Nationwide Mut. Ins. Co. v. Chantos

• Decision Date: 07 May 1975
• Docket Number: No. 7510SC3,7510SC3
• Citation: 214 S.E.2d 438,25 N.C.App. 482
• Parties: NATIONWIDE MUTUAL INSURANCE COMPANY v. Andrew Currie CHANTOS.
• Court: North Carolina Court of Appeals

Page 438

214 S.E.2d 438

25 N.C.App. 482

NATIONWIDE MUTUAL INSURANCE COMPANY v. Andrew Currie CHANTOS.

No. 7510SC3.

Court of Appeals of North Carolina.

May 7, 1975 Certiorari Denied by Supreme Court June 6, 1975.

Ragsdale & Liggett by George R. Ragsdale and Robert R. Gardner, Raleigh, for plaintiff.

Teague, Johnson, Patterson, Dilthey & Clay by Ronald C. Dilthey, Raleigh, for defendant.

CLARK, Judge.

Summary judgment may '. . . be rendered . . . if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law.' G.S. § 1A--1, Rule 56(c). This remedy is an extreme one and should be awarded only where the truth is quite clear. Lee v. Shor, 10 N.C.App. 231, 178 S.E.2d 101 (1970). The rule does not contemplate that the court is to decide an issue of fact, but rather it impels the court to determine whether a real issue of fact exists. Keith v. Reddick, Inc., 15 N.C.App. 94, 189 S.E.2d 775 (1972). Lastly, summary judgment '. . . should be granted only where it is perfectly clear that no issue of fact is involved and inquiry into the facts is not desirable to clarify the application of the law. (Citations omitted) And this is true even where there is no dispute as to the evidentiary facts in the case but only as to the conclusions to be drawn therefrom. (Citations omitted).' Stevens v. Howard D. Johnson Co., 181 F.2d 390, 394 (4th Cir. 1950). Before applying these principles to the facts in the present case, we are of the opinion that the means by which liability may attach should be discussed, that question under these facts being a novel one in this State.

Prior to 1967, G.S. § 20--279.21(b)(2) provided, Inter alia:

'(b) Such owner's policy of liability insurance:

(2) Shall issue the person named therein and any other person, as insured, using any such motor vehicle . . . with the express or implied permission of such named insured . . ..'

In 1967, an amendment added the following language to the above subsection;

'. . . or any other persons in lawful possession . . ..' Chapter 1162, § 1, 1967 Session Laws of North Carolina.

Under the above statutory scheme, the plaintiff issued its policy of automobile, liability insurance to the Williamses on 22 January 1971. In the omnibus clause of the liability section of that policy, 'persons insured' were defined as follows:

'Persons Insured

The following are Insureds under Part II:

(a) with respect to the owned automobile,

(1) the Named Insured and any resident of the same household,

(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, and

(3) any other person or organization but only with respect to his or its liability because of acts or omissions of an Insured under (a)(1) or (2) above;'

The effects of the above omnibus clause, the provisions of G.S. § 20--279.21(b)(2), and the reimbursement provisions referred to previously upon the status of the present defendant become of critical importance in determining the precise nature of the liability alleged. For instance, if it is found as an undisputed fact that the defendant is a permissive user under section (a)(2) of the omnibus clause, then he is an insured under the express provisions of that policy, and the provisions relating to the Financial Responsibility Laws are inapplicable. However if it is found as a matter of law upon undisputed facts that the defendant did not have the express or implied permission of the named insureds, Mr. and Mrs. Williams, then the question turns to whether he was nevertheless in 'lawful possession' so as to impose upon the insurer the obligation of providing protection under G.S. § 20--279.21(b)(2).

The facts as disclosed in the affidavits and documents filed with the motion for summary judgment indicate unequivocally and without dispute that the defendant was driving the car with the express and exclusive permission of the Son of the named insureds. In that circumstance, it is well established that absent other extenuating circumstances which are not present here, such a person, driving only with the permission of a permittee, is not considered as using the automobile with either the express or implied permission of the owner so as to create omnibus clause coverage. See Truelove v. Insurance Co., 5 N.C.App. 272, 168 S.E.2d 59 (1969). However, the Original permittee-son gave the defendant express permission, and this makes him a person in 'lawful possession' under G.S. § 20--279.21(b)(2). See Jernigan v. Insurance Co., 16 N.C.App. 46, 190 S.E.2d 866 (1972). The case of Insurance Co. v. Broughton, 283 N.C. 309, 196 S.E.2d 243 (1973), is factually distinct, for in that case, the original permittee had been expressly instructed by the owner pursuant to a car rental agreement not to lend the car to a person under the age of 21 years. There were no similar instructions here. In Jernigan v. Insurance Co., Supra, 16 N.C.App. at 52, 190 S.E.2d 871, this Court stated that '.. . permission of the named insured Or of the original permittee is essential to extend coverage to a second permittee' under G.S. § 20--279.21(b) (2) (emphasis added). Absent circumstances similar to those in Insurance Co. v. Broughton, Supra, it is our opinion that permission expressly granted by the original permittee is sufficient for purposes of the statute to place the second permittee in 'lawful possession'. Consequently, the defendant in the present case was in lawful possession of the Williamses' automobile. For a discussion of the owner-original permittee-second permittee relationship after Broughton and Jernigan, see Note, 52 N.C.L.Rev. 809 (1974).

The effect of our holding the defendant to be in lawful possession of the insured automobile, but without the express or implied permission of the named insureds, is to extend coverage to the defendant solely by virtue of (1) the Financial Responsibility Laws and (2) the insurer's concomitant obligation to provide coverage pursuant thereto. However, even though the plaintiff becomes legally obligated to cover defendant, an entirely separate question in contract arises, to wit, how does the defendant become obligated, if at all, to reimburse the plaintiff under the reimbursement provisions of the policy? Problems are suggested in that it is not at all clear who is the 'Insured' in the reimbursement provision and it is not suggested how persons other than those in privity to the insurance contract could be bound by such a provision.

In Employers &c. Ins. Co. v. Byers, 99 N.H. 455, 457, 114 A.2d 888, 890 (1955), '(t)he issue to be decided (was) what is meant by 'the insured' in that clause of the policy which provides that for any payment made solely because of the requirements of a Financial Responsibility Law 'the insured' shall reimburse the company.' The law suit in that case was actually against a named insured under the policy for reimbursement for sums paid out by the company as the result of an accident caused by an additional insured. While such is not the case here, that court stated that the reimbursement provisions '. . . were 'only meant to apply, in fact, they only have sensible meaning, when the assured is a defendant and when the insurer has assumed the defense.'' 99 N.H. at 457, 114 A.2d at 890. They concluded that '. . . the parties intended that only the insured who invokes the protection of the policy should have the obligation to reimburse the company under the clause in question.' 99 N.H. at 457, 114 A.2d at 890.

In this case, a sensible reading of the reimbursement provision leads to the conclusion that the defendant was the 'insured' referred to in the policy. He was in fact the one being afforded protection thereunder. See generally 5 Federation of Insurance Counsel Quarterly 52 (1954). However, for the plaintiff to be able to invoke the reimbursement provision against this defendant, it would be necessary that the defendant actively and positively seek protection under the policy. If in fact the defendant did seek such protection, it would be our opinion that he could not take the benefits afforded him by the policy...