016,s. 75-1015
• Citation: 519 F.2d 1317
• Parties: Dudley J. EMICK, Jr., Administrator of the Estate of Jack Wesley Minnich, et al., Appellees, v. DAIRYLAND INSURANCE COMPANY, a Wisconsin Corporation, Defendant. Appeal of MIDDLESEX MUTUAL INSURANCE COMPANY, a Massachusetts Corporation. Dudley J. EMICK, Jr., Administrator of the Estate of Jack Wesley Minnich, et al., Appellees, v. DAIRYLAND INSURANCE COMPANY, a Wisconsin Company, Appellant, and Middlesex Mutual Insurance Company, a Massachusetts Corporation, Defendant.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 1317

519 F.2d 1317

Dudley J. EMICK, Jr., Administrator of the Estate of Jack

Wesley Minnich, et al., Appellees, v. DAIRYLAND INSURANCE COMPANY, a Wisconsin Corporation, Defendant.

Appeal of MIDDLESEX MUTUAL INSURANCE COMPANY, a

Massachusetts Corporation.

Dudley J. EMICK, Jr., Administrator of the Estate of Jack

Wesley Minnich, et al., Appellees, v. DAIRYLAND INSURANCE COMPANY, a Wisconsin Company, Appellant, and Middlesex Mutual Insurance Company, a Massachusetts

Corporation, Defendant.

Nos. 75-1015, 75-1016.

United States Court of Appeals Fourth Circuit.

Argued May 7, 1975.

Decided Aug. 6, 1975.

Frank N. Cowan, Richmond, Va. (Gordon, Cowan & Dodson, Richmond, Va., on brief), for appellant in No. 75-1016.

S. D. Roberts Moore, Roanoke, Va. (Gentry, Locke, Rakes & Moore, Roanoke, Va., on brief), for appellant in No. 75-1015.

Thomas T. Lawson, Roanoke, Va., James M. Roe, Jr., Fincastle, Va. (Dudley

J. Emick, Jr., Carter, Roe, Emick & Honts, Fincastle, Va., Woods, Rogers, Muse, Walker & Thornton, Roanoke, Va., on brief), for appellees in Nos. 75-1015 and 75-1016.

Before HAYNSWORTH, Chief Judge, ANDERSON, Senior Circuit Judge, ^* and CRAVEN, Circuit Judge.

ROBERT P. ANDERSON, Circuit Judge:

On January 18, 1974 a judgment was entered in the Circuit Court of Roanoke County, State of Virginia in the amount of $75,507.50 (consisting of $50,000 for financial or pecuniary loss; $25,000 for solace; $500 for funeral expenses and $7.50 for medical expenses) in favor of Dudley J. Emick, Jr., as Administrator of the Estate of Jack Wesley Minnich, deceased, and against Sheriff T. J. Cundiff as Administrator of the Estate of David A. Ashwell, deceased. The judgment reflected damages found by the state court judge, sitting without a jury, to have been incurred in an automobile accident on May 11, 1973.

The plaintiff, judgment creditor, Emick, Jr., Administrator, then brought the present action, in the United States District Court for the Western District of Virginia (Roanoke Division), on the state court judgment to recover the amount due with interest and costs. He sued the defendants-appellants, Dairyland Insurance Co. (Dairyland) and Middlesex Mutual Insurance Co. (Middlesex) on the grounds that Dairyland was the insurance carrier which, under the terms of its policy, had agreed to insure, up to $20,000, any person operating the 1970 Chevrolet automobile owned by one Sandra Wood, the named insured, with her permission; and that Middlesex was the excess insurance carrier in a policy of insurance, covering a 1972 Chevrolet Impala and a 1972 Chevrolet pick-up truck, owned by the named insured, George W. Lawhorn, covering any relative of the named insured, who was a member of his household, while he or she was operating a non-owned vehicle with the permission of its owner.

Emick, Jr., as Administrator, further asserted in connection with his claim against Dairyland that the 1970 Chevrolet owned by Sandra Wood was being operated by David Ashwell, with her permission, at the time and place of the accident on May 11, 1973; and that David Ashwell was a relative and member of George W. Lawhorn's household at the time of the collision. ¹ The defendant insurance companies, however, claimed there was no evidence to support either of these assertions.

The district court submitted interrogatories to the jury in the form of a special verdict which were designed to resolve these questions. The answers which the jury returned, in effect, found that the plaintiff's allegations were true. ² The district court, on the basis of the special verdict, held that, at the time and place of the accident, David Ashwell came within the coverages of both policies, and it having been stipulated by the parties that damages would be determined by the court alone, considered entering judgment against Dairyland for $20,000 and against Middlesex for $25,000, both with interest and costs. Before the trial court actually entered any judgment, however, the plaintiff, Emick, Jr., Administrator, argued that the court should find $50,000 rather than $25,000 due from Middlesex on the ground that its policy covered two automobiles rather than one, and that the coverage for each, insured against liability incurred by a member of the named insured's household while he was operating a non-owned car. The court was ultimately persuaded, after briefs were submitted by the parties, that when an insurance company charges a separate and equal amount for non-owned vehicle liability coverage for each vehicle owned by the named insured and listed in the policy, the limitation of liability clause ³ and the provision applying the terms of the policy separately to each automobile insured under the policy (separability clause), ⁴ when read together, create an ambiguity which must be strictly construed against the insurance company, thereby requiring that the otherwise separate limits of bodily injury liability on each vehicle be stacked, resulting in a total liability in this case of $50,000.

The two issues now before this court on appeal are: whether there was sufficient evidence to support the jury's answers to the special verdict interrogatories relating to permission, express or implied, given Ashwell to drive the Wood car, and whether Middlesex, under the terms of its policy, was required to pay double the limit of bodily injury liability for one insured car because there was coverage for two cars, i. e. the 1972 Chevrolet Impala and the 1972 Chevrolet pick-up truck, and the car actually operated by Ashwell was neither of these, but was instead a non-owned automobile, i. e. the 1970 Chevrolet of Sandra Wood.

With regard to the first issue, the claim of insufficient evidence to support the jury's answers, we hold that the jury could reasonably have found the facts to be substantially as follows:

David Ashwell lived in Bedford, Virginia, with his step-father, George W. Lawhorn, and Mrs. Lawhorn, who was David's mother. Also living in the household was Michael Lawhorn, the son of Mr. and Mrs. Lawhorn. Sandra Wood was fairly well acquainted with David and Michael, as her brother was married to Mr. Lawhorn's daughter. Sandra, David and Michael, on May 11, 1973, through conversations held earlier in the day, arranged to go out together for the evening. She drove her car to the Lawhorn house, where she stayed a short while, conversing with her sister-in-law and others. At about 8:00 p. m. the three of them left in Sandra's car, stopped to purchase beer, which David and Michael began to drink, and they then went to Roanoke where they persuaded two girls, Darlene and Delores Dooley, to accompany them, which the two did in their own car. Michael rode in the Dooley car, leaving Sandra and David in Sandra's car. To make up three couples, they induced George Brizindine who was driving a third car to go with them to Hollis Moose Lodge, where they arrived between 9:30 and 10:30 p. m. Up to this point Sandra Wood drove her own car; apparently neither Michael nor David had ever driven it.

At the lodge they danced and drank alcoholic beverages. Michael became so intoxicated that he had to be helped to Sandra's car in which he went into a stuporous sleep. The rest continued their entertainment at the lodge. Some time later an announcement was made that an automobile, having the registration number of Sandra's car, was blocking another car in the crowded parking lot and the request was made that the owner move it. Sandra, who was sitting down, took her car keys from her bag and started to get up, but David offered to move the car and she gave him the keys. He told Darlene Dooley that he would be back in a minute as he wanted to dance with her again. After a short while she and her sister went out to the parking lot to look for the car but they did not see it and went back into the lodge to dance. Sandra Wood expressed no concern that David had not returned promptly.

David drove the car out of the parking lot and turned south on a four-lane divided highway. He increased the car's speed to about 85 m. p. h. and passed two crossovers in the median strip where he could have gone over to the north bound lanes. When he was about a half a mile south of the Hollis Moose Lodge, where there was no regular cross-over, he lost control of the car, went over the top of the median divider, and collided with the car in which Mr. and Mrs. Minnich were driving north on a north-bound lane. David Ashwell, Michael Lawhorn and Mrs. Minnich were killed immediately, and Mr. Minnich died a few minutes later.

We hold that there was sufficient evidence under Virginia law to support the jury's conclusion that there was at least implied permission given by Sandra Wood to David Ashwell to take her car from the parking lot and drive down the four-lane highway at that time to the place of the accident.

This case is in the federal courts on the basis of diversity jurisdiction, 28 U.S.C. § 1332, and Virginia law governs, Erie R. R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938).

As required by the Virginia omnibus statute, Dairyland's and Middlesex's insurance policies both provided liability coverage for "the named insured and any other person responsible for the use of or using the motor vehicle . . . with the consent, express or implied, of the named insured . . . ." ⁵ 6 Code of Virginia § 38.1-381(a) (1970 Repl.Vol.1974 Supp.). Although the plaintiff has the burden of proof on the issue of permissive use, Hartford Acc. & Indem. Co. v. Peach, 193 Va. 260, 68 S.E.2d 520, 522 (1952), the Virginia omnibus statute is remedial in purpose and is to be liberally construed in order to broaden coverage, American Auto. Ins. Co. v. Fulcher, 201 F.2d 751, 756 (4 Cir. 1953); State Farm Mutual Auto. Ins. Co. v. Cook, 186 Va. 658, 43 S.E.2d 863, 865-67 (1947), particularly in view of the fact that one of its principal aims is "to establish a more comprehensive provision for the public by...