Truck Ins. Exchange v. Hunt

Decision Date21 November 1979
Docket NumberNo. 10566,10566
Citation590 S.W.2d 425
PartiesTRUCK INSURANCE EXCHANGE, Plaintiff-Appellant, v. Ralph L. HUNT and Sharon Sue Anderson, Defendants-Respondents.
CourtMissouri Court of Appeals

Bob J. Keeter, Schroff, Keeter, Glass & Newberry, P.C., Springfield, for plaintiff-appellant.

Donale E. Bonacker, Bonacker & Reynolds, Springfield, David W. Ansley, Woolsey, Fisher, Whiteaker & Stenger, Springfield, for defendants-respondents.

MAUS, Judge.

In this declaratory judgment action the plaintiff seeks to establish that Barry F. Hubbard was not on July 5, 1974, an insured under the "omnibus clause" 1 of the liability coverage of a policy issued to T.A.G. Enterprises, Inc. The defendants are Hubbard (who defaulted), Ralph L. Hunt, Sharon Sue Anderson and James Edward Barke (who defaulted). The latter three defendants were allegedly injured in an automobile accident on July 5, 1974, involving the insured automobile while driven by Hubbard. The case was tried to a jury who found the issue submitted in favor of the defendants. Plaintiff's first point on appeal is that the trial court erred in not directing a verdict for the plaintiff at the close of all the evidence. This is premised upon its proposition the defendants had the burden of proof to establish coverage and the evidence was not sufficient to support the verdict and judgment. By their brief the defendants agree that the burden of proof to establish coverage was upon them. 2 However, as will be developed later, that agreement did not extend to all aspects of the case and certainly was not binding on the trial court. It is not always the burden of one claiming under a liability insurance policy to prove all issues upon which coverage is dependent. For example, if the insurer seeks to avoid coverage because of an exclusion or breach of condition subsequent, the burden of proof on such issues is upon the insurer. Mission Insurance Company v. Ward, 487 S.W.2d 449 (Mo. banc 1972); McNeal v. Manchester Ins. & Indem. Co., 540 S.W.2d 113 (Mo.App.1976); Michigan Mutual Liability Co. v. Stallings, 523 S.W.2d 539 (Mo.App.1975). In this case, as delineated by the evidence as distinguished from the pleadings, the sole issue was whether or not express permission to use the insured automobile had been terminated. 3 Intriguing as that question in the abstract may be, in the circumstances of this case this court is not called upon to do so and does not decide which party generally bears the burden of proof on such issue. 4

The plaintiff's first point requires a summary of the evidence. T.A.G. was the named insured in the automobile insurance policy in question in which a 1972 Ford was one of the described vehicles. T.A.G. was an investment company and had commercial property and real estate and a used car dealership. Its office was in Columbia. Carson Teel was President of T.A.G. Teel and a business associate decided to attempt to organize a mobile home manufacturing business. The associate introduced Hubbard to Teel. Hubbard had experience in the mobile home manufacturing business. Arrangements were made for Hubbard to help in organizing the business, primarily selling shares in a new company. Hubbard was to provide his own automobile and pay his own expenses. He had no instructions on where to go or whom to contact. His compensation was to be a job and a stock option. He started work in late April or early May. Early in May Hubbard's automobile broke down. On or about May 10 Teel loaned the insured Ford, which carried a dealer's tag, to Hubbard. Teel knew that Hubbard had no other automobile for his personal use and granted Hubbard unrestricted use of the automobile. No time limit was placed upon this use.

Approximately the first part of June, because of an adverse development concerning the proposed mobile home plant, Teel realized that the business would not be organized. Teel decided to sell the car. Teel tried to locate Hubbard, apparently by phone calls. A week or two after June 4 an employee of Teel saw the automobile at a bar in Columbia. He reported to Teel who went to the bar.

At this meeting Teel and Hubbard agreed upon a price for the automobile. At that price T.A.G., would make a profit, although Teel couldn't say how much. Teel related what was said at that meeting in a variety of ways. Teel, on October 9, 1974, gave a statement to a representative of the plaintiff. On October 22, 1974, a second statement was given. These statements, by agreement, were admitted as substantive evidence. Concerning the meeting in the statement of October 9th, Teel said: "(H)e came back to Columbia approximately June the 10th or 11th and I was to pick up the car; . . . and he says I'll be back in three days and pay you for it and then we started looking for him right after that . . . ." The next question and answer were: "Q: In other words you discussed settlement, not settlement but sale of the vehicle to him at that time, is that right?" A: "That's right." Teel later agreed with the representative's statement that as far as Teel was concerned after June 10th, Hubbard was using the car without permission.

In the statement of October 22nd the following references were made: "(H)e just happened to be here and I found him. . . . I was looking for the car prior to that without any results and I happened to be going by the Columbia Inn and I saw this car so I walked in on him." The following questions and answers were:

"Q: Ok. Now what was the extent of the discussion at this time? A: He said I'm going to buy your car and I'm going to go get the money and I'll be back in about three days. Q: Did he say where he was going to go? A: No he didn't. He said he had a job down south and he never did say where. . . . Q: Ok and then after June the 10th then you had an understanding that he was to pay bring the car back or come back in three days then? A: That's right. Q: And pay you the money for the car. And after that period of time he would have no reason to believe that he had implied permission to use the car. A: That's exactly right."

At the trial, when first asked what transpired concerning the car his answer was: "He told me that he would buy the car." After questions relating to a time limit he said, "Mr. Hubbard said he would buy the car and he had to go down south and get the money and I told him that I wanted either the money or the car in three days." Teel subsequently stated several times that he gave Hubbard three days. Later, "I told him to have the money or the car back here in three or four days . . . three days."

When he had not heard from Hubbard by about June 25, Teel, although he did not believe the automobile to be in Boone County, contacted a deputy sheriff of that county. This visit was to no avail as he told the deputy he didn't want a warrant but just wanted his car picked up. Later, Teel called a friend in Rockport who was a highway patrolman. He asked the friend to see if the automobile was at Hubbard's mother's as she lived in that area. This call was of a personal rather than an official nature. The accident in question occurred on July 5 in Springfield.

Teel had engaged in the liability insurance business for twenty-three years. He was familiar with the permissive user omnibus clause. About July 14th defendant Hunt called Teel and they discussed insurance coverage on the automobile Hubbard was driving. Teel said nothing concerning the dealings he had with Hubbard in reference to that automobile.

Concerning plaintiff's point of the insufficiency of the evidence, there is no question but what Hubbard was granted indefinite permission to make unrestricted use of the automobile. The decisive question is whether or not the evidence is conclusive that such permission was terminated. The answer hinges upon a determination of what is necessary to effectively terminate such permission. The court has been cited to no Missouri case expressly dealing with the subject. Independent research has developed but little authority.

In determining the question of permissive use relative to an omnibus clause, the courts to one degree or another follow one of three rules. They are the initial permission rule, the conversion rule, and the minor deviation rule. McKee v. Travelers Insurance Company, 315 S.W.2d 852 (Mo.App.1958); Annot. 5 A.L.R.2d 600. In those cases which have expressly considered the choice, the courts of Missouri have followed the minor deviation rule. Speidel v. Kellum, 340 S.W.2d 200 (Mo.App.1960); Farmers Mutual Automobile Insurance Co. v. Noel, 211 F.Supp. 216 (W.D.Mo.1962).

Under the minor deviation rule it is said "if the use made by the bailee is not a gross violation of the terms of the bailment, even though it may have amounted to a deviation, protection is still afforded such additional insured." 6C Appleman, Insurance Law and Practice (Buckley ed.), § 4368, p. 216. Or, stated another way, a material deviation from the scope of permission constitutes a use without permission. McKee v. Travelers Insurance Company, supra. Under this rule coverage has been denied where an employee contrary to instructions was using a vehicle for personal purposes, McKee v. Travelers, supra; where an employee was returning his employer's automobile and for personal reasons was two and one half miles off the route, Speidel v. Kellum, supra; where at 9:30 a. m. initial permission was granted to use an automobile in town for one and a half hours and the accident occurred at 7:00 p. m. out of town, Savage v. American Mutual Liability Ins. Co., 158 Me. 259, 182 A.2d 669 (1962); and where permission was granted to use an automobile for 15 or 20 minutes during the noon hour and an accident occurred ten hours later, Wilson v. Hartford Accident and Indemnity Co., 272 N.C. 183, 158 S.E.2d 1 (1967).

But, such cases dealing with a deviation from a limited scope of permission are not decisive here. This case does not involve a deviation...

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