Snyder v. Allstate Ins. Co.

• Decision Date: 28 June 1972
• Docket Number: No. B-2980,B-2980
• Citation: 485 S.W.2d 769
• Parties: Robert SNYDER, et al., Petitioners, v. ALLSTATE INSURANCE COMPANY, Respondent.
• Court: Texas Supreme Court

Page 769

485 S.W.2d 769

Robert SNYDER, et al., Petitioners, v. ALLSTATE INSURANCE COMPANY, Respondent.

No. B-2980.

Supreme Court of Texas.

June 28, 1972.

Rehearing Denied July 26, 1972.

Sanders, Scott, Saunders, Brian & Finney, Robert H. Smith, Gibson, Ochsner, adkins, Harlan & Hankins, Wayne P. Sturdivant, Underwood, Wilson, Sutton Heare & Berry, Gerald G. Bybee, Walter P. Wolfram, Amarillo, for petitioners.

Garner, Boulter & Jesko, Beau Boulter, Lubbock, for respondent.

DANIEL, Justice.

The controversy here is between Allstate Insurance Company, which issued an automobile insurance policy to J.B. Rhodes, and Fidelity and Casualty Company, which issued a policy to John Snyder, as to which insurer was obligated to defend Robert Snyder (minor son of John Snyder) and pay damages arising out of the collision of an automobile in the possession of and used by Darla Rhodes (minor daughter of J.B. Rhodes) while being driven by Robert Snyder with Darla Rhodes as a passenger.

Allstate Insurance Company brought this declaratory judgment action seeking an affirmative determination that it has no obligation under its policy. fidelity contends that Allstate has primary coverage and that Fidelity's liability is limited to excess coverage under John Snyder's policy. The trial court withdrew the case from the jury and granted judgment against Allstate. The Court of Civil Appeals reversed and remanded. 470 S.W.2d 282. We reverse the judgment of the Court of Civil Appeals and affirm the judgment of the trial court.

On June 1, 1968, J.B. Rhodes purchased a 1962 Mercury automobile and delivered it to his daughter, Darla Rhodes, a minor, who did not live in the same household with her father. Both the legal and equitable title to the car are disputed by the parties, but is is undisputed that J.B. Rhodes purchased an automobile liability insurance policy from Allstate Insurance Company and that the 1962 Mercury was specifically described in the policy and a premium was paid for that car. On January 18, 1969, Darla Rhodes and Robert Snyder were involved in a collision while Snyder was driving the automobile at Darla's request. Both suffered personal injuries, as did the occupants of the other car, who have suits pending against Robert Snyder for damages to person and property as a result of the collision.

Robert Snyder and his father, John Snyder, and Darla Rhodes and her father, J.B. Rhodes, have requested Allstate to defend Robert Snyder up to the limits of the Allstate policy against any suits arising out of the collision.

Allstate's declaratory judgment action is against the Snyders, Rhodes, all claimants in other litigation against Robert Snyder, and Fidelity and Casualty Company of New York, automobile liability insurance carrier for Robert's father. It seeks a judgment decreeing that Allstate has no obligation to defend Robert Snyder or pay any claim against him arising out of the collision in question, or in the alternative, that both Allstate and Fidelity are obligated to Darla Rhodes and Robert Snyder "pro rata--in keeping with their policy limits." In addition to their answer, Robert Snyder and his parents filed a cross-action for medical expenses and services up to the limits of the Allstate policy incurred by them as a result of the collision.

Both policies have "other insurance" clauses which state that the policy provides only excess insurance with respect to non-owned automobiles, but provide for prorated coverage with respect to the owned automobile. If the 1962 Mercury was an "owned automobile" within the meaning of the Allstate policy, then Allstate's coverage is primary and Fidelity "non-owned" coverage is excess within the meaning of both policies. Great American Indemnity Co. v. McMenamin, 134 S.W.2d 734 (Tex.Civ.App.1940, error dism'd, judgmt. cor.); United Services Auto Assn. v. Russom, 241 F.2d 296 (5th Cir.1957); Allstate Ins. Co. v. Universal Underwriters Ins. Co., 439 S.W.2d 385 (Tex.Civ.App.1969, n. w. h.); Canal Ins. Co. v. Gensco, Inc., 404 S.W.2d 908 (Tex.Civ.App.1966, n. w. h.); 8 Appleman Insurance Law and Practice Sec. 4914.

Withdrawing the case from the jury at the close of evidence, the trial court entered judgment that Allstate has an obligation to defend Robert Snyder, J.B. Rhodes, and Darla Rhodes in all actions and to pay all claims up to its policy limits arising out of the collision, and further decreed that Robert Snyder and his parents recover medical expenses and services incurred by them as a result of the collision up to the limits of the Allstate policy, plus attorneys' fees, penalty, and interest from the date of judgment.

In reversing and remanding to the trial court, the Court of Civil Appeals interprets the Allstate policy as requiring that the legal or equitable title of the "owned automobile" described in the Allstate policy be in the named insured, J.B. Rhodes, and held that the evidence presented a disputed question of fact as to such ownership. As stated by the Court of Civil Appeals, there was a dispute as to whether the delivery of the car by J.B. Rhodes to his daughter, Darla, for her use constituted a gift and passage of legal or equitable title. This fact issue is immaterial, since we hold that the provisions of the Allstate policy do not require that the named insured (J.B. Rhodes) be the owner of the vehicle.

By its policy of liability insurance, Allstate contracted with J.B. Rhodes, the named insured, to pay all sums he should become legally obligated to pay as damages because of bodily injury or property damage "arising out of the ownership, maintenance or use of the owned automobile." The policy defines "insureds," with respect to the owned automobile, as:

"(1) the named insured and any resident of the same household

"(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, and

"(3) any other person or organization but only with respect to his or its liability because of acts or omissions of an insured under (a)(1) or (2) above."

"Owned automobile" is defined in the policy as:

"(a) a private passenger, a farm or utility automobile described in this policy for which a specific premium charge indicated that coverage is afforded, ..."

It is undisputed that a specific premium charge was paid on the specific automobile in question; therefore, the automobile was an "owned automobile." Allstate argues that in addition to the definition of "owned automobile" the policy requires that actual ownership of the automobile be in the named insured. The policy does not so provide, and we find no rule of law which would compel us to add such requirement.

Even if the automobile were not owned by J.B. Rhodes that does not necessarily mean that he would be precluded from purchasing and being covered by an automobile liability policy and being the named insured. See 1 ALR3d 1193; 7 Am.Jur.2d 307; 7 Appleman, Insurance Law and Practice 264 (1962); 7 Blashfield, Automobile Law & Practice 164 (3rd ed. 1966). It is true that several cases interpreting Texas law have recognized ownership as a requirement of coverage, but they involved policies which expressly provided that the named...