Hawley v. Indemnity Ins. Co. of North America, 596

• Decision Date: 15 June 1962
• Docket Number: No. 596,596
• Citation: 126 S.E.2d 161,257 N.C. 381
• Parties: Ivor B. HAWLEY v. INDEMNITY INSURANCE COMPANY OF NORTH AMERICA. George HAWLEY, by his Next Friend, Ivor B. Hawley INDEMNITY INSURANCE COMPANY OF NORTH AMERICA.
• Court: North Carolina Supreme Court

Page 161

126 S.E.2d 161

257 N.C. 381

Ivor B. HAWLEY v. INDEMNITY INSURANCE COMPANY OF NORTH AMERICA George HAWLEY, by his Next Friend, Ivor B. Hawley INDEMNITY INSURANCE COMPANY OF NORTH AMERICA.

No. 596

Supreme Court of North Carolina.

June 15, 1962

Anderson, Nimocks & Broadfoot, Fayetteville, for appellant.

Hair & Ruppe, Williford & Person, Fayetteville, for appellees.

MOORE, Justice.

The crucial question in these actions is whether or not Joseph L. Monroe was operating the pickup at the time of the collision with the permission of his employer, Burkhead DeVane Printing Company.

The evidence bearing on this question is summarized as follows: The Printing Company owned two automobiles and the pickup truck. They were not stored at the place of business at night. Officers of the company usually kept the automobiles at their homes overnight. Burns, an old and trusted employee, took the pickup to his home each night and kept it there on weekends. Burns was permitted to drive the pickup to church and could use it locally without special permission. Burns obtained permission on one occasion to use the pickup to transfer furniture for his daughter--Monroe- ""Monroe accompanied him on this occasion. Monroe had worked for the Company about five months. On one occasion, about three months before the collision, Monroe was permitted to keep the pickup overnight when Burns was ill, but was instructed to take it 'straight home,' park it, and bring it 'straight back' next morning. During working hours Monroe drove the truck in making deliveries and on other Company business. While on Company business, he had on occasion picked up riders. Upon learning this, Mrs. Burkhead, Secretary-Treasurer, reprimanded him and theatened to fire him if he did so again, and explained that the insurance did not cover passengers. She repeated the warning several times. In June 1960 Mr. Brixon, Vice-President and General Manager, took a two-weeks vacation. Before leaving he arranged for Burns to drive home each night, during the vacation period, the automobile Brixon was accustomed to keep; and Brixon gave Monroe permission to keep the pickup overnight during the vacation. Brixon testified that he specifically instructed Monroe to drive it straight home, park it, and drive it straight back to work, and that Monroe had no permission to use it for his personal business or pleasure. According to Monroe, Brixon said: 'Don't do too much running around with it at night. ' Brixon left on Wednesday for California. On the following Friday night Monroe drove to his home, ate supper, and then drove the pickup about three miles to the home of an aunt. About 10:00 P.M. he left the home of his aunt in the company of two men and a woman, all sitting in the cab of the pickup, and drove eight miles to a Western Union office so the woman could 'pick up' some money. On the return trip the collision occurred--at about 11:15 P.M. Monroe testified that no one ever gave him specific permission to use the truck for any personal business or pleasure, but that Mr. Brixon didn't say he couldn't.

The liability insurance policy in question contains an extended coverage or omnibus clause which insures 'any person while using the automobile * * *, provided the actual use of the automobile is * * * with the permission of' the named insured. (Emphasis added).

Permission which gives coverage under the omnibus clause may be either express or implied. Hooper v. Casualty Co., 233 N.C. 154, 158, 63 S.E.2d 128. This is the universally accepted rule. Hodges v. Ocean Accident & Guarantee Corporation, 66 Ga.App. 431, 18 S.E.2d 28, 31, cert. den. 316 U.S. 693, 62 S.Ct. 1299, 86 L.Ed. 1763, which has reh. den. 317 U.S. 705, 63 S.Ct. 25, 87 L.Ed. 563, (1942). Indeed, compliance with the requirements of the Motor Vehicle Safety and Financial Responsibility Act (G.S., Ch. 20, Art. 9A) necessitates coverage of all who use the insured vehicle with the permission, express or implied, of the named insured. Whether the permission be expressly granted or impliedly conferred, it must originate in the language or the conduct of the named insured or of someone having authority to bind him or it in that respect. Hooper v. Casualty Co., supra.

In the cases at bar we are concerned with permission granted by employer to employee. As to cases involving omnibus clauses in automobile liability insurance policies and relating to permission from employer to employee, there is an exhaustive annotation in 5 A.L.R.2d, pp. 601-690, reviewing all pertinent legal principles. A general or comprehensive permission is much more readily to be assumed where the use of the insured motor vehicle is for social or nonbusiness purposes than where the relationship of master and servant exists and the usage of the vehicle is for business purposes. Jordan v. Shelby Mut. Plate Glass & Casualty Co., 51 F.Supp. 240 (W.D.Va.1943). Where express permission is relied upon it must be of an affirmative character, directly and distinctly stated, clear and outspoken, and not merely implied or left to inference. On the other hand, implied permission involves an inference arising from a course of conduct or relationship between the parties, in which there is mutual acquiescence or lack of objection under circumstances signifying assent. Hinton v. Indemnity Ins. Co. of North America, 175 Va. 205, 8 S.E.2d 279 (1940).

While it is a universally accepted rule that permission which will effectuate coverage under the usual omnibus clauses may be either express or implied, there is a wide difference of opinion in the construction of the term 'permission' as used in such clauses. The main difference in construction 'is whether the permission is confined to the time when the accident occurs or whether it is defined as permission 'in the first instance,' * * *.' Hodges v. Ocean Accident & Guarantee Corporation, supra. Court opinions construing 'permission' especially as between employer and employee, may conveniently be placed into three categories or classifications (though this is a somewhat oversimplification), from which three rules are evolved:

(1) The strict or 'conversion' rule. Under this rule, the permission, express or implied, which will bring the operator-employee within the coverage of the policy, must be given to the employee not only to use the vehicle in the first instance, but also for the particular use being made of the vehicle at the time in question. 'In other words, the automobile must have been used for a purpose reasonably within the scope of the permission given, during the time limits expressed, and within the geographical limits contemplated.' 5 A.L.R.2d 622; Johnson v. American Automobile Insurance Co., 131 Me. 288, 161 A. 496 (1932); Blair v. Travelers Insurance Co., 291 Mass. 432, 197 N.E. 60 (1935); Gray v. Sawatzki, 291 Mich. 491, 289 N.W. 227 (1939).

(2) The liberal or 'initial permission' rule. Operator-employee is insured if he has permission to take the vehicle in the first instance, and any use while it remains in his possession is 'with permission' though that use may be for a purpose not contemplated by the named insured when he parted with possession. 5 A.L.R. 2d 622; Stovall v. New York Indemnity Co., 157 Tenn. 301, 8 S.W.2d 473, 72 A. L.R. 1368 (1928); Dickinson v. Maryland Casualty Co., 101 Conn. 369, 125 A. 866, 41 A.L.R. 500 (1924); Parks v. Hall, 189 La. 849, 181 So. 191 (1938); Matits v. Nationwide Mutual Insurance Co., 33 N.J. 488, 166 A.2d 345 (1960). This view has been referred to as the 'hell and high water' rule. 7 Appleman: Insurance Law and Practice, s. 4366, p. 308.

(3) The moderate or 'minor deviation' rule. A material deviation from the permission given constitutes a use without permission, but a slight deviation is not sufficient to exclude the employee from the coverage under the omnibus clause. Hodges v. Ocean Accident & Guarantee Corporation, supra; United States Fidelity & Guaranty Co. v. Brann, 297 Ky. 381, 180 S.W.2d 102 (1944); State Farm Mutual Automobile Insurance Co. v. Cook, 186 Va. 658, 43 S.E.2d 863, 5 A.L.R.2d 594 (1947).

Hooper v. Casualty Co., supra, is the only case in this jurisdiction which fits into the factual and legal category to which the instant cases belong. In that case it was deemed unnecessary to expressly adopt either of the rules of construction above stated. Indeed, it is unnecessary to make a choice on the present appeal in determining the question of nonsuit; but it is otherwise in ruling on the exception to the charge.

It is our opinion that the evidence is sufficient to make out a prima facie showing of express permission. Considered in the light most favorable to plaintiffs, it tends to show that the pickup was put in the possession of Monroe for a period...