Weathers v. Royal Indem. Co.

• Decision Date: 13 February 1979
• Docket Number: No. 60600,60600
• Citation: 577 S.W.2d 623
• Parties: Henry Earl WEATHERS et al., Appellants, v. ROYAL INDEMNITY CO., a corporation, Respondent.
• Court: Missouri Supreme Court

Page 623

577 S.W.2d 623

Henry Earl WEATHERS et al., Appellants, v. ROYAL INDEMNITY CO., a corporation, Respondent.

No. 60600.

Supreme Court of Missouri, En Banc.

Feb. 13, 1979.

Rehearing Denied March 13, 1979.

Samuel A. Goldblatt, William R. Kirby, St. Louis, for appellants.

Ben Ely, Jr., Brent W. Baldwin, St. Louis, for respondent.

RENDLEN, Judge.

This equitable garnishment action was brought by Henry and Bernice Weathers against Royal Indemnity Company (Royal) to collect amounts due on their unsatisfied judgments for personal injuries obtained against Elliott Davis, Jr. (Davis). Plaintiffs' base their claims on a contract of insurance issued by defendant insuring an automobile owned by The Hertz Corporation (Hertz) and used in its rent-a-car business. The general question is whether Davis, as driver of the Hertz automobile "rented" to one Davis A. Walker, was an additional insured under the omnibus clause of the insurance policy issued by Royal on Hertz's fleet of rental vehicles. It will be seen that the omnibus clause extended liability coverage to any person "Using " the insured vehicle provided the "Actual use " was "with permission of the named insured," i. e. Hertz.

Judgment was entered for defendant in the garnishment action and plaintiffs appealed contending the trial court's findings lacked evidentiary support and that the court misapplied the law. The Missouri Court of Appeals, St. Louis District (now the Eastern District), affirmed, but in view of an apparent conflict between its opinion and that of the Springfield District (now the Southern District), in Farm Bureau Mut. Ins. Co. v. Broadie, 558 S.W.2d 751 (Mo.App.1977), transferred the cause under Rule 83.02 that we might reexamine the existing law. We decide the case as if it were here on original appeal. Mo.Const., art. V, § 10.

The underlying negligence action flowed from certain occurrences commencing December 30, 1971. On that day Walker rented an automobile from a Hertz rent-a-car office on the Washington University campus in St. Louis where he was a student. He executed a written rental agreement tendered by Hertz at the time he obtained the car and on the afternoon of January 1, 1972, drove it to the home of his close friend, Elliott Davis, Jr. The young men, then on semester break from their respective colleges, used the car for social purposes. The next day they decided to drive to a mutual friend's house and because Davis was more familiar with the way, Walker permitted him to drive while he, Walker, rode in the front seat. En route they collided with an automobile in which Henry Earl Weathers was a guest. Immediately after the collision Davis and Walker agreed to say that Walker had been the driver, apparently in the understanding that this was necessary for insurance coverage. However, when a police officer arrived at the scene and questioned them, Davis admitted he had been driving.

Mr. and Mrs. Weathers sued Davis and Walker for damages occasioned by the accident and at the close of plaintiffs' case, judgment was entered in favor of Walker from which plaintiffs have appealed. Royal had provided Walker defense counsel subject to a reservation of rights. On the other hand, Royal refused Davis' demand that it provide his defense in that suit, and plaintiffs recovered judgments (now final) against Davis in the amount of $100,000 for Henry and $10,000 for Bernice Weathers. Plaintiffs thereafter commenced this garnishment proceeding.

We consider first the applicable statutory law. Section 303.190.2(2), RSMo 1969, ¹ mandates the inclusion of an omnibus clause broadening coverage in every auto liability policy issued to comply with Missouri Safety Responsibility Law and requires that it protect not only the named insured but "any other person . . . Using any such motor vehicle . . . with the express or implied permission of such named insured." (Emphasis ours.) ² Such an omnibus clause, evidently designed to comply with the referenced statute was included in Royal's policy here, affording coverage for the named insured (Hertz) and for "any person while Using (vis-a-vis Operating ) the automobile . . . provided the actual Use (vis-a-vis Operation ) of the automobile is . . . with the permission of the (named insured.)" ³ Critical to the issues under consideration, the omnibus clause speaks broadly to the Use of the automobile, not narrowly to its Operation. Any insurance contract providing less would be subject to challenge for non-compliance with § 303.190.

The manifestation of public policy found in the Motor Vehicle Safety Responsibility Law, particularly § 303.190.2(2), supports a liberal interpretation of automobile liability insurance omnibus clauses. In Winterton v. Van Zandt, 351 S.W.2d 696, 700-01 (Mo.1961), this Court noted,

Chapter 303 . . . requires that policies issued under § 303.170 as proof of financial responsibility shall insure 'any other person, * * * using any such motor vehicle * * * with the express or implied permission of such named insured.' The provisions of that act are indicative of the public policy of this state to assure financial remuneration to the extent and under the conditions therein provided for damages sustained through the negligent operation of motor vehicles upon the public highways of this state not only by the owners of such automobiles but also all persons using them with the owners' permission, express or implied.

Additionally, Royal in recognition of the need to comply with statutes such as Missouri's Motor Vehicle Safety Responsibility Act provided in "condition 9" of the policy of insurance issued on Hertz's fleet of rental cars,

9. Financial Responsibility Laws Coverages A (Bodily Injury Liability) and B (Property Injury Liability). When this policy is certified as proof of financial responsibility for the future under the provisions of the motor vehicle financial responsibility law of any state or province, such insurance . . . shall comply with the provisions of such law which shall be applicable with respect to any such liability . . . .

In this connection the Court of Appeals has declared, "Omnibus coverage provisions are intended to extend, not restrict, coverage afforded and such intention is salutary." Hauser v. Hill, 510 S.W.2d 765, 768 (Mo.App.1974). Such extension is accomplished by enlarging the number and variety of insured classes. Missouri law favors a liberal construction of auto liability insurance policies and as stated in Giokaris v. Kincaid, 331 S.W.2d 633, 639 (Mo.1960), quoting Varble v. Stanley, 306 S.W.2d 662, 665 (Mo.App.1957), "An insurance policy, being a contract designated to furnish protection, will, if reasonably possible, be construed so as to accomplish that object and not to defeat it." See also Meyer Jewelry Co. v. General Ins. Co. of America, 422 S.W.2d 617, 623 (Mo.1968), wherein the court stated, "We follow a construction favorable to the insured wherever the language of a policy is susceptible of two meanings, one favorable to the insured, the other to the insurer." This principle of construction was more fully discussed in Brugioni v. Maryland Casualty Co., 382 S.W.2d 707, 710-11 (Mo.1964) as follows: "(A)n insurance policy being a contract designed to furnish protection will, if reasonably possible, be interpreted so as to accomplish that object and not to defeat it, and, if terms of the contract are susceptible of two possible interpretations and there is room for construction, the provisions limiting or cutting down on the coverage of the policy, or avoiding liability therefor, will be construed most strongly against the insurer." In Sibothan v. Neubert, 168 S.W.2d 981, 984 (Mo.App.1943), the Court of Appeals, dealing with an automobile liability omnibus clause stated, "It is of course true that the 'additional insured' clause was written in the policy for the primary purpose of extending not limiting liability."

Mindful then that the omnibus clause meets the statutory mandate by extending coverage beyond the named insured (and resident spouse) to permittees Using the motor vehicle with the insured's express or implied consent, we examine the Use here involved and determine if it was permitted by the rental agreement and thus protected by Royal's policy.

It cannot be seriously questioned that Walker's rental of the car was for a broad, almost unfettered use. The due date for return of the car was left blank in the rental agreement, indicating an unlimited term, ⁴ with rentals based on a daily charge for the days the car was retained. There were no mileage restrictions and the first two hundred miles were free though a charge of eight cents per mile was made for travel thereafter. No limitations appear as to where the car could be driven except in Paragraph 8, which stated that proof of coverage and vehicle ownership were required before entering Canada and "coverage is void in Mexico." This is the rental agreement's only reference to an act, the commission of which would void liability insurance. Paragraph 8 further provides that because "coverage is void in Mexico," the "(c)ustomer must obtain Lessor's written authorization and purchase special insurance before entering Mexico." ⁵ The vehicle could be used for any lawful purpose of the customer limited by the provisions of Paragraph 6 that it should not be "used" (a) to carry persons or property for hire, (b) to propel or tow other vehicles or objects, or (c) for racing, tests or contests. ⁶ Nothing in the testimony, briefs or oral argument suggests these limitations on Use were violated.

On the other hand, Paragraph 7 sets forth restrictions as to the "operation" or driving of the vehicle.

7. Vehicle shall NOT be Operated by any person except Customer and the following Authorized Operators, each of whom must be duly qualified and licensed to drive and must have received Customer's advance permission:

(a) persons of full age (21 years) who are members of the immediate...