St. Paul Mercury Ins. Co. v. Pennsylvania Lumbermen's MIC, 11012

• Decision Date: 28 April 1967
• Docket Number: 11013.,No. 11012,11012
• Citation: St. Paul Mercury Ins. Co. v. Pennsylvania Lumbermen's MIC, 378 F.2d 312 (4th Cir. 1967)
• Parties: ST. PAUL MERCURY INSURANCE COMPANY and State Farm Mutual Automobile Insurance Company, Appellants, 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, Appellees. PENNSYLVANIA LUMBERMEN'S MUTUAL INSURANCE COMPANY, Appellant, v. ST. PAUL MERCURY INSURANCE COMPANY and State Farm Mutual Automobile Insurance Company, Appellees.
• Court: U.S. Court of Appeals — Fourth Circuit

378 F.2d 312 (1967)

ST. PAUL MERCURY INSURANCE COMPANY and State Farm Mutual Automobile Insurance Company, Appellants, 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, Appellees.

PENNSYLVANIA LUMBERMEN'S MUTUAL INSURANCE COMPANY, Appellant, v. ST. PAUL MERCURY INSURANCE COMPANY and State Farm Mutual Automobile Insurance Company, Appellees.

Nos. 11012, 11013.

United States Court of Appeals Fourth Circuit.

Argued March 7, 1967.

Decided April 28, 1967.

William H. Vaughan, Jr., Charleston, S. C., for State Farm Mut. Auto. Ins. Co.

Edward D. Buckley, Charleston, S. C., for St. Paul Mercury Ins. Co. (Bailey & Buckley and Grimball & Cabaniss, Charleston, S. C., on brief).

Joseph H. McGee, Jr., and Pledger M. Bishop, Jr., Charleston, S. C. (Moore, Mouzon & McGee, Charleston, S. C., on brief), for Pennsylvania Lumbermen's Mut. Ins. Co.

Before HAYNSWORTH, Chief Judge and BRYAN and BELL, Circuit Judges.

PER CURIAM:

A family automobile liability insurance policy written by Pennsylvania Lumbermen's Mutual Insurance Company in the name of Eusebio Gallardo, on a Mercury automobile owned by him, was held in this declaratory judgment action not to cover a second car, a 1957 Chevrolet acquired by him during the term of the policy, despite its clause describing in the following words what other cars owned by him are included in the protection:

"Definitions: Under Part I:

* * * * * *

"`owned automobile\' means

* * * * * *

"(c) a private passenger, farm or utility automobile ownership of which is acquired by the named insured during the policy period, provided

* * * * * *

(2) the company insures all private passenger, farm and utility automobiles owned by the named insured on the date of such acquisition and the named insured notifies the company during the policy period or within 30 days after the date of such acquisition of his election to make this and no other policy issued by the company applicable to such automobile * * *."

This provision is known as automatic insurance of a subsequently purchased car.

St. Paul Mercury Insurance Company, joined by intervening plaintiff State Farm Mutual Automobile Insurance Company, brought this action for a declaration of Lumbermen's primary liability under the policy. Defendants were Lumbermen's, its insured Eusebio Gallardo, and his son Varndell, plus the tort-plaintiffs in two suits against Varndell, one for death and the other for personal injury, predicated on his negligent driving of the 1957 Chevrolet upon a South Carolina highway on January 13, 1964 — a date within the policy period of one year commencing September 3, 1963. Both the deceased and the injured person, riding as Varndell's guests, were insured, respectively, by State Farm and St. Paul under policies covering other automobiles.

Were Lumbermen's, over its disclaimer, found as the insurer of the Chevrolet, of course it would be liable to tort judgment creditors. Otherwise, the latter's insurers would be answerable under the South Carolina uninsured motorists statute. St. Paul has settled the claim of its insured for an amount conceded to be reasonable by Lumbermen's. The estate of the State Farm insured has secured a judgment against Varndell which is elsewhere on appeal. St. Paul and State Farm look to Lumbermen's for indemnity.

The District Court's decision exonerating Lumbermen's was based on the finding that although the 1957 Chevrolet was owned by Eusebio, and although Lumbermen's insured the only other car owned by Eusebio — the Mercury — the Chevrolet was not embraced within the automatic insurance clause of the policy because Eusebio had declined its coverage. As the effect of the Court's decree was to remove insurance from Varndell and to render the two uninsured-driver insurers liable, they appeal. To secure its escape from responsibility for Varndell's liability to the tort-plaintiffs, Lumbermen's cross-appeals against the holding that Eusebio and not Varndell was the Chevrolet's owner.

The facts pertinent to ownership of the automobile may be briefly recited. Told he could not purchase the 1957 Chevrolet by a dealer cognizant of his minority, but having signed a tentative sales order at the dealer's direction, Varndell returned to the lot a day or two later in November 1963 with his father, Eusebio, who thereupon signed both a conditional sales contract and a State registration application. The salesman deposed...