Goforth v. Allstate Insurance Company, Civ. A. No. 2103.

• Decision Date: 21 August 1963
• Docket Number: Civ. A. No. 2103.
• Citation: 220 F. Supp. 616
• Court: U.S. District Court — Western District of North Carolina
• Parties: Frank H. GOFORTH, Plaintiff, v. ALLSTATE INSURANCE COMPANY, Defendant and Third-Party Plaintiff, v. Robert Lee MELTON, Manson L. Huntley, State Farm Mutual Insurance Company and Nationwide Insurance Company, Third-Party Defendants.

220 F. Supp. 616

Frank H. GOFORTH, Plaintiff, v. ALLSTATE INSURANCE COMPANY, Defendant and Third-Party Plaintiff, v. Robert Lee MELTON, Manson L. Huntley, State Farm Mutual Insurance Company and Nationwide Insurance Company, Third-Party Defendants.

Civ. A. No. 2103.

United States District Court W. D. North Carolina, Asheville Division.

Heard August 6, 1963.

Decided August 21, 1963.

Harold K. Bennett, Ward & Bennett, Asheville, N. C., for plaintiff.

Harry DuMont, Uzzell & DuMont, Asheville, N. C., for defendant and third-party plaintiff.

O. E. Starnes, Jr., Van Winkle, Walton, Buck & Wall, Asheville, N. C., for third-party defendant State Farm Mutual Ins. Company.

J. Scroop Styles, Asheville, N. C., for third-party defendants Robert Lee Melton and Mason L. Huntley.

William C. Morris, Jr., Williams, Williams & Morris, Asheville, N. C., for third-party defendant Nationwide Ins. Co.

CRAVEN, Chief Judge.

This is an action on a judgment for damages rendered in the state trial court against Robert L. Melton. Goforth here contends that Melton was an insured driver under a policy of automobile liability insurance issued by Allstate to Ernest R. Bartlett and that Allstate is liable, therefore, for the amount of the judgment.

At the conclusion of all of the evidence, in open court, the undersigned district judge dictated tentative findings of fact, which findings are now affirmed, except as they may be modified in this memorandum opinion.

The trial proceeded on the theory that the language of permissive user in the insurance policy issued by Allstate Insurance Company to Bartlett was that contained in paragraph 5 of the complaint, and that the exclusion clause was as set out in defendant Allstate's brief. Neither at pre-trial nor during the trial did counsel for defendant Allstate ever formally admit the allegation of paragraph 5, and it was indicated at the trial that the original policy had been misplaced by the assured Bartlett. The court, on its own motion, suggested that the original policy be located and made a part of the record evidence, or failing that, that the defendant Allstate furnish to the court a blank policy containing the language of the policy issued to Bartlett. Counsel indicated their consent to this procedure, and this opinion and the decision of the court is predicated upon the assumption that the actual language in the Bartlett policy is identical with that appearing in the complaint and in the briefs of counsel for Goforth and Allstate Insurance Company. In the event of a discrepancy, the court retains jurisdiction to re-open the case for the purpose of receiving further evidence to establish the precise language of the policy involved.

On the assumption that the language contained in the policy is that brought to the court's attention and argued during the trial, it would appear that the verbiage with respect to permissive user is as follows:

"The following are insureds * *:

(a) With respect to the owned automobile,

(1) the named insured * * *.

(2) any other person using such automobile, provided the actual use thereof is with the permission of the named insured."

Beyond question, Bartlett expressly granted permission to Melton to drive his automobile back to the Melton-Huntley garage for the purpose of doing further repair work upon the automobile. The actual use of his automobile by Melton was with the express permission of the named insured Bartlett. It is true that the court might permissibly infer from Bartlett's better acquaintance with Huntley that he would have preferred Huntley to drive his car rather than Melton. Such an inference is refuted by the fact that Bartlett did not express a preference and handed the keys to Melton. The evidence does not disclose Bartlett's car to have had unusual value: it was a 1950 Hudson. The most that can be said for the defendant's contention is that Bartlett may well have intended to grant express permission to both Melton and Huntley to use his automobile for the purpose intended. The fact remains that Melton did use it and had express permission to do so.

Under the pertinent omnibus portion of the policy quoted hereinabove, the court concludes as a matter of law that the facts establish Melton to have been an additional insured by reason of using the automobile with the express permission of the named insured.

But defendant earnestly contends that Melton came within one of the exclusions of the policy, relying upon the following language:

"Exclusions. This policy does not apply * * *

(g) to an owned automobile while used in the automobile business, but this exclusion does not apply to the named insured, a resident of the same household as the named insured, a partnership in which the named insured or such resident is a partner, or any partner, agent or employee of the named insured, such resident or partnership;"

* * * * * *

"`automobile business' means the business or occupation of selling, repairing, servicing, storing or parking automobiles;".

Herein is the heart of the controversy. Counsel for defendant Allstate contend with some ingenuity that plaintiff must choose between the horns of a dilemna: that if the automobile was "used" within the meaning of the permissive user clause of the policy it must have been used "in the automobile business" which excludes coverage. This is an over-simplification and ignores the definition contained in the policy of "automobile business". That business could, of course, include the transporting of motor vehicles to and from a garage for the purpose of repairing. No such meaning, i. e., "transporting" is found within the definition, and it would have been easy to supply. The policy was written by Allstate and not by the additional insured Melton. Wherever ambiguous, it should be read against its scrivener. Pepsi-Cola Bottling Co. of Charleston and Travelers Insurance Co. v. Indemnity Insurance Co. of North America, 318 F.2d 714 (4th Cir. 1963). This rudimentary rule of construction applies not only in favor of the policy-holder but also in favor of the additional insured. Ibid. The omission to include the transporting of automobiles along with selling, repairing, servicing, storing or parking them is significant, and implies an intent not to enlarge the exclusion.

Counsel agreed during oral argument that some years ago the usual omnibus clause in liability insurance policies included the following:

"Nor shall insurance under this insuring agreement be available to any such garage * * * nor to the proprietors, employees, or agents thereof."

Such language would plainly and unequivocably exclude Melton on the facts in this case, and the omission of such language and substitution of that in Bartlett's policy is a plain indication of intention on the part of Allstate to broaden coverage. No evidence was offered at the trial of any special meaning in the trade attached to the word "repairing". In the absence of such evidence, and the burden of proof is apparently upon defendant Allstate to establish the exclusion¹, the court is unable to construe the phrase "repairing * * * automobiles" to include Melton's activity in driving Bartlett's car to his shop. It follows that Bartlett's automobile was not being "used in the automobile business" at the...