Peterson v. Sunshine Mutual Insurance Company

• Decision Date: 30 December 1959
• Docket Number: No. 16196.,16196.
• Citation: 273 F.2d 53
• Parties: Elsie PETERSON and Arthur S. Peterson, Appellants, v. SUNSHINE MUTUAL INSURANCE COMPANY, a foreign corporation, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

273 F.2d 53 (1959)

Elsie PETERSON and Arthur S. Peterson, Appellants, v. SUNSHINE MUTUAL INSURANCE COMPANY, a foreign corporation, Appellee.

No. 16196.

United States Court of Appeals Eighth Circuit.

December 30, 1959.

P. W. Lanier, Jr., Fargo, N. D., for appellants.

Clifford Jansonius, Bismarck, N. D., for appellee.

Before SANBORN, VAN OOSTERHOUT and BLACKMUN, Circuit Judges.

SANBORN, Circuit Judge.

This is an appeal from a declaratory judgment in favor of the Sunshine Mutual Insurance Company, of Sioux Falls, South Dakota, entered February 5, 1959.

The appellants, Elsie Peterson and Arthur S. Peterson, citizens of Minnesota, on August 20, 1956 sustained bodily injuries and property damage when their automobile, traveling on a North Dakota state highway near Garrison, North Dakota, collided with an automobile driven by Walter Mai. The Insurance Company, on or about April 14, 1956, had issued to Richard Mai a policy insuring him, and any person using his 1949 Oldsmobile with his permission, against liability for bodily injuries and property damage arising out of the use of his automobile.¹ This was the automobile that Walter Mai was driving when the collision occurred and the Petersons were injured. They claimed that the accident and the injuries and property damage sustained by them as a result were due to the negligence of Walter Mai and that his liability was covered by the policy issued to Richard Mai. The Company disclaimed liability, and on January 10, 1958, brought this action under the Federal Declaratory Judgment Act, 28 U.S.C. § 2201, against Walter Mai, Richard Mai, Elsie Peterson and Arthur S. Peterson, basing jurisdiction upon diversity of citizenship and amount in controversy. The Company asked in its complaint that the court determine the rights and liabilities of the parties under the provisions of the policy.

The case was tried to the court, the controlling issue being whether Walter Mai was, at the time of the accident, using the automobile referred to in the policy with the permission of Richard Mai, the named insured, within the meaning of the "omnibus clause" of the policy. The court determined that Walter Mai was using the automobile of Richard without his permission, and that the Company was not liable under the policy for the injury or damage for which Walter Mai might be held responsible. Judgment was entered accordingly, and this appeal followed.

The facts found by the court, and upon which it based its conclusion that the Company was not liable, under its policy, for injury and damage sustained by the Petersons, for the most part are not in issue. Findings which are uncontroverted are to the effect that the automobile which Walter Mai was driving belonged to his brother Richard; that within approximately one month after purchasing the automobile and procuring the automobile liability policy in suit, Richard left North Dakota; that he secured employment in Montana and became a resident of that State; that he left his automobile with his brother Theodore Mai at the latter's residence in Dunn County, North Dakota, for Theodore's unrestricted use; that within a few days after Richard had left North Dakota, Walter obtained the automobile from Theodore, with Theodore's permission, and used and continued to use and operate it as his (Walter's) own until the time of the accident; that, after having taken possession of the automobile, Walter made four monthly installment payments upon the purchase price; that at the time of the accident the use of the automobile by Walter was without express permission from Richard and was solely for Walter's own purposes; and that the possession, use, control and operation of the automobile by Walter was unknown to Richard and was without his express consent or acquiescence. The court further found that this use of the automobile by Walter was without Richard's implied consent and that Richard had not authorized or granted permission to Theodore to transfer possession of the automobile to Walter for his use.

The question, then, is whether, under applicable North Dakota law, the permission given by Theodore to Walter to possess and use Richard's automobile compelled the conclusion that Walter was an additional insured by virtue of the "omnibus clause" of the policy.

In Johnson v. State Farm Mut. Automobile Ins. Co., 8 Cir., 194 F.2d 785, which arose in Nebraska, and...