United States Fidelity and Guaranty Company v. Winkler
| Decision Date | 15 November 1965 |
| Docket Number | No. 17956.,17956. |
| Parties | UNITED STATES FIDELITY AND GUARANTY COMPANY, Appellant, v. Nancy WINKLER, a minor by her Mother and Guardian Ad Litem Violet M. Winkler, Joyce Ann Simpson and Margaret Louise Patton Lohse, Appellees. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Roy F. Carter, of Sprinkle, Carter, Sprinkle & Larson, Kansas City, Mo., for appellant.
Lane D. Bauer, of Shook, Hardy, Ottman, Mitchell & Bacon, Kansas City, Mo., David W. Shinn, Robert M. Coleman, Vincent E. Baker and Henry H. Fox, Jr., Kansas City, Mo., for appellees.
Before VAN OOSTERHOUT and MEHAFFY, Circuit Judges, and MEREDITH, District Judge.
VAN OOSTERHOUT, Circuit Judge.
Plaintiff United States Fidelity and Guaranty Company brought this declaratory judgment action to obtain a determination that no liability exists under the family automobile policy it issued to D. H. Patton with respect to the consequences of an accident which occurred about 10:00 p. m. on October 23, 1959, when the automobile described in the policy was being operated by Margaret Patton, now Margaret Patton Lohse, divorced wife of D. H. Patton. Nancy Winkler and Joyce Ann Simpson, who had obtained state court judgments against Mrs. Lohse for damages based on the negligent operation of the automobile on that occasion, are made defendants as is Mrs. Lohse. All defendants by answer asserted coverage existed on plaintiff's policy and asked that declaration of such coverage be made and that the state court judgments obtained against Mrs. Lohse, which were within policy limits, be enforced against the plaintiff. The defendants by counterclaim sought reformation of the policy to include Mrs. Lohse as a named insured. Jurisdiction, based upon diversity of citizenship and the jurisdictional amount, exists.
After trial to the court, memorandum opinion incorporating findings of fact and conclusions of law and a discussion of the applicable law was filed. The court determined liability existed under the policy for the consequences of the October 23, 1959, accident, and entered judgment against the plaintiff declaring policy coverage existed and enforcing the state court judgments obtained by Winkler and Simpson against Mrs. Lohse. This timely appeal followed.
Plaintiff insurer concedes that its liability policy issued to D. H. Patton covering the 1955 Buick involved in the accident here pertinent was in full force and effect on the date of the accident. The insurer's basic contention is that Mrs. Lohse is not a named insured and that she has not brought herself within the omnibus clause coverage, in that she was not a spouse or a member of the household of the named insured at the time of the accident, and further that she did not fall within the permission provision of the omnibus clause as Mr. Patton was not the owner of the car at the time of the accident and hence was in no position to give permission for its use.
It is stipulated that Mrs. Lohse obtained a divorce from D. H. Patton on the morning of October 23, 1959; that the insured Buick was awarded to Mrs. Lohse as part of an approved property settlement; that shortly after noon on October 23 the title certificate to the car was delivered to Mrs. Lohse and she obtained possession of the car about 4:00 p. m. that afternoon. The accident occurred about 10:00 p. m. the same day. The trial court found that the transfer of the title to the car under Missouri law was completed prior to the accident. While Mrs. Lohse had contended otherwise at the trial, she accepts this finding upon appeal. Thus it is established that at the time of the accident Mrs. Lohse was the sole owner of the car.
The policy bears the title "Family Automobile Policy — Liability and Physical Damage." The policy provisions under the heading "Persons Insured" with respect to liability insurance read:
Under policy definitions, we find: "Named Insured" means the individual named in Item I of the declarations and also includes his spouse, if a resident of the same household.
The insurer urges that Mrs. Lohse did not meet the policy requirement of being a named insured because only Mr. Patton is specifically named as an insured in the policy. It is undisputed that Mrs. Lohse was not his spouse at the moment of the accident. Mr. and Mrs. Patton were married in 1948; they separated in 1959 and were divorced on October 23, 1959. Upon the basis of such established facts, the insurer argues that at the moment of the accident Mrs. Lohse did not fall within the named insured provision of clauses (a) (1) and (b) (1) or the definition, supra, because she was not a spouse and did not live in the same household.
It is not entirely clear from the terms of the policy whether the named insured status is to be determined on the basis of facts existing at the time the insurance originates or whether the status at the time of the accident controls. It is apparent that Mrs. Lohse met the named insured definition at least until the time of the separation. Thus, taking away the coverage from her would be in the nature of a forfeiture. It is of course well-established that forfeitures are strictly construed. The policy is far from clear in containing any express statement that the status of the named insured once acquired is lost by a subsequent event such as separation. However, on the theory advanced by the trial court, which we adopt, it is not necessary to resolve the issue of whether Mrs. Lohse's status as a named insured is determined as of the time of the issuance of the policy or at a subsequent period.
The trial court made findings which are supported by substantial evidence to the effect that the insured automobile, the 1955 Buick, was purchased by Mr. and Mrs. Patton in 1955 with joint funds with the intention of the purchasers that it be a jointly owned automobile to be used by both of them, although the title was taken in Mr. Patton alone. It is undisputed that the car was principally used by Mrs. Patton, Mr. Patton having other vehicles, and that Durkee, the insurer's authorized agent, was so fully advised when the insurance was taken out in 1955 and was further advised that both the Pattons wanted liability coverage as long as either one of them was operating the 1955 Buick. The policy renewals were upon the same basis. Mr. Durkee knew that the Pattons believed the policy would cover either of them when driving the Buick and had he thought it necessary, he would have requested an endorsement specifically designating Mrs. Patton as a named insured. It is established that the insurer, if so requested, would have provided such an endorsement without question and without extra premium and that it was the intent of Durkee as the insurer's agent as well as that of the Pattons to cover both Pattons completely so long as either of them operated or possessed the car.
Insurer's head underwriter by deposition testified as follows:
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