Pulley v. Allstate Insurance Company

• Citation: 242 F. Supp. 330
• Decision Date: 04 June 1965
• Docket Number: Civ. A. No. 4306.
• Parties: Fred PULLEY, Plaintiff, v. ALLSTATE INSURANCE COMPANY and the Travelers Indemnity Company, Defendants.
• Court: U.S. District Court — Eastern District of Virginia

242 F. Supp. 330

Fred PULLEY, Plaintiff, v. ALLSTATE INSURANCE COMPANY and the Travelers Indemnity Company, Defendants.

Civ. A. No. 4306.

United States District Court E. D. Virginia, Norfolk Division.

June 4, 1965.

Bangel, Bangel & Bangel, Stanley J. Bangel, Portsmouth, Va., for plaintiff.

White, Ryan & Reynolds, Allan S. Reynolds, Norfolk, Va., for Allstate Ins. Co.

Seawell, McCoy, Winston & Dalton, Harry E. McCoy, Norfolk, Va., for Travelers Indemnity Co.

WALTER E. HOFFMAN, Chief Judge.

The facts, stipulated by counsel in this case, are not in dispute.

Plaintiff, Pulley, obtained a judgment on March 4, 1963, in the Circuit Court of the City of Portsmouth, Virginia, for the sum of $22,500.00, plus interest and costs, against Samuel Edward Tillman and Stephen Thomas Reavis. Plaintiff was a passenger in an automobile operated by Reavis and was injured when the car in which he was riding collided with an automobile operated by Tillman.

The automobile operated by Reavis was owned by Empire Motors, Incorporated, an automobile dealership in Portsmouth. The vehicle was a demonstrator in the care and custody of Carlton Russell, a salesman employed by Empire Motors. Plaintiff, Pulley, was likewise employed by Empire Motors as a mechanic Plaintiff and Russell had a private agreement with Russell, the salesman, to the effect that if plaintiff referred any prospects to Russell, and a sale of an automobile resulted, then plaintiff and Russell would share the commission paid to Russell by Empire Motors. Plaintiff and Reavis, the operator of the automobile owned by Empire Motors, were friends and had married sisters.

On the night of May 10, 1962, Reavis visited Empire Motors after the salesroom had closed for the night. He talked with plaintiff who was working overtime repairing a customer's automobile. Reavis expressed interest in buying a new automobile. After plaintiff completed his work on the customer's car he took Reavis to the home of the salesman, Russell, where Reavis and Russell negotiated a sale of a new car to Reavis, based on a trade-in allowance for an old automobile and Reavis borrowing the money to complete the transaction from a credit union at the company where Reavis was employed. Reavis requested permission to drive the demonstrator owned by Empire Motors, which vehicle Russell, the salesman, had at his home. Russell had not finished his dinner and, therefore, requested the plaintiff to ride with Reavis for the purpose of explaining any details of the vehicle which was a foreign-make automobile. It was under these circumstances that Reavis was driving and plaintiff was a passenger in the foreign-make car when it collided with the automobile operated by Tillman.

Reavis carried automobile liability insurance on his personally owned vehicle with Allstate Insurance Company under Policy No. 18,676,144,2-28, which policy was in full force and effect at the time of the accident.

The Travelers Indemnity Company had issued to Empire Motors its Garage Liability Policy No. FG 5569900, together with endorsements 1721A(A164) and 4187A attached thereto, which said policy was in full force and effect at the time of the accident. The endorsements in question had been approved by the Bureau of Insurance, State Corporation Commission of Virginia. The plaintiff and Allstate Insurance Company, while admitting the foregoing facts, contend that the endorsements are irrelevant to the issues in this case and are, therefore, inadmissible. Endorsement 1721A (A164) was approved by the Commissioner of Insurance by order dated October 24, 1961 (Docket No. 2399), as an addition to Rule 52 which became a standard policy form in Virginia under the terms of the Virginia State Corporation Commission Administrative Order No. 6677, effective and applicable to all new and renewal policies written on or after November 15, 1961. Both the Allstate Insurance Company and The Travelers Indemnity Company are members of the Virginia Automobile Rate Administrative Bureau and received the bulletins and publications of that Bureau, including its Bulletin 292 of November 7, 1961, which called attention to the addition to Rule 52 as follows:

"H. Limited Coverage — Customers. The bodily injury and property damage coverage may be limited with respect to customers in accordance with the applicable endorsement. When such coverage is so limited, the policy bodily injury and property damage premium and minimum premium shall be reduced 5%. The discount shall not apply to other coverages, and those premiums which are calculated as a percentage of the bodily injury or property damage premium shall be determined prior to the application of the aforementioned discount."

As previously noted, plaintiff and Allstate Insurance Company object to any consideration of the endorsements attached to the Garage Liability Policy issued by Travelers on the ground that said endorsements, as applied to the facts of this case, are contrary to Virginia law and are, therefore, irrelevant.

The Travelers Indemnity Company likewise issued a Workmen's Compensation Policy to Empire Motors and, as of September 9, 1963, had paid benefits to and for the plaintiff herein to the extent of $4557.55. Other benefits may have been paid since that date.

Samuel Edward Tillman, the operator of the other vehicle involved in the collision, was an uninsured motorist who carried no liability insurance on his vehicle.

At the state court trial in which plaintiff obtained his judgment against both Reavis and Tillman, Reavis was represented and defended by Allstate. Tillman was defended by Travelers under Endorsement 4187A and its policy, issued to Empire Motors. The present action is to enforce the collection of the judgment and, inter alia, to determine the rights of the parties.

Plaintiff contends that he is entitled to the satisfaction of his judgment from either and/or both defendants herein. He further argues that Travelers is not entitled to reimbursement for benefits paid under the Workmen's Compensation Act but, if in error on this point, said benefits so reimbursed to Travelers should be subject to an attorney's fee in favor of plaintiff.

Allstate, with a limit of coverage in the sum of $15,000.00 (subject to further provisions with respect to interest and costs), submits that Travelers is primarily liable for the payment of any judgment against Reavis and that, even if Allstate is liable for the judgment against Tillman, it is liable for less than the total judgment.¹

Travelers, relying upon its Garage Liability Policy with endorsements attached, contends that it owed no coverage to Reavis; that the only coverage owed to anyone arose from the uninsured motorist endorsement No. 4187A attached to said policy, and that plaintiff was a beneficiary of this endorsement and, by reason of Allstate's coverage afforded, there is no liability upon Travelers because the uninsured motorist endorsement only permits a beneficiary thereunder to collect a judgment not exceeding $15,000.00 and that, in any event, Travelers (while denying any liability) would be liable only for the difference between Allstate's coverage of $15,000.00 and the total amount of the judgment; that any amount found to be due by Travelers under the uninsured endorsement must be reduced by the benefits paid under the Virginia Workmen's Compensation Act but, even if not deductible, Travelers holds a lien against plaintiff's judgment to the extent of the benefits paid.

The multiple questions presented have been fully argued and briefed. Allstate's liability, if any, is occasioned by reason of it having issued a liability policy to Reavis on his personally owned automobile (not involved in the accident), which said policy included an uninsured motorist provision as required by Virginia law. Traveler's liability, if any, is derived from two sources, namely, (1) as the insurer of the automobile operated by Reavis with the express permission of the named insured, and (2) under the uninsured motorist endorsement if the same is applicable. Allstate, to the extent and subject to the conditions of its policy issued to Reavis, is also liable with respect to the operation of the Empire Motors automobile by Reavis under the non-owned automobile clause.²

Under Allstate's policy issued to Reavis, uninsured motorist protection is afforded under "Part 4 — Uninsured Motorists — Coverage S — Uninsured Motorists (Damages for Bodily Injury)" reading as follows:

"To pay all sums which the insured or his legal representative shall be legally entitled to recover as damages from the owner or operator of an uninsured automobile because of bodily injury, sickness or disease, including death resulting therefrom, hereinafter called `bodily injury,' sustained by the insured, caused by accident arising out of the ownership, maintenance or use of such uninsured automobile. * * *"

The term "insured" as used above is defined to include the named insured, any relative of the named insured, and "any other person while occupying an insured automobile." The term "insured automobile" is defined to include "any automobile not owned by the named insured while being operated by the named insured."

As Reavis was operating an automobile owned by Empire Motors with the permission of the latter, and since the plaintiff was an "other person while...