Protective Fire & Cas. Co. v. Cornelius

• Decision Date: 13 December 1963
• Docket Number: No. 35486,35486
• Citation: 125 N.W.2d 179,176 Neb. 75
• Parties: PROTECTIVE FIRE AND CASUALTY COMPANY, a Corporation, Appellant, v. Glenda CORNELIUS, Jerry Dee Van Hoozer, Martin Schwartzman doing business as Marty's Auto Parts, Empire Fire and Marine Insurance Company, a Corporation, Irvin M. Trenary, Hannah M. Abbott, Dora Price, and State Farm Insurance Company, a Corporation, Appellees.
• Court: Nebraska Supreme Court

Page 179

125 N.W.2d 179

176 Neb. 75

PROTECTIVE FIRE AND CASUALTY COMPANY, a Corporation, Appellant, v. Glenda CORNELIUS, Jerry Dee Van Hoozer, Martin Schwartzman doing business as Marty's Auto Parts, Empire Fire and Marine Insurance Company, a Corporation, Irvin M. Trenary, Hannah M. Abbott, Dora Price, and State Farm Insurance Company, a Corporation, Appellees.

No. 35486.

Supreme Court of Nebraska.

Dec. 13, 1963.

Syllabus by the Court

1. Where a statutory omnibus provision requires coverage of additional insureds in automobile liability insurance policies, it will be treated as if expressly referred to and incorporated in the provisions of the policy.

2. Where such a statutory provision is in conflict with the provisions of the insurance policy, the statute and not the policy provision is controlling.

3. Section 60-534, R.R.S.1943, is an omnibus provision providing that a person using an automobile with the express or implied permission of the owner is an added insured.

4. The omnibus statute making a person using an automobile covered by insurance with the express or implied consent of the owner an added insured excludes from the protection of the policy any person who takes the automobile and uses it without permission in the first instance.

5. Where the automobile covered by the policy is used by a person other than the owner with the permission of such owner, his subsequent use of it is with the permission of the owner within the meaning of the omnibus statute, regardless of whether the automobile is driven to a place or for a purpose not within the contemplation of the owner when the permission was granted.

6. Where a person uses an automobile of another with the permission of its owner, such person's use of the automobile makes the owner's insurer primarily liable for the negligence of the user under the omnibus provisions of section 60-534, R.R.S.1943, and excludes application of the operator's automobile policy except for coverage in accordance with the terms of such policy.

Ivan A. Blevens, Seward, for appellant.

Perry & Perry, Wagener & Marx, Healey & Healey, John McArthur, Lincoln, for appellees.

Wright, Simmons & Hancock, Scottsbluff, for amicus curiae.

Heard before WHITE, C. J., and CARTER, MESSMORE, YEAGER, SPENCER, BOSLAUGH and BROWER, JJ.

CARTER, Justice.

This is an action under theDeclaratory Judgments Act to determine the extent of liability on two automobile insurance policies alleged to cover the same automobile accident. The trial court found for the defendants and the plaintiff has appealed.

The evidence shows that on August 12, 1961, one Van Hoozer was an employee of Martin Swartzman, who was operating an establishment for the sale of used automobiles and automotive parts under the name of Marty's Auto Parts. At the close of business on the day in question, a Saturday, Van Hoozer indicated a desire to purchase a 1941 Chevrolet automobile from Martin Swartzman for the sum of $25. The terms of sale were agreeable with Swartzman. Because of the lateness of the hour no sale was completed. Van Hoozer requested permission, as he said, to try the car out over the weekend. Swartzman testified that permission was granted to Van Hoozer to take the automobile over the weekend for the purpose of working on it. A dealer's license plate was placed on the car so that Van Hoozer could take the car that evening.

Van Hoozer drove the automobile to the home of Glenda Cornelius, where he left it overnight. He returned the following morning, a Sunday, and tinkered with the car until about 11 a. m. At that time Van Hoozer and Glenda Cornelius went to the home of Van Hoozer's mother for the purpose of showing her the car, Van Hoozer doing the driving. When they left the mother's home Van Hoozer asked Glenda Cornelius if she would like to drive the car. She indicated a desire to do so and she proceeded to drive it back to her home. Van Hoozer occupied the front seat during the trip and gave directions as to the route to be taken, which directions Glenda followed. On the way she had an intersection accident with an automobile owned and operated by one Trenary, which gave rise to the present litigation.

The evidence showed that Van Hoozer and Glenda were engaged to be married. Glenda had become acquainted with Swartzman at his place of business and she was known to Swartzman as Van Hoozer's girl friend. In the transaction leading up to the permission granted to Van Hoozer to take the car, the name of Glenda Cornelius was not mentioned and consequently no express permission was given by Swartzman for Glenda to drive the car.

The plaintiff, Protective Fire and Casualty Company, was the insurance carrier for Glenda Cornelius covering an automobile owned by her. The Empire Fire and Marine Insurance Company was the insurance carrier for Martin Swartzman, doing business as Marty's Auto Parts. The first question to be determined is whether or not liability exists on the part of Empire Fire and Marine Insurance Company under its contract of insurance with Swartzman.

The policy of Empire Fire and Marine Insurance Company defines the insured as follows: 'With respect to the insurance under coverages A, B and D the unqualified word 'insured' includes the named insured and also includes (1) any partner, employee, director or stockholder thereof while acting within the scope of his duties as such, and any person or organization having a financial interest in the business of the named insured covered by this policy, and (2) any person while using an automobile covered by this policy, and any person or organization legally responsible for the use thereof, provided the actual use of the automobile is by the named insured or with his permission'.

It is provided by section 60-534, R.R.S.1943, which we shall hereafter designate as the omnibus statute, in part as follows: 'Such owner's policy of liability insurance: (1) Shall designate by explicit description or by appropriate reference all motor vehicles with respect to which coverage is thereby to be granted; and (2) shall insure the person named therein and any other person, as insured, using any such motor vehicle or motor vehicles with the express or implied permission of such named insured, against loss from the liability imposed by law for damages arising out of the ownership, maintenance or use of such motor vehicle or motor vehicles * * *.'

It is the law of this state that applicable statutes which exist at the time of making a contract of insurance enter into and form a part of it as if they were expressly referred to and incorporated therein. This principle embraces alike those laws which affect its validity, construction, discharge, and enforcement. Reinsch v. Pacific Mutual Life Ins. Co., 140 Neb. 225, 299 N.W. 632. See, also, Moore v. Washington Nat. Ins. Co., 135 Neb. 29, 280 N.W. 221; Wildman v. Government Employees' Ins. Co., 48 Cal.2d 31, 307 P.2d 359.

The omnibus statute provides a broader coverage than is contained in the Empire Fire and Marine Insurance Company policy. This is demonstrated in that the statutory provision fixes liability on one 'using' the automobile with the express or implied consent of the named insured while the insurance policy provides liability by one using the automobile of the named insured provided the 'actual use' of the automobile is by the named insured or with his permission.

The evidence shows that Van Hoozer testified that the permission granted by Swartzman was to try out the car, while Swartzman said that the permission was to work on it. In either event, the permission was to use the car, which is all that is required by the omnibus statute.

The statute is remedial in nature and has for its purpose the protection of the public against damages resulting from accidents arising because of the negligent use of automobiles by irresponsible and noninsured permittees. The statute should be construed to accomplish the purpose and policy of the legislation. We must therefore reject the contention that the language of the omnibus statute means that the permission to use the car in a specified manner or for a specified purpose only bears upon the liability where permission to use the car is in fact given. Under this rule as stated in 5A Am.Jur., Automobile Insurance, s. 99, p. 99, a deviation from the permitted use is immaterial, the only essential being that permission be given for use in the first instance.

In Dickinson v. Maryland Casualty Co., 101 Conn. 369, 125 A. 866, 41 A.L.R. 500, the court, in construing an omnibus clause in an insurance policy extending coverage to any person while riding in or legally operating the automobile described in the policy, and to any person legally responsible for the operation thereof, provided such use or operation is with the permission of the named insured, said: 'The insurer desired to obtain insurance, for this object, it extended in its policy the benefits of the policy to the guest riding in the insured's automobile, provided the guest was riding with the permission of the insured. If the insurer had intended by this proviso to restrict the permission to its specifically named objects, it would, in each case, be necessary to make inquiry into the purpose and extent of the permission, while by specific provision the insurer could readily have done this and avoided the inquiry. The result would have been a policy less acceptable to prospective insured. It would have invited in most cases an investigation as to whether the permission granted had been violated in a particular case or...