Pennsylvania Nat. Mut. Cas. Ins. Co. v. Parker

• Decision Date: 16 April 1984
• Docket Number: No. 0241,0241
• Citation: 282 S.C. 546,320 S.E.2d 458
• Parties: PENNSYLVANIA NATIONAL MUTUAL CASUALTY INSURANCE COMPANY, Respondent, v. George E. PARKER, Co-Administrator of the Estate of Dorothy L. Parker, Deceased; Gayle P. Scruggs, Co-Administrator of the Estate of Dorothy L. Parker, deceased; Felicia Dawn Parker, a minor under the age of 14 years, by and through her Guardian ad Litem, George E. Parker, James Edward Montgomery, Julius Montgomery, Robert D. Gantenbein, State Farm Mutual Auto Insurance Company, Firemen's Insurance Company of Newark, and South Carolina Insurance Company, Defendants, of whom James Edward Montgomery and Firemen's Insurance Company of Newark, George E. Parker, Gayle P. Scruggs and Felicia Dawn Parker, by and through her Guardian ad Litem, George E. Parker, are Appellants. Appeal of James Edward MONTGOMERY. . Heard
• Court: South Carolina Court of Appeals

Page 458

320 S.E.2d 458

282 S.C. 546

PENNSYLVANIA NATIONAL MUTUAL CASUALTY INSURANCE COMPANY, Respondent, v. George E. PARKER, Co-Administrator of the Estate of Dorothy

L. Parker, Deceased; Gayle P. Scruggs, Co-Administrator of

the Estate of Dorothy L. Parker, deceased; Felicia Dawn

Parker, a minor under the age of 14 years, by and through

her Guardian ad Litem, George E. Parker, James Edward

Montgomery, Julius Montgomery, Robert D. Gantenbein, State

Farm Mutual Auto Insurance Company, Firemen's Insurance

Company of Newark, and South Carolina Insurance Company, Defendants,

of whom James Edward Montgomery and Firemen's Insurance

Company of Newark, George E. Parker, Gayle P. Scruggs and

Felicia Dawn Parker, by and through her Guardian ad Litem,

George E. Parker, are Appellants.

Appeal of James Edward MONTGOMERY.

No. 0241.

Court of Appeals of South Carolina.

Heard April 16, 1984.

Decided Aug. 28, 1984.

Gary E. Clary, of Hall, Daniel, Winter & Clary, Gaffney, Theron G. Cochran and David L. Moore, Jr., Love, Thornton, Arnold & Thomason, Greenville, for appellants.

James W. Hudgens and Michael Wilkes, Ward, Howell, Barnes, Long, Hudgens & Adams, Spartanburg, for respondent.

CURETON, Judge.

The Respondent, Pennsylvania National Mutual Casualty Insurance Company, instituted this declaratory judgment action to determine its potential liability to the appellant, James Montgomery, on an automobile insurance policy issued to Julius Montgomery, its insured. Based on a "business use" limitation in the policy, the trial court concluded that the policy afforded no coverage and granted Penn National's motion for summary judgment. We reverse.

The facts upon which this controversy is based center upon an automobile accident which occurred in July, 1980. James Montgomery was driving a pickup truck which he had borrowed from his father, Julius Montgomery, some two to four weeks previously.

At the time of the accident, James, a self-employed roofing contractor, was using the pickup truck to haul roofing shingles to a job site. He was also towing a utility trailer borrowed from Robert Gantenbein loaded with shingles. The trailer came loose from the pickup truck and collided with a vehicle driven by Dorothy Parker in which Felicia Parker was a passenger. Mrs. Parker was killed; Felicia Parker was injured.

The following insurance policies were in effect at the time: (1) Penn National's policy to Julius Montgomery covering the pickup truck; (2) State Farm's policy to James Montgomery covering his vehicles listed on the policy; (3) Firemen's policy to Robert Gantenbein covering the utility trailer; and (4) South Carolina Insurance Company's policy to Dorothy Parker providing uninsured motorist coverage.

Appellants George Parker and Gayle P. Scruggs, administrators of Dorothy Parker's estate, and Felicia Parker, by her guardian ad litem, George Parker, initiated actions against James Montgomery. The four insurance companies were notified of the institution of the suits and each denied coverage.

In this declaratory judgment action against the Parkers, James and Julius Montgomery, and the three other insurers, Penn National contends James Montgomery's business use of the pickup truck in violation of the terms of the policy vitiated the policy. The trial court granted summary judgment in favor of Penn National and this appeal followed.

The issue before us, which we find to have been raised in appellant Firemen's Answer (Record at 15), is whether the provision of Penn National's policy limiting coverage to owned vehicles "not used for business or commercial purposes" is void because it contravenes the provisions of the Motor Vehicle Financial Responsibility Act (S.C.Code Ann. Section 56-9-820 (1976)) and the South Carolina Automobile Reparation Reform Act of 1974 (S.C.Code Ann. Section 56-11-10, et seq.) (compulsory insurance law).

The evidence reveals that Julius Montgomery purchased a "Family Combination Automobile Policy" covering two personal vehicles, including the pickup, from Penn National in compliance with South Carolina's compulsory insurance requirements. These requirements are part of the Automobile Reparation Reform Act of 1974 and provide in relevant part:

Section 56-11-190. Every owner of a motor vehicle required to be registered in this State shall maintain the security required by Section 56-11-200 with respect to each such motor vehicle owned by him ....

Section 56-11-200. The security required under this chapter shall be a policy or policies written by insurers authorized to write such policies ... providing for at least (1) the minimum coverages specified in Article 7 of Chapter 9 ....

The minimum coverage specified in Article 7, Chapter 9 is detailed in Section 56-9-820:

No policy ... of bodily injury liability insurance or of property damage liability insurance, covering liability arising from the ownership, maintenance or use of any motor vehicle, shall be issued ... upon any motor vehicle ... unless it contains a provision insuring the persons defined as insured, against loss from the liability imposed by law for damages arising out of the ownership, maintenance or use of such motor vehicles ... subject to limits .... (emphasis added).

The appellants contend the following provisions of Penn National's policy limit the coverage mandated by statute:

PART 1--LIABILITY

Coverage A--Bodily Injury Liability; Coverage B--Property Damage Liability: To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of [bodily injury or property damage] arising out of the ownership, maintenance or use of the owned automobile ... and the company shall defend any suit alleging such ... damage .... (emphasis added).

Persons Insured--The following are insureds under Part 1: (a) with respect to the owned automobile,

....

(2) any other person using such automobile with the permission of the named insured .... (emphasis added).

Definitions--Under Part 1:

"owned automobile" means

(a) a private passenger, farm or utility automobile described in this policy ....

"private passenger automobile" means a four wheel private passenger, station wagon or jeep type automobile;

"farm automobile" means an automobile of the truck type with a load capacity of fifteen hundred pounds or less not used for business or commercial purposes other than farming;

"utility automobile" means an automobile, other than a farm automobile, with a load capacity of fifteen hundred pounds or less of the pickup body, sedan delivery or panel truck type not used for business or commercial purposes. (emphasis added).

Under these provisions, although James Montgomery is defined as an "insured" since he was using the pickup with the permission of Julius Montgomery, no coverage is afforded because at the time of the accident he was using the pickup truck in his business. The appellants assert that this limitation of coverage is impermissible under Section 56-9-820. In essence, they assert that the statute requires that a policy provide coverage without restrictions of any nature for those defined as insured up to the statutory monetary limit.

It is generally conceded that insurers have the right to limit their liability and to impose whatever conditions they desire upon an insured, provided they are not in contravention of some statutory inhibition or public policy. Rhame v. National Grange Mutual Insurance Co., 238 S.C. 539, 544, 121 S.E.2d 94, 96 (1961); Jordan v. Aetna Casualty & Surety Co., 264 S.C. 294, 214 S.E.2d 818 (1975); Couch On Insurance Section 45:82 (rev. ed. 1981).

Reasonable exclusionary clauses which do not conflict with the legislative expression of the public policy of the State as revealed in the various motor vehicle insurance statutes are permitted. Pennsylvania National Mutual Casualty Insurance Co. v. Dawkins, 551 F.Supp. 971, (D.S.C.1982); Heaton v. State Farm Mutual Automobile Insurance Co., 278 F.Supp. 725 (D.S.C.1968). Where a statute requires insurance for the benefit of the public, however, the insurer is not permitted to nullify its purposes through engrafting exceptions from liability as to uses which it was the evident purpose of the statute to cover. Couch On Insurance Section 45:961 (rev. ed. 1981).

The purpose of the Motor Vehicle Financial Responsibility Act and the Automobile Reparation Reform Act of 1974 is to "afford greater protection to those injured through the negligent operation of automobiles in this State." Heaton v. State Farm Mutual Automobile Insurance Co., supra; Pennsylvania National Mutual Casualty Insurance Co. v. Dawkins, supra.

In giving effect to the purpose and policy of the statutes, our Supreme Court "has consistently struck down provisions which have the effect of limiting the coverage requirements of the statute[s]. Southern Farm Bureau Casualty Insurance Co. v. Fulton, 244 S.C. 559, 137 S.E.2d 769 (1964); Ferguson v. State Farm Mutual Automobile Insurance Co., [261 S.C. 96, 198 S.E.2d 522 (1973) ]; Hogan v. Home Insurance Co., 260 S.C. 157, 194 S.E.2d 890 (1973)." Benson v. Nationwide Mutual Insurance Co., 269 S.C. 563, 567, 238 S.E.2d 683, 684 (1977); see American Mutual Fire Insurance Co. v. Southland Motors, Inc., 279 S.C. 101, 302 S.E.2d 854 (1983); Belk v. Nationwide Mutual Insurance Co., 271 S.C. 24, 244 S.E.2d 744 (1978).

Based on (1) the Supreme Court's policy of strict construction of the motor vehicle insurance statutes, (2) the exclusions recognized in the statutes, and (3) persuasive reasoning from jurisdictions with comparable statutes, we hold that the business use limitation, as applied to the facts before us, contravenes the statutes and is void.

First, a review of the decisions of the Supreme Court construing the statutes in question reveals a policy of strictly construing the statute against the insurer in order to accomplish the purposes underlying the statutes. Jordan v. Aetna Casualty & Surety Co., supra; ...