Sunshine Mutual Insurance Co. v. Mai

• Decision Date: 02 February 1959
• Docket Number: Civ. No. 48.
• Citation: 169 F. Supp. 702
• Parties: SUNSHINE MUTUAL INSURANCE CO., a foreign corporation, Plaintiff, v. Walter MAI, Richard Mai, Elsie Peterson and Arthur S. Peterson, Defendants.
• Court: U.S. District Court — District of South Dakota

169 F. Supp. 702

SUNSHINE MUTUAL INSURANCE CO., a foreign corporation, Plaintiff, v. Walter MAI, Richard Mai, Elsie Peterson and Arthur S. Peterson, Defendants.

Civ. No. 48.

United States District Court D. North Dakota, Southwestern Division.

February 2, 1959.

Alvin C. Strutz, of Strutz, Jansonius & Fleck, Bismarck, N. D., for plaintiff.

P. W. Lanier, Jr., of Lanier, Lanier & Knox, Fargo, N. D., for defendants Elsie Peterson and Arthur S. Peterson.

No appearance for either of defendants Walter Mai or Richard Mai.

REGISTER, Chief Judge.

The trial judge makes the following Findings of Fact and Conclusions of Law:

Findings of Fact

1. Plaintiff, a foreign corporation, is a citizen and resident of the State of South Dakota, with its home office and principal place of business located in the City of Sioux Falls, South Dakota. Said plaintiff is authorized to do and is doing business in the State of North Dakota.

2. Defendant Walter Mai is a resident and citizen of the State of North Dakota; defendant Richard Mai is a resident and citizen of the State of Montana; and defendants Elsie Peterson and Arthur S. Peterson are citizens and residents of the State of Minnesota.

3. The amount in controversy, exclusive of interest and costs, exceeds the sum of $3,000. (The complaint in this action was filed on January 10, 1958.)

4. An actual controversy of a justiciable nature exists as to the rights and liabilities of the respective parties under the contract of liability insurance here considered.

5. On or about April 14, 1956, plaintiff insurance company issued its policy number X-XXXXX-X insuring a certain 1949 Oldsmobile sedan, and naming as the insured defendant Richard Mai. Said policy of insurance contained provisions, among others, for indemnifying the named insured (Richard Mai) on account of bodily injury or property damage occasioned by the use or operation of said automobile. Said policy also contained the usual "omnibus clause" insuring, in addition to the named insured, "any person while using the automobile and any person or organization legally responsible for the use thereof, provided the actual use of the automobile is * * *" with the permission of the named insured.

6. Prior to the accident hereinafter described, said policy of insurance had never been cancelled, transferred or assigned.

7. On August 20, 1956, at approximately 7:30 P.M. and at a point approximately one mile east of the City of Garrison, North Dakota, on North Dakota state highway number 37, defendant Walter Mai, while driving the automobile described in the insurance policy above referred to, was involved in a collision with another automobile then owned and being driven by defendant Arthur S. Peterson and in which defendant Elsie Peterson was then riding. As a result of said accident, defendants Elsie Peterson and Arthur S. Peterson sustained personal injuries, and both automobiles involved were severely damaged.

8. On or about August 22, 1956, Walter Mai went to a Mr. Harmon (an insurance agent located in Garrison, North Dakota), who completed a formal notice of such accident, based upon the information furnished by Walter Mai, and such notice (Plaintiff's Exhibit 1) was forthwith mailed to the plaintiff, and such notice was received by plaintiff. This was the only notice of such accident received by plaintiff.

9. The accident was investigated by Mr. Walter Link, highway patrolman for the State of North Dakota.

10. Walter Mai made inconsistent statements concerning the ownership of the automobile, both before and after the accident. He informed his employer, prior to the accident, that he had bought the automobile from Richard; he made similar statements to Mr. Link and to Mr. Harmon (as appears on Exhibit 1); later he stated that he did not know who owned the automobile at the time of the accident, and in his deposition taken on October 11, 1957, he stated that Richard is the owner of the automobile involved.

11. Within a short time (approximately one month) after purchasing the automobile and after the issuance of the insurance policy, Richard left North Dakota, and secured employment and established his residence in the State of Montana; at the time of his departure from North Dakota he left said automobile with his brother, Ted, at the latter's residence.

12. The automobile was left with Ted for the latter's use, without restriction as to business or pleasure.

13. Within a few days after Richard left this state, Walter obtained the automobile from Ted, with the latter's permission, and thereafter, until the time of the accident, used and operated it as his own and for his sole purposes and objects. After obtaining possession of the automobile, and prior to the accident, Walter made four monthly installment payments on the purchase price of the automobile.

14. At the time of the accident, the named insured, Richard Mai, was the owner of the automobile involved herein.

15. At the time of the accident, the use of the automobile by Walter was not with the express permission of Richard.

16. At the time of the accident, the use of the automobile by Walter was not with the implied permission of Richard.

17. The use of the automobile by Walter was solely in his own behalf; he was using it solely for his own purpose.

18. The possession, use, control over, and operation of the automobile by Walter was without the actual or implied knowledge, consent or acquiescence of Richard.

19. Richard did not authorize or grant permission to Ted to transfer possession of said automobile from Ted's possession to Walter for the latter's use, and Ted did not have authority to grant or give permission to Walter to use said automobile.

Discussion

This action is brought by plaintiff under the provisions of Title 28, Section 2201, U.S.C.A., commonly referred to as the Federal Declaratory Judgment Act, for the purpose of construing certain provisions of the insurance policy issued by plaintiff, and of determining the rights and liabilities thereunder of the parties to this action.

Plaintiff submits four grounds as basis for its contention that there is no coverage under the policy. They are as follows:

"I. The operation of the insured automobile by the Defendant Walter Mai was not covered under the provisions of the policy.

"II. The failure of the insured to give Notice of Loss.

"III. The sale or assignment of the insured interest under the policy voids the policy.

"IV. Failure of the insured to assist and cooperate with the Plaintiff Company voids the policy."

Plaintiff's first contention is that the accident-driver, Walter Mai, was not, at the time of the accident, insured under the omnibus provisions of the policy. Defendants contend that, under the decision of the North Dakota Supreme Court in Persellin v. State Automobile Insurance Association, 75 N.D. 716, 32 N.W.2d 644, Walter Mai was, under such omnibus provision, insured. It is conceded by both parties that the Persellin case is the only pronouncement of the Supreme Court that may be helpful. Plaintiff contends that the facts are so dissimilar that the Persellin decision is not applicable; defendants contend it is controlling.

A careful reading of the "Syllabus by the Court" in the Persellin case discloses specifically and clearly the Court's decision. In the Persellin case, the insurance company contended that, as the actual operator of the motor vehicle at the time of the accident was driving without the knowledge or permission of the named insured, he was not an additional insured within the provisions of the "omnibus clause". It was the Court's view that the evidence in that case established that the use of the automobile by the accident-driver was a use permitted by the named insured. In the opinion, the Court says: "The only condition here is that the use of the car must be with the permission of the named insured. If that condition is met then the user of the car and any person legally responsible for its use are additional insured persons and entitled to the protection of the policy." Hence the test is—was the use of the automobile at the time of the accident with the permission of the named insured?

It is conceded that, in the instant case, there was no express permission by the named insured. However, it is the general rule that such permission may be express or implied (in the absence of express prohibition). American Casualty Co. of Reading, Pa. v. Windham, D.C., 26 F.Supp. 261, affirmed, 5 Cir., 107 F.2d 88; Hodges v. Ocean Accident & Guarantee Corp., 66 Ga.App. 431, 18 S.E.2d 28.

Implied permission "involves an inference arising from a course of conduct or relationship between the parties, in which there is mutual acquiescence or lack of objection under circumstances signifying assent. An implied permission is not, therefore, confined alone to affirmative action." State Farm Mutual Automobile Ins. Co. v. Cook, 186 Va. 658, 43 S.E.2d 863, 867, 5 A.L.R.2d 594.

"And it (permission) may arise from a course of conduct pursued with knowledge of the facts for such time and in such manner as to signify clearly and convincingly an understanding consent which amounts in law to a grant of the privilege involved." United Services Automobile Ass'n v. Preferred Acc. Ins. Co. of New York, 10 Cir., 190 F.2d 404, 406.

In order to support an inference that one had the implied permission to use the assured's automobile for his own pleasure and purposes, there must be evidence tending to show a course of conduct or practice known to the owner and acquiesced in by him or by someone having authority to give permission. Brochu v. Taylor, 223 Wis. 90, 269 N.W. 711. See also: Hinton v. Indemnity Ins. Co., 175 Va. 205, 8 S.E.2d 279, and Note at 5 A.L.R.2d 608, 610.

It is unfortunate that, in determining this critical issue, the Court does not have the benefit of the testimony (either in person or by deposition) of either Richard (the named insured) or Ted (the permittee)....