Universal Underwriters Insurance Company v. Bush

• Decision Date: 04 December 1959
• Docket Number: No. 6148.,6148.
• Parties: UNIVERSAL UNDERWRITERS INSURANCE COMPANY, Appellant, v. Mrs. Pearl BUSH, Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

272 F.2d 675 (1959)

UNIVERSAL UNDERWRITERS INSURANCE COMPANY, Appellant, v. Mrs. Pearl BUSH, Appellee.

No. 6148.

United States Court of Appeals Tenth Circuit.

December 4, 1959.

Gus Rinehart, Oklahoma City, Okl. (Butler, Rinehart & Morrison, Oklahoma City, Okl., were with him on the brief), for appellant.

William G. Smith, Oklahoma City, Okl. (Frank M. Houts, Alva, Okl., was with him on the brief), for appellee.

Before BRATTON, LEWIS and BREITENSTEIN, Circuit Judges.

LEWIS, Circuit Judge.

On November 17, 1955, the appellant insurance company had in force and effect a policy of garage liability insurance issued to Phil Middleton, d/b/a Middleton Chevrolet Company, the named insured. Upon that date, one Stanley Kaczar, while driving a car owned by Middleton and with this permission, was involved in an accident with the appellee. At such time Kaczar was a prospective purchaser of the car, was unaccompanied, and had no other interest in the car or in the affairs of the Middleton company. The accident premised a suit filed by appellee against Kaczar and Middleton in the Oklahoma state court which resulted in a judgment against Kaczar for $33,400. The claim against Middleton was dismissed for lack of evidence. Appellee then instituted the instant suit in the United States District Court for the Western District of Oklahoma alleging that Kaczar was within the policy definition of an additional insured as contained in the Middleton policy written by appellant. The trial court, holding that the terms of the policy were ambiguous and capable of being interpreted as including Kaczar as an additional insured, gave judgment against appellant for $10,000 the policy limit. The holding forms the basis for appeal by the insurance company.

Although claim is made that a prospective purchaser while taking a solo demonstration in a vehicle owned by an automobile agency enjoys a relationship superior in law to that of a simple permissive user we deem such contention to be totally without merit in interpreting the insurance coverage of the instant policy. The single question, as we view it, is whether or not Kaczar, as a permissive user of a Middleton automobile, was within the defined coverage of the policy as contained in a policy endorsement in effect on the date of the accident. Before the endorsement, and as the policy was originally issued, a permissive user was clearly included as an additional insured for the policy provided:

"Definition of Insured: * * * the unqualified word `insured\' includes the named insured and also includes (1) any partner, employee, director or stockholder thereof while acting within the scope of his duties as such, and any person or organization having a financial interest in the business of the named insured covered by this policy, and (2) any person while using an automobile covered by this policy, and any person or organization legally responsible for the use thereof, provided the actual use of the automobile is by the named insured or with his permission. This policy does not apply:

"(a) to any employee with respect to injury to or sickness, disease or death of another employee of the same employer injured in the course of such employment in an accident arising out of the business of such employer;

"(b) to any partner, employee, director, stockholder or additional insured with respect to any automobile owned by him, or by a member of his household other than the named insured;

"(c) under coverage B, to any partner or employee with respect to injury to or destruction of property owned by, rented to, in charge of or transported by the named insured."

However subsequent to the issuance of the policy an endorsement was tendered to the policyholder, Middleton, and accepted by him at a reduced premium rate. The insurance company contends that the endorsement restricts the coverage by redefining "insured"; the appellee reads it as an enlargement of the class of persons covered:

"It is understood and agreed that paragraph III, Definition of Insured, of Insuring Agreements of this policy is amended to read

"Definition of Insured

"The unqualified word `insured\' includes the named insured and also includes (1) any partner, employee, director or stockholder thereof while acting within the scope of his duties as such, and any person or organization having a financial interest in the business of the named insured covered by this endorsement, and (2) any partner, employee, director or

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