Stovall v. New York Indem. Co.

Decision Date16 July 1928
Citation8 S.W.2d 473,157 Tenn. 301
CourtTennessee Supreme Court

Certiorari to Court of Appeals, on appeal from Chancery Court, Shelby County; D. W. De Hanen, Chancellor.

Suit by M. G. Stovall and others against the New York Indemnity Company. A decree for complainants was affirmed by the Court of Appeals, and defendant brings certiorari. Affirmed.

Winchester & Knapp, of Memphis, for appellant.

Crabtree & Crabtree, of Memphis, for appellees.


A decree was rendered by the chancellor in this cause for complainants, which was affirmed by the Court of Appeals. Petition for certiorari, filed by the defendant, New York Indemnity Company, was granted by this court, and the cause has been presented in oral argument.

The New York Indemnity Company issued a policy of automobile liability insurance to Wm. R. Moore Dry Goods Company Incorporated, covering a number of automobiles owned by that company, as well as automobiles owned by officers and salesmen of that company. The policy contains a clause providing:

"The insolvency or bankruptcy of the assured shall not relieve the company from the payment of the indemnity provided by the policy, but shall entitle the claimant to maintain an action against the company for the recovery of such indemnity." Complainants were injured in a collision with one of the automobiles of the Wm. R. Moore Dry Goods Company, covered by the policy, and secured judgments for damages in the aggregate sum of $3,000 against G. W. Thomas, a traveling salesman of the Wm. R. Moore Dry Goods Company, who was driving the latter's automobile when the injuries were inflicted upon complainants. The insolvency of Thomas having been determined by a nulla bona return of the executions issued against him, this suit was instituted against the insurer under the clause of the policy hereinabove quoted.

The policy of insurance refers to the Wm. R. Moore Dry Goods Company as the "named assured." It obligates the insurer " to extend the insurance provided by the policy so as to be available in the same manner as to the named assured and under the same conditions to additional assureds not hereinafter excepted."

The policy of insurance defined the term "additional assureds" as follows:

"B. The words additional assured(s) used in the insuring agreements shall mean (a) any person(s) while riding in or legally operating an automobile insured hereunder, or (b) any person, firm, or corporation legally responsible for the operation thereof, providing such use or operation is with the permission of the named assured, or, if the named assured is an individual, with the permission of an adult member of his family other than a chauffeur or domestic servant."

This definition is followed by certain exceptions and exclusions, which are not material to this opinion.

In the declaration of the named assured "of the use to which the automobile covered will be applied," which declaration is a part of the policy, "private use" is stipulated, as well as "business calls."

Complainants' suit is predicated upon the theory that, at the time of the accident in which complainants were injured, the driver, G. W. Thomas, operating an automobile of the named assured, which was covered by the policy, was entitled to the protection of the policy as an "additional assured," and that, the insolvency of Thomas having been ascertained, complainants were entitled to proceed against the insurer for the recovery of the indemnity to which Thomas, as an "additional assured," was entitled under the terms of the policy.

The defense interposed is that, at the time of the accident and injury, Thomas was not operating or using the automobile with the permission of the named assured; and, having taken the automobile from the owner without permission, he had committed the felony denounced by Acts 1921, c. 17, and was, therefore, operating the automobile illegally. The insurer insists, therefore, that Thomas, at the time of the accident and injury, was not an "additional assured," within the terms of the policy.

A jury was demanded by complainants, and an issue of fact was submitted to a jury, calling for a response whether the automobile, driven by Thomas, was being used or operated at the time of the accident with the permission of the Wm. R. Moore Dry Goods Company. At the conclusion of the evidence offered by complainant, consisting of the testimony of the president of the Wm. R. Moore Dry Goods Company and the deposition of G. W. Thomas, defendant moved for a directed verdict in its favor. After argument of this motion, the chancellor discharged the jury, entertaining the view that the evidence had developed no controverted question of fact, and that under the uncontroverted evidence the right of complainants to a recovery depended only upon the proper construction of the contract of insurance, which was a question of law.

The facts are that the Wm. R. Moore Dry Goods Company, operating a wholesale dry goods business in Memphis, Tenn., assigned G. W. Thomas as its traveling representative and salesman in a section of Southern Mississippi. The automobile in question was purchased by the Wm. R. Moore Dry Goods Company about three weeks before the date of the accident, and was assigned to Thomas for his use in covering his territory. He was specifically instructed that he should not use the automobile for his own pleasure or private purposes. The expense of the operation and upkeep of the automobile were paid by his employer. The accident in which complainants were injured occurred on the evening of Thursday, August 27, 1927. During that week a Merchants' Convention was held in Memphis, attended by retail merchants in the Memphis business territory, and for which all salesmen of the Wm. R. Moore Dry Goods Company were called in.

The immediate superior officer of G. W. Thomas was the sales manager. The testimony is that Thomas was the custodian of the automobile, "under the supervision of the sales manager." Thomas had not previously brought the particular automobile here involved to Memphis, but, when he had come to Memphis for week ends with automobiles previously assigned to his use, he had stored such automobiles in a public garage patronized by the Wm. R. Moore Dry Goods Company, and had delivered the claim check therefor to the sales manager.

When Thomas came to Memphis for the Merchants' Convention, he brought with him the automobile in question and stored it in the public garage above referred to, and delivered the claim check to the sales manager, He testified that this was required in order that other salesmen or employees of the company might use the car in the entertainment and accommodation of visiting customers of the company. The convention closed on Thursday, August 27th. Before 8 o'clock that morning, Thomas procured the claim check for the automobile from the sales manager, and drove to the railroad station with three of the departing customers of the company, who had been attending the Merchants' Convention. There is no evidence that Thomas stated to the sales manager that this was the purpose for which he desired the claim check and the automobile. With reference to his use of the car during the week, Thomas testified:

"I always reported to Mr. Aldridge [the sales manager] that I was taking Mr. Williams out for a drive, or whichever one it was that wanted to go."

But with reference to his action in obtaining the claim check for the automobile on Thursday morning Mr. Thomas testified as follows:

"Q. 211. How many times did you take it out of the garage that day? A. I went over that morning at 7:30, when the store opened, and got the car. I went down to the Chisca Hotel and took Mr. Brown Williams and Mr. and Mrs. K. E. Windham and carried them to the depot.

By Mr. Winchester: Q. 212. And then brought the car back? A. Yes, sir.

Q. 213. Where did you get the ticket when you got it? A. I got it from Mr. Aldridge.

Q. 214. Mr. Aldridge didn't hand you the ticket; you had a place to leave it? A. I don't know how he kept it. I just told him I wanted the ticket for the car, and he just handed it to me.

By Mr. Crabtree: Q. 215. They knew you had the car, and knew that you had the ticket, didn't they? A. They knew I could get it.

Q. 216. There was no objection made to your getting it? A. No, sir.

Q. 217. It was stored in their name, because the storage was in their account? A. When I would give him the ticket, he would put 'Geo. Thomas' on the back, so he would know whose car it was.

Q. 218. And this ticket was turned over to you without question, whenever you asked for it, wasn't it? A. Yes, sir.

Q. 219. No questions asked? They knew it was your habit to go and put it in the garage, and go and get it whenever you wanted it, didn't they? A. Yes, sir."

When Thomas had carried the three customers to the railroad station, he returned the automobile to the garage and again stored it in the name of the Wm. R. Moore Dry Goods Company but retained the claim check in his possession. At 3 o'clock in the afternoon, although his duties at the store had not been entirely completed, he left without notice to his superior and again procured the automobile from the garage, by presenting the claim check which he had failed to deliver to the sales manager. He drove the automobile out the back door of the garage, and, to use his own expression, "slipped off" for the purpose of driving to Sardis, Miss., to visit a young lady to whom he was engaged, and whom he subsequently married. ...

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