Zurich Ins. Co. v. Monarch Ins. Co. of Ohio

• Decision Date: 02 June 1967
• Docket Number: No. 332,332
• Parties: ZURICH INSURANCE COMPANY et al. v. MONARCH INSURANCE COMPANY OF OHIO.
• Court: Maryland Court of Appeals

Page 3

247 Md. 3

230 A.2d 330

ZURICH INSURANCE COMPANY et al. v. MONARCH INSURANCE COMPANY OF OHIO.

No. 332.

Court of Appeals of Maryland.

June 2, 1967.

William A. Ehrmantraut, Rockville, (Donahue, Ehrmantraut, Mitchell & Gleason, Rockville, on the brief), for appellants.

William H. Clarke, Washington, D. C. (Galiher, Stewart & Clarke, Washington, D. C., on the brief), for appellee.

Before HAMMOND, C. J., and HORNEY, OPPENHEIMER, BARNES and FINAN, JJ.

FINAN, Judge.

The appellee, Monarch Insurance Company of Ohio (Monarch), issued a liability insurance policy to one William Lee Fuller that was in effect on May 7, 1964, the date of the accident. In the early spring of 1964, the insured, William Lee Fuller, was separated from his wife, Ruby Lee Fuller, and his automobile was in her custody. John Morris Quade, Mrs. Fuller's brother, and his wife temporarily resided with Mrs. Fuller in May of 1964. In the late evening of May 1, 1964, Quade, using the Fuller vehicle, transported Mrs. Fuller, who was expecting a child, to the hospital and thereafter retained custody of the Fuller automobile. Quade had borrowed the automobile on prior occasions and it was understood that he was not to permit other persons to operate the automobile.

On May 7, 1964, Quade drove the Fuller automobile to the home of appellant, Lawrence Wayne Heiston. Heiston requested Quade's permission to use the vehicle and Quade instructed Heiston that permission must come from Mrs. Fuller. Later that evening, while the Fuller automobile was being operated by Heiston, with Donna Wildman, his fiancee, and Quade as passengers, it was involved in a collision. Mr. and Mrs. Fuller both testified that Heiston did not request their permission to operate the vehicle. Heiston, at his deposition, testified under oath that he had telephoned Mrs. Fuller, had spoken with her and had received her permission to operate the vehicle. However, at the trial, Heiston stated that he assumed that Quade had telephoned Mrs. Fuller on the date of the accident requesting permission on his behalf, because Quade had given him the keys to the automobile, although he, Heiston, had not personally talked to Mrs. Fuller.

On May 8, 1964, Mrs. Fuller was confined in the hospital and was advised of the accident. She in turn, notified her husband who notified Monarch. Monarch retained the services of the Roane Company to investigate the accident and the file wass assigned initially to Mr. Frank Harrison. He testified as to his efforts to contact Heiston and generally as to the lack of cooperation on the part of Heiston.

At about this time, the operator of the adverse vehicle, Thomas, filed suit against Heiston and Mr. Fuller in the Circuit Court for Prince George's County. Monarch refused to defend Heiston in the action on the ground of non-cooperation and also refused to recognize itself as the primary carrier under its policy. Fuller was never served with process in that action.

Appellant, Zurich Insurance Company (Zurich), defended the suit against Heiston since he had an assigned risk liability policy with that company. Zurich and Heiston then filed an action in the same court against Monarch and Mr. Fuller to recover the amount paid ($4,659.80) after judgment was entered in favor of Thomas against Heiston. When the present suit for a declaratory judgment was filed, Monarch alleged, in addition to asserting the defense of non-cooperation, that Heiston's use of the Fuller vehicle was nonpermissive.

The court entered judgment for Monarch finding that Heiston did not cooperate with the company and that the use of the Fuller vehicle by Heiston was not with the permission of the owner or the owner's agent. The court further found that the provisions of Art. 48A, § 482 Code (1966 Cum.Supp.) did not apply.

The Court is of the opinion that the lower court should be affirmed; however, in doing so we need not, nor do we intend to, go beyond the consideration of the issue of nonpermissive use.

Monarch's policy contains the following pertinent provisions:

'PERSONS INSURED: The following are insureds under Part 1:

(a) with respect to the owned automobile (1) the named insured and any resident of the same household,

(2) any other person using such automobile with the permission of the named insured, provided his actual operation or (if he is not operating) his other actual use thereof is within the scope of such permission, * * *.

'DEFINITIONS: Under Part 1:

'NAMED INSURED' means the individual named in Item 1 of the declarations and also includes his spouse, if a resident of the same household;

'RELATIVE' means a relative of the named insured who is a resident of the same household; * * *.'

At the outset it becomes necessary to establish the status of Mrs. Fuller, wife of the 'named insured.' Mrs. Fuller being the spouse, if she was a resident of the same household, she herself would be a 'named insured' within the purview of the policy. The appellee, in its argument, characterizes her as the first permittee contending that because she and her husband had been separated since the January preceding the happening of the accident on May 7, 1964, and he had taken another abode, that she was not a member of his household, within the terms of the policy, at the time of the happening of the accident. The factual situation presented by this case places it somewhere between American Casualty Co. v. Harleysville Ins., 238 Md. 322, 208 A.2d 597 (1965) and Selected Risks v. Miller, 227 Md. 174, 175 A.2d 584 (1961). However, in the instant case, the couple later effected a reconciliation and during the period of separation the husband continued to use the address of the residence occupied by the wife as his legal address. We think this places it more in the sphere of American Casualty and accordingly adopt the proposition that she was a member of the 'named insured's' household. We do think that the lower court correctly concluded (this is implicit in its decision) that Quade, the brother of Mrs. Fuller, had only temporary residence at the Fuller home and accordingly was not a member of the 'named insured's' household within the meaning of the policy. Thus Quade was the first permittee, having secured permission from Mrs. Fuller, a 'named insured,' to use the automobile for his personal use.

There is a division of authorities on the proposition as to whether when a named insured leaves an automobile with someone for their general use and that person in turn permits its use by another the use is deemed to be with the permission of the named insured. Annot., 4 A.L.R.3rd 10, 56 et seq. (1965). The cases collected in 7 Appleman, Insurance Law and Practice, § 4361, would not include the second permittee within the coverage afforded by the omnibus clause.

Authority to the contrary may be found in the opinion of Judge Winter in Ohio Casualty Ins. Co. v. Pennsylvania Nat. Mut. Cas. Ins. Co., 238 F.Supp. 706 (D.C.Md.1965), who considered the status of the second permittee under Maryland law and noted at p. 708:

'This conclusion leads to additional problems, because there is no direct decision of the Maryland Court of Appeals deciding whether, or under what circumstances, a second permittee becomes an insured under an omnibus clause, although, on facts tantalizingly similar to those found in the case at bar, the Maryland Court of Appeals has found coverage under policy provisions concededly not applicable here, and has...