ST. PAUL MER. INS. CO. v. PENNSYLVANIA LUM. MUT. INS. CO.

• Decision Date: 31 August 1966
• Docket Number: Civ. A. No. 8609.
• Court: U.S. District Court — District of South Carolina
• Parties: ST. PAUL MERCURY INSURANCE COMPANY, a corporation, Plaintiff, v. PENNSYLVANIA LUMBERMEN'S MUTUAL INSURANCE COMPANY, a corporation, Eusebio Gallardo, Varndell Gallardo, John W. Carn, Andrew Carn, and Feliciano D. Garcia, individually and as Administrator of the Estate of John Delano Garcia, deceased, Defendants. State Farm Mutual Automobile Insurance Company, a corporation, Intervener.

257 F. Supp. 483

ST. PAUL MERCURY INSURANCE COMPANY, a corporation, Plaintiff, v. PENNSYLVANIA LUMBERMEN'S MUTUAL INSURANCE COMPANY, a corporation, Eusebio Gallardo, Varndell Gallardo, John W. Carn, Andrew Carn, and Feliciano D. Garcia, individually and as Administrator of the Estate of John Delano Garcia, deceased, Defendants.

State Farm Mutual Automobile Insurance Company, a corporation, Intervener.

Civ. A. No. 8609.

United States District Court D. South Carolina, Charleston Division.

August 31, 1966.

Edward D. Buckley, of Bailey & Buckley, Charleston, S. C., for plaintiff.

Moore, Mouzon & McGee, Charleston, S. C., for defendant, Pennsylvania Lumbermen's Mut. Ins. Co.

Donald B. Barkowitz, Charleston, S. C., for defendant, Feliciano D. Garcia individually and as Adm. of Estate of John Delano Garcia, decd.

William H. Vaughan, Jr., of Grimball & Cabaniss, Charleston, S. C., for intervener.

HEMPHILL, District Judge.

St. Paul Mercury Insurance Company, plaintiff, sues for a declaration of rights in respect of a policy of liability automobile insurance issued by defendant Pennsylvania Lumbermen's Mutual Insurance Company to defendant Eusebio Gallardo which was in force and effect on January 31, 1964 when a 1957 Chevrolet which was allegedly insured under the policy was involved in an accident while being driven by defendant Varndell Gallardo, a minor son of the named insured.

On that evening Varndell Gallardo, with Andrew Carn and John Delano Garcia and two other men as passengers in the 1957 Chevrolet ran into a tree. Carn was injured in the accident. He was insured by St. Paul Mercury with the uninsured motorist provision. He instituted actions against Varndell Gallardo in the South Carolina courts and served his insurer St. Paul Mercury¹ on the theory that the 1957 Chevrolet was an uninsured vehicle under the laws of South Carolina² and as defined by the policy. Pennsylvania Lumbermen's was notified of the accident, Carn's claim, and the suit. They denied coverage and declined to defend. St. Paul Mercury has since negotiated a settlement of Carn's claim which has been conceded by Pennsylvania Lumbermen's to be a reasonable settlement.³

Garcia did not survive the injuries he sustained in the accident. His administrator brought actions in the South Carolina courts against Varndell Gallardo serving Garcia's insurer State Farm Mutual Automobile Insurance Company on the theory that the 1957 Chevrolet was an uninsured vehicle. Pennsylvania Lumbermen's was given notice of the accident, claim, and the actions. Coverage was denied and defense was declined. The wrongful death action was tried by jury and a verdict for the plaintiff was returned: appeal is now pending.⁴

St. Paul Mercury, plaintiff, the uninsured motorist carrier for Carn, and State Farm, intervenor, the uninsured motorist carrier for Garcia, seek a declaratory judgment determining that Pennsylvania Lumbermen's policy to Eusebio Gallardo covered the 1957 Chevrolet driven by Varndell Gallardo—that the Chevrolet was not an uninsured vehicle.

It is conceded that on the night of the accident there was in full force and effect a "family combination policy" issued to Eusebio Gallardo specifically insuring a 1953 Mercury automobile. The plaintiff asserts that this policy also insured the Chevrolet under the "automatic insurance" clause. The defendant maintains that the Chevrolet was (1) not an owned automobile within the meaning of the policy, and (2) that even if it were, the defendant Eusebio Gallardo specifically rejected coverage of the Chevrolet before the accident and cannot now claim the benefit of coverage. An "owned" automobile as defined by the policy is "a private passenger, farm or utility automobile ownership of which is acquired by the name insured during the policy period."

Varndell, the son, was at the time an eighteen year old construction worker who lived with the family in his father's home. Eusebio, the father, apparently lead a relatively inactive life during these times and his wife carried quite a measure of familial responsibility. They owned the Mercury automobile named in the St. Paul Mercury policy and they operated it to a somewhat limited extent because it was in need of some repair. Vince, the older brother of Varndell, owned an older 1954 Chevrolet, which Varndell had use of. There is testimony that Varndell had the 1954 Chevrolet transferred and registered in his name with the South Carolina Highway Department but on the records of the financing company they let Vince's name remain as the owner.

In 1963 Varndell's driver's license was suspended for excessive points under the system of the State but he continued to use the 1954 Chevrolet. Because the 1954 Chevrolet did not have the quality he desired and did not have the speed capability he desired in an automobile, Varndell decided to purchase a 1957 Chevrolet that had caught his eye on the used car lot of George Wannamaker. Wannamaker testified that he told the boys Vince and Varndell that he could not sell the automobile in the name of any one under twenty-one. Perhaps confusing the two boys in some manner he wrote up a sales order, however, and Varndell signed the order as the purchaser. A day or two after the tentative arrangements had been made Eusebio went to the car lot with Varndell and agreed that the car should be purchased and put in his name. The father then signed a conditional sales contract for the financing company and signed the South Carolina Highway Department forms requesting registration. The papers were in time issued to the father.

The 1954 Chevrolet which was then registered in Varndell's name was traded in on the 1957 Chevrolet as the down payment or a portion of it. Varndell paid the highway department registration fee and a $20.00 uninsured motorists fee. After the Gallardos took possession of the automobile some of the monthly payments were paid by Varndell and some were paid for by his father. The family's testimony indicates that they regarded it as Varndell's car but his mother testified that she was the one that was the principal user of the car and that she did so without having to ask permission of her son. It is to be understood that at this time Varndell did have his driving privileges suspended and that the mother did some driving for him. She testified that the title was in the father's name not only because the son could not finance the car but because he was underage.

If the automobile was owned by the father it would be insured under the Pennsylvania Lumbermen's policy as an acquired vehicle during the terms of the policy. If the automobile was in fact owned by the son it would then be an uninsured vehicle. South Carolina provides by statute that "a certificate of title issued by the Department is prima facie evidence of the facts appearing on it."⁵ Therefore there is at least prima facie ownership of the auto in Eusebio Gallardo as record title holder. The presumption of ownership evidenced by the certificate of title may be overcome by evidence that another is the true owner. Grain Dealers Mut. Ins. Co. v. Julian, 247 S.C. 89, 145 S.E.2d 685 (1965); Bankers Ins. Co. of Pa. v. Griffin, 244 S.C. 552, 137 S.E.2d 785, 787 (1964).

In Bankers Ins. Co. of Pa. v. Griffin, supra, true ownership was found in one other than the title holder on the following facts: Merdy Griffin was unable to buy the auto he desired because his credit was unsatisfactory and he could not obtain financing. His brother Henry had satisfactory credit and it was arranged for Henry to sign the note and mortgage to accommodate his brother. During the processing of the sale, apparently, Henry's name appeared on the vehicle registration and the certificate of title. The judge found that neither Merdy nor Henry realized that the vehicle would be registered in Henry's name as they apparently were of the impression that Henry would merely act as a co-signer or endorser of the note and mortgage.

In Grain Dealers Mut. Ins. Co. v. Julian⁶ ownership was again found in one other than the title holder. Julian purchased the automobile on installment payments giving a chattel mortgage in which he named himself as sole owner. He took only an out of date registration paper and a bill of sale. All the payments were completed by him, and control of the car was maintained solely by him. He was held to be the owner of the vehicle notwithstanding he had never obtained a certificate of title.

In Booth v. American Cas. Co.⁷ the question was whether the insured under a non-owners policy "owned" the auto he was driving thus precluding coverage under the policy. The insured under a non-owners policy through the assigned risk plan had his operator's license suspended due to traffic violations. He had no right to drive an automobile or to obtain license plates. He nevertheless purchased an automobile in his sister's name and obtained license plates for it. It was held he was the actual owner.

In both Griffin and Julian no evidence was offered by the title holder to...