Metropolitan Casualty Ins. Co. v. Friedley

• Decision Date: 02 October 1948
• Docket Number: Civil Action No. 421.
• Parties: METROPOLITAN CASUALTY INS. CO. OF MEW YORK et al. v. FRIEDLEY et al.
• Court: U.S. District Court — Northern District of Iowa

79 F. Supp. 978

METROPOLITAN CASUALTY INS. CO. OF MEW YORK et al. v. FRIEDLEY et al.

Civil Action No. 421.

United States District Court N. D. Iowa, E. D.

October 2, 1948.

Donald N. Clausen, of Chicago, Ill., and Sterling Beers, of Waterloo, Iowa, for plaintiffs.

R. F. Merner and Reno R. Reeve, both of Cedar Falls, Iowa, for defendants.

Craig H. Mosier, of Waterloo, Iowa, guardian ad litem for defendant Maynard Kroemer.

GRAVEN, District Judge.

Action for a declaration of nonliability on an automobile liability insurance policy under the Federal Declaratory Judgment Act, 28 U.S.C.A. §§ 2201, 2202, following a mishap with the claimed insured automobile, involving waiver, estoppel, and reformation.

On November 13, 1946, the defendant Glenn Fairhurst, a resident of the City of Cedar Falls, Iowa, purchased a 1937 Dodge automobile in the City of Waterloo, Iowa, for $637.50 which he paid in cash from his own funds. The City of Waterloo and the City of Cedar Falls lie close together. While Glenn Fairhurst was at the home of the seller in the City of Waterloo, Iowa, counting out the money in payment of the purchase price, M. L. Trookman, an agent of the plaintiffs in the Waterloo area, came into the house. M. L. Trookman was introduced to Glenn Fairhurst as the insurance agent with whom the seller had had insurance. M. L. Trookman started to discuss the matter of insurance on the automobile with Glenn Fairhurst. They did not complete their discussion and made arrangements to meet at the home of defendant Grace Friedley, mother of Glenn Fairhurst, that afternoon to discuss the matter further. At the Friedley home that afternoon, M. L. Trookman was informed that Glenn Fairhurst was a minor, nineteen years of age. M. L. Trookman then explained that neither plaintiffs nor other insurance companies insured minors against automobile liability, but stated that if the registration certificate were put in Mrs. Friedley's name it would be possible to insure Glenn Fairhurst in that way. Mrs. Friedley then asked Mr. Trookman if she would be getting herself liable in any way if there was an accident. Mr. Trookman assured her she would not and that that was the way most insurance companies handled it in the case of minors. The parties stipulated that one L. V. Miller whom defendants intended to call as a witness would testify that he was an agent for five insurance companies and that it was possible for a minor to secure insurance for public liability and other damage in those companies. M. L. Trookman then handled the details of having the automobile registered in Mrs. Friedley's name. Glenn Fairhurst paid the premium from his own funds. M. L. Trookman gave Mrs. Friedley a receipt for the premium payment for the year from November 13th, 1946, to November 13th, 1947. Plaintiffs then issued Policy No. F M 141 insuring Mrs. Grace Friedley to the extent of $5000 against liability for property damage and to the extent of $5000 for each person or $10,000 for each mishap against personal injury liability arising out of the ownership, maintenance, or use of the automobile, and against fire and theft of the automobile. The automobile described in the policy was the 1937 Dodge automobile. M. L. Trookman countersigned the policy as plaintiffs' "authorized agent."

Sometime in February, 1947, Glenn Fairhurst sold the 1937 Dodge automobile and purchased with his own funds a 1935 Ford automobile which he registered in his own name. Shortly after the purchase, Glenn Fairhurst called M. L. Trookman on the telephone and told him he had sold the Dodge and bought a 1935 Ford. Mr. Trookman responded "O. K." and got from Glenn Fairhurst the serial number and other details about the Ford automobile. There was then attached to the policy a rider signed by M. L. Trookman as agent for the plaintiffs changing the coverage from the 1937 Dodge automobile to the 1935 Ford automobile. So far as appears, M. L. Trookman did not suggest that the 1935 Ford be registered in Mrs. Friedley's name. Later a refund was given Glenn Fairhurst of the amount of the unused premium for fire and theft. That refund was made because the plaintiffs did not wish to insure the 1935 Ford against fire and theft because of its age. No other refund of the premium was or has been made or tendered.

The policy as issued by plaintiffs contained the following clause under the general heading Declarations:

"Item 7. Ownership: Except with respect to bailment lease, conditional sale, mortgage or other encumbrance the named insured is the sole owner of the automobile, except as stated herein: No Exceptions."

The italicized words were typewritten in a blank provided for that purpose. Under the general heading Conditions the following clause appears:

"26. Declarations. By acceptance of this Policy the named insured agrees that the statements in the Declarations are his agreements and representations, that this Policy is issued in reliance upon the truth of such representations and that this Policy embodies all agreements existing between himself and the Company or any of its agents relating to this insurance."

The change of coverage rider contains the following clause:

"Nothing herein contained shall be held to vary, alter, waive or extend any of the Agreements, Conditions, Declarations, Exclusions, Limitations or Terms of the undermentioned Policy other than as above stated."

On June 16, 1947, while driving the 1935 Ford automobile, Glenn Fairhurst was involved in a mishap in which he came in contact with a motor scooter owned by defendant Maynard Kroemer and operated by defendant Sylvan Livingston. As a result of the mishap Maynard Kroemer suffered property damage to his motor scooter and Sylvan Livingston suffered personal injury damage.

Glenn Fairhurst notified M. L. Trookman of the mishap and he in turn notified plaintiffs. This suit was instituted by the plaintiffs on October 20, 1947, for a declaration of nonliability under the policy on the theory that defendant Grace Friedley had breached the sole ownership clause previously set out. The parties defendant are Grace Friedley, Glenn Fairhurst, and the two possible claimants, Sylvan Livingston and Maynard Kroemer. Defendant Maynard Kroemer, being a minor, was represented by a guardian ad litem appointed by the Court. The defendants in their answer state that plaintiffs' authorized agent, M. L. Trookman, knew that Glenn Fairhurst was the owner of both the 1937 Dodge and the 1935 Ford automobiles and that Grace Friedley was the owner of neither, both when the original policy was issued and when the change of coverage rider was issued, that M. L. Trookman stated to Glenn Fairhurst and Grace Friedley that it would be necessary to register the Dodge in Grace Friedley's name because plaintiffs did not insure minors, and that upon such registration plaintiffs would issue a policy in Grace Friedley's name which would fully protect Glenn Fairhurst from liability for bodily injury and property damage that might be caused in the use of said automobile. Defendants contend such knowledge and representations by M. L. Trookman constitute a waiver of the sole ownership clause and plaintiffs are thereby estopped to set up a breach thereof.

It clearly appears from the record and none of the parties contend otherwise that the named insured, Grace Friedley, is under no liability as a result of the mishap which occurred June 16, 1947, because she was not the owner of the 1935 Ford automobile involved and was in no way responsible for the injuries sustained by Maynard Kroemer and Sylvan Livingston. Under such circumstances the doctrines of waiver and estoppel are of no avail to defendants. Even if facts justifying the invocation of waiver and estoppel are present, the policy would still inure to the benefit of Grace Friedley, the named insured, only, and she is under no liability.

Plaintiffs strongly rely on the registration of the 1937 Dodge automobile in the name of Grace Friedley as a basis for a declaration of nonliability under the policy. The matter of the registration and regulation of automotive vehicles in general is governed by Ch. 321 of the 1946 Code of Iowa, entitled "Motor Vehicles and Law of Road." Sec. 321.20 provides that "every owner of a vehicle subject to registration hereunder shall make application to the county treasurer, of the county of his residence" for registration, setting forth his name and address and a description of the vehicle to be registered. The Iowa Supreme Court has often held that such registration is not determinative of the ownership of the vehicle so registered. Union Bank & Trust Co. of Stanwood v. Willey, 1946, 237 Iowa 1250, 24 N.W.2d 796; Garuba v. Yorkshire Ins. Co., 1943, 233 Iowa 579, 9 N.W.2d 817; Craddock v. Bickelhaupt, 1939, 227 Iowa 202, 288 N.W. 109, 135 A.L.R. 474; Abraham v. Hartford Fire Ins. Co., 1932, 215 Iowa 1, 244 N.W. 675; Tigue Sales Co. v. Reliance Motor Co., 1928, 207 Iowa 567, 221 N.W. 514; Shepard v. Findley, 1927, 204 Iowa 107, 214 N.W. 676; Cerex Co. v. Peterson, 1927, 203 Iowa 355, 212 N.W. 890; Davenport v. Pierce, 1922, 194 Iowa 1152, 190 N.W. 942. When ownership is in issue registration is one fact to be considered, but it can be overcome by other evidence. Craddock v. Bickelhaupt, supra; Abraham v. Hartford Fire Ins. Co., supra; Tigue Sales Co. v. Reliance Motor Co., supra. In Garuba v. Yorkshire Ins. Co., supra, the defendant insurance company successfully defended a suit by the named insured on a collision policy by showing a sale of the insured automobile by the insured, notwithstanding the fact that the registration certificate was still in the name of the insured as owner of the automobile.

In referring to the predecessor of Ch. 321 of the 1946 Code, the Iowa Court said in Davenport v. Pierce, 1922, 194 Iowa 1152, 190 N.W. 942, at pages 942, 943:

"The statutes of the state prescribing regulations for the licensing, registering, and regulating and the buying,...