Travelers Indem. Co. v. Hudson

• Decision Date: 20 September 1971
• Docket Number: No. 1,CA-CIV,1
• Citation: 15 Ariz.App. 371,488 P.2d 1008
• Parties: The TRAVELERS INDEMNITY COMPANY, Appellant and Cross-Appellee, v. Joe HUDSON and Edna Young, Appellees and Cross-Appellants. 1385.
• Court: Arizona Court of Appeals

Page 1008

488 P.2d 1008

15 Ariz.App. 371

The TRAVELERS INDEMNITY COMPANY, Appellant and Cross-Appellee, v. Joe HUDSON and Edna Young, Appellees and Cross-Appellants.

No. 1 CA-CIV 1385.

Court of Appeals of Arizona, Division 1, Department B.

Sept. 20, 1971.

Burch, Cracchiolo, Levie, Guyer & Weyl by Daniel Cracchiolo, Phoenix, for appellant and cross-appellee.

Richmond, Ajamie, Fay & Warner by Jack C. Warner, Phoenix, for appellees and cross-appellants.

JACOBSON, Presiding Judge.

This appeal is from an action adjudicating the rights of a judgment creditor against the motor liability insurer of a judgment debtor.

The relevant facts are as follows: Defendant-appellant. Travelers Indemnity Company had issued a family automobile policy to James L. Norman, covering a 1958 Chevrolet which he owned.

This policy contained $10,000 limits and in addition to insuring a named 1958 Chevrolet, also insured Norman while driving non-owned automobiles provided the use of such non-owned automobile was with the permission of the owner.

On the weekend of March 16, 1963, a friend of Norman's by the name of Cooper, borrowed Norman's 1958 Chevrolet automobile for 'the weekend'. At the time he borrowed this automobile Cooper owned a 1955 Chevrolet which was inoperable, the battery being dead and the engine needing timing. This inoperable automobile was pushed into Norman's yard and left there, Cooper delivering the keys to this car to Norman, and driving away in the 1958 Chevrolet. At the time of this exchange, nothing was said concerning Norman's use of Cooper's car, such use neither being expressly prohibited nor agreed to. Cooper failed to return Norman's car as agreed, and Norman, the following weekend, anxious to keep a date with his fiance put Cooper's car into running condition. Thereupon, Norman using the borrowed automobile, began a series of tavern stops that ultimately resulted in his driving the borrowed Cooper automobile into the plaintiffs' son, killing him. Within a few days after the accident, Norman was advised by Travelers that it denied coverage under Norman's policy for any claim against him arising out of this fatality. Thereafter, Joe Hudson and Edna Young, the plaintiff-appellee parents, brought suit against Norman to recover damages for the wrongful death of their son. Norman, through his personal attorney, tendered the defense of the action to Travelers, which declined to accept the defense of the suit. During the pendency of the action, plaintiffs offered to settle their claim for $10,000, that amount being the policy limits under Travelers' policy for injury to or death of any one person. This offer was conveyed to Travelers, who declined to accept the offer, contending that the claim was excluded from coverage. The case went to trial, Norman being represented by his personal attorney, which resulted in plaintiffs obtaining a $25,000 judgment against Norman.

After obtaining this judgment, plaintiffs attempted to collect the same from Travelers by a garnishment proceeding. Travelers moved to dismiss this proceeding after plaintiffs served a tender of issues on the ground that tender combined a claim in tort with a debt. The Superior Court granted this motion, dismissing the garnishment. The order of dismissal failed to contain a statement in Haec verba that the garnishment was dismissed 'without prejudice'. No appeal had been taken from the dismissal. Subsequently, plaintiffs purchased Norman's claim against Travelers under his Family Automobile Policy for $10,000.00. They instant action was commenced to enforce the rights obtained under this assignment. From a judgment in plaintiffs' favor for the sum of $15,000 plus costs and interest, Travelers has appealed. A cross appeal has also been filed by plaintiffs.

Travelers' contentions on appeal are: (1) the instant suit was barred by the dismissal of the prior garnishment proceeding plaintiffs had instituted against Travelers; (2) the evidence was insufficient to support a jury finding that Norman, the insured-assignor, was operating the automobile in question with the permission of its owner; (3) coverage was excluded under the policy because the owner of the automobile furnished the same to Norman for his 'regular use'; (4) the court erred in refusing to give Travelers' requested jury instructions and (5) the verdict improperly exceeded the policy liability limit. The plaintiffs-assignees' cross appeal contends that the court erred in awarding Travelers a $10,000 credit against the $25,000 judgment plaintiffs obtained against Norman in the wrongful death action, and that the court erred in directing a verdict in favor of Travelers on plaintiffs' theory that Travelers failed to exercise good faith toward its insured, Norman, when it refused to settle within policy limits the claim plaintiffs asserted against Norman.

Travelers initially contends that the omission in the order of dismissal of the garnishment proceeding of the recital that the same was being dismissed 'without prejudice' barred the commencement of this suit pursuant to Rule 41(b), Rules of Civil Procedure, 16 A.R.S. This rule provides, insofar as is pertinent:

'If the court renders judgment on the merits against the plaintiff, the court shall make findings as provided in Rule 52(a). Unless the court in its order for dismissal otherwise specifies, a dismissal under this subdivision and any dismissal not provided for in this rule, other than a dismissal for lack of jurisdiction, for improper venue, or for failure to join a party under Rule 19, operates as an adjudication upon the merits.' (Emphasis added.)

In this regard, Travelers relies upon Anguiano v. Transcontinental Bus System, 76 Ariz. 246, 263 P.2d 305 (1954), holding that Rule 41(b) uses 'plain, clear, simple, unequivocal language, and says an involuntary dismissal other than for lack of jurisdiction or for improper venue operates as an adjudication upon the merits Unless the court otherwise directs.' (Emphasis supplied). 76 Ariz. at 250, 263 P.2d at 308. This decision was reaffirmed in Fovargue v. Singer, 77 Ariz. 305, 270 P.2d 1090 (1954). However, in the case at bar the court's order of dismissal Did otherwise specify that the dismissal was to be other than on the merits by explicitly reciting therein as the ground for the dismissal that plaintiffs' 'Tender of Issue combined a claim in tort against the garnishee defendant.' Rule 41(b) does not require that the trial court use prescribed words, such as 'without prejudice', to denote that the order of dismissal is without prejudice, the rule merely requiring 'the court in its order for dismissal otherwise specif(y)' that the dismissal was not an adjuciation upon the merits. This the Superior Court did, by giving as the ground therefor the improper joinder of claims. This ruling is obviously not an adjudication upon the merits. We therefore hold that the dismissal of the prior garnishment suit did not operate as an adjudication on the merits, and that plaintiffs were not barred by that dismissal from bringing this action.

Travelers next contends that the jury finding that its insurer had Cooper's permission to drive the automobile was not supported by reasonable evidence. This contention arises from the non-owner provision in the Family Automobile Policy which extends coverage as follows:

'(b) With respect to a non-owned automobile,

'(1) The named insured,

'(2) any relative, but only with respect to a private passenger automobile or trailer,

Provided the actual use thereof is with the permission of the owner * * *.' (Emphasis supplied.)

In this regard, Norman testified that he had not received express permission to use Cooper's automobile in Cooper's absence. However, neither was Norman expressly prohibited the use thereof. The evidence was that Norman and Cooper were close friends. Norman on at least one other occasion had lent Cooper the use of his car. On the occasion in question, Cooper left his car in Norman's yard and gave Norman his keys thereto. The jury could have concluded that Cooper's failure to return Norman's car at the time agreed upon was based in part on leaving Norman with transportation in the form of the Cooper automobile. We agree with the plaintiffs that the relationship between the parties, together with the attendant facts concerning the mutual bailments here involved, raised a jury question of whether Norman's use of Cooper's car was with his permission. Moreover, from these facts, a jury could conclude that Cooper assented to Norman's putting his car into operable condition and by leaving the keys with him assented to his using the automobile in Cooper's absence. See, Lumbermens Mutual Casualty Co. v. Poths, 104 Ill.App.2d 80, 243 N.E.2d 40 (1968); Hinton v. Indemnity Ins. Co. of North America, 175 Va. 205, 8...