Haley v. State Farm Mut. Auto. Ins. Co., s. 48299

• Decision Date: 15 October 1973
• Docket Number: 2,48300,Nos. 1,3,Nos. 48299,s. 48299,s. 1
• Parties: Frank HALLEY et al. v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY et al. Harriet J. MAGOON v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY et al
• Court: Georgia Court of Appeals

Page 838

202 S.E.2d 838

130 Ga.App. 258

Frank HALLEY et al. v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY et al.

Harriet J. MAGOON v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY et al.

Nos. 48299, 48300.

Court of Appeals of Georgia, Division Nos. 1, 2, 3.

Oct. 15, 1973.

Rehearing Denied Nov. 21, 1973.

McClure, Ramsay & Struble, Robert B. Struble, John A. Dickerson, Toccoa, Eugene W. Harper, Jr., Robert D. Matthews, Hartwell, for appellants.

Heard, Leverett & Adams, E. Freeman Leverett, Elberton, for appellees.

Syllabus Opinion by the Court

HALL, Presiding Judge.

In a collision between a private automobile driven by a Mrs. Childs and a pick-up truck owned by Eugene Haley and driven by his brother Frank Haley, Mary Linden Magoon was killed. Her mother, Mrs. Magoon, filed a $150,000 wrongful death suit against Mrs. Childs' administrator and Frank Haley. Great American Insurance Company filed defensive pleadings on behalf of Frank Haley under the uninsured motorist law. Additionally, plaintiff caused a copy of the complaint to be served on State Farm Mutual Automobile Insurance Company ('State Farm') which had written one insurance policy covering the pick-up truck owned by Eugene Haley, and two policies covering two vehicles owned by Frank Haley.

State Farm filed a declaratory judgment action seeking a determination of whether its policies noted above provided any coverage to the Haleys. Each party stipulated that the coverage issue should be determined prior to trial on the merits as to liability and damages. This appeal is taken from the trial court's grant of summary judgment for State Farm on the coverage issue, and its denial of summary judgment motions made by Great American and Mrs. Magoon.

All three of the State Farm policies provided that liability coverage would not extend to an automobile '(1) While maintained or used by any person while such person is employed or otherwise engaged in an automobile business of the insured or any other person or organization. . . .' The term 'automobile business' was defined as follows:

'Automobile Business-means the business or occupation of selling, leasing, repairing, servicing, storing or parking of vehicles or trailers.'

The question of coverage turns on whether the use of Eugene Haley's pick-up truck by his brother Frank comes within these exclusion clauses.

Frank Haley at the time of the collision was the lessee and operator of a BP automobile service station where he performed typical automobile service functions. He had a grease rack and a wash rack, he fixed tires and did 'just anything that is done at a service station.' The call for service which took him out on the trip resulting in the collision came in during business hours, and was a request to provide road service to restart a stalled telephone company truck some distance away. The telephone company was a new customer of Frank Haley and had begun to trade with him on their usual basis of rotating their business among various service stations on a monthly basis. Frank Haley testified tht he was trying to get his business started and knew the telephone company was a cash customer, so that although he was not in the road service business he nonetheless decided to make the call. He had never before offered road service. Not having a vehicle on his own premises to use, he borrowed the pick-up truck used by his brother Eugene in Eugene's service station business, and also borrowed a chain in case the telephone truck needed to be towed. Subsequently, he was not certain whether any charge had been made for the service. When he had succeeded in restarting the telephone truck, Haley began his return trip to his service station, choosing one of alternate routes of return varying in length by perhaps a half mile. Before he reached his service station the collision occurred.

On these facts we think there is no question but that the collision occurred while the truck was being used by Frank Haley while engaged in his automobile business, and therefore the exclusion clauses of all three policies apply.

Such policy exclusions have their genesis in the assumption that an auto turned over by the owner to a service station or other auto business is more apt to be driven by an irresponsible person in ways unpredictable by the driver, who thus relinquishes control over its times and manner of operation. This potential liability is thought to be too great to impose on the insurer the obligation of covering the automobile business as an additional insured. See 13 Couch on Insurance 2d, p. 27, § 45:981; 7 Appleman, Insurance Law and Practice, p. 341, § 4372.

The variety of results reached in different jurisdictions in cases such as this, See generally Annot. 71 A.L.R.2d 964; Annot. 47 A.L.R.2d 556, some of which are cited by appellants, may perhaps be more comprehensible if close attention is given in each case to policy language, which is ultimately controlling.

There are two main types of 'automobile business' exclusions. The 'older' type, providing a narrower exclusion and correspondingly greater insurance coverage, focuses on the use to which the automobile is being put at collision-time and is phrased in terms of excluding coverage for automobiles being 'used: in the automobile business. See 13 Couch on Insurance 2d, pp. 23-25, § 45:972-45:975 and cases cited therein. For example, an automobile in the hands of a shop for repairs might not always be 'used' in the automobile business, if it is not an active instrumentality of that business. See Queen Ins. Co. v. Creacy (Tex.Civ.App.) 456 S.W.2d 538, 542. But a borrowed automobile used to run an errand of picking up an extra part to be placed in stock could be 'used' in the automobile business. Walker v. State Farm Mut. Auto. Ins. Co., 40 Ill.App.2d 463, 190 N.E.2d 121.

The exclusion in the present appeal is the 'newer' exclusion and its language quoted above focuses on the person in whose charge the automobile is at collision-time. For a comparison of the two types of exclusions see 7 Blashfield, Auto Law and Practice §§ 315.16, 317.4 (3d ed.) A recent Georgia case, Northwestern Cas. Co. v. Safeco Ins. Co., 121 Ga.App. 209, 173 S.E.2d 407, denying coverage where a garage employee after dropping the owner at work was returning to the garage to service the car, was decided under the 'newer' type exclusion which is broader than the old. Arguably, had the policy in that case just cited been of the older type denying coverage to automobiles 'used' in the automobile business, a different result could have been reached. An example of such a decision quite properly holding that an exclusion of the automobile 'use' type did not apply to an automobile shop employee's driving the insured's car off to be appraised, is Pirkle v. American Liberty Ins. Co., 247 F.Supp. 1018 (N.S.Ga.1965). The fact that Pirkle was decided under a policy exclusion different from that now before us distinguishes it, contrary to the contentions of appellants.

In light of the foregoing discussion, care must be taken in applying an older decision of this court, Public Indemnity Co. v. Yearwood, 50 Ga.App. 646, 179 S.E. 232 which is cited by State Farm on this appeal as authority for the proposition that Georgia construes these automobile business exclusion clauses very broadly. That is said to follow from the fact that the collision in Yearwood involved a chauffeur who was employed full time as a domestic servant and only did work upon insured's car as an odd job to make Christmas money. We denied coverage saying that he was a 'public garage' or 'automobile repair shop' within the exclusion. However, the policy in question in Yearwood denied extended coverage as follows: '(Coverage) shall not be available to (1) any public garage, automobile repair shop . . .' etc. This exclusion is obviously broader than either of the two usual types discussed above, and for that reason, as well as for the reason that the case as a split decision is not precedent, Yearwood should be taken to be an unreliable prognosticator in cases presenting narrower exclusions.

To return to the present appeal, Great American urges, in opposition to the grant of State Farm's motion, that the exclusion is only intended to apply to vehicles being used by personnel of an automobile business in connection with service or repairs to be made on that vehicle. This is simply incorrect. Although it is true that the only pertinent Georgia decisions have been based on such facts (and have uniformly denied coverage), viz. Public Indemnity Co. v. Yearwood, supra; Allstate Ins. Co. v. McBride, 117 Ga.App. 592, 161 S.E.2d 415; and Northwestern Cas. Co. v. Safeco Ins. Co., supra; this means only that we have not heretofore considered a case in which the vehicle in question is not itself being serviced but is allegedly being used as an instrumentality of an automobile business.

Cases presenting such facts are not unusual, and the 'automobile business' exclusion is properly brought into play in determining coverage, contrary to appellants' contentions here. E.g., Cohen v. Levine, 59 Misc.2d 848, 300 N.Y.S.2d 393 (car driven by friend of service station operator to get spare part for repair job); Western Cas. & Sur. Co. v. Verhulst, (Mo.) 471 S.W.2d 187 (car used to transport three persons to another city to ferry back vehicles bought by dealer).

In situations such as that present here, where an automobile is in the hands of an automobile business but not for repairs, the language of the policy excluding coverage to a vehicle 'used by any person while such person is employed or otherwise engaged in an automobile business' is even more plainly applicable to the facts than in the automobile-being-serviced cases. There is no doubt that Frank Haley, as the lessee-operator of the BP service station, was generally in the 'automobile business' as defined in the three policies. The only question, which presents little difficulty,...