Travelers Indemnity Co. v. Pray

• Decision Date: 10 June 1953
• Docket Number: No. 11735.,11735.
• Citation: 204 F.2d 821
• Parties: TRAVELERS INDEMNITY CO. v. PRAY.
• Court: U.S. Court of Appeals — Sixth Circuit

204 F.2d 821 (1953)

TRAVELERS INDEMNITY CO. v. PRAY.

No. 11735.

United States Court of Appeals Sixth Circuit.

June 10, 1953.

Leroy G. Vandeveer, Detroit, Mich. (Clark & Henry, Bay City, Mich., Vandeveer, Haggerty, Garzia & Haggerty, Detroit, Mich., on the brief), for appellant.

John M. Patterson, Bay City, Mich. (Patterson & Patterson, Bay City, Mich., on the brief), for appellee.

Before MARTIN, McALLISTER and MILLER, Circuit Judges.

MARTIN, Circuit Judge.

This appeal by the Travelers Indemnity Company requires interpretation of an exception clause in an automobile liability insurance policy issued by it to Hubert T. Leibfarth, Jr., who owned a Pontiac automobile. Young Leibfarth's father, for whom he was named, owned a Cadillac automobile which was insured in another company. While the son, accompanied by his father, was driving the latter's Cadillac, they met with an accident in consequence of which both died and the appellee herein, Floyd J. Pray, was seriously injured.

Pray recovered judgment in the amount of $27,000 against the estates of the Leibfarths, father and son. Ohio Casualty Company, the insurer which issued the liability policy on the Cadillac owned by Leibfarth, Sr., paid on the above-mentioned judgment its policy limit of $10,000 for injury to one person in one accident; and Pray filed a writ of garnishment in the United States District Court against the appellant Travelers Indemnity Company to collect on the policy issued by it to Leibfarth, Jr. After a trial without the intervention of a jury, the District Judge, on the basis of his findings of fact which are supported by substantial evidence and are not clearly erroneous and for the reasons stated in his opinion, entered judgment for $10,000 against the appellant insurer in favor of Pray.

The policy issued by appellant, upon which this judgment was rendered, insured Hubert T. Leibfarth, Jr., against public liability while driving the Pontiac automobile owned by him and also while he was driving "any other automobile," subject to specified exceptions embraced in Article V (b) (1) in the following language: "* * (b) This insuring agreement does not apply: (1) to any automobile owned by, hired as part of a frequent use of hired automobiles by, or furnished for regular use to the named insured or a member of his household other than a private chauffeur or domestic servant of the named insured or spouse; * * *."

Considerable controversy developed as to whether, as a matter of fact, Hubert T. Leibfarth, Jr., was a member of the household of his father. We think that the record shows that he was. Cf. Ocean Accident & Guaranty Co. v. Schmidt, 6 Cir., 46 F.2d 269. After being discharged from military service in 1946, the young man lived for a time in his father's home. He attended college for three years, and then returned home and worked in his father's jewelry store. He was rooming at his father's home in October, 1950, at the time of the accident, and was not paying for his room and board, though this was given consideration in fixing his pay for personal services performed in the father's jewelry store. Sometimes the son purchased groceries for the family. All the furniture, except a Victrola, in the room which he occupied was owned by the father. The other member of the household was young Leibfarth's mother, Mrs. Leibfarth, Sr. The mother, the father and the son each owned an automobile; but there was no understanding among them by which each could drive the automobile of the other, although they did so occasionally by permission of the owner. However, we do not consider the fact that young Leibfarth was a member of his father's household as determinative of the issue presented.

In our judgment, the exception clause in the policy in question is undoubtedly ambiguous. It is established law that exceptions from liability in an insurance policy, unless expressed plainly and without ambiguity, will be construed strictly against the insurer and liberally in favor of the insured. This flows from the principle particularly applicable to insurers that, in the interpretation of contracts generally, where there is ambiguity in the language used, an agreement in writing should be interpreted strictly against the draftsman.

The Supreme Court has said: "The rule is settled that in case of ambiguity that construction of the policy will be adopted which is most favorable to the insured. The language employed is that of the company and it is consistent with both reason and justice that any fair doubt as to the meaning of its own words should be resolved against it." Mutual Life Insurance Co. v. Hurni Packing Co., 263 U.S. 167, 174, 44 S.Ct. 90, 91, 68 L.Ed. 235. In Stroehmann v. Mutual Life Insurance Company of New York, 300 U.S. 435, 439, 440, 57 S.Ct. 607, 81 L.Ed. 732, it was held that, where it was doubtful from the language of a policy of life insurance whether provisions for disability benefits were excepted from the incontestible clause, the doubt would be resolved in favor of the insured.

In reversing a judgment in favor of an insurance company in an action brought on a life insurance policy, we said: "It is settled law that if an insurance contract is so drawn as to be ambiguous, or to require interpretation or to be fairly susceptible of two different constructions, so that reasonably intelligent men would honestly differ as to the meaning of the contract, the construction most favorable to the insured should be adopted." Marshall v. Equitable Life Assur. Soc., 6 Cir., 116 F.2d 901, 902, 903, 135 A.L.R. 1225, certiorari denied 313 U.S. 575, 61 S.Ct. 1088, 85 L.Ed. 1533.

Appellant concedes in its brief that, if the policy provision in question is ambiguous, it must be construed most favorably to the insured, but denies that the controversial clause is in actuality ambiguous. The opinion of District Judge Chesnut in Aler v. Travelers Indemnity Co., D.C.Md., 92 F.Supp. 620 which construed the identical clause, is urged by appellant as direct authority. In that case, Aler sued the Travelers Indemnity Company for a declaratory judgment that the insurance company was liable to him, on an automobile liability policy which it had issued covering a Mercury Sedan which he owned, for damages awarded against him in favor of a person injured by being struck by another automobile, a Plymouth, owned by his mother-in-law, which, with her permission, was being driven by Aler at the time of the accident. The mother-in-law of the insured lived with him and her daughter and, at the time of the accident, was undoubtedly a member of his household. The insured, his wife, and his son had been accustomed to use the mother-in-law's car, as well as his own, when desired. The cars were usually parked, one behind the other, on the driveway alongside Aler's home. On the day of the accident, he had used his mother-in-law's Plymouth because it was nearer the street. The crucial fact in the Aler case was that the insured,...