Maryland Cas. Co. v. Iowa Nat. Mut. Ins. Co.

• Decision Date: 04 June 1973
• Docket Number: No. 45259,45259
• Parties: The MARYLAND CASUALTY COMPANY, Appellant, v. The IOWA NATIONAL MUTUAL INSURANCE COMPANY et al., Appellees.
• Court: Illinois Supreme Court

Page 163

297 N.E.2d 163

54 Ill.2d 333

The MARYLAND CASUALTY COMPANY, Appellant, v. The IOWA NATIONAL MUTUAL INSURANCE COMPANY et al., Appellees.

No. 45259.

Supreme Court of Illinois.

June 4, 1973.

Reno, O'Byrne & Kepley, Champaign (Vance I. Kepley, Champaign, of counsel), for appellant.

Allen & Korkowski & Associates, Rantoul (John E. Gambill, of counsel), for appellees.

GOLDENHERSH, Justice.

This action for declaratory judgment was brought by plaintiff, Maryland Casualty Company, in the circuit court of Champaign County under the provisions of section 57.1 of the Civil Practice Act (Ill.Rev.Stat.1971, ch. 110, par. 57.1). The issues presented by this appeal are whether insurance coverage was provided defendant William S. Horton, in connection with claims made against him by Charles B. McElhaney and Harold E. Morlan for personal injuries arising out of an automobile collision, under the terms of either or both of two liability policies, one issued by plaintiff and the other by defendant Iowa National Mutual Insurance Company, hereafter called defendant, and if by both, which coverage was primary and which excess. The circuit court directed verdicts against both insurance carriers and entered judgment holding that the plaintiff's policy provided primary coverage and the policy issued by defendant provided excess coverage. Plaintiff appealed, defendant cross-appealed, the appellate court reversed the judgment (5 Ill.App.3d 384, 283 N.E.2d 27), holding that no coverage was provided Horton by either policy, and we granted plaintiff's petition for leave to appeal. The facts are reviewed in detail in the opinion of the appellate court and will be restated only to the extent necessary to this opinion.

In view of the fact that the decision of the appellate court relieves both plaintiff and defendant of liability under their respective policies, we consider it advisable to explain why plaintiff sought leave to appeal. From pleadings on file in this court it appears that following the entry of the circuit court judgment plaintiff assumed the defense of the claims made against Horton, disposed of them for sums within its policy limits, and Horton and the claimants Morlan and McElhaney are no longer parties to this appeal. If we were to reverse the judgment of the appellate court holding that defendant's policy did not provide coverage, and affirm the judgment as to plaintiff, presumably plaintiff would seek to recover from defendant the sums which it has expended.

The record shows that plaintiff had issued to Robert E. Smythe, as the named insured, a policy of liability insurance covering the 1968 Buick which was being driven by Horton at the time of the collision. This automobile, which was titled in the name of Robert Smythe and his wife, was one of two automobiles which they owned. The policy contained the following omnibus clause:

'Persons Insured: Under the liability and medical expense coverages the following are insured:

(a) with respect to an owned automobile,

(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 * * *.'

There was also in force a policy of liability insurance issued by defendant to Donald Horton, the father of defendant Horton, which contained the following provision:

'Persons Insured: Under the liability and medical expense coverage, the following are insureds:

(b) with respect to a non-owned automobile,

(1) the named insured,

(2) any relative, but only with respect to a private passenger automobile or trailer, provided his actual operation or (if he is not operating) the other actual use thereof is with the permission, or reasonably believed to be with the permission, of the owner and is within the scope of such permission * * *.'

Robert E. Smythe is the father of Thomas Smythe, who at the time in question was 20 years of age and a student at Southern Illinois University at Carbondale. Although he had previously owned two cars given him by his father, Thomas did not own an automobile in 1968. He was living at his parents' home in Hoopeston, was permitted to use either of the two Smythe family automobiles whenever he wished, and had driven the 1968 Buick on several occasions.

On July 21, 1968, Thomas drove the automobile to a party in Boswell, Indiana, and while there met Horton and John Higgins, both of whom were students at Southern Illinois University, and his friends. Horton lived in Rankin and he and Thomas frequently traveled together between Carbondale and their respective homes. Horton had driven to the party in a pickup truck owned by his father, Donald Horton, and the truck is one of two vehicles described in the policy issued by the defendant. Higgins had driven to the party in his own automobile.

Horton testified that at some time during the evening Thomas Smythe told him they had a new car, a 1968 Buick, and told him that it was owned by either his father or mother, but he did not recall which parent Smythe told him was the owner. At some point during the party Smythe, Horton and Higgins agreed to meet at a gasoline station in Hoopeston and then proceed in one car to Danville for something to eat. As summarized by the appellate court the testimony shows that:

'* * * There was also some conversation about trading automobiles for this trip. Smythe had driven Higgins' Chevrolet around Boswell earlier in the evening and testified that he liked to drive this automobile because he wanted to impress some young ladies. Accordingly, Higgins asked Horton if he could drive Horton's pick-up truck to Hoopeston and Horton granted him permission to do so. Shortly after Higgins left, however, Horton changed his mind about going to Danville and asked Smythe to stop Higgins and asked him to return the truck. Smythe then got in Higgins' Chevrolet and caught up with him about two miles outside of Boswell. Higgins refused to drive back to the party and proceeded on to Hoopeston.

When the party was over, both Horton and Smythe prepared to leave for Hoopeston. Smythe got into the Higgins vehicle and Horton got into the Smythe Buick. Smythe's testimony indicated that he did not engage in any conversation with Horton about which automobile to drive. Horton, on the other hand, testified that when they left the party Smythe told him that he wanted to drive Higgins' Chevrolet and that Horton should drive the Buick to Hoopeston.' (5 Ill.App.3d 384, 389, 283 N.E.2d 27, 30.)

While being driven by Horton toward Hoopeston, the Smythe automobile was involved in the collision in which McElhaney and Morlan suffered injuries.

Simply stated, without enumerating in detail their specific arguments, it is the contention of both plaintiff and defendant that Horton is not 'an insured' under the terms of their respective omnibus clauses. The testimony shows that approximately two years prior to the date of the collision, while Thomas was a senior in high school, he had left a family automobile parked near the school with the keys in it, and one of his fellow students, without his knowledge or permission, had driven it. When his parents learned of the incident Thomas was instructed never to permit anyone other than a member of the family to use a family automobile. This was the only occasion on which any such instructions were given. The testimony shows that the only exception to the prohibition was that a young man who was a long-time friend and who was 'treated as one of the family' was permitted to drive one of the Smythe cars on several occasions.

Horton had met Smythe's father only one time, had never met Mrs. Smythe, and had never previously driven one of the Smythe cars. Thomas had not informed him that his father had ever forbidden him to permit anyone other than members of the family to drive the car and when they left the party Thomas's only comment was that Horton was not to drive over 70 miles per hour or brake too hard. Approximately an hour before he drove the Smythe car Horton had seen a blonde girl drive it around the block. Thomas Smythe testified that earlier in the evening Higgins had moved the car for him because it was too close to a newly blacktopped street and he feared it might be damaged by flying rocks thrown by the spinning wheels of passing vehicles.

Prior to discussing the contentions of the parties on the coverage issues, we consider the argument of defendant that plaintiff is without 'standing' to prosecute this appeal for the reason that its notice of appeal sought reversal only of the judgment holding that its policy provided primary coverage and it cannot now seek reversal of the judgment...