State Farm Mut. Auto. Ins. Co. v. Scheel

• Decision Date: 18 August 1998
• Docket Number: Nos. WD,s. WD
• Citation: 973 S.W.2d 560
• Parties: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Plaintiff, v. Kendall R. SCHEEL, et al., Defendants-Respondents, and American Standard Insurance Company, Third-Party Defendant-Appellant. 54581, WD 54614.
• Court: Missouri Court of Appeals

Page 560

973 S.W.2d 560

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Plaintiff, v. Kendall R. SCHEEL, et al., Defendants-Respondents, and American Standard Insurance Company, Third-Party Defendant-Appellant.

Nos. WD 54581, WD 54614.

Missouri Court of Appeals,

Western District.

Aug. 18, 1998.

Cynthia Barchet, Columbia, for Appellant.

William D. Mize, Kansas City, for Plaintiff.

Kendall R., Robert W. Scheel, Excello, Respondents acting pro se.

John David Collins, Macon, for Respondents Chew and Hendricks.

Before HANNA, P.J., and LAURA DENVIR STITH and EDWIN H. SMITH, JJ.

EDWIN H. SMITH, Judge.

American Standard Insurance Company appeals from the circuit court's judgment entered in favor of the defendants below: Kendall R. Scheel (Kendall); Robert W. Scheel (Kendall's father); and respondents, Danny R. Chew and Holly Hendricks, declaring, inter alia, that a policy of insurance, number 0338-0891-02-78-SPPA-MO, issued by it to Kendall on his 1983 Chevrolet Camaro provided non-owned vehicle coverage for an accident involving his operation of his parents' 1989 Ford Ranger.

In its sole point on appeal, the appellant claims that the trial court erred in declaring that the policy it issued to Kendall on his Camaro provided liability coverage for the accident involving his operation of his parents' Ford Ranger on August 29, 1994, because the policy specifically excluded liability coverage for operation of a "non-owned vehicle," such as his parents' Ford Ranger, without the permission of the owners in that the record did not support a finding that the exclusion violated the Motor Vehicle Financial Responsibility Law (MVFRL) §§ 303.010, ¹ et seq., or that on the day the accident occurred, Kendall had the implied permission of his parents to operate their Ford Ranger.

We reverse and remand.

Facts

On April 19, 1991, Kendall and his father purchased the Ford Ranger. On July 28, 1991, Kendall's operator's license was suspended due to an accumulation of points. It was again suspended on December 18, 1992, as a result of being cited for driving while intoxicated. Because he could not afford the loan and insurance payments, Kendall gave up physical possession of the Ford Ranger to his father and his mother (Sandra J. Scheel) in December of 1991 or January of 1992. He divested himself of legal title to the Ford Ranger on February 1, 1993, when title was transferred from him and his father to his parents. At that time, he acquired from his parents a 1986 F150 Ford truck. Having transferred the Ford Ranger to his parents, Kendall did not possess a set of keys to it; however, he did have access to a set, which hung on a key board in the kitchen of his parents' house.

A policy of liability insurance was issued by State Farm Insurance Company (State Farm) to Kendall's father on the Ford Ranger. The policy specifically excluded coverage for bodily injury, loss, or damage while the Ford Ranger was being operated by Kendall. Kendall's father admitted that he signed the exclusion, but his mother testified she did not, and, as far as she knew, it was okay for Kendall to drive the Ford Ranger whenever he wanted. In the fall of 1992, Kendall acquired the Camaro, for which the appellant issued to him a liability insurance policy, number 0338-0891-02-78-SPPA-MO (the American Standard policy), which was in full force and effect on August 29, 1994. This policy provided liability coverage for a non-owned vehicle provided it was being operated with the owner's consent or permission.

Although he was excluded from coverage under the State Farm policy, a fact which was communicated to Kendall by his father, Kendall operated the Ford Ranger on six to eight occasions, after transferring title to his parents, at the specific request of and with the express consent and permission of his father for the purpose of taking his parents' boat to and from the boat ramp. The ramp was located, at most, one mile from their house on a gravel road. Kendall testified that he may have asked his father to use the Ford Ranger on other occasions, but permission was denied.

In August of 1994, the transmission in Kendall's Camaro "went out." As a result, he struck a bargain with the Fayette Auto Salvage Yard to put in a salvaged transmission. As part of the bargain, Kendall was to deliver to the salvage yard the transmission that went out in his Camaro. Because he did not own a vehicle capable of transporting the transmission, on August 29, 1994, he took his parents' Ford Ranger and operated it for that purpose from his home in Excello to the salvage yard in Fayette. He did not obtain express permission from his parents to operate the Ford Ranger on this occasion. They were out of town at the time.

While returning from Fayette, having dropped off the transmission at the salvage yard, Kendall became involved in a motor vehicle accident. He collided with a vehicle driven by respondent Danny Chew and owned by respondent Holly Hendricks.

In December of 1994, State Farm filed a declaratory judgment action in the Circuit Court of Macon County against Kendall, his father, and the respondents, requesting a declaration that there was no coverage for the accident under the State Farm policy. The appellant was subsequently added as a third-party defendant. On May 12, 1997, the case was tried before the Honorable Ronald M. Belt. On June 13, 1997, the trial court entered its judgment declaring that both the American Standard and State Farm policies provided coverage for the accident involving Kendall's operation of his parents' Ford Ranger. As to coverage pursuant to the American Standard policy, the trial court found coverage under the policy's non-owned vehicle coverage provision, based on its finding that, at the time of the accident, Kendall had the implied permission of his parents to operate their Ford Ranger.

Both the appellant and State Farm appealed the declaratory judgment of the circuit court. However, State Farm dismissed its appeal on October 14, 1997.

Standard of Review

Under the standard of review in declaratory judgment cases, we will affirm the decision of the trial court "unless there is no substantial evidence to support it, unless it is against the weight of the evidence, unless it erroneously declares the law, or unless it erroneously applies the law."

McDermott v. Carnahan, 934 S.W.2d 285, 287 (Mo. banc 1996) (quoting Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976)). In determining the sufficiency of the evidence, this court accepts as true the evidence and inferences from it favorable to the trial court's judgment and disregards contrary evidence. Automobile Club Inter-Ins. Exch. v. Chamberlain, 839 S.W.2d 378, 381 (Mo.App.1992). "Substantial evidence is that which a reasonable mind would accept as sufficient to support a particular conclusion, granting all reasonable inferences which can be drawn from it...." Id. at 382 (quoting Farmers and Merchants Ins. Co. v. Harris, 814 S.W.2d 332, 334 (Mo.App.1991)).

I.

The appellant claims that the trial court erred in declaring that the policy it issued to Kendall on his Camaro included liability coverage for the accident involving his operation of his parents' Ford Ranger on August 29, 1994, because the policy specifically excluded liability coverage for his operation of a "non-owned vehicle," such as his parents' Ford Ranger, without the permission of the owners in that the record did not support a finding that the exclusion violated the MVFRL or, that on the day of the accident, Kendall had the implied permission of his parents to operate their Ford Ranger. The respondents contend that the trial court did not err in declaring that there was coverage because the policy language was ambiguous as to whether there was coverage under an "owner's policy" or "operator's policy," as defined in the MVFRL, and as such, it should be construed against the appellant as being an operator's policy, which would require coverage within the required MVFRL limits, regardless of whether Kendall had his parents' permission to operate the Ford Ranger. In the alternative, the respondents contend that, even if the policy did not violate the MVFRL and Kendall's parents' permission was a precursor to a declaration of coverage, the record supports such a finding by the trial court.

Given the claims and arguments of the parties, logically, we must first determine the issue of whether the appellant could, without violating Missouri public policy, as expressed in the MVFRL, contract with Kendall to exclude liability coverage for his operation of a non-owned vehicle where he lacked the owners' consent. If, in fact, we find that such an exclusion does violate the MVFRL, then we will affirm the declaratory judgment of the trial court because the appellant would not be permitted to exclude coverage of Kendall's operation of his parents' Ford Ranger based on their lack of permission to do so. However, if we find that such an exclusion is permitted under the MVFRL, we will then address the issue of whether the evidence presented, sub judice, was sufficient to support a finding by the trial court that Kendall had his parents' permission to use their Ford Ranger on the day of the accident, a prerequisite to a finding of coverage under the policy.

A. Validity of Exclusion from Coverage Under MVFRL

The MVFRL was enacted in 1986 and can be found in § 303.010, et seq. Halpin v. American Family Mut. Ins. Co., 823 S.W.2d 479, 480 (Mo. banc 1992). Section 303.025 states:

1. No owner of a motor vehicle registered in this state shall operate the vehicle ... unless the owner maintains the financial responsibility as required in this section. Furthermore, no person shall operate a motor vehicle owned by another with the knowledge that the owner has not maintained financial responsibility unless such person has financial responsibility which covers his operation of the other's vehicle.

2. A motor vehicle owner shall maintain his...