Hardware Mut. Casualty Co. v. Wendlinger

Decision Date26 December 1944
Docket NumberNo. 5313.,5313.
Citation146 F.2d 984
CourtU.S. Court of Appeals — Fourth Circuit

Archibald G. Robertson, of Richmond, Va. (Hunton, Williams, Anderson, Gay & Moore and Thomas B. Gay, all of Richmond, Va., on the brief), for appellant.

Thomas A. Williams and John W. Fussell, both of Richmond, Va. (L. C. O'Connor, of Richmond, Va., on the brief), for appellee.

Before PARKER and DOBIE, Circuit Judges, and CHESNUT, District Judge.

CHESNUT, District Judge.

Robert M. Wendlinger (the appellee in this case) recovered a judgment for $4500 against Mildred Barbee in a Virginia State Court for injuries sustained in an automobile accident occurring in the City of Richmond, Virginia, on October 31, 1942. Being unsuccessful in collecting the judgment, Wendlinger then brought suit against her and the Hardware Mutual Casualty Company, a corporation of the State of Wisconsin, the appellant in this case, (hereinafter called the Insurer) to collect the judgment. This latter suit was duly removed from the State Court to the District Court of the United States for the Eastern District of Virginia. In that court, both the plaintiff and the defendant moved for a directed verdict in their favor respectively. The District Judge directed a verdict for the plaintiff in the amount of $4500 and subsequently overruled a motion by the defendant for judgment notwithstanding the verdict. From the ensuing judgment the Insurer has appealed.

The liability of the Insurer is predicated upon its policy of insurance called an "automobile garage liability policy". It was issued to J. W. Ramsey and Duncan Barbee d/b/a (doing business as) Ramsey & Barbee, address, North Fifth Street, Auburn, Sangamon County, Illinois, the location of the insured premises being the same. The policy period was from August 21, 1942 to August 21, 1943; and the limit of liability for bodily injury was $10,000 for each person. The coverage of the policy was limited to the named insured as an "automobile dealer or repair shop", but with an "additional interests endorsement".

The "insuring agreement" was to "pay on behalf of the insured all sums which the insured shall become obligated to pay by reason of the liability imposed upon him by law for damages * * * because of bodily injury * * * sustained by any person or persons caused by accident and arising out of such of the operations hereinafter defined as are indicated by specific premium charge or charges in Item 4 of the declarations."

The operations covered by the policy were defined as follows:

"Division 1. Automobile Dealer or Repair Shop. The ownership, maintenance, occupation or use of the premises herein designated, including the public ways immediately adjoining, for the purpose of an automobile dealer or repair shop, and all operations, either on the premises or elsewhere which are necessary and incidental thereto, including repairs of automobiles or their parts, and ordinary repairs of buildings on the premises and the mechanical equipment thereof; and the ownership, maintenance or use of any automobile for any purpose in connection with the above defined operations, and also for pleasure use."

Under the heading of "exclusions" it was provided "This policy does not apply; * * * to the ownership, maintenance or use for pleasure purposes of any automobile not owned by or in charge of the named insured for use principally in such operations."

Under the designation of "insured" it was provided "The unqualified word `insured' wherever used includes not only the named insured but also any partner thereof if the named insured is a partnership * * * provided, such partner or officer is active in the declared operations."

The pertinent parts of the "additional interests endorsement" were —

"It is agreed that such insurance as is afforded by the policy for Bodily Injury Liability and for Property Damage Liability applies subject to the following provisions —

"1. To any employee of the named insured, as insured (with certain limitations not here applicable)

"2. To any other person, or organization, as insured provided: The insurance applies only if the named insured's operations are classified as `automobile dealer or repair shop' and only with respect to the use, for such business operations or for pleasure purposes of any automobile covered under such classification;

"3. The insurance does not apply (a) unless the actual use of the automobile is with the permission of the named insured; * * *.

"All other conditions and provisions remain unchanged."

It was further provided by the policy that the insurance "shall comply with the provisions of the Motor Vehicle Financial Responsibility Law of any State or Province which shall be applicable * * *."

We have italicized those phrases of the policy provisions that are specially pertinent to the proper construction and application of the insurance contract to the facts of this case.

In support of its defense the Insurer relies upon the policy provisions above quoted limiting the coverage granted and particularly upon the exclusion clause of the policy whereby the coverage does not extend to accidents arising from the "pleasure use" of an automobile when not owned for use principally in the operations of the insured automobile dealer. As to this the evidence in the case was uncontradicted. Mildred Barbee was the wife of Duncan Barbee who was a member of the firm of Ramsey & Barbee, the named insured, whose garage business was at Auburn in the State of Illinois. The policy was issued July 28, 1942. Some two weeks thereafter and before the policy period began on August 21, 1942, in view of the then reduced volume of business of the partnership, Duncan Barbee sought employment in connection with a military camp near Petersburg, Virginia, agreeing to relinquish his salary from the business while away, but not his share of the profits, and to return at any time if needed. Pursuant to this arrangement Barbee rented his residence in Auburn, Illinois, leased an unfurnished apartment in Richmond, Virginia, for a term of one year, and bought furniture for it. After arriving in Virginia, Barbee and his wife used the automobile involved in the accident for general personal purposes. The accident in which the plaintiff Wendlinger was injured occurred in Richmond on October 31, 1942 while Mrs. Barbee was driving the automobile with the consent of her husband. Thereafter the business of the partnership in Auburn, Ill., improved to such an extent that Ramsey requested Barbee to return and the latter resigned his employment at Camp Lee and returned to Auburn in February 1943. The automobile was registered under the laws of the State of Illinois in the name of Ramsey & Barbee.

Under this state of facts the District Judge should have directed a verdict for the defendant because it is clear that the automobile involved in the accident was not within the coverage of the policy. It was not being used in the insured's business even incidentally, and under the exclusion clause it was not covered by the policy even when used for pleasure purposes unless its ownership by the insured was principally for use in connection with the garage operations. We think it cannot be said that it was owned for such use under the uncontradicted evidence.

The policy is called an "automobile garage liability policy"; and it will be noted that the primary risk assumed by the policy is the liability of the assured for operations of the garage business. Automobiles are included because they are necessary features of the business; but the policy does not specify or describe any particular automobile. In this respect this form of policy is to be sharply differentiated from the ordinary automobile liability policy which covers liability for loss and damage resulting from the operation of a particularly named and described automobile anywhere in the United States and Canada. In the instant case the only identification for any automobile is to be found in the clause above quoted which protected the named insured from liability resulting from the ownership, maintenance or use of any automobile for any purpose in connection with the defined operations of the business, and also for pleasure use; but when used for pleasure and not for the garage operations the automobiles covered by the policy were limited to those owned principally for use in the garage operations. Under the undisputed facts the automobile involved in the accident had been withdrawn from the operations of the business, even before the risk under the policy attached. It was taken to a far distant State by one of the partners who had there engaged in an entirely different employment, and was being used by him and his wife for an indefinite period for their own personal convenience in no way connected with the business operations of the partnership. In these circumstances the particular automobile was not within the description of those covered by the policy and there was no liability on the insurer for the accident which occurred.

The contention of the appellee is that the policy covered any automobile owned by the named insured, Ramsey & Barbee, when used for pleasure purposes, and also indemnified in addition to the named insured any other person so using the automobile with the permission of the named insured. This construction of the policy is untenable because it ignores the policy provisions which limit the class of automobiles covered to those which are related to the operations of the garage business. While the "additional interests endorsement" extended the protection afforded by the policy to Mildred Barbee as a person other than the named insured with respect to the use of automobiles covered by the policy, it did not extend the classification of what automobiles were themselves covered by the policy even when used for pleasure purposes.

In recent years policies of this general...

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