Sanders v. Liberty Mutual Insurance Company
| Decision Date | 14 December 1965 |
| Docket Number | No. 22122.,22122. |
| Parties | W. H. SANDERS, Appellant, v. LIBERTY MUTUAL INSURANCE COMPANY, Appellee. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Frederick W. Killion, Jr., Pillans, Reams, Tappan, Wood & Roberts, Mobile, Ala., for appellant.
T. E. Twitty, Inge, Twitty, Duffy & Prince, Mobile, Ala., for appellee.
Before MARIS,* RIVES and BELL, Circuit Judges.
This appeal is from a summary judgment for the defendant, entered without opinion. Mr. R. E. Swords drove to Sanders' service station in Mobile, Alabama, and asked Sanders to ride home with him so that Swords might remain home while Sanders took Swords' automobile back to his service station to be washed. On the way back to the service station, Sanders collided with an automobile driven by a Mrs. Seiler. Mrs. Seiler received severe personal injuries, and eventually died.
Swords carried insurance against liability with the appellee, Liberty Mutual Insurance Company. Sanders was insured by Gulf American Fire & Casualty Company under a policy covering accidents "arising out of the ownership, maintenance or use of the premises for the purpose of an automobile service station * * * and all operations for or necessary or incidental thereto."
Liberty Mutual refused to defend the suits brought by the estate of Mrs. Seiler and her husband. Gulf eventually settled those suits on behalf of its insured, Sanders, for a total of $10,000 and appropriate judgments were entered. Gulf advanced the money to pay the judgments to Sanders under a "Loan Agreement." Under the terms of the agreement the money was advanced "as a loan without interest, repayable only in the event and to the extent of any net recovery the undersigned may make from Liberty Mutual Insurance Company or any other insurance carrier under its or their policy or policies of insurance * * *."
Gulf's service station policy contained the following clause: "If there is available to the insured or any other interested party any other valid and collectable insurance which would apply in the absence of this policy the insurance under this policy shall apply only as excess insurance over such other insurance." Sanders, through Gulf's attorneys, therefore brought this suit against Liberty Mutual in an attempt to recover under Liberty Mutual's policy covering Swords' automobile.
The general provisions of Liberty Mutual's policy make it applicable to the "named insured" or "any other person using such automobile, provided the actual use thereof is with permission of the named insured." However, the policy does not cover an insured automobile "while used in the automobile business," defined as follows: "`Automobile business' means the business of selling, repairing, servicing, storing or parking of automobiles."
There is some contention by Liberty Mutual that Sanders is not the proper party plaintiff, but that Gulf American Fire & Casualty Company is the real party in interest under Rule 17 (a), Fed.R.Civ.P. The Supreme Court in Luckenbach v. W. J. McCahan Sugar Refining Co., 1918, 248 U.S. 139, 148, 149, 39 S.Ct. 53, 63 L.Ed. 170, 1 A.L.R. 1522, approved the use of loan agreements and upheld the right of the insured to sue in his own name. That decision has been consistently followed.1 Sanders was the proper party plaintiff.
Sanders complains that the district court should have granted his motion under Rule 34, Fed.R.Civ.P., to require Liberty Mutual to produce its policy with Swords. Liberty contends that it did not produce the policy because it did not have it; that the policy was issued to Swords, and Liberty did not have a copy of it. However, this problem was solved by the stipulation of the parties which has attached true copies of both the Liberty Mutual policy and the Gulf American policy. The ruling on the motion, if error, was harmless error. Rule 61, Fed.R.Civ.P.
The real question to be decided is whether Sanders' car was being "used in the automobile business" within the exclusion from coverage in Liberty Mutual's policy. There have been many rulings as to a like exception from the omnibus clause.2
Sanders relies on Goforth v. Allstate Insurance Co., W.D.N.Car.1963, 220 F. Supp. 616, aff'd 4 Cir. 1964, 327 F.2d 637. The Fourth Circuit's per curiam affirmance reads as follows:
The rationale of the opinion of the district court in Goforth appears to be expressed as follows:
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