Martin v. Travelers Indemnity Company

• Citation: 450 F.2d 542
• Decision Date: 03 November 1971
• Docket Number: No. 30483.,30483.
• Parties: Willie MARTIN and Mrs. Alma Martin, Plaintiffs-Appellees-Cross Appellants, v. The TRAVELERS INDEMNITY COMPANY, Defendant-Appellant-Cross Appellee, Charles Kinnard, Intervenor-Appellee-Cross Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

450 F.2d 542 (1971)

Willie MARTIN and Mrs. Alma Martin, Plaintiffs-Appellees-Cross Appellants, v. The TRAVELERS INDEMNITY COMPANY, Defendant-Appellant-Cross Appellee, Charles Kinnard, Intervenor-Appellee-Cross Appellant.

No. 30483.

United States Court of Appeals, Fifth Circuit.

November 3, 1971.

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W. Scott Welch, III, Lawrence J. Franck, Roger C. Landrum, Jackson, Miss., for appellant and cross-appellee; Butler, Snow, O'Mara, Stevens & Cannada, Jackson, Miss., of counsel.

Francis S. Bowling, Jackson, Miss., William W. Ferguson, Raymond, Miss., William F. Coleman, Jackson, Miss., for appellees-appellants; Bowling, Coleman & Cothren, Jackson, Miss., of counsel.

Before TUTTLE, WISDOM, and INGRAHAM, Circuit Judges.

WISDOM, Circuit Judge:

This diversity appeal requires us to decide two intricate and interrelated questions of insurance law—as we think the highest court of Mississippi would decide them. In addition, the parties have locked horns over a number of subsidiary issues relating to the procedure followed in the court below.

Charles Kinnard Brown, known throughout these proceedings as Charles Kinnard (or simply "Kinnard"), worked for a number of years at a service station near Utica, Mississippi, owned by Hubbard Butane Company. Hubbard Butane was, in turn, owned by Charles Hubbard; the service station and Hubbard Butane itself were run by Charles Hubbard and his son-in-law, Richard Partridge. Hubbard Butane allowed Kinnard to use company vehicles for the purpose of travelling to and from his place of employment to his home. There was evidence, not seriously controverted, that Hubbard and Partridge had instructed Kinnard and other employees given similar privileges that they were not to use company vehicles for any purpose other than travelling to and from work.

The record shows that on the evening of June 16, 1967, a Friday, at about 6:00 p. m., Partridge reminded Kinnard as he was leaving work in a company station wagon to use that vehicle only to travel home and not for any other purpose. Kinnard, however, drove instead to a girl friend's home in Hickstown, a nearby community. Kinnard spent the night in Hickstown, and the following morning, Saturday, June 17, 1967, while en route to his home, Kinnard was in an automobile accident with Willie Martin and Mrs. Alma Martin. Both the Martins sustained serious injuries in the crash. Mr. and Mrs. Martin sued Kinnard in the Mississippi state court, and received judgments in their favor for $100,000 and $75,000 respectively. The Mississippi Supreme Court affirmed these judgments.

Prior to June 17, 1967, The Travelers Indemnity Company ("Travelers") had issued to Hubbard Butane Company a comprehensive general liability policy, including automobile liability insurance, which was in effect on the day of Kinnard's accident. This policy provided limits of $50,000 for a single claim and $100,000 for multiple claims. It was a standard policy containing an "omnibus clause," providing that in addition to the named insured the policy also insured "any other person while using an automobile * * * with the permission of the insured provided his actual operation thereof is within the scope of such permission. * * *" The policy also contained the standard provision requiring that any insured cooperate with the insurer.

Travelers hired an attorney to represent Kinnard in the state court proceedings, but it did so under a non-waiver agreement reserving the insurer's right to deny that Kinnard was covered by the omnibus clause of the Hubbard policy. When the Martins, as judgment creditors, filed suit in the United States District Court for the Southern District of Mississippi demanding payment of the state court judgments by Travelers under the Hubbard liability insurance policy, Travelers did deny that Kinnard was its insured. After all the evidence was in, the district court turned down Travelers' motion for a directed verdict and allowed the jury to decide whether, under the applicable Mississippi law, Kinnard was Travelers' insured. The jury returned a verdict favorable to the Martins, finding coverage, and Travelers moved for judgment n. o. v. That motion was denied, and on this appeal Travelers now asks us to rule that the jury verdict should not have been allowed to stand, since there was insufficient evidence to support it.

I. Kinnard's Coverage.

A. We turn to the central issue in the case: Did the district court err in allowing the jury to decide whether Kinnard operated the Hubbard vehicle "within the scope of the permission" granted him by Hubbard? If the issue was properly submitted to the jury, then its finding that Kinnard may claim the protection of Hubbard's automobile insurance must stand. If, however, the trial judge erred in allowing the jury to determine the scope of Hubbard's permission to Kinnard, then Travelers' appeal must be sustained and Kinnard must satisfy the state court judgment against him as best he can.

In this Circuit, at least, it is proper to grant motions for a directed verdict and for judgment notwithstanding the verdict only "if the facts and inferences point so strongly and overwhelmingly in favor of one party that the Court believes that reasonable men could not arrive at a contrary verdict." Boeing Co. v. Shipman, 5 Cir. 1969, 411 F.2d 365, 374. In Boeing we noted that "it is the function of the jury as the traditional finder of the facts, and not the Court, to weigh conflicting evidence and inferences, and determine the credibility of witnesses." 411 F.2d at 375.

With this federal rule of judge and jury in the background, our role in this diversity appeal is a limited one. We must ascertain as best we can the present law of Mississippi, and then decide whether that law was applied correctly below. Mindful of that role, we affirm the submission to the jury of the issue of Kinnard's coverage under the Travelers policy.

Only three years ago, the Supreme Court of Mississippi considered at some length the test it would apply to determine whether an automobile was driven within the scope of the permission of the named insured, so as to entitle the driver to claim the protection of the "omnibus" clause of the named insured's policy. Travelers Indemnity Company v. Watkins, 209 So.2d 630 (1968). The court rejected "strict" construction of the omnibus clause, requiring affirmative proof that the use at the time when the claim arose was specifically within the scope of the named insured's permission. At the same time the court refused to adopt the "liberal" approach under which the original loan by the owner is held to permit all uses by the borrowing driver. Instead, the Mississippi Supreme Court embraced the intermediate or "minor deviation" rule, which provides protection for the borrowing driver unless his operation of the vehicle at the time and place of the accident is either specifically prohibited¹ or amounts to a gross deviation from the time, place, and nature of use expressed in the owner's permission.

Our first inquiry, then, is whether reasonable men might have decided that Kinnard was not specifically prohibited from operating the Hubbard vehicle as he did at the time of the accident. Unfortunately, the Watkins decision fails to make clear exactly what the Mississippi Supreme Court meant by "specifically prohibited." In order to evaluate Travelers' contention, we must therefore determine the meaning of "specifically prohibited" from the facts of the Watkins case itself.

In Watkins, an employee was granted use of his employer's truck for a personal errand on Saturday afternoon. When the employee asked his supervisor if he should return the truck to the employer when the had completed his personal business, the supervisor replied, "No, leave it at home, leave it in the yard there and bring it back Monday morning." The accident occurred when the employee used the truck to pick up his wife on Sunday at a neighbor's house. On these facts the Mississippi Supreme Court concluded that there was no "positive, express prohibition against using the truck on Sunday." Travelers argues that here, unlike Watkins, Kinnard was specifically prohibited from using the borrowed vehicle as he did at the time of the accident. The company points to Hubbard's instructions that Kinnard use the vehicle only for travel to and from work, not for "running all around the countryside." In other words, here the lender did tell Kinnard not to use the station wagon except to go to and from work. In Travelers' view, Hubbard's negative imperative converted his instructions to Kinnard into the "positive, express prohibition" found wanting in Watkins.

We think not. In Watkins, the lender gave the borrower specific instructions to leave the car in his yard over the weekend. The obvious implication of this instruction was the negative command not to use the borrowed vehicle during the same span of time—from Friday to Monday morning. We find it difficult to believe that the Mississippi Supreme Court intended to have the Watkins case turn on the distinction between ordering the borrower affirmatively to dispose of the borrowed vehicle (by leaving it in the yard) and an alternative phraseology in the negative—for example, "Do not do any thing with the car besides parking it in your yard." When the Mississippi court concluded that "there was no positive, express prohibition against using the truck on Sunday," we think that the court intended to emphasize the failure of the lender to forbid the precise use which led to the accident —"using the truck on Sunday"—rather than the lender's failure to phrase his instructions in the negative imperative. We therefore reject Travelers' invitation to distinguish the present case from Watkins simply on account of Hubbard's fortuitous order to Kinnard not to use the loaned vehicle except for transportation to and from work.

Instead, we app...