Schneberger v. U.S. Fidelity & Guaranty Co.

• Decision Date: 19 December 1973
• Docket Number: No. 55900,55900
• Citation: 213 N.W.2d 913
• Parties: Alphonse T. SCHNEBERGER and Leona (Mrs. Alphonse T.) Schneberger, Appellants, v. UNITED STATES FIDELITY AND GUARANTY COMPANY and Horace Mann Mutual Insurance Company, Individually and Jointly, Appellees.
• Court: Iowa Supreme Court

Page 913

213 N.W.2d 913

Alphonse T. SCHNEBERGER and Leona (Mrs. Alphonse T.) Schneberger, Appellants, v. UNITED STATES FIDELITY AND GUARANTY COMPANY and Horace Mann Mutual Insurance Company, Individually and Jointly, Appellees.

No. 55900.

Supreme Court of Iowa.

Dec. 19, 1973.

Strand & Anderson, Decorah, for appellants.

Swisher & Cohrt, Waterloo, for Horace Mann Mut. Ins. Co.

Newman, Redfern, McKinley & Olsen, and David R. Mason, Cedar Falls, for United States Fidelity and Guaranty Co.

Heard by MOORE, C.J., and MASON, RAWLINGS, REES and McCORMICK, JJ.

REES, Justice.

This appeal results from rulings of the trial court sustaining defendants' motions for summary judgment and judgment on the pleadings following separate adjudications of law points.

In December, 1968 plaintiffs recovered judgments against one James Glenn in the amount of $4000 and $42,000 resulting from personal injuries plaintiffs sustained in an automobile accident. During the course of trial, plaintiffs' claim against one Esther Stegeman, the owner of the automobile Glenn was operating at the time of the accident, was dismissed. An appeal was taken by plaintiffs (Schneberger v. Glenn, filed May 5, 1970, and appearing in 176 N.W.2d 782), and this court affirmed the action of the trial court in dismissing the petition of the plaintiffs as against Stegeman. The factual background of the case is set out in detail in the above cited case, and we will not repeat it here except when necessary to achieve clarity and understanding of the facts.

Esther Stegeman was the owner of the automobile which James Glenn was driving at the time of the happening of the accident in which plaintiffs were injured. He had obtained the automobile from one Larry Livingston, to whom Miss Stegeman had directly loaned the car restricting its use to none other than Livingston by a note which was the fighting issue in the prior case.

Following our affirmance of the trial court in the above cited case, executions were issued on the two judgments against Glenn and were returned unsatisfied. Plaintiffs then instituted the instant action in accordance with the provisions of chapter 516, The Code, to recover from the insurance companies--defendants in the instant action.

Defendant United States Fidelity and Guaranty Company (hereinafter 'USF & G') had in force at the time of the accident a contract of insurance which had been issued to Howard J. Glenn, the father of the judgment debtor. At the same time defendant Horace Mann Mutual Insurance Company (hereinafter 'Horace Mann') had in force a contract of automobile insurance which it had issued to Larry Livingston.

The opinion in the first case was filed by this court on May 5, 1970, and the writs of general execution above referred to were issued by the clerk of the Winneshiek county court on May 14, 1970. They were returned unsatisfied on May 22, 1970 and the instant action was instituted by the plaintiffs against the defendant insurance companies on July 7, 1970.

In ruling on defendants' motions for separate adjudication of law points, for judgment on the pleadings, and for summary judgment the trial court found:

(a) Plaintiffs are not 'judgment creditors' under the provisions and within the contemplation of section 516.1, 1, The Code, 1966.

(b) If plaintiffs were such 'judgment creditors', they then failed to comply with the statute of limitations, section 516.3, The Code, 1966, for they failed to institute their action against the defendants within 180 days from the entry of judgment.

(c) That both policies of insurance require an element of consent from the owner of the automobile involved, and

(d) The issue of owner consent was fully litigated in the prior case of Schneberger v. Glenn, and is Res judicata as to the instant matter.

Based on such findings, trial court dismissed plaintiffs' petition. From such rulings and dismissal, plaintiffs have appealed, and rely for reversal upon the following assignments of error:

(1) Trial court erred in finding plaintiffs were not judgment creditors in accordance with the provisions of § 516.1, The Code, 1966.

(2) Trial court erred in finding the 180-day statute of limitations had expired under the provisions of § 516.3, The Code, 1966.

(3) Trial court erred in holding the doctrine of issue preclusion was applicable to this case, and

(4) Trial court erred in finding that both policies of insurance required an element of consent from the owner, Esther Stegeman.

I. We consider first plaintiffs' contention that trial court erred in finding an element of owner's consent is required to permit recovery as to both policies of insurance, and that plaintiffs are precluded from relitigating the issue of consent in view of the prior determination by this court in Schneberger v. Glenn, Supra, in which case was sustained the trial court in its findings and determination that Glenn did not have the consent of the owner Stegeman as was required under the provisions of § 321.493, The Code, 1966.

We now examine the pertinent provisions of each policy. The policy of insurance issued by USF & G to Howard J. Glenn, the father of judgment debtor James Glenn, provided in part I thereof:

'PERSONS INSURED. Under the Liability and Medical Expense Coverages, the following are Insureds:

'(b) with respect to a non-owned automobile

'(2) a relative, but only with respect to a private passenger automobile or utility trailer, provided his actual operation or (if he is not operating) the other actual use thereof is with the permission, or reasonably believed to be with the permission, of the owner and is within the scope of such permission.'

The USF & G policy then goes on to define a 'non-owned automobile' as follows:

'. . . an automobile not owned by or furnished or available for the regular use of either the Named Insured or any resident of the same household . . . but 'non-owned automobile' does not include a temporary substitute automobile.'

Trial court held the owner's consent was necessary to enable plaintiffs to recover under the USF & G policy, presumably basing its conclusion on the court's interpretation of the policy that James Glenn was using a 'non-owned automobile' as defined in the above set out policy provision.

The USF & G policy is not susceptible of any other interpretation than that reached by trial court. From the facts alleged in the petition of the plaintiffs and the facts admitted in the answer of defendant USF & G, there is no controversy as to whether or not owner's consent was necessary to subject USF & G to liability. The trial court correctly found and held that the consent of the owner was a necessary element to subject USF & G to liability.

II. We are however unable to reach the same conclusion with respect to the provisions of the Horace Mann policy issued to Livingston, the first permittee to whom the Stegeman automobile had been entrusted. The record establishes that Livingston's own automobile was out of service and undergoing repair, and consequently the Stegeman car was a 'temporary substitute automobile' in his hands. It seems entirely logical under the provisions of the Horace Mann policy that the Stegeman automobile was, in the hands of Livingston--the 'named insured', an 'owned automobile'. The Horace Mann policy provides:

"Owned automobile' is defined as follows:

'(d) a temporary substitute automobile.'

This is defined by the policy as follows:

"Temporary substitute automobile' means any automobile or trailer, not owned by the named insured, while temporarily used with the permission of the owner as a substitute for the owned automobile or trailer when withdrawn from normal use because of its breakdown, repair, servicing, loss or destruction.'

If we conclude as we feel we must that under the provisions of Livingston's policy with Horace Mann, the Stegeman vehicle was an 'owned automobile' in Livingston's hands, then we must refer to the additional policy provisions of the Horace Mann policy to determine the extent of coverage:

'Persons Insured. The following are insureds under Part I:

'(a) with respect to the owned automobile,

'(2) any other person using such automobile with The permission of the named insured, provided his actual operation or (if he is not operating) his other actual use thereof is within the scope of such permission.' (Emphasis added).

The Horace Mann policy provides that it is the permission of the 'named insured' (Livingston) to which we must look to determine coverage under the policy and not the permission of the owner of the automobile as such. Clearly, the original permission given by Stegeman to Livingston might have some relevance to the authority which Livingston might have had to delegate that original permission to use, but it is not the primary consideration according to the Horace Mann policy.

III. Both parties make reference in their briefs and arguments to the doctrine or theory of issue preclusion in connection with the fourth assignment of error advanced by plaintiffs. Trial court held that plaintiffs were required to show some fact issue which would permit them to establish consent of the owner or a reasonable belief of consent and use within the scope thereof, and trial court then determined that the issue had been precluded by our opinion in the prior Schneberger case.

To bar further litigation on a specific issue four requirements must be established:

(1) The issue concluded must be identical.

(2) The issue must have been raised and litigated in the prior action.

(3) The issue must have been material and relevant to the disposition of the prior action, and

(4) The determination made of the issue in the prior action must have been necessary and essential to the resulting judgment.

See Purdes v. Carvel Hall, Inc., 301 F.Supp. 1256 at 1263 (D.C.1969).

Identity of parties is not necessary to give validity to a claim of issue preclusion. A stranger to a primary suit can assert the theory of issue preclusion as...