Kelsay v. State Farm Mut. Auto. Ins. Co., 283

Citation219 A.2d 830,242 Md. 528
Decision Date26 May 1966
Docket NumberNo. 283,283
PartiesDonald L. KELSAY and Unsatisfied Claim and Judgment Fund v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY et al.
CourtCourt of Appeals of Maryland

William Walsh, Cumberland (William C. Walsh, Cumberland, and Thomas B. Finan, Atty. Gen., and R. Randolph Victor, Asst. Atty. Gen., Baltimore, on the brief), for appellants.

William H. Geppert and Hugh A. McMullen, Cumberland (Gunter & Geppert, Cumberland, on the brief,) for appellees.

Before PRESCOTT, C.J., and MARBURY, OPPENHEIMER, BARNES and McWILLIAMS, JJ.

MARBURY, Judge.

On October 28, 1964, suit was instituted by Donald L. Kelsay and the Unsatisfied Claim and Judgment Fund (appellants here), seeking a declaratory judgment that Donald L. Kelsay (Kelsay) was insured under a policy of liability insurance issued by State Farm Mutual Automobile Insurance Company (State Farm) to August Edward Chenowith, and is entitled to coverage thereunder with respect to an accident in which Chenowith's daughter, Drinda K. Chenowith (Drinda) was killed. In the alternative, it was prayed that a declaratory judgment be given to the effect that any provision or provisions in said automobile liability insurance policy that excluded Kelsay as an insured are contrary to the Maryland financial responsibility law and thus void and of no effect. The declaration filed by the plaintiff-appellants alleged that there was a present and actual controversy between the parties because (1) in January 1964, August Chenowith, individually and as administrator of the estate of Drinda, and Bessie M. Chenowith, individually, filed two law suits in the Circuit Court for Allegany County claiming damages for the injuries to Drinda and damages for her death, (2) that Kelsay was one of the defendants in those suits, (3) that State Farm had denied that Kelsay was insured under its policy for the purposes of those suits, and (4) that if State Farm did not insure Kelsay against bodily injuries to Drinda then the Unsatisfied Claim and Judgment Fund would be required to defend Kelsay and satisfy any judgment, up to the statutory maximum, that might be obtained against him. A hearing was held on this matter before Judge Harold E. Naughton, and in an order dated April 15, 1965, the judge ruled that Kelsay was a person insured under the endorsement to the insurance policy but that State Farm was not liable for damages to Drinda under coverage A. This is an appeal from that order.

At the hearing the following undisputed facts were adduced: On December 7, 1963, Kelsay was operating a 1958 Ford sedan on State Route No. 36 in Allegany County, and Drinda, daughter of appellees August and Bessie Chenowith, was a passenger in the vehicle. The automobile was involved in a collision with another vehicle and Drinda was fatally injured. At the time of the accident Kelsay was driving the automobile at the request and with the permission of Drinda. Although the car was titled in the name of August Chenowith, the latter testified that he had given it to his daughter Drinda, as a gift for her eighteenth birthday, some eighteen months before the accident occurred. At the time of the accident and at the time the insurance contract was issued, Drinda resided in La Vale, Maryland, with her mother, while her father, August Chenowith, lived in Cumberland, Maryland.

The questions presented on this appeal involve the interpretation of the insurance contract issued to August Edward Chenowith by State Farm. These questions are: (1) Was Kelsay an insured under the contract by virtue of Code (1957), Article 66 1/2, Section 131(a)(3); (2) was Drinda 'the insured' within the meaning of the policy's exclusion clause so that Kelsay was not afforded coverage for damages resulting from her death; (3) assuming that Drinda was excluded, is such an exclusion contrary to the Maryland financial responsibility law and thus void and of no effect.

The policy to be here interpreted was issued on June 16, 1963, by State Farm and on the first page of the policy it was declared that August Chenowith was the 'named insured' and that Drinda was the 'person insured' under coverage S. 1 The expiration date was December 16, 1963, and the automobile covered was the 1958 Ford sedan in which Drinda was riding when she was fatally injured. In the fourth declaration of the policy it was stated that the named insured, August Chenowith, was the sole owner of the vehicle.

Under the terms of the policy it was provided that the company obligated itself 'to pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of (A) bodily injury (including death) sustained by other persons, and (B) property damage, caused by accident arising out of the ownership, maintenance or use, * * * of the owned automobile; * * *.' (Emphasis added.)

It was further provided by one of the policy's exclusion clauses that the insurance did not apply under 'coverage A, to bodily injury to the insured or any member of the family of the insured residing in the same household as the insured'. (Emphasis added.)

Included in the policy was a section dealing with definitions and it was therein stated that:

'Insured-under coverages A, B, * * * the unqualified word 'insured' includes

(1) the named insured, and

(2) if the named insured is a person or persons, also includes his or their spouse(s), if a resident of the same household, and

(3) if residents of the same household, the relatives of the first person named in the declarations, or of his spouse, and

(4) any other person while using the owned automobile, provided the operation and the actual use of such automobile are with the permission of the named insured or such spouse and are within the scope of such permission, * * *.' (Emphasis added.)

In the endorsement on the policy it was agreed that the insurance afforded for Bodily Injury Liability and Property Damage Liability shall constitute proof of financial responsibility of the minor, Drinda, in accordance with the 'provisions of Section 92 of Article 66 1/2 of the Annotated Code of Maryland (1951 Edition), as amended, * * *.' This section has been amended and is now Section 93 of Article 66 1/2 of the Code (1957 Edition) and it requires minors to maintain proof of financial responsibility until they become twenty-one years of age. A policy is proof of financial responsibility when it meets the requirements of Section 131 of Article 66 1/2. The last named section of Article 66 1/2 has as one of its requirements that the policy

'shall extend to insure any person using or legally responsible for the use of any motor vehicle described in the said policy, when such use is with the permission of the insured person named in said policy.' (Emphasis added.)

It was also provided in the same endorsement that 'the insurance afforded by this endorsement applies only to the minor named below.' The named minor was Drinda.

On this appeal both parties agree that the answer to the first question here presented (i. e., whether Kelsay was an insured driver under the insurance contract by virtue of Section 131(a)(3) of Article 66 1/2) should be in the affirmative. In so agreeing both parties concede that Judge Naughton was correct in ruling that since this policy was offered as proof of financial responsibility under Section 131 of Article 66 1/2 then that article must prevail over that portion of the endorsement which specifically states that the insurance afforded by the endorsement applies only to Drinda. Drinda was 'the insured person named' for the purposes of Section 131 because the endorsement to the policy specifically afforded her coverage under the policy, and thus Kelsay became an insured under the policy by virtue of that section since he was driving the automobile with the permission of Drinda.

The parties, however, disagree as to whether Drinda was 'the insured' within the meaning of the policy's exclusion clause, which precluded recovery under coverage A for bodily injury to 'the insured.' The appellees contend that Drinda met the definition of 'the insured' as set forth in paragraph (4) of the policy's definition section, to wit: 'any other person while using the owned automobile, provided the operation and the actual use of such automobile are with the permission of the named insured or such spouse and are within the scope of such permission, * * *.' It is the appellants' position that Drinda did not fit within the above definition inasmuch as she was not using the automobile with the permission of the named insured (her father) because under the authority of Selected Risks Ins. Co. v. Miller, 227 Md. 174, 175 A.2d 584,...

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