Ranger Insurance Company v. Culberson

Decision Date26 January 1972
Docket NumberNo. 71-1515.,71-1515.
PartiesRANGER INSURANCE COMPANY, Plaintiff-Appellant, v. Mrs. Miriam G. CULBERSON, as Executrix of the Estate of W. A. Culberson, Defendant-Appellee. Carol Brown MacLEAN, as Executrix, Plaintiff-Appellee, v. Miriam G. CULBERSON, as Administratrix, Defendant-Third Party Plaintiff-Appellee, v. RANGER INSURANCE COMPANY, Third Party Defendant-Appellant.
CourtU.S. Court of Appeals — Fifth Circuit


Lloyd Sutter, Sewell K. Loggins, E. Smythe Gambrell, Gambrell, Russell, Killorin, Wade & Forbes, Atlanta, Ga., for Ranger Ins. Co.

Gambrell & Mobley, Albert Sidney Johnson, Robert D. Feagin, III, Atlanta, Ga., for Miriam G. Culberson.

Swift, Currie, McGhee & Hiers, Glover McGhee, Atlanta, Ga., Pindar, McElroy, Connell, Foley & Geiser, Newark, N. J., Kreindler & Kreindler, Alan J. Konigsberg, New York City, for Carol Brown MacLean; Stanley J. Levy, New York City, of counsel.

Before GEWIN, GOLDBERG and DYER, Circuit Judges.

Rehearing and Rehearing En Banc Denied January 26, 1972.

GOLDBERG, Circuit Judge:

The facts of these two consolidated cases, both the tragic and the technical, are not in dispute. An airplane crash in New York claimed the lives of two men, and we are asked to construe the insurance policy that allegedly covered one of them, the pilot. The district court, on cross-motions for summary judgment, held that the policy was in effect during the accident. We affirm.

W. A. Culberson, the insured and the pilot of the private airplane, styled a Cessna 210A, purchased his airplane and an insurance policy during the same day. These transactions and the delivery of the policy took place in the State of Georgia, where Mr. Culberson resided. At that time and at the time of the crash, Mr. Culberson held a valid student pilot's license. About a month after purchasing the airplane and insurance, Mr. Culberson flew from his home in East Point, Georgia, to Morristown, New Jersey, where he picked up B. A. MacLean as a passenger. It was on the next leg of the journey that the plane crashed near Oxford, New York, in a violent thunderstorm, killing both men.

Appellant Ranger Insurance Company, the insurer, paid $10,097.12 to an aircraft lienholder under a warranty endorsement in the policy, thereby becoming the assignee of a promissory note that had been secured by Culberson's mortgage to the aircraft seller. Ranger then sued Culberson's estate on the subrogated note to recover its payment. Ranger argued that Culberson's coverage was suspended during the accident because of violations of the policy. Thereafter, the executrix of passenger MacLean sued Culberson's estate in federal court, asking $750,000 for wrongful death. Culberson's executrix filed a third-party complaint against Ranger, seeking judgment that Ranger is bound to defend or to indemnify the Culberson estate under its policy. After the actions were consolidated by the district court, both Ranger and Mrs. Culberson, executrix of Culberson's estate, moved for summary judgment in both actions. F.R.Civ.Proc. 56(b). The district court granted Culberson's motions and denied those of Ranger. Ranger was held liable under the policy to defend and to indemnify the Culberson estate, and not entitled to recover its warranty payment. Ranger appeals.

Under Georgia conflicts law, it is the place of the delivery of the insurance contract that controls in this diversity suit. Float-Away Door Co. v. Continental Casualty Co., 5 Cir. 1967, 372 F.2d 701, cert. denied, 1967, 389 U.S. 823, 88 S.Ct. 58, 19 L.Ed.2d 76; Pink v. AAA Highway Express, Inc., 1941, 191 Ga. 502, 13 S.E.2d 337, aff'd, 1941, 314 U.S. 201, 62 S.Ct. 241, 86 L.Ed. 152; Klaxon Co. v. Stentor Elec. Mfg. Co., Inc., 1941, 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477. In our case, the contract was made and delivered in Georgia to a Georgia resident, and we shall look to Georgia law. That law requires that policies be interpreted liberally and in favor of coverage. Johnson v. Mutual Life Ins. Co., 1922, 154 Ga. 653, 115 S.E. 14. In addition, any lack of clarity or any ambiguity in the policy is considered the responsibility of the insurance company, for it is the company that drafts the policies and must be required to draft clearly. Ga.Code Ann. § 20-704; Cherokee Life Ins. Co. v. Baker, 1969, 119 Ga.App. 579, 168 S. E.2d 171; Boston Ins. Co. v. Gable, 5 Cir. 1965, 352 F.2d 368; Float-Away Door v. Continental Casualty, supra. At the same time, this court has no intention of stretching for ambiguity when it is not there, and the plain meaning of the policy obviously controls. Canal Ins. Co. v. Dougherty, 5 Cir. 1957, 247 F.2d 508.

Both parties ask this court, as they asked the district court, to construe the language of an insurance policy. The policy is a standard one, mostly printed but with additional forms and riders typewritten or checked. All additional materials were prepared by Ranger on its own stationery. The policy before us is not a paradigm of clarity, and if there be ambiguities in the construction, the constructor must allow a green light to coverage in passing upon its words. If there be a red light, it, of course, will not be ignored; but even a yellow caution brings us much nearer the green one, calling for coverage. On appeal, Ranger asks us to conclude as a matter of law that the district judge was wrong in his assessment of this policy. On the contrary, we quite agree with the district judge's assessments of both policy and law.

That concluded, we pose our question for review as a matter of law: Was it the intention of the parties from the terms of the policy, as such terms would reasonably be understood by the insured, that Culberson would be covered under the circumstances that later occurred? Ga.Code Ann. § 20-702; Stevens Industries, Inc. v. Maryland Casualty Co., 5 Cir. 1968, 391 F.2d 411, cert. denied, 392 U.S. 926, 88 S.Ct. 2285, 20 L.Ed.2d 1386; Loftin v. U. S. Fire Ins. Co., 1962, 106 Ga.App. 287, 127 S.E.2d 53; Royal Indemnity v. McClatchey, 1960, 101 Ga.App. 507, 114 S.E.2d 394. We must look at the policy as a totality, using the usual rules of construction of contracts, Ga.Code Ann. § 56-2419; Float-Away Door Co. v. Continental Casualty Co., supra; Stevens Industries, Inc. v. Maryland Casualty Co., supra.

On appeal, Ranger argues that Culberson's coverage was "suspended" during the alleged transgressions of the policy. This is in accord with the accepted principle of our court that a violation of an insurance provision does not operate to cancel a policy, but only to suspend its application to any accident that occurs during the violative acts. Lineas Aereas Colombianas Expresas v. Travelers Fire Ins. Co., 5 Cir. 1958, 257 F.2d 150. Specifically, Ranger's "suspension" argument centers around the fact that Culberson carried a passenger, admittedly in violation of the FAA regulations, and contrary to a provision that was stamped on his student certificate. From that fact, Ranger contends that coverage was suspended by any one of three clauses in the policy.


One of the provisions in Culberson's policy provided:

"Only the following pilot(s) will operate the aircraft while `in flight\' and while holding proper pilot certificate(s) with appropriate ratings as required by the Federal Aviation Agency:
W. A. Culberson or any other private or commercial pilot having a minimum of 200 total logged hours including at least 25 hours in retractable gear aircraft."
The italicized portion was typewritten by Ranger; the rest was printed.

Ranger's argument goes as follows: Culberson would be covered only "while holding a proper certificate . . . with appropriate ratings"; because Culberson flew with a passenger, his certificate was "improper" and his ratings "inappropriate."

Ranger begins its first argument under the Pilot Clause by contending that Culberson's certificate was not "proper" within the sanctions of the Pilot Clause because his carrying of a passenger violated the face of his student certificate. The certificate had the notation "Passenger Carrying Prohibited" stamped in two places. We cannot agree.

We do not read the word "proper" as requiring exact compliance with the face of the certificate. It is quite proper for an insurance company to insure a pilot for any permutation of circumstances, whether or not that permutation involves conduct that violates the certificate or the FAA regulations. Fireman's Fund Ins. Co. v. McDaniel, N.D.Miss.1960, 187 F.Supp. 614, aff'd, 5 Cir. 1961, 289 F.2d 926. It is the policy, not the pilot's certificate nor the FAA regulations, that sets the perimeters of insurance coverage.

In viewing the totality of the policy, we observe that omitted form paragraphs are parts of a written document. They serve to explain the intent of the parties, just as typewritten or handwritten statements serve to clarify or to change the sense of printed paragraphs. See Royal Indemnity v. John F. Cawrse Lumber Co., D.Or., 1965, 245 F.Supp. 707; Aetna Life and Casualty Co. v. Charles S. Martin Distributing Co., 1969, 120 Ga.App. 133, 169 S.E.2d 695; Fireman's Fund v. McDaniel, supra. Ranger included an additional page of printed exclusions in Culberson's policy. The page had four exclusions, with boxes to the side that Ranger was to check if applicable to the policy. Of the four exclusions printed on the page, only two were checked by Ranger as applying to Culberson. Those two checked exclusions are not relevant here. One omitted exclusion reads:

"It is agreed that this policy does not apply and no coverage is afforded to any insured while any aircraft insured under this policy is being operated by a Student Pilot unless said Student Pilot is under the direct supervision of a properly qualified FAA Certified Flight Instructor who shall have specifically approved each flight undertaken by the student prior to takeoff. This

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