U.S. Fire Ins. Co. v. Macloskie, 2422

• Decision Date: 25 January 1996
• Docket Number: No. 2422,2422
• Citation: 465 S.E.2d 759,320 S.C. 459
• Court: South Carolina Court of Appeals
• Parties: UNITED STATES FIRE INSURANCE COMPANY, Respondent, v. Charles B. MACLOSKIE, Temporary Administrator of the Estate of Morris Middleton, Deceased; and Tamer J. Middleton, Personal Representative of the Estate of Frederick Middleton, Deceased of whom Tamer J. Middleton, Personal Representative of the Estate of Frederick Middleton, Deceased, is Appellant.

Page 759

465 S.E.2d 759

320 S.C. 459

UNITED STATES FIRE INSURANCE COMPANY, Respondent, v. Charles B. MACLOSKIE, Temporary Administrator of the Estate of Morris Middleton, Deceased; and Tamer J Middleton, Personal Representative of the Estate of Frederick Middleton, Deceased of whom Tamer J. Middleton, Personal Representative of the Estate of Frederick Middleton, Deceased, is Appellant.

No. 2422.

Court of Appeals of South Carolina.

Submitted Oct. 3, 1995.

Decided Nov. 27, 1995.

Rehearing Denied Jan. 25, 1996.

James H. Moss and H. Fred Kuhn, Jr., both of Moss & Kuhn, Beaufort, for appellant.

Charles E. Hill, of Turner, Padgett, Graham & Laney, Columbia, for respondent.

HOWELL, Chief Judge:

United States Fire Insurance Company (United) filed this declaratory judgment action, which arose out of a tragic one-car accident which killed both occupants. The passenger's estate filed a wrongful death claim against both the driver's estate and his employer. Pending that suit, the employer's liability carrier, United, brought the present action, seeking a judicial determination of: (1) whether the driver was a covered insured under the policy; and (2) whether the carrier was obligated to defend the driver's estate in the wrongful death suit. From an unfavorable judgment, passenger's estate appeals.

I. FACTS

Barry Bennett (Bennett) owns and operates Pedaling Pelican Bike Rentals, Inc., (Pelican), located on Hilton Head Island. Morris Middleton (Morris), an employee, borrowed a company truck on Friday May 29, 1992, so he would have transportation to work the following morning. Morris left work between 5:00 and 6:00 p.m., driving a 1986 Toyota pick-up truck owned by Pelican and insured by United.

Morris arrived at his aunt's (Tamer Middleton, Appellant) and uncle's home on St. Helena Island at approximately 7:00 p.m. Morris and his cousin, Frederick Middleton (hereinafter "Frederick", also the truck passenger, Appellant's son and decedent), left together sometime after 8:00 p.m. in Pelican's truck.

Morris's and Frederick's whereabouts thereafter until 10:30 p.m. are unclear. One witness, Frederick's brother Benjamin, testified he saw the Pelican truck that night parked outside a "little club" on Highway 21. At 10:30 p.m., Morris and Frederick were involved in a single car accident while heading east on U.S. Highway 21. Frederick was dead when the highway patrol arrived, and Morris was dead on arrival at the hospital. Blood alcohol analysis revealed Morris's blood alcohol level at .124%.

II. STANDARD OF REVIEW

A declaratory judgement action to determine the coverage under an insurance policy's omnibus clause is an action at law. Felts v. Richland County, 299 S.C. 214, 383 S.E.2d 261 (Ct.App.1989) (characterization of declaratory judgment suit depends on nature of underlying controversy), aff'd 303 S.C. 354, 400 S.E.2d 781 (1991); Allstate Ins. Co. v. Federated Mut. Implement & Hardware Ins. Co., 251 S.C. 203, 161 S.E.2d 240 (1968) (issue of liability under omnibus clause of an auto insurance policy is an action at law). In an action at law tried without a jury, findings of fact made by the trial court have the same force and effect as those of a jury; that is, the court's findings will not be disturbed on appeal unless without evidence which reasonably supports the judge's findings. Townes Assocs. v. City of Greenville, 266 S.C. 81, 221 S.E.2d 773 (1976).

III. DISCUSSION

Appellant has the burden to show that Morris was covered within the confines of Bennett's permission. See Liberty Mut. Ins. Co. v. Edwards, 294 S.C. 368, 364 S.E.2d 750 (1988) (the burden is on the party seeking coverage to establish that permission was given by the named insured). This analysis requires determining the scope of permission granted, and whether the scope of the permissive use was exceeded.

The trial court found that Morris's permissive use of Pelican's truck was limited to driving it directly home, parking it, and driving it back to work the next morning; he was not to use the truck for his personal use. Appellant attacks this finding on three interrelated grounds: (1) incompetency of certain United witnesses to testify under the Dead Man's Statute, S.C.Code Ann. § 19-11-20 (1985); (2) improperly admitted hearsay statements; and (3) insufficiency of the evidence.

Appellant asserts that under the Dead Man's Statute, S.C.Code Ann. § 19-11-20 (1985), Bennett and two employees, Steven Moore and Mary Steuber, were all incompetent to testify concerning conversations Morris had regarding the scope of and restrictions on Bennett's grant of permission. Because this statute is an exception to the general rule of witness competency, it requires a restrictive reading, which the party requesting its muzzling effect bears the burden on. See Havird v. Schissell, 252 S.C. 404, 166 S.E.2d 801 (1969); James F. Dreher and W.M. Von Zharen, A Guide to Evidence Law in South Carolina, 21-22 (S.C. Bar, 2nd ed. 1987). Of the four classes of witnesses disqualified, the relevant class here is "a person having an interest which may be affected by the event of the trial." Long v. Conroy, 246 S.C. 225, 232, 143 S.E.2d 459, 462 (1965). The test is whether the witness has a certain or vested legal or equitable interest, and the interest may possibly be affected by the direct, legal operation of the judgement. Id.

Appellant has failed to meet her burden. Bennett, doing business as Pelican, is the named insured under the subject insurance policy and there is no evidence United has challenged Bennett's coverage under the policy. The policy provides coverage for Bennett and any person using a covered vehicle with his permission. Whether United prevailed in its efforts to deny coverage to Morris Middleton cannot be said to affect its existing duty to perform its contractual obligations to Bennett. Thus, Bennett did not stand to gain or lose by the direct legal operation and effect of the judgment in this action. See Long, 246 S.C. at 234, 143 S.E.2d at 463 (regarding disqualification under the Dead Man's Statute, the test of the interest of a witness is whether he stands to gain or lose by the direct legal operation and effect of the judgment). Accordingly, we hold the trial court correctly concluded Bennett has no "interest" in the outcome of the instant action within the meaning of the Dead Man's Statute.

The trial judge also properly ruled that Bennett's two employees, Moore and Steuber, should not be disqualified. Appellant failed to define either their particular interests at issue, or the potential impact their testimony or the judgment may have on such interests. Standing alone, their status as Bennett's employees is insufficient to bring them within the limited orbit of the Dead Man's Statute. Kean v. Landrum, 72 S.C. 556, 52 S.E. 421 (1905) ("[A]n agent is no doubt usually partial to his principal, but he is not legally interested in the suit of his principal in the sense that his testimony as to the transactions or communications with deceased persons is rendered incompetent under [the Dead Man's Statute].").

Appellant also raises hearsay issues concerning two conversations on the limited permission granted Morris. The first conversation was between Bennett and Morris, which Steven Moore overheard. Morris's statements were not offered to prove the truth of the matter asserted, but to show Morris's state of mind or plan for using the truck by his acceptance of the instructions. See e.g. Ervin v. Myrtle Grove Plantation, 206 S.C. 41, 32 S.E.2d 877 (1945) (pre-trip assertions). Bennett's statements could properly be admitted as a state of mind exception to the hearsay rule. See Winburn v. Minnesota Mut. Life Ins., 261 S.C. 568, 201 S.E.2d 372 (1973) (the hearsay rule does not apply to an out-of-court statement offered to prove state of mind). Similarly, statements Morris made to Mary Steuber in the second conversation at issue were also properly admitted to show Morris's planned use of the truck.

Therefore, because the trial judge properly found the three witnesses to be competent, and the admission of their testimony not violative of the hearsay rule, his findings on Morris's narrow scope of permission were well supported by the evidence. ¹ Bennett specifically instructed Morris to drive the truck directly home and directly back to work the next day. Bennett...