Liberty Mut. Ins. Co. v. Gould, 20215

• Citation: 266 S.C. 521,224 S.E.2d 715
• Decision Date: 06 May 1976
• Docket Number: No. 20215,20215
• Court: South Carolina Supreme Court
• Parties: LIBERTY MUTUAL INSURANCE COMPANY, Respondent, v. Dinah Taylor GOULD et al., Respondents, v. The SOUTH CAROLINA INSURANCE COMPANY, Appellant.

Page 715

224 S.E.2d 715

266 S.C. 521

LIBERTY MUTUAL INSURANCE COMPANY, Respondent, v. Dinah Taylor GOULD et al., Respondents, v. The SOUTH CAROLINA INSURANCE COMPANY, Appellant.

No. 20215.

Supreme Court of South Carolina.

May 6, 1976.

Robert H. Hood, of Sinkler, Gibbs, Simons & Guerard, Charleston, for appellant.

Robert A. Patterson, of Barnwell, Whaley, Stevenson & Patterson, Charleston, for respondent, Liberty Mut. Ins. Co.

Joseph W. Cabaniss, of Grimball & Cabaniss, Charleston, for respondent, State Farm Mutual Automobile Ins. Co.

James C. Sanders, of Dowling, Dowling, Sanders & Dukes, Beaufort, for respondents, Felix Bobian, and others.

RHODES, Justice:

This declaratory judgment action was instituted to determine which of three insurance companies afforded liability coverage for claims arising out of an automobile accident. The lower court held that appellant, The South Carolina Insurance Company (Carolina), was required to provide the coverage, and relieved respondents Liberty Mutual Insurance Company (Liberty) and State Farm Mutual Automobile Insurance Company (State Farm) from any liability as a result of the accident. We affirm.

The issues on appeal are:

(1) Whether Liberty afforded liability coverage to the drivr of its named insured's automobile as a permissive user.

(2) Whether Liberty was estopped from denying coverage on the ground of the nonpermissive use of its named insured's automobile.

(3) Whether Carolina afforded liability coverage to the spouse of its named insured.

(4) Whether a witness' credibility may be impeached by showing a prior conviction for involuntary manslaughter.

(5) Whether the lower court abused its discretion in permitting recross-examination.

The uncontradicted facts giving rise to this action are as follows: In August of 1972, Dinah Taylor purchased a 1972 Dodge Challenger automobile which she insured by adding it to an existing automobile liability policy issued to her by Liberty. In addition, she entered into a written agreement with Edward Allen which stated that she had purchased the Dodge for Allen, and that the monthly payments on the car note would be paid by him. The agreement also provided that Allen was to be the sole user of the automobile, and that it was to be insured by Liberty and garaged at Allen's residence. Allen at the time was living with his aunt, Shirley Bufford.

On September 15, 1972, this automobile, while being driven by Norman Bufford, was involved in an accident with an automobile owned and operated by Felix Bobian. Bobian and Jeremiah Grant, a passenger in Bobian's vehicle, suffered personal injuries, and both automobiles sustained property damage.

At the time of the accident, Norman Bufford was married to Shirley Bufford who had a family automobile policy with Carolina in which she was the named policyholder. State Farm provided uninsured motorist coverage to Bobian and Grant under its policy with Bobian. All policies were in force at the time of the accident.

Liberty was notified of the accident a few days after it occurred, and undertook the defense of Norman Bufford when personal injury actions were subsequently brought against him by Bobian and Grant. It also paid for the property damage sustained by the two automobiles involved in the accident.

In March of 1974, Liberty notified Norman Bufford that it was, henceforth, handling his defense with a reservation of all rights under its policy with Taylor, by reason of the lack of permission from its named insured to drive the 1972 Dodge on the day of the accident. As a result of Liberty's reservation of rights, Bobian and Grant subsequently notified State Farm of their suits against Bufford and Liberty's denial of coverage. In July of 1974, Carolina was notified of Liberty's reservation of rights and subsequently denied any coverage under its policy issued to Shirley Bufford.

Liberty commenced this declaratory judgment action on September 3, 1974, against the other two insurance companies involved and the individuals mentioned except for Shirley Bufford. While this action was pending, judgments totaling $27,000 were obtained against Norman Bufford by Bobian and Grant. Both Liberty and State Farm appeared and participated in the trials of these actions under a reservation of rights. Carolina, however, elected not to involve itself in any manner with the defense of Norman Bufford.

Liberty alleged in its complaint that Norman Bufford was operating the 1972 Dodge, owned by Taylor, without her consent, either expressed or implied, at the time of the accident and, therefore, it afforded no liability coverage to Bufford under its policy. Liberty further alleged that Norman Bufford was married to Shirley Bufford and was a resident of her household and, thus, insured by Carolina at the time of the accident.

In the alternative, Liberty alleged that if coverage was not afforded by it or Carolina, then State Farm as the uninsured motorist carrier was liable. It asked for an adjudication that it did not afford liability coverage to Norman Bufford and to ascertain the liability of Carolina and State Farm.

Separate answers were filed by State Farm, Carolina, and Bobian and Grant, denying the material allegations in the complaint relative to nonpermissive use by Norman Bufford. Bobian and Grant further alleged in their joint answer that Liberty had waived its rights to deny coverage and was estopped from asserting such denial. In addition, Carolina asserted the defense of estoppel in later stages of this action without objection by any of the other parties.

In the instant action specific questions of fact were submitted to the jury, and the following factual determinations were made by it:

(1) Norman Bufford did not have the express or implied permission of Taylor to drive the 1972 Dodge at the time of the accident.

(2) Norman Bufford did have the permission of Allen to drive the automobile at the time of the accident.

(3) Norman Bufford was a member of the household of Shirley Bufford at the time of the accident.

The lower court held, based on these findings, that Liberty did not afford liability coverage to Norman Bufford because he was not a permissive user of the 1972 Dodge within the terms of its policy. Liberty's policy provided that persons insured with respect to an owned automobile included the following: (1) the named insured and (2) any other person using such automobile with the permission of the named insured, provided his actual operation or (if he is not operating) his other actual use thereof is within the scope of such permission.

As stated by the lower court:

'It thus becomes apparent that there can be no question but that Liberty Mutual owes no coverage to Norman Bufford under the theory of permissive use of the vehicle, as the jury has found that there was no permissive use flowing from Liberty Mutual's named insured, Dinah Taylor Gould (Taylor), to the tortfeasor, Norman Bufford. The law in South Carolina is clear that the permission which puts the omnibus or extended coverage clause of a liability insurance policy into operation must originate in the language of (sic; or) the conduct of the named insured or from someone having the authority to bind him in that respect. Keller (Keller) vs. Allstate Insurance Company, 261 S.C. 151, 198 S.E. (2d) 793, 1973. The written agreement between Defendants Allen and Gould clearly demonstrates that Defendant Allen had no authority to bind Defendant Gould by giving permission to a third party to use the vehicle.'

In exception eight, Carolina charges the lower court with error in holding that the jury had found that there was no permissive use flowing from Taylor to Norman Bufford, and states the error as being that the jury made no specific determination as to who had authority to bind Taylor. We find no error.

The jury found that Bufford did not have the implied permission of Taylor to use the 1972 Dodge and this determination necessarily included a finding that Allen lacked authority to bind Taylor when...