United States Fidelity and Guaranty Company v. Drinkard

• Decision Date: 19 September 1966
• Docket Number: Civ. A. No. 65-C-67-A.
• Citation: 258 F. Supp. 380
• Court: U.S. District Court — Western District of Virginia
• Parties: UNITED STATES FIDELITY AND GUARANTY COMPANY, Plaintiff, v. Dan DRINKARD, Jr., Administrator of the Estate of Dan Drinkard, III, deceased, J. Nelson Ingoldsby, Administrator of the Estate of Carole Perkins, deceased, and Billy Roy Simpson, Defendants, and New York Underwriters Insurance Company, Intervenor.

258 F. Supp. 380

UNITED STATES FIDELITY AND GUARANTY COMPANY, Plaintiff, v. Dan DRINKARD, Jr., Administrator of the Estate of Dan Drinkard, III, deceased, J. Nelson Ingoldsby, Administrator of the Estate of Carole Perkins, deceased, and Billy Roy Simpson, Defendants, and New York Underwriters Insurance Company, Intervenor.

Civ. A. No. 65-C-67-A.

United States District Court W. D. Virginia, Abingdon Division.

September 19, 1966.

Donald T. Stant and Bradley Roberts, of Stant & Roberts, Bristol, Va., for plaintiff.

George M. Warren, Jr., Bristol, Va., for defendants, Dan Drinkard, Jr., Admr. of Estate of Dan Drinkard, III, decd. and J. Nelson Ingoldsby, Admr. of Estate of Carole Perkins, decd.

H. Emory Widener, Jr., Widener, Widener & Frackelton, Bristol, Va., for defendant, Bill Roy Simpson.

Andrew P. Miller, Penn, Stuart & Miller, Abingdon, Va., for defendant, New York Underwriters Ins. Co.

OPINION and JUDGMENT

DALTON, Chief Judge.

In this case the court on June 8, 1966 filed a written opinion and entered judgment accordingly, which opinion is of record in 254 F.Supp. 867, to which reference is here made. Thereafter, to wit, on June 23, 1966, by reason of a misunderstanding between the court and counsel as to whether the action was intended to be submitted on its merits, the court set aside and annulled the order of June 8, 1966. A full and complete hearing was then held on July 26, 1966, and the case was submitted to the court for determination.

The court reaffirms its opinion set forth in the decision of June 8, 1966, reported in 254 F.Supp. 867, and files this supplemental opinion and order thereon.

In a memorandum filed after the decision of June 8, 1966 was set aside, counsel for USF&G argues that USF&G did not intend to "take on any teenage risks" when it issued the policy and that instead the risk intended to be covered by the policy extended only to automobiles furnished in connection with the business of the insured. Counsel states that, "We have not been able to find any authorities dealing with the particular language of this GARAGE LIABILITY POLICY or the endorsement, but believe the general principles governing the construction of contracts sustain our position." However, it is a well established "general principle" of insurance law that in construing a contract of insurance the test is not what the insurer intended the policy to mean, but what a reasonable person in the position of the named insured would have understood it to mean. Merchants Mut. Cas. Co. v. Manzer, 93 N.H. 34, 35 A.2d 392 (1943); Standard Acc. Ins. Co. v. Swift, 92 N.H. 364, 31 A.2d 66 (1943); United Services Automobile Ass'n v. Pinkard, 258 F.Supp. 804 (W.D.Va.1965), aff'd 356 F.2d 35 (4th Cir. 1966). See also: Liberty Mut. Ins. Co. v. United States Fidelity & Guaranty Co., 232 F.Supp. 76 (D.Mont.1964); Federal Ins. Co. v. Bock, 382 S.W.2d 305 (Tex.Civ.App.1964). Since Simpson is covered by the very terms of the policy, some secret and unmanifested intent on the part of the insurer cannot be controlling.

The policy in question was written specifically for a corporation— Henard Enterprises was the named insured and not merely some sort of incidental beneficiary. Therefore, upon drafting the policy it was incumbent upon USF&G to consider all of the acts of the corporation which might fall within the terms of its policy. It would not seem unusual for the child of a corporate executive to be given a "company car" for his or her own use, and if the insurer wants such persons to be excluded from coverage it can so indicate. It should also be noted, in considering the argument that only a business related use was intended insofar as the risk was concerned, that paragraph 1(b) (i) of the policy provides for coverage of the spouses of the parties named therein. It would not seem that this is consistent with the argument that the risk contemplated extended only to a car used in connection with the business of the named insured.

At the time of the trial on July 26, 1966, counsel for USF&G conceded in oral argument that if Kathy Henard was a person to whom the named insured furnished an automobile for her regular use under policy provision 1(b) (ii), coverage was afforded Simpson under provision 1(4) by the amendment which was added to the policy and which is set forth in the opinion of June 8, 1966. In the memorandum submitted to the court after the trial was held on July 26, 1966, counsel for USF&G now states that such a concession should not have been made since Kathy could not grant permission (as provided in provision 1(4)) to Simpson, since she was an infant and was herself restricted in her use of the car. It appears to the court that this is the same argument which was advanced originally by USF&G and which was rejected by the court in the opinion of June 8, 1966, for the reasons stated therein. The court is of the opinion that the reasoning stated therein is still applicable to this argument and that it is not affected by the case of Messer v. Reid, 186 Tenn. 94, 208 S.W.2d 528 (1948), cited by USF&G in its memorandum, as that case involved the "Family Purpose Doctrine", which is not the situation in the case at bar.

Since the court does not accept the argument that Kathy was not in a position to give permission to Simpson to...