Liberty Mut. Ins. Co. v. Bishop

• Decision Date: 30 November 1970
• Citation: 177 S.E.2d 519,211 Va. 414
• Parties: LIBERTY MUTUAL INSURANCE COMPANY v. Claude Vernon BISHOP et al.
• Court: Virginia Supreme Court

Page 519

177 S.E.2d 519

211 Va. 414

LIBERTY MUTUAL INSURANCE COMPANY v. Claude Vernon BISHOP et al.

Supreme Court of Appeals of Virginia.

Nov. 30, 1970.

G. Kenneth Miller, Richmond (May, Garrett & Miller, Richmond, on brief), for plaintiff in error.

Edward A. Marks, Jr., Frank B. Miller, III, Richmond (Sands, Anderson, Marks & Clarke, Richmond, on brief), for defendants in error.

Before SNEAD, C.J., and I'ANSON, CARRICO, GORDON, HARRISON, COCHRAN, and HARMAN, JJ.

HARRISON, Justice.

Liberty Mutual Insurance Company seeks a reversal of a final judgment rendered against it in a declaratory judgment proceeding brought under the provisions of Code §§ 8--578 through 8--585. The court below decreed recoveries against Liberty Mutual in favor of appellees, Hartford Accident and Indemnity Company, Virginia Farm Bureau Mutual Insurance Company and Claude Vernon Bishop, in the respective amounts of $3682.02, $3682.01 and $15, with interest from October 3, 1968 and costs.

Subsequent to the filing of appellees' petition for declaratory judgment, and appellant's answer thereto, the parties agreed to submit all issues of law and fact to the court. Prior to the taking of evidence, appellant moved the court to dismiss this action on the ground that it was insufficient in law and was not a proper case for a declaratory judgment. The trial court reserved decision on the motion. In its final order, the court overruled the motion and decided the action upon its merits. We granted Liberty Mutual a writ of error.

There is no serious controversy as to the facts in the case. Claude Vernon BishopA resident of Brunswick County, was engaged in a road construction project in King George County, Virginia during the summer of 1964. His son, Claude Vernon Bishop, Jr., was working with his father on this highway job. In May 1964 Bishop decided to purchase an additional automobile for the use of his family. At that time he owned a 1963 Pontiac and a 1954 Willys Jeep. Bishop placed an order with a personal friend, R. F. Ellis, Jr., who operated the Lawrenceville Motor Company, Inc., for a 1964 red Pontiac Catalina convertible. The dealer experienced delay in getting this automobile from the factory and loaned the Bishop family one of its automobiles for their use pending arrival of the new car.

On August 12, 1964 Ellis advised Mrs. Bishop, wife of Claude Vernon Bishop, that the car had arrived. She picked it up that afternoon and drove it home. At the same time she returned to Ellis the car that had been loaned the Bishops. At the time possession of the new car was given Mrs. Bishop, she was advised by Ellis that her husband could stop by the next time he was in town and make settlement. The new car left the garage equipped with the dealer's license tags on it.

Later during the day of August 12, 1964, Mrs. Bishop phoned either her husband or son in King George and advised that the car had arrived. Bishop, Jr. requested permission of his father to get the car and bring it to the job site in King George. On the evening of August 12th Bishop, Jr. drove his father to Richmond, using a company car that was at the job site. The father attended a meeting there, and the son continued to his home in Brunswick. He remained there for a short time and then returned to King George in the new 1964 Pontiac. That night, about 12:30 A.M., this car, while being operated by Bishop, Jr., was involved in an accident which resulted in the death of William D. MacMillan, Jr.

Bishop, after attending his meeting in Richmond, went to his home in Brunswick. He learned of his son's accident the following day.

On August 14, 1964, Bishop went to Lawrenceville and made a cash settlement with the Lawrenceville Motor Company for the new car. The invoice describing the vehicle, equipment thereon, price, etc. is dated August 11, 1964. The application for title, signed and acknowledged by Bishop, is dated August 14, 1964. At that time the fatal accident was discussed, and Bishop advised Ellis that he had automobile liability insurance on his personal vehicles that protected him and his family. Bishop was in turn advised by Ellis that the Lawrenceville Motor Company also had liability coverage.

Bishop was the named insured under a policy of automobile liability insurance issued by Hartford covering his 1963 Pontiac automobile, and also under a policy of automobile liability insurance issued by Virginia Farm Bureau covering his 1954 Willys Jeep. Bishop, Jr., a resident of his father's household, was an additional insured under both policies. The policies contained provisions that the insurance thereon with respect to a loss arising out of the use of any 'non-owned' automobile would be excess insurance over any other valid and collectible insurance.

The Lawrenceville Motor Company was insured under a garage liability policy issued by Liberty Mutual. The policy contained a provision excluding coverage where possession of a vehicle had been delivered to another by the named insured pursuant to an agreement of sale. The pertinent language of the policy provides:

'None of the following is an insured:

'(iii) any person or organization other than the named insured with respect to any automobile * * * (b) possession of which has been transferred to another by the named insured pursuant to an agreement of sale;'

Investigations of the accident were made by both Hartford and Liberty Mutual immediately following its occurrence. Virginia Farm Bureau was not advised of the accident until approximately 2 years after it occurred.

The administrator of William D. MacMillan, Jr., deceased, brought an action for wrongful death in July 1966 against Bishop, Jr. in the Circuit Court of King George County. Liberty Mutual refused to defend, denying any obligation to do so, and denying any liability to Bishop, Jr. under its policy with Lawrenceville Motor Company. Hartford and Virginia Farm Bureau retained counsel to appear on behalf of Bishop, Jr. and defended the action.

In November 1967 Hartford and Virginia Farm Bureau settled the case brought by MacMillan's Administrator, each paying $2495 and Bishop paying $10. Subsequently this action was commenced to recover the amount the appellees had paid in satisfaction of the MacMillan death claim and the expenses they had incurred.

Appellees take the position that the controlling issue is the validity and the applicability of the provision in Liberty Mutual's policy excluding coverage where a vehicle has been delivered pursuant to an agreement of sale. They argue that this policy exclusion is invalid under Code § 38.1--381(a). This Code section requires all policies providing automobile liability insurance on Virginia automobiles to include among the persons insured any person who is using an insured vehicle with the consent, express or implied, of the named insured, and to insure such persons against liability for negligence in such use.

Appellees say that even if the exclusionary clause in Liberty Mutual's policy is valid, possession of the 1964 Pontiac convertible was not transferred to Bishop 'pursuant to an agreement of sale' as those terms are used in the policy.

Hartford and Virginia Farm Bureau also point to provisions in their policies providing for automatic extension of coverage to newly acquired automobiles provided that all of the vehicles owned by the named insured are covered by that policy. They assert that neither of the policies issued to Bishop covered all of his vehicles and therefore there was no automatic pickup or extension of coverage on the new 1964 Pontiac. They say the only coverage they afforded Bishop, Jr. was under the 'non-owned vehicle provision', which coverage was excess over that available to an insured under another policy.

Liberty Mutual maintains that a declaratory judgment action is improper; that delivery of the 1964 Pontiac convertible had been made to Bishop and that possession of the car had been transferred by Lawrenceville Motor Company pursuant to an agreement of sale; and that its policy excluded coverage upon the vehicle under a valid exclusionary clause.

Appellant also contends that Hartford is estopped from asserting any claim against it by virtue of an agreement to arbitrate the controversy with appellant and Hartford's failure to do so after having secured a portion of appellant's files for use in the defense of the claim asserted against Bishop, Jr.

We need consider here only appellant's assignment of error which questions the right of appellees to maintain a declaratory judgment proceeding.

In Criterion Ins. Co. v. Grange Mutual, 210 Va. 446, 171 S.E.2d 669 (1970), we said:

'The purpose of the Declaratory Judgment Act (Chap. 25, Title 8, Code of 1950, 1957 Repl. Vol.) 'is to afford relief from the uncertainty and insecurity attendant upon controversies over legal rights, without requiring one of the parties interested so to invade the rights asserted by the other as to entitle him to maintain an ordinary action therefor.' The Act is remedial and is to be liberally construed and administered. Code § 8--585, as amended. But before an action may be maintained under the Act there must be a justiciable controversy, for the rendering of...