Standard Accident Insurance Company v. Wilmans

• Decision Date: 04 February 1963
• Docket Number: No. LR-62-C-58.,LR-62-C-58.
• Citation: 214 F. Supp. 53
• Parties: STANDARD ACCIDENT INSURANCE COMPANY, Plaintiff, v. R. D. WILMANS, Jr., et al., Defendants.
• Court: U.S. District Court — Eastern District of Arkansas

214 F. Supp. 53

STANDARD ACCIDENT INSURANCE COMPANY, Plaintiff, v. R. D. WILMANS, Jr., et al., Defendants.

No. LR-62-C-58.

United States District Court E. D. Arkansas, W. D.

February 4, 1963.

J. W. Barron, Little Rock, Ark., for plaintiff.

Charles J. Lincoln, Little Rock, Ark., Kaneaster Hodges, Newport, Ark., Robert S. Lindsey, Little Rock, Ark., for defendants.

HENLEY, Chief Judge.

This diversity case is an action for a declaratory judgment of non-liability on an automobile insurance policy issued by plaintiff, Standard Accident Insurance Company, to the defendant R. D. Wilmans, Jr., and covering a 1959 model Chevrolet truck. The policy period was from November 19, 1960, to November 19, 1961, and the policy was issued in renewal of the policy which Wilmans procured when he purchased the truck initially.

On October 26, 1961, during the policy period, the truck while being driven by one Victor Ramirez came into collision with a tractor-trailer being operated by one Richard Lee Dennis. Both drivers were killed as a result of the accident and both vehicles were damaged. The tractor portion of the vehicle being operated by Dennis belonged to him, and the trailer belonged to defendant Southwest Motor Freight Lines.

Following the happening of the accident just described, the defendant Mrs. Marcella Ramirez, widow of Victor Ramirez and administratrix of his estate, filed suit against a special administrator of the estate of Richard Lee Dennis and against Southwest Freight Lines. It is alleged in the complaint in that case that the accident and the consequent death of Ramirez were due to the alleged negligence of Dennis in the operation of his vehicle, and that both the estate of Dennis and Southwest Freight Lines, his alleged employer, are liable for the damages claimed to have been sustained on account of the death of Ramirez. The case was removed by the defendants to the United States District Court for the Northern Division of the Eastern District of Arkansas.

The defendants, Mrs. Louise M. Dennis, ancillary administratrix of the estate of Richard Eugene Dennis, and Southwest Freight Lines, answered the complaint of Mrs. Ramirez denying liability on account of the death of Mr. Ramirez. In addition, Mrs. Dennis and Southwest Freight Lines filed counterclaims against the Ramirez estate, and against R. D. Wilmans & Sons, Inc., R. D. Wilmans, Jr., and Hildegarde Wilmans, his wife, the latter two individuals being described as partners doing business as McQuistion Farms. It is the theory of the counterclaimants that the Ramirez-Dennis accident was proximately caused by the alleged negligence of Ramirez, that at the time of the accident Ramirez was an employee of R. D. Wilmans & Sons, Inc., and of R. D. Wilmans, Jr., and Hildegarde Wilmans, and was acting in the scope of his employment, and that all of the counter-defendants are liable to the counterclaimants for the death of Dennis, the damages to his tractor, and the damages to the trailer belonging to Southwest Freight Lines. The counter-defendants have denied any liability to the counterclaimants.

The litigation just described is pending, and that case should not be tried until the instant case is disposed of.

The instant controversy involves a dispute between plaintiff insurance company, on the one hand, and the Ramirez estate, Mr. and Mrs. R. D. Wilmans, Jr., Mrs. Dennis, and Southwest Freight Lines, on the other hand, as to whether the insurance policy issued to Mr. Wilmans in 1960 and which was purportedly in force when the accident occurred affords coverage with respect to that accident to either the Ramirez estate or to Mr. Wilmans.¹ It is the position of plaintiff that by reason of a September 1960 transaction between Wilmans and Ramirez relative to the truck, and by reason of certain uses to which Ramirez put the truck, the renewal policy in suit did not provide coverage for either Ramirez or for Mr. Wilmans. The defendants here deny the validity of plaintiff's contentions.

The case has been tried to the Court and to a jury and was submitted to the jury on special interrogatories and instructions in connection therewith, with all remaining issues of law and of fact, if any, being reserved for determination by the Court. Rule 49, Federal Rules of Civil Procedure, 28 U.S.C.A. As will be seen, the jury returned answers to the interrogatories which were favorable to plaintiff, and plaintiff has moved for judgment in accordance with the jury's answers. The defendants resist this motion and contend that notwithstanding the jury's answers to the interrogatories, the policy, as a matter of law, was in force at the time of the accident, and that plaintiff is liable thereunder.²

The defendant, R. D. Wilmans, Jr., is a substantial farmer residing in Jackson County, Arkansas. One of his operations, known as McQuistion Farms, is conducted as a partnership made up of Mr. and Mrs. Wilmans. Mr. Wilmans also has an interest in R. D. Wilmans & Sons, Inc.³ Victor Ramirez, who was killed in the accident, was employed for many years by R. D. Wilmans, Jr., as an agricultural laborer and truck driver, and Mr. Ramirez and his family resided on McQuistion Farms. In addition to driving a truck for Mr. Wilmans, Ramirez did certain agricultural hauling on his own account, transporting agricultural laborers and commodities. When Ramirez was hauling either for Mr. Wilmans or for others, he was compensated on the basis of the number of laborers or the quantities of agricultural products hauled by him. His employment was seasonal, and his income varied accordingly.

The evidence indicates that the relationship between Ramirez and the Wilmans family was to some extent a paternal one. Ramirez, a Mexican by birth, maintained no bank account of his own and deposited all of his earnings with R. D. Wilmans & Sons, Inc., being credited with the amounts of his deposits. He drew funds from the corporation as needed, and his account was charged with his withdrawals and with advances made to him by the company.

For many years the insurance business of Mr. Wilmans has been handled by the McDonald-Hinkle Insurance Agency in Newport, Arkansas, in which agency Mr. Paul McDonald is a partner. By custom the agency maintains insurance on the various vehicles owned by Mr. Wilmans and bills Mr. Wilmans periodically for premiums. The Wilmans policies are kept in the physical possession of the agency in a separate file and are not mailed to Wilmans or, as a general rule, examined by him. When Wilmans acquires a new vehicle, he notifies the agency which, in turn, effects insurance thereon and sees that the policies are renewed as they expire.

When Wilmans bought the truck involved in this case, he notified Mr. McDonald of that fact, and McDonald, as local agent for plaintiff, issued a policy which provided indemnity against liability for personal injuries, including death, and property damage. The policy also provided $50 deductible collision insurance. The anniversary date of the policy was November 19, and when the policy which expired on November 19, 1960, was nearing its anniversary date, a renewal policy was issued for the period from November 19, 1960, to November 19, 1961. As stated, that policy is the one in suit.

In September 1960, prior to the issuance of the policy in suit, Wilmans and Ramirez entered into an oral contract under the terms of which Ramirez was to obtain title to the truck upon the payment to Wilmans of $2,500. Ramirez was not able to make this payment at the time of the contract, and since his employment was seasonal the parties made no effort to set up any schedule of weekly or monthly payments. It was agreed that Ramirez would make payments when and as he was financially able to do so, and it was contemplated that the $2,500 would be paid out over a period of approximately 30 months. At the time of his death Ramirez had in fact paid about $700 on the truck.

When Mr. McDonald issued the original policy on the truck at the time when it was first acquired by Mr. Wilmans, the declarations appearing on the face of the policy were correctly filled out so as to show that Mr. Wilmans, the named insured, was the sole owner of the truck, that his business was that of a farmer, and that the vehicle would be used for business and pleasure.

When Mr. Wilmans entered into his 1960 contract with Ramirez, he did not advise Mr. McDonald of that transaction, and when McDonald issued the renewal policy for 1960-61, he simply repeated the declarations of the original policy which, insofar as he knew, were true and correct. It was not until after the accident that McDonald discovered the 1960 Wilmans-Ramirez transaction, nor did he learn until that time that Ramirez was hauling farm laborers and commodities for compensation, his services being extended not only to Mr. Wilmans but also to others.

It should be said that the use to which Ramirez put the truck after the 1960 transaction with Wilmans did not differ substantially from the use which had been made of it by Ramirez prior to the contract. However, before the contract Ramirez was not free to use the truck except with the permission or at the direction of Mr. Wilmans, whereas after the contract Ramirez was free to use the truck as he chose.

It is the theory of the plaintiff that the 1960 contract between Wilmans and Ramirez relating to the truck was a "sale" of the vehicle by Wilmans to Ramirez; that Ramirez, whose interest in the truck was not disclosed by the policy in suit, was driving the truck at the time of the accident as "owner" thereof and not "with the permission" of Wilmans, the named insured, as provided in the insuring agreements and in the policy definition of the term "insured," and that plaintiff owes the Ramirez estate no obligation under the policy. As to Wilmans, plaintiff contends that when Wilmans sold the truck to Ramirez, the policy then in force ceased to provide coverage to anyone, and that the...