Navajo Freight Lines, Inc. v. Liberty Mut. Ins. Co.

• Decision Date: 22 June 1970
• Docket Number: No. 1,CA-CIV,1
• Citation: 471 P.2d 309,12 Ariz.App. 424
• Parties: NAVAJO FREIGHT LINES, INC., a corporation, and James R. Masters and Lola K. Masters, his wife, et al., Appellants, v. LIBERTY MUTUAL INSURANCE CO., a corporation, Appellee. 1038.
• Court: Arizona Court of Appeals

Page 309

471 P.2d 309

12 Ariz.App. 424

NAVAJO FREIGHT LINES, INC., a corporation, and James R. Masters and Lola K. Masters, his wife, et al., Appellants, v. LIBERTY MUTUAL INSURANCE CO., a corporation, Appellee.

No. 1 CA-CIV 1038.

Court of Appeals of Arizona, Division 1, Department B.

June 22, 1970.

Rehearing Denied July 30, 1970.

Dushoff, Sacks & Corcoran, by Seymour Sacks, and Stephen L. Weiss, Phoenix, for appellants.

Gust, Rosenfeld & Divelbess, by Richard A. Segal, Phoenix, for appellee.

HAIRE, Judge.

On this appeal the appellants seek to impose liability upon the appellee insurer for damages caused by a negligent driver alleged to be an omnibus insured under a policy issued by the appellee. The trial court found that the negligent driver, LeRoy Vann, was not at the time of the accident driving the vehicle with the named insured's permission, and therefore was not an omnibus insured.

In the trial court appellee sought a declaratory judgment to the effect that Vann was not an omnibus insured and that therefore appellee was neither obliged to defend Vann nor to pay any judgments rendered against him arising out of the accident. Appellants counterclaimed, seeking judgment against the insurer for their claimed damages as established by judgments obtained in other actions against Vann. One of the appellants had also filed a separate action against appellee seeking to recover the amount of its judgment against Vann. This latter action was consolidated with the declaratory judgment action for trial.

The court, after finding that Vann was driving the vehicle without the named insured's permission at the time of the accident and was therefore not insured by appellee, entered judgment in favor of the appellee holding that it was not obligated to defend Vann nor to pay any judgments against him arising out of the accident.

Appellants have appealed from the final judgment, from the trial court's denial of their motion to amend its findings of fact, and from the trial court's denial of their motion for summary judgment on their counterclaims.

Appellants' first contention is that the trial court erred in its factual findings that the named insured, Cline '* * * directed a New Mexico police officer to impound the car and to keep Vann from driving it * * *', that '(i)t was Cline's intention to deny Vann the use of the car * * *', and that '(a)t the time of the accident Vann was operating the car without the permission of Cline.' The foregoing factual findings were made by the trial court pursuant to a request therefor under Rule 52(a), Rules of Civil Procedure, 16 A.R.S.

It is clearly the law of this state that findings of fact made pursuant to Rule 52(a), Supra, which are supported by substantial evidence will not be upset, altered or reversed on appeal. Hunsaker v. Smith, 1 Ariz.App. 51, 399 P.2d 185 (1965); City of Phoenix v. Burke, 9 Ariz.App. 395, 452 P.2d 722 (1969); Ashton Co. v. State, 9 Ariz.App. 564, 454 P.2d 1004 (1969).

The foregoing general rule notwithstanding, appellants argue that the findings of fact made by the trial court are entitled to less weight on this appeal than they are usually accorded since, as shown in its memorandum opinion, the trial court based those findings of fact and its final judgment solely upon written depositions and a copy of the insurance policy involved.

Appellants assert that where there is no oral testimony before the trial court, it has no opportunity to judge the credibility of the witnesses insofar as that credibility is based upon the witnesses' demeanor. Thus, appellants reason, the appellate court has as good an opportunity to judge the credibility of the witnesses as had the trial court where depositions constitute the only 'testimony', and where that is the case, this Court may disregard the mandate of Rule 52(a) that '* * * due regard shall be given to the opportunity of the trial court to judge the credibility of witnesses.' The logic of this argument cannot be denied, but we are unable to take the additional step necessary to reach appellants' ultimate argument that we can, because of the foregoing, make our own De novo findings of fact and disregard the traditional function of the trial court as the fact-finding forum. We do not believe that the provision requiring the appellate court to give due regard to the opportunity of the trial court to judge the credibility of witnesses was intended as a limitation on the principal mandate of Rule 52(a) that '(f)indings of fact shall not be set aside unless clearly erroneous'. Rather, we believe that this provision was intended to emphasize that where oral testimony is involved, the appellate court should be Especially reluctant in arriving at a 'clearly erroneous' reversal of the trial court's findings of fact. In our opinion the correct rule is that, irrespective of the nature of the evidence or the basis of the factual finding, an appellate court may set aside a Rule 50(a) finding of fact only if it is convinced that the finding is clearly erroneous. However, if as is usually the case the trial of the action involves live oral testimony and the trial court has an opportunity to consider the demeanor of the witnesses in determining their credibility, an appellate court should be Even more reluctant to set aside the trial court's factual findings. The foregoing rules are required

'* * * by the essential nature of trial courts as distinguished from appellate courts. Even in instances where an appellate court is in as good a position to decide as the trial court, it should not disregard the trial court's finding, for to do so impairs confidence in the trial courts and multiplies appeals with attendant expense and delay.' 2B Barron & Holtzoff, Federal Practice and Procedure § 1132 at 523--24 (Rules ed., Wright rev. 1961).

And, as said in Lundgren v. Freeman, 307 F.2d 104, 114 (9th Cir. 1962):

'Rule 52(a) * * * should not be construed to encourage appeals that are based on the hope that the appellate court will second-guess the trial court. * * * Rule 52(a) explicitly clearly applies where the trial court has not had an opportunity to judge of the credibility of witnesses.' (Emphasis added).

Giving full weight to the trial court's Rule 52(a) factual findings, we find them supported by substantial evidence and do not consider them clearly erroneous.

In addition to attacking the sufficiency of the evidence to support the findings made by the trial court, the appellants urge that even if Vann was not driving the vehicle with the consent of the named insured, appellee still had a duty to defend him, and because of its failure to do so appellee is now estopped to assert non-liability for the resulting judgments against Vann. As to this latter contention, it is appellants' position that the question of whether a party is or is not an insured must be determined solely from the allegations of the complaint filed in the damage action, and that if the complaint contains an allegation that the defendant was driving with permission of the named insured, the insurer owes a duty to defend that defendant, notwithstanding what the true facts might be. While the appellee insurer denies that this contention is legally correct, it urges that even if it were correct, the issue was not properly presented and preserved in the trial court, and therefore cannot now be raised on appeal. Robinson v. Lintz, 101 Ariz. 448, 420 P.2d 923 (1966); Milam v. Milam, 101 Ariz. 323, 419 P.2d 502 (1966).

The pretrial order defining the issues of fact and legal issues does not make reference to any issue resembling the above contention, and at the trial no evidence was submitted concerning any question of estoppel. Further, it is clear from the trial court's memorandum opinion and order that the trial court did not consider this issue nor was it raised in the motion filed by appellant after the trial. However, appellants point out that prior to the consolidation of these cases, the issue was raised by their motion for summary judgment which was denied. Of course, the denial of a motion for summary judgment is not an appealable order and appellants concede as much. See Fernandez v. Garza, 93 Ariz. 318, 380 P.2d 778 (1963); Renck v. Superior Court, 66 Ariz. 320, 187 P.2d 656 (1947); Burke v. Gottfried, 7 Ariz.App. 96, 436 P.2d 488 (1968). Appellants assert, however, that even though an order denying a motion for summary judgment might not be appealable, such an order may be reviewed as part of an appeal from the final judgment later entered in the matter.

There do not appear to be nay prior Arizona decisions directly considering this latter contention. The federal courts are firmly committed to the view that not only is the denial of a motion for summary judgment not appealable, Switzerland Cheese Association, Inc. v. E. Horne's Market, Inc., 385 U.S. 23, 87 S.Ct. 193, 17 L.Ed.2d 23 (1966), but, in addition, such denial is not even reviewable in connection with a proper appeal from some later appealable order or judgment. Drittel v. Friedman,154 F.2d 653 (2d Cir. 1946); Dutton v. Cities Service Defense Corp., 197 F.2d 458 (8th Cir. 1952); John Hancock Mut. Life Ins. Co. v. Kraft, 200 F.2d 952 (2d Cir. 1953); 6 Moore's Federal Practice § 56.27(1), n. 3 at 2971 (1965). Many states appear to have adopted this view. See Annot., 15 A.L.R.3d 899, 922--25 (1967).

To support their argument for a contrary rule in Arizona, appellants cite A.R.S. § 12--2102 which, in dealing with the scope of appellate review, reads in part as follows:

'A. Upon an appeal from a final judgment, the supreme court shall review Any intermediate orders involving the merits of the action and necessarily affecting the judgment, and all orders and rulings assigned as error, whether a motion for new trial was made or not.' (Emphasis added).

While an order denying a motion for summary judgment is undoubtedly an 'intermediate order', we do not believe that such order '* * *...