Wells v. Allstate Insurance Company

• Decision Date: 01 June 1971
• Docket Number: Civ. A. No. 70-41.
• Citation: 327 F. Supp. 622
• Court: U.S. District Court — District of South Carolina
• Parties: James Robert WELLS, Plaintiff, v. ALLSTATE INSURANCE COMPANY, State Farm Mutual Automobile Insurance Company, and Annie M. Smith, Administratrix of the Estate of Ray E. Smith, Deceased, Defendants.

327 F. Supp. 622

James Robert WELLS, Plaintiff, v. ALLSTATE INSURANCE COMPANY, State Farm Mutual Automobile Insurance Company, and Annie M. Smith, Administratrix of the Estate of Ray E. Smith, Deceased, Defendants.

Civ. A. No. 70-41.

United States District Court, D. South Carolina, Greenwood Division.

June 1, 1971.

William H. Nicholson, Jr., Greenwood, S. C., for plaintiff.

G. Dewey Oxner, Jr., and W. Francis Marion, of Haynsworth, Perry, Bryant, Marion & Johnstone, Greenville, S. C., for Annie M. Smith, Administratrix, and Allstate Ins. Co.

J. William Bradford, Jr., and J. Kendall Few, of Burns, McDonald, Bradford, Erwin & Few, Greenwood, S. C., for State Farm Mutual.

ORDER

HEMPHILL, District Judge.

This is a declaratory judgment action instituted by James Robert Wells against Allstate Insurance Company, State Farm Mutual Automobile Insurance Company and Annie M. Smith, Administratrix of the Estate of Ray E. Smith. The plaintiff alleges that on or about July 22, 1968, he was driving a 1964 Falcon in Greenwood, South Carolina and was involved in an automobile accident with a motorcycle being driven by Ray E. Smith; that at the time of the above mentioned accident he had in force and effect an automobile liability insurance policy with State Farm Mutual Insurance Company with limits of $10,000.00 for each person sustaining bodily injury and $20,000.00 for each accident. State Farm's policy of insurance covered a 1968 Torino owned by the plaintiff, however, said vehicle was under repair at the time of the accident in question. The plaintiff further alleges that the vehicle that he was driving at the time of the accident in question was furnished to him by Jefferson Motor Company and that said vehicle was covered under a garage liability insurance policy of Allstate Insurance Company issued to Jefferson Motor Company.

The defendant Allstate had in effect a garage insurance policy on Jefferson Motor Company with policy limits of $100,000.00 for personal injury to one person.

Allstate denies coverage upon the following grounds: (1) that the 1964 Falcon that the plaintiff was operating at the time of the accident in question was not owned by Jefferson Motor Company and was not being used in connection with the business of Jefferson Motor Company and, therefore, is not covered by the garage liability policy issued by Allstate Insurance Company to Jefferson Motor Company; (2) that even if Hubert Martin loaned a 1964 Falcon to the plaintiff in connection with the business of Jefferson Motor Company, he did not have permission from the named insured to do so and was not operating within the scope of his authority and, therefore, the vehicle in question is not covered by the garage liability policy issued by Allstate Insurance Company; (3) that even if said vehicle was being used by Jefferson Motor Company in connection with the business of Jefferson Motor Company and the said Hubert Martin had permission to loan said vehicle to the plaintiff, the 1964 Falcon is excluded from coverage under exclusion 1(e) (2) (ii) which is found on page 1 of its policy and reads as follows:

"while rented to others by the named insured unless to a salesman for use principally in the business of the named insured, or";

(4) that the plaintiff only had permission to drive the above mentioned 1964 Falcon in Atlanta, Georgia and did not have permission to drive said vehicle to Greenwood, South Carolina and, therefore, said vehicle was not covered under the garage liability policy issued to Jefferson Motor Company by Allstate Insurance Company; (5) that in the event there is coverage to the plaintiff, its policy of insurance is secondary and the policy of State Farm Mutual Insurance Company is primary.

The defendant State Farm Insurance Company admits that it owes the plaintiff a defense and further admits that it provides coverage however, it alleges that its coverage is only secondary to that of Allstate Insurance Company.

The matter came to be heard by this court and in accordance with Rule 52, Federal Rules of Civil Procedure the court publishes its findings of fact and conclusions of law.

FINDINGS OF FACT

1. That the plaintiff is a citizen and resident of Jackson County, Georgia, and that the defendants Allstate Insurance Company (hereinafter referred to as "Allstate") and State Farm Mutual Automobile Insurance Company (hereinafter referred to as "State Farm") are corporations organized and existing under the laws of the State of Illinois, and the defendant Annie M. Smith, Administratrix of the Estate of Ray E. Smith, deceased, is a resident of Greenwood County, South Carolina. There exists between plaintiff and defendants complete diversity of citizenship and the amount in controversy exceeds, exclusive of interest and costs, the sum of Ten Thousand and No/100 ($10,000.00) Dollars.

2. This is an action for a declaratory judgment under the Federal Declaratory Judgment Act, 28 U.S.C. Section 2201. A real and vital controversy exists between the parties to this action involving the construction of the insurance policies of the defendants State Farm and Allstate, as to which this court should exercise its discretion in the granting of declaratory relief.

3. The court finds that the plaintiff was driving a 1964 Ford Falcon automobile on July 22, 1968 when he was involved in an accident in Greenwood, South Carolina which resulted in the death of Ray E. Smith. The plaintiff was then the named insured under a policy of automobile liability insurance issued by State Farm. The Falcon came within the definition of a "temporary substitute automobile" under the State Farm policy and coverage was afforded to the plaintiff by State Farm under the provisions relating to a "temporary substitute automobile." The policy limits of the plaintiff's policy with State Farm were Ten Thousand and No/100 ($10,000.00) Dollars.

4. A short time prior to the date of this accident, the plaintiff had left an automobile belonging to his mother-in-law, which he had been driving, with the service and repair shop of Jefferson Motor Company, Jefferson, Georgia for the purpose of being repaired. At the time that the plaintiff left his automobile with Jefferson Motor Company, there was located on Jefferson Motor Company's used car lot the 1964 Falcon subsequently involved in the accident mentioned above. The title to this automobile was, at that time, in the name of G. Hubert Martin, one of the salesmen for Jefferson Motor Company, who had acquired the automobile from its previous owner for the purpose of selling it and at the time in question was holding it on the Jefferson lot for that purpose.

5. On the same day that the plaintiff had left the automobile which he was driving with Jefferson Motor Company for repairs, his mother-in-law Mrs. A. L. Venable, of Jefferson, Georgia, had called Mr. Martin at Jefferson Motor Company and asked him for assistance in obtaining an automobile for her daughter, the plaintiff's wife, to drive while the other automobile was being repaired at Jefferson Motor Company. As a result of this conversation, the plaintiff and his wife went to Jefferson Motor Company and met with Mr. Martin at which time he showed them the 1964 Falcon and agreed to let them use it while their vehicle was being repaired. Mr. Martin then had one of the employees of Jefferson Motor Company crank and check the Falcon inside the Jefferson Motor Company shop in preparation for turning it over to the plaintiff and his wife. A conversation took place between Mr. Martin and plaintiff's wife during which the plaintiff's wife agreed to pay four (4) cents per mile for the use of the automobile.

The testimony is conclusive that the figure agreed upon was neither calculated nor intended to return a profit to Mr. Martin on the transaction. Rather it was to cover wear and tear on the vehicle. Mr. Martin's purpose in the transaction was to provide an accommodation to the family of Mrs. A. L. Venable because they were good customers.

6. Mr. Martin was an old and trusted employee of Jefferson Motor Company, having been a salesman there for 44 years. He had the permission of Jefferson Motor Company to store and display used cars on its lot, which used cars Mr. Martin acquired on his own from time to time for the purpose of resale. Jefferson Motor Company had no financial interest in Mr. Martin's used cars and did not stand to profit or lose from his transactions regarding them.

7. The deceased husband of Mrs. A. L. Venable had been a long time customer of Jefferson Motor Company. His purchases at the establishment went back to the Model T. Four months prior to the time in question Mrs. Venable had purchased a new Ford automobile from Jefferson Motor Company and it appears that some of her children, not the plaintiff herein, may also have purchased automobiles there. The Venables were valuable customers not only of Jefferson Motors but also of Mr. Martin as they traded with him in his capacity as salesman and presumably he earned a commission on those sales.

8. Mr. Martin was allowed to make such use of his own automobile stored on the Jefferson Motor Company lot as he saw fit. The Jefferson Motor Company knew of his practice of occasionally turning over one of his automobiles to a customer as an accommodation. However, Mr. Martin had no authority to accommodate a customer with a Jefferson Motor Company car without first checking with his superior. Jefferson Motor Company had no notice of this particular transaction.

9. At the time plaintiff and his wife acquired the Falcon from Mr. Martin, it was Mr. Martin's understanding and their intention that the car would be used by plaintiff's wife in going to and from work in Atlanta. Mr. Martin did not expressly limit their use of the Falcon to that purpose. When a Corvair owned by plaintiff developed mechanical trouble, he used the Falcon to travel from Atlanta to his job site in Greenwood, S. C., leaving his...