Phillips v. Government Employees Insurance Company

• Decision Date: 16 May 1968
• Docket Number: No. 17494.,17494.
• Citation: Phillips v. Government Employees Insurance Company, 395 F.2d 166 (6th Cir. 1968)
• Parties: Harry J. PHILLIPS, Jr., Plaintiff-Appellee, v. GOVERNMENT EMPLOYEES INSURANCE COMPANY, Defendant-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

395 F.2d 166 (1968)

Harry J. PHILLIPS, Jr., Plaintiff-Appellee, v. GOVERNMENT EMPLOYEES INSURANCE COMPANY, Defendant-Appellant.

No. 17494.

United States Court of Appeals Sixth Circuit.

May 16, 1968.

Ray Moseley, Chattanooga, Tenn., for appellant.

Joe Timberlake, Chattanooga, Tenn., for appellee.

Before O'SULLIVAN, PECK and McCREE, Circuit Judges.

O'SULLIVAN, Circuit Judge.

Government Employees Insurance Company appeals from a judgment of the United States District Court, Eastern District of Tennessee, Southern Division, which held that its policy of insurance, issued to one Harry J. Phillips, covered the liability of the latter's son, Harry J. Phillips, Jr., for a tort committed by the son while driving an automobile owned by one A. C. Quarles, possession of which automobile had been given to Phillips, Jr., by Gary Quarles, son of A. C. Quarles. The substantive law of Tennessee applies.

Gary Quarles had violated the command of his father not to allow any third party to drive the involved vehicle. The District Judge dismissed the present action as to the insurer of A. C. Quarles, Employers Liability Assurance Corporation, because the tortious driving of the vehicle involved was without "the permission of the named insured," i. e., A. C. Quarles, as required by the policy language. Appellant's policy, issued to Harry J. Phillips, insured a described automobile owned by him, and also covered the use of a non-owned automobile by him or,

"any relative such as his son, Harry J. Phillips, Jr, the tort feasor but only with respect to a private passenger automobile or trailer, provided the actual use thereof is with the permission of the owner."

Notwithstanding his holding that the Quarles policy was exonerated because young Phillips did not have the permission of A. C. Quarles, the named insured in the policy, the District Judge held that Gary Quarles, son of the owner of the Quarles automobile, was, for the purposes of coverage by the Phillips policy, also an "owner" of his father's automobile, and thus young Phillips was using the Quarles automobile "with the permission of the owner." We reverse.

The District Judge arrived at this ruling by first finding that the word "owner" as used in the appellant's policy issued to Phillips, Jr.'s, father was ambiguous, and then resolving this ambiguity by determining that the word "owner" included in this case the son of the owner — one having temporary possession of an automobile. The District Judge correctly recited the general rule that where an insurance policy is reasonably susceptible to two or more meanings, the ambiguity will be resolved in favor of the insured. Harkavy v. Phoenix Insur. Co., Tenn., 417 S.W.2d 542, 546 (1967); Alsup v. Travelers Ins. Co., 196 Tenn. 346, 353-354, 268 S.W.2d 90, 93 (1954); Monroe County Motor Co. v. Tennessee Odin Ins. Co., 33 Tenn.App. 223, 231 S.W.2d 386 (1950); 29 Am. Jur. Insurance § 258, at 640. This general rule, however, does not permit the creation of an ambiguity where, in the context of the use and application of a term, none exists. In re Estate of Clement, Tenn., 414 S.W.2d 644, 646 (1967); Harkavy v. Phoenix, supra, Tenn., 417 S.W.2d at 546; Standard Life Ins. Co. v. Hughes, 203 Tenn. 636, 641-642, 315 S.W.2d 239, 243 (1958); Brown v. Tenn. Auto Ins. Co., 192 Tenn. 60, 63, 237 S.W.2d 553, 555 (1951); 29 Am.Jur. Insurance § 260, at 644-645.

We are aware, too, of the rule that exceptions to and limitations upon the coverage otherwise provided by an insurance contract will be strictly construed against the insurer. 29 Am.Jur. Insurance § 264. See, e. g., Universal Life Ins. Co. v. Lillard, 190 Tenn. 111, 114, 228 S.W.2d 79, 80 (1950).

But application of such rule will not be read as overcoming plain language. Brown v. Tenn. Auto Ins. Co., supra, 192 Tenn., at 63, 237 S.W.2d at 554; Wallace v. State Farm Mut. Automobile Ins. Co., 187 Tenn. 692, 701, 216 S.W.2d 697, 700-701 (1949) (applying cancellation clause); Colley v. Pearl Assur. Co., 184 Tenn. 11, 16, 195 S.W.2d 15, 16-17 (1946); 29 Am.Jur. Insurance § 264. Cf. Gilchrist Transp. Co. v. Phenix Ins. Co., 170 F. 279, 282 (6th Cir. 1909).

We must consider then whether there may be found some fact, contract language, or other circumstance providing a context calling for construing the word "owner" to include one who was not the owner, but who was the son of the owner and had temporary possession of the involved vehicle. On the day in question, Gary Quarles was using an automobile owned by his father, A. C. Quarles. Two automobiles were titled in the name of A. C. Quarles, a station wagon and a Ford. Gary had customarily driven the Ford, but on the day of the accident it was out of commission and he had been permitted to use his father's station wagon, subject to the father's requirement that Gary not let any third person drive it, except in case of emergency. Contrary to these directions, he did allow his friend, Harry J. Phillips, Jr., to drive the automobile.

Neither the above facts nor any provision of the appellant's policy, issued to Harry J. Phillips, Sr., provide a context for infecting the word "owner" with an ambiguity permitting its expansion to include one who was not the owner, but merely the son of the owner. The District Judge and the appellee in its brief to us cite authorities wherein it is said that the word "owner" may be ambiguous in some contexts involving automobile insurance policies, so as to...