U.S. Fidelity & Guaranty Co. v. Brann, Etc.

• Decision Date: 25 February 1944
• Parties: United States Fidelity & Guaranty Co. v. Brann (two cases). Same v. Johnson (two cases).
• Court: United States State Supreme Court — District of Kentucky

297 Ky. 381

United States Fidelity & Guaranty Co. v. Brann (two cases).

Same v. Johnson (two cases).

Court of Appeals of Kentucky.

February 25, 1944.

1. Insurance. — Permission to drive motor vehicle within meaning of

omnibus clause of automobile liability policy is not limited to that expressly granted by named insured but may arise and be implied from circumstances.

2. Insurance — Where there is no express consent for an employee to use his employer's motor vehicle, an implied permission, within omnibus clause of liability policy, extends only to its use in scope of employment, and its use outside of employment cannot be implied unless there has been permission to use vehicle generally or in course of conduct or practice with knowledge and acquiescence of employer, such as would indicate to reasonable mind that employee had right to assume permission under particular circumstances.

3. Automobiles. — The "family purpose doctrine" imputes relationship of principal and agent where one maintains an automobile for pleasure or other use of members of his family.

4. Insurance. — The purpose of an omnibus clause in automobile liability policy is to extend coverage beyond limitations of the family purpose doctrine.

5. Insurance. — Substantially the same conditions must exist with respect to a boarder or guest in a household as must exist in relation of employer and employee to bring operation of motor vehicle by boarder or guest within omnibus clause of automobile liability policy.

6. Insurance. — Where an employee, or guest, or other person occupying a similar association takes insured's automobile and uses it for the first time, there can be no implied permission, within omnibus clause of automobile liability policy, by reason of the relationship.

7. Insurance. — Where evidence is all one way without susceptibility of a different inference or deduction and there is no evidence bringing case within rules regarding implied permission for use of automobile, whether automobile was being used with insured's permission within omnibus clause of liability policy becomes a matter of law for the court.

8. Witnesses. — Where judgments recovered against truck driver were unsatisfied and judgment creditors brought action against insurer relying on omnibus clause in liability policy, statements made by insured indicating that driver had permission to use truck could not bind the insurer or modify policy, and competency and effect of evidence regarding the statements were only as an impeachment.

9. Insurance. — Where delivery boy occasionally slept and took meals in employer's home and on Sunday morning used delivery truck at employer's request to take some young men to Sunday school, but, without employer's knowledge, used automobile Sunday afternoon for joy ride during which accident occurred, in action against insurer by holders of unsatisfied judgments against delivery boy, evidence was insufficient for

jury on question whether truck was being driven with implied permission of employer within omnibus clause of liability policy.

10. Insurance. — Where personal injury actions were brought against truck driver and insured owner, and insurer's attorneys did not continue in case after dismissal against insured, the insurer had not waived defense, and was not estopped from denying coverage, under omnibus clause of policy.

Appeal from Whitley Circuit Court.

Stephens & Steely for appellant.

J. Marshall McCann and H.C. Gillis for appellees.

Before Flem D. Sampson, Judge.

OPINION OF THE COURT BY STANLEY, COMMISSIONER.

Reversing.

A small truck owned by H.C. Hopper and driven by Orland Gaylor collided with an automobile in which Dr. Albert Brann, his wife, T.P. Johnson and his wife, citizens of Texas, were riding and injured them in various degrees. Suits for damages were brought against Hopper and Gaylor, but were dismissed as to Hopper. Judgments for different amounts were recovered of Gaylor, but they could not be collected as he is insolvent. These suits were then brought on the judgments against United States Fidelity & Guaranty Company, which carried indemnity insurance on the truck. Verdicts were recovered upon the issue of whether Gaylor had permission to use the machine. The Company brings appeals from the several judgments rendered thereon.

The policy of indemnity stipulates, with certain inapplicable exceptions, that the word insured "includes not only the Named Insured but also any person while using the automobile * * * provided the declared and actual use of the automobile is `pleasure and business,' each as defined herein, and provided further the actual use is with the permission of the named insured." Such a provision is generally called an omnibus clause. In some states it is written into policies of this kind by virtue of a statute. It is conceded that the injured plaintiffs would be entitled to the benefits of the insurance indemnity if the evidence had established that the use of the truck by Gaylor was with Hopper's implied or inferred permission under a proper construction of the policy.

Permission within the meaning of the provision is not limited to that expressly granted but may arise and be implied from circumstances. It seems to us that where there is no express consent for an employee to use his employer's car, an implied permission extends only to its use in the scope of the employment (slight deviations making no difference) and that its use outside that employment cannot be implied unless there had been permission to use the car generally or a course of conduct or a practice with the knowledge and acquiescence of the owner, such as would indicate to a reasonable mind that the employee had the right to assume permission under the particular circumstances. United States Fidelity & Guaranty Co. v. Hall, 237 Ky. 393, 35 S.W. (2d) 550; Western Casualty & Surety Co. v. Strozier, 67 Ga. App. 41, 19 S.E. (2d) 433; Annotations, 41 A.L. R. 495; 72 A.L.R. 1375; 106 A.L.R. 1254; 126 A.L.R. 548. Included in this would be knowledge of the employee using the car for his own purpose or private affairs on different or similar occasions by acquiescence or lack of objection or of reprimand by the employer or owner. Maryland Casualty Company v. Ronan, 2 Cir., 37 F. 2d 449, 72 A.L.R. 1360; Tomasetti v. Maryland Casualty Company, 117 Conn. 505, 169 A. 54.

In the case at bar it is claimed there is more than the ordinary relationship of employer and employee because the driver was a member or guest in the owner's home. It would probably not be contended that there was no liability if the driver should come within the family purpose doctrine, which goes further and imputes the relationship of principal and agent where one maintains an automobile for the pleasure or other use of members of his family. United States Fidelity & Guaranty Co. v. Hall, supra; Randig v. O'Hara, 123 Pa. Super. 251, 187 A. 83. The purpose of an "omnibus clause" is to extend the coverage beyond such limitations. Vezolles v. Home Indemnity Co., D.C. 38 F. Supp. 455, affirmed Home Indemnity Co. v. Vezolles, 6 Cir., 128 F. 2d 257. We think substantially the same conditions must exist with respect to a boarder or guest in a household, as we have suggested should exist in the relation of employer and employee. We held in the Hall case that an adult son who lived with his mother, in whose name title to the automobile had been placed by him, under the circumstances had the implied permission of the mother to use the car although not obtaining her consent to use it upon the particular trip during which the accident occurred, especially since the policy provided that any adult member of the insured's family might grant such permission to another. But there can be no implied permission by reason of the relationship where an employee or guest or other person occupying a similar association takes the car and uses it for the first time. Stovall v. New York Indemnity Co., 157 Tenn. 301, 8 S.W. (2d) 473, 72 A.L.R. 1368; Brochu v. Taylor, 223 Wis. 90, 269 N.W. 711. Of course, there may be an implied consent in the first instance if the peculiar circumstances justify the inference.

Whether there was a permission within any of the foregoing interpretative applications at the time...