Mt. Beacon Insurance Company v. Williams

• Citation: 296 F. Supp. 1094
• Decision Date: 26 February 1969
• Docket Number: Civ. No. 18784.
• Parties: MT. BEACON INSURANCE COMPANY v. Grover Cleveland WILLIAMS, Sampson Bright, Helen V. Bright, John R. Jewell, Commissioner of Motor Vehicles of the State of Maryland, the Unsatisfied Claim and Judgment Fund Board, Betty Johnson, et al.
• Court: U.S. District Court — District of Maryland

296 F. Supp. 1094

MT. BEACON INSURANCE COMPANY v. Grover Cleveland WILLIAMS, Sampson Bright, Helen V. Bright, John R. Jewell, Commissioner of Motor Vehicles of the State of Maryland, the Unsatisfied Claim and Judgment Fund Board, Betty Johnson, et al.

Civ. No. 18784.

United States District Court D. Maryland.

February 26, 1969.

Robert E. Cahill and Melnicove, Asch, Greenberg & Kaufman, Baltimore, Md., for plaintiff.

Francis B. Burch, Atty. Gen., and William E. Brannan, Asst. Atty. Gen. of Maryland, Baltimore, Md., for John R. Jewell, Commissioner of Motor Vehicles, and The Unsatisfied Claim and Judgment Fund Board.

Jack L. Hardwick, Hardwick & Tripoda, Baltimore, Md., for Grover Cleveland Williams.

THOMSEN, Chief Judge.

This case presents a dispute between an insurance company (Mt. Beacon) and the Board of the Unsatisfied Claim and Judgment Fund (UCJF) as to which of the two must defend Grover Cleveland Williams in actions filed against him after an automobile accident and to pay any judgments which may be rendered against him in such actions. The attorneys for the injured persons have shown no interest in the contest, because the maximum amounts which they may recover under the insurance policy and under the UCJF are the same.

The insurance policy involved in this case was issued by Mt. Beacon to Sampson Bright on April 11, 1967, in Maryland. It covered his 1960 Pontiac and contained the following omnibus clause:

"With respect to the insurance for bodily injury liability and for property damage liability, the unqualified word `insured' includes the named insured and, if the named insured is an individual, his spouse if a resident of the same household, and also includes any person while using the automobile and any person or organization legally responsible for the use thereof, provided the actual use of the automobile is by the named insured or such spouse or with the permission of either."

Bright and his wife lived at 2236 Guilford Avenue, in Baltimore. Their nephew, Grover Cleveland Williams, who was 18 years old in 1967, stayed with them from time to time. Neither Mrs. Bright nor Williams had an operator's license, and Bright had never given permission to either of them to drive his car.

On June 17, 1967, Bright was admitted to the Union Memorial Hospital, some ten blocks due north of his home. He did not go to the hospital in his car, but left it near his house. About 6 p. m. on the following day, June 18, Mrs. Bright asked Williams to drive her to the hospital to visit her husband, taking the keys off the dresser, where Bright had left them. She told Williams to wait for her near the hospital, so that he could drive her home. She gave Williams no other permission to use the car.

Instead of waiting for his aunt, Williams drove south toward their home, met some friends on the street, and agreed to drive them to a house beyond The Alameda, which is east and northeast of the hospital. While driving them toward The Alameda, Williams collided with a parked truck, and several persons were injured. He was not on his way back to the hospital to pick up his aunt when the collision occurred.

The question to be decided is whether the "actual use of the automobile" by Williams was "with the permission of" Mrs. Bright. No one contends that it was with the permission of Mr. Bright.

Courts faced with cases involving deviation from the permission granted have adopted one of three rules: (1) the liberal or "initial permission" rule that if a person has permission to use an automobile in the first instance, any subsequent use while it remains in his possession though not within the contemplation of the parties is a permissive use within the terms of the omnibus clause; (2) the strict or "conversion" rule that any deviation from the time, place or purpose specified by the person granting permission is sufficient to take the permittee outside the coverage of the omnibus clause; and (3) the moderate or "minor deviation" rule that the permittee is covered under the omnibus clause so long as his deviation from the permissive use is minor in nature. American Home Assurance Co. v. Erie Insurance Exchange, et al., Md., 248 A.2d 887 (1969).¹ See also 7 Appleman, Insurance Law & Practice, sections 4366-4368, pp. 308-327.

Since the policy was issued in Maryland, Maryland law controls. Ohio Casualty Ins. Co. v. Pennsylvania Nat. Mut. Cas. Ins. Co., 238 F.Supp. 706 (D. Md.1965), aff'd per curiam, 352 F.2d 308 (4 Cir. 1965). The precise question has not been decided by the Court of Appeals of Maryland, although opinions of that Court and of the Fourth Circuit point to the proper basis of decision. For reasons stated below, this Court concludes that in construing the policy in this case the Court of Appeals of Maryland would adopt the so-called "minor deviation" rule.

In Melvin v. American Auto. Ins. Co., 232 Md. 476, 194 A.2d 269 (1963), the policy contained a so-called "family omnibus" clause, which extended coverage to the named insured and any resident of the same household and any other person responsible for the use of the automobile, "provided the actual use thereof is by a person who is an insured * * * with respect to such automobile * * *." On the evening of the accident the named insured had given his son, Barry, who was a member of his household, permission to use the automobile. No restrictions were placed on its use, nor was anything said about who should drive it. The accident occurred while the automobile was being driven by Alan Melvin, a friend of the son, with the permission of the son, who was riding in the car on their way home. The Court noted that the cases "indicate that `actual use' means the particular use contemplated when permission is granted and relied on", 232 Md. at 479, 194 A.2d 271, and that some cases turn on a question of deviation from the permission granted, 232 Md. at 481, 194 A.2d at 272. The Court, however, found it unnecessary in that case to discuss the scope of the permission granted, because it held that "the actual use was by Barry, a person insured, and that this fact extended the coverage to Alan, under the terms of the policy in the case at bar". 232 Md. at 480, 194 A.2d at 272.² The Maryland Court's discussion in the Melvin case indicates that such factors as the "scope" of permission granted and the "deviation" from that permission might be relevant in determining whether "actual use" was "with the permission of the named insured." Both of these factors would be relevant only if the "minor deviation" rule were held applicable in Maryland.

A rule similar to the minor deviation rule has been applied by the Maryland Court in cases involving the liability of an employer for the negligence of his employee. See e. g., National Trucking and Storage Co. v. Durkin, 183 Md. 584, 39 A.2d 687 (1944).

In Williams v. Travelers Insurance Co., 265 F.2d 531, (4 Cir. 1959), construing a North Carolina policy, the Court said:

"* * * It is well established in this circuit and elsewhere that a person who is given permission to drive an automobile for a limited purpose does not fall within the scope of the omnibus clause, so as to be within the meaning of the term `insured', when he goes beyond the permissive use and drives the car for purposes of his own. See Continental Cas. Co. v. Padgett, 4 Cir., 219 F.2d 133; Young v. State Farm Mut. Auto. Ins. Co., 4 Cir., 244 F.2d 333; Farmer v. Fidelity Cas. Co. of N. Y., 4 Cir., 249 F.2d 185. * * *" 265 F.2d at 532.³

Counsel for the UCJF Board in this case urges adoption of the "initial permission" rule.⁴ They rely particularly on Matits v. Nationwide Mutual Ins. Co., 33 N.J. 488, 166 A.2d 345 (1960), in which the New Jersey Court held: "If a person is given permission to use a motor vehicle in the first instance, any subsequent use short of theft or the like while it remains in his possession, though not within the contemplation of the parties, is a permissive use within the terms of a standard omnibus clause in an automobile liability insurance policy." 33 N.J. at 496-7, 166 A.2d at 349. In support of its conclusion, the majority opinion in that case referred to New Jersey's "comprehensive scheme of motor vehicle legislation designed to assure that persons who cause automobile accidents are able to answer financially to their innocent victims", and "noted that since automobile liability insurance contracts are written solely by the insurer and in face of the legislative purpose to benefit persons injured, such contracts are to be construed liberally in favor of the injured." 33 N.J. at 495, 166 A.2d at 349. The Fund argues that since Maryland also has a comprehensive scheme of motor vehicle legislation designed for the same purpose, including a UCJF statute modeled on the New Jersey Act, the Maryland Court would probably follow the New Jersey law. This Court cannot agree, for several reasons.

It is true, as the Board argues, that the Maryland UCJF Act was patterned on the New Jersey Act, and that the Maryland Court has looked to the New Jersey decisions "for enlightenment", particularly those rendered before the adoption of the Maryland Act, Mundey v. Unsatisfied Claim & Judgment Fund Board, 233 Md. 169, 195 A.2d 720, 2 A.L.R.3d 755, (1963); Unsatisfied Claim and Judgment Fund Board v. Holland, 241 Md. 294, 216 A.2d 525 (1966). But the Court of Appeals of Maryland has not slavishly followed the rulings of the New Jersey Courts; on the contrary, it has carefully examined the Maryland statutes to determine what they require. In Mundey, the Maryland Court agreed with the New Jersey Court that the statute should "be liberally construed to advance the remedy, due regard being had for the protection of the fund and the realization of the essential legislative design,"⁵ but took "a dim view" of the New Jersey Courts' "inflation of the concept of `physical capability,'" and refused to follow the New Jersey Court. See discussion of Mundey in Holland...