English v. Virginia Surety Co.

• Citation: 32 Beeler 426,196 Tenn. 426,268 S.W.2d 338
• Parties: ENGLISH et al. v. VIRGINIA SURETY CO. 32 Beeler 426, 196 Tenn. 426, 268 S.W.2d 338
• Decision Date: 03 March 1954
• Court: Supreme Court of Tennessee

Page 338

268 S.W.2d 338

ENGLISH et al. v. VIRGINIA SURETY CO.

32 Beeler 426, 196 Tenn. 426, 268 S.W.2d 338

Supreme Court of Tennessee.

March 3, 1954.

Petition Denied May 21, 1954.

Courtney, Covington & Courtney, Franklin, for complainants.

Henderson & Henderson, Franklin, Manier, Crouch & White, Nashville, for defendant.

LLOYD S. ADAMS, Special Justice.

Defendant issued a policy of automobile liability insurance covering a truck tractor belonging to one W. D. Stevens, who was named as the insured in the policy. Thereafter, and while the policy was still in effect, W. D. Stevens loaned the vehicle to his brother, Marvin B. Stevens, so that Marvin B. Stevens might take his wife and children to a family reunion. While the vehicle was being operated by Marvin B. Stevens it was involved in a collision with an automobile belonging to and being driven by complainant Polly C. English, resulting in personal injuries and property damage. It is conceded that at the time the vehicle was being operated with the permission of W. D. Stevens. Complainant and her husband recovered judgments aggregating $10,500.00 in the Circuit Court of Williamson County against both Marvin B. Stevens the driver, and W. D. Stevens, the owner. The judgments against Marvin B. Stevens have become final. W. D. Stevens appealed and the judgments against him were reversed by the Court of Appeals on the ground that there was no agency or other relationship upon which to base vicarious liability, and this Court denied certiorari. English v. Stevens, 35 Tenn.App. 557, 249 S.W.2d 908.

On the theory that Marvin B. Stevens was an additional insured within the meaning of the policy of insurance issued by defendant Virginia Surety Company, Mr. and Mrs. English filed their original bill in this cause in the Chancery Court of Williamson County, seeking a decree against Virginia Surety Company for the amount of their judgments against Marvin B. Stevens together with the statutory penalty. Defendant interposed a demurrer, the first three grounds of which were sustained by the Chancellor, and the bill was dismissed, resulting in this appeal by complainants.

The insurance policy in question sets forth in its declarations that the purposes for which the automobile is to be used are 'commercial', and that term is defined 'as use principally in the business occupation of the named insured as stated in item 1, including occasional use for personal, pleasure, family, and other business purposes'.

The policy contains the usual Omnibus Clause and definition of the word 'insured':

'I. Definition of 'Insured'

'The unqualified word 'insured' wherever used in coverages A and B and in other parts of this policy, when applicable to such coverages, includes the named insured and, except where specifically stated to the contrary, 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 with the permission of the named insured.' Coverages A and B provide for Bodily Injury Liability and Property Damage Liability.

There is also appended to the policy an endorsement which reads as follows:

'It is understood and agreed that the automobiles and/or trailer described in the aftermentioned policy are covered for Bodily Injury Liability and Property Damage Liability in accordance with the terms and conditions of the policy to which this endorsement is attached, provided, no load or merchandise other than that belonging to, or in charge of, the named Assured is being carried, and only while such automobiles are being operated in the business occupation of the named Assured as stated in item I of the policy declarations and occasionally for the personal, pleasure, family and other business purposes of the named Assured.'

There is only one issue arising out of the Chancellor's ruling on the demurrer and complainants' assignments of error based thereon. Does the endorsement restrict and limit the Omnibus Clause so that the operation of the vehicle at the time of the accident, conceded to be with the permission of the named insured, was nevertheless outside the coverage of the insurance policy? In order to decide this question, it is necessary to interpret the policy provisions set forth in detail above in light of accepted judicial principles of construction and interpretation. Counsel in their briefs have cited no cases construing a provision such as is found in the endorsement, nor has independent research disclosed any such case, although there is copious authority construing and interpreting the Omnibus clause alone.

The Chancellor, in his opinion, correctly points out that but for the endorsement there would be no question as to the liability of defendant company. Stovall v. New York Indemnity Co., 157 Tenn. 301, 8 S.W.2d 473, 72 A.L.R. 1368; Foley v. Tennessee Odin Ins. Co., 193 Tenn. 206, 245 S.W.2d 202; and see also the article on 'Insurance', Annual Survey of Tennessee Law 6 Vand.L.Rev. 1068, 1071. The solution then, lies in the effect and interpretations to be given the endorsement.

There is no disagreement between the parties as to what are the proper rules of construction. An insurance policy and its endorsements are to be read as a whole, all provisions of the policy being construed together, rejecting no part of the policy which may, by a reasonable interpretation of the whole, be saved. Laurenzi v. Atlas Ins. Co., 131 Tenn. 644, 176 S.W. 1022; Holmes v. Elder, 170 Tenn. 257, 265, 94 S.W.2d 390, 104 A.L.R. 1282; Bank of Commerce & Trust Co. v. Northwestern Nat. Life Ins. Co., 160 Tenn. 551, 559, 26 S.W.2d 135, 68 A.L.R. 1380; Colley v. Pearl Assur. Co., 184 Tenn. 11, 195 S.W.2d 15; Park Corp. v. Great American Indemnity Co., 187 Tenn. 79, 83 213 S.W.2d 12; 29 Am.Jur., Insurance, Sec. 162;

Blashfield Cyc. of Auto. Law & Practice, Sec. 3521.

As was said by this Court in Colley v. Pearl Assur. Co., supra, 184 Tenn. at page 15, 195 S.W.2d at page 16, 'This...