Baesler v. Globe Indemnity Co.

162 A.2d 854, 33 N.J. 148, 1960 N.J. LEXIS 145

Opinions

The opinion of the court was delivered by

Proctor, J.

This case presents a question of coverage under the omnibus clause of an automobile liability insurance policy issued by the defendant company. The facts were stipulated.

In March 1957 the defendant company issued the policy in question to John Ranaletti as the named insured. The policy was in effect at the time of an accident in February 1958, and covered an automobile involved in the accident that was owned by Ranaletti and driven at the time by Robert Tureckie. Under the terms of the policy, the defendant company extended coverage for liability to Ranaletti, as the named insured, to any resident of his household, and to “any other person using such automobile provided the actual use thereof is with the permission of the named insured * * *.” When the insured automobile was bought by Ranaletti, he immediately turned it over to his nephew, George Rogers, a member of his household under 21 years of age, for Rogers’ exclusive use. At the same time, “Rogers was expressly prohibited by the named insured from permitting other people to use said vehicle.” Down to the date of the accident, Rogers used the automobile “for his pleasure.”

At the time of the accident involving the automobile, Robert Tureckie was driving it “with the express consent and permission of George Rogers.” Rogers lent Tureckie the automobile with knowledge that Tureckie was to use it for a social engagement, and with knowledge that Bernard Kulp was to accompany Tureckie. “Aside from this favor to Tureckie there was no advantage or benefit to either Rogers or the named assured in this use of the car by Tureckie, except insofar as this use served Rogers’ pleasure.” In the accident that occurred while Tureckie was driving the car, Bernard Kulp was injured. The defendant company disclaimed liability and did not defend Tureckie in an action brought against him by Gertrude Kulp Baesler, individually, and as guardian ad litem of Bernard Kulp, for damages for the latter’s personal injuries. Judgment was entered in that action against Tureckie in the total amount of $3,177.75. In the present action Gertrude Kulp Baesler, in the same capacity, seeks to recover the amount of the judgment from the defendant company, asserting that Tureckie was an additional insured under the terms of the aforementioned liability policy.

In the Superior Court, Law Division, summary judgment was granted the defendant company on the facts stipulated. On the plaintiffs’ appeal, the Appellate Division unanimously affirmed. 57 N. J. Super. 386 (1959). The case is here on petition for certification granted. 31 N. J. 551 (1960).

It is a well-established general rule that when the named insured gives another permission to use his insured automobile, without more, the permittee is not thereby authorized to allow another to use it. And if he does, the second permittee’s use is not “with the permission of the named insured,” as those words are used in a comprehensive liability policy. Cronan v. Travelers Indemnity Co., 126 N. J. L. 56 (E. & A. 1941); Standard Accident Ins. Co. v. New Amsterdam Cas. Co., 249 F. 2d 847 (7 Cir. 1957); Aetna Cas. & Surety Co. v. DeMaison, 213 F. 2d 826 (3 Cir. 1954); United Services Automobile Ass’n v. Preferred Accident Ins. Co., 190 F. 2d 404 (10 Cir. 1951); Fox v. Crawford, 50 Ohio Law Abst. 553, 80 N. E. 2d 187 (Ohio Ct. App. 1947); Boyer v. Massachusetts Bonding & Ins. Co., 277 Mass. 359, 178 N. E. 523 (Sup. Jud. Ct. 1931); 7 Appleman, Insurance, § 4361 (1942); Annotation 160 A. L. R. 1195, at p. 1210 (1946).

The rule is subject, however, to a broad qualification in terms of the scope of the named insured’s initial grant of permission. The factual determination must be made, in every case where the first permittee permits another to use the- insured automobile, whether the initial grant of permission was broad enough, to include an implied grant to the permittee of authority to give another use of the automobile and thus to render the latter an additional insured under the omnibus clause of the policy. Costanzo v. Pennsylvania Threshermen, etc., Ins. Co., 30 N. J. 262 (1959); National Orange Mut. Liability Co. v. Metroka, 250 F. 2d 933 (3 Cir. 1958); Utica Mut. Ins. Co. v. Rollason, 246 F. 2d 105 (4 Cir. 1957); United Services Automobile Ass’n v. Preferred Accident Ins. Co., supra; Boyer v. Massachusetts Bonding & Ins. Co., supra; 7 Appleman, Insurance, § 4361 (1942).

Thus, it is almost universally held in the modern cases that where the named insured grants his permittee broad and unfettered dominion over his insured automobile, he also impliedly authorizes his permittee to allow a third person to use it, and thus to render him an additional insured. Costanzo v. Pennsylvania Threshermen, etc., Ins. Co., supra; National Grange Mut. Liability Co. v. Metroka, supra; Utica Mut. Ins. Co. v. Rollason, supra; Indiana Lumbermens Mut. Ins. Co. v. Janes, 230 F. 2d 500 (5 Cir. 1956); Pennsylvania Thresherman, etc., Ins. Co. v. Crapet, 199 F. 2d 850 (5 Cir. 1952); State Farm Mut. Auto Ins. Co. v. Porter, 186 F. 2d 834, 52 A. L. R. 2d 515 (9 Cir. 1950), rehearing denied 186 F. 2d 844 (9 Cir. 1951); Robinson v. Fidelity & Cas. Co., 190 Va. 368, 57 S. E. 2d 93 (Sup. Ct. App. 1950); Perrodin v. Thibodeaux, 191 So. 148 (La. Ct. App. 1939). Contra, Samuels v. American Automobile Ins. Co., 150 F. 2d 221, 160 A. L. R. 1191 (10 Cir. 1945). The first permittee, by being granted complete dominion over the insured automobile, is put in the shoes of the named insured, and therefore his permittee is held to be the named insured’s permittee. Hinchey v. National Surety Co., 99 N. H. 373, 111 A. 2d 827 (Sup. Ct. 1955).

Implied authority to delegate the use of the insured automobile may be gathered not only from the scope of the initial permission but also from the subsequent conduct of the named insured and his permittee. Boyer v. Massachusetts Bonding & Ins. Co., supra; United Services Automobile Ass’n Co. v. Preferred Accident Ins. Co., supra; Holthe v. Iskowitz, 31 Wash. 2d 533, 197 P. 2d 999 (Sup. Ct. 1948); Odden v. Union Indemnity Co., 156 Wash. 10, 286 P. 59, 72 A. L. R. 1363 (Sup. Ct. 1930). Cf. Trotter v. Union Indemnity Co., 35 F. 2d 104 (9 Cir. 1929).

In the present case, however, where the named insured expressly forbade his permittee to allow others to use his automobile, and where there was no conduct thereafter, that could be interpreted as a grant of authority to allow others to use it, there is no room for a finding of implied authority. However liberally we may wish to read the insurance policy in favor of coverage, there is no way to hold that the second permittee was using the automobile "with the permission of the named insured” short of ignoring the meaning of those words. Our consideration of the present case is limited by the facts as they were stipulated by the parties, presumably after a careful and intelligent appraisal of the circumstances. We are not confronted with the necessity or the opportunity of evaluating the nuances of oral testimony, or the inferences to be drawn therefrom. Rather, we are enjoined to deal solely with the bald stipulated fact that the named insured expressly prohibited his permittee from allowing another to use the insured automobile.

A different case would be presented where the named insured expressly forbade his permittee to allow anyone else to operate the insured vehicle, and contrary to these instructions the permittee allowed another to drive, but the purpose to which the vehicle was being put was within the scope of the initial permission. Such would be the case, for instance, where a father permitted his son to use the car for social engagements, and, while “double-dating,” the son, contrary to his father’s orders, turned the wheel over to a fellow occupant. In those situations it has been held that even though the car was being operated contrary to the named insured’s initial grant of permission, yet the driver is an additional insured because the use of the car was an authorized one. Loffler v. Boston Ins. Co., 120 A. 2d 691 (D. C. Mun. Ct. App. 1956); Brooks v. Delta Fire & Cas. Co., 82 So. 2d 55 (La. Ct. App. 1955). See Arcara v. Moresse, 258 N. Y. 211, 179 N. E. 389 (Ct. App. 1932). Contra, Prisuda v. General Cas. Co. of America, 272 Wis. 41, 74 N. W. 2d 777 (Sup. Ct. 1956).

The reasoning of those cases has no application here. Rogers was expressly forbidden to allow others to use the automobile. Yet he allowed Tureckie to use it for the latter’s own personal business. Rogers was not a passenger in the car, and there was no benefit running to him other than the suggestion that Tureckie’s use “served Rogers’ pleasure.” If this were enough to overcome an express prohibition by the named insured, the prohibition could be nullified by the permittee, whenever such a course served his pleasure, simply by the expedient of ignoring it. Except in case of duress, one never permits another to use an automobile unless some degree of pleasure or advantage is expected from the loan.

We are unable to hold that Tureckie’s forbidden use of the Ranaletti automobile in these circumstances rendered him an additional insured. To do so would be to infer an intent that is utterly inconsistent with a clearly expressed prohibition, and to disregard the clear and simple words of the insurance policy. Neither our own research nor that of counsel has turned up a single case holding that a second permittee, who uses an insured automobile for his own purposes, unaccompanied by the first permittee, and against the express instructions of the named insured as to use, is nonetheless using the automobile with the permission of the named insured. See Farmer v. Fidelity & Cas. Co., 249 F. 2d 185, at p. 188 (4 Cir. 1957); 26 Insurance Counsel Journal 262, at p. 263 (1959). Every case that we have found in other jurisdictions is to the contrary and supports our conclusion. Carlton v. State Farm Mut. Automobile Ins. Co., 309 P. 2d 286 (Okla. Sup. Ct. 1957); Hopson v. Shelby Mut. Cas. Co., 203 F. 2d 434 (4 Cir. 1953); Norris v. Pacific Indemnity Co., 39 Cal. 2d 420, 247 P. 2d 1 (Sup. Ct. 1952); Clemons v. Metropolitan Cas. Ins. Co., 18 So. 2d 228 (La. Ct. App. 1944); Dodson v. Sisco, 134 F. Supp. 313 (D. C. W. D. Ark. 1955). See Farmer v. Fidelity & Cas. Co., supra; Cocos v. American Automobile Ins. Co., 302 Ill. App. 442, 24 N. E. 2d 75 (Ct. App. 1939). Cf. Arcara v. Moresse, supra. See also Annotation 160 A. L. R., 1195 at p. 1206 and 1209 (1946); Annotation 5 A. L. R. 2d 600, at p. 657 (1949); 5A Am. Jur., Automobile Insurance, § 96 (1956).

The defendant company receives premiums in return for its agreement to insure any person driving the insured automobile, just so long as the use is with the permission of the named insured. It may seem odd, in these circumstances, that the defendant company should be able to withdraw its protection solely on the basis of an avuncular admonition that in all probability was made without any thought of insurance coverage. The public interest might be better served if comprehensive liability policies were written to cover every driver of an insured automobile, without regard to intra-familial instructions given by laymen unfamiliar with insurance law. But they are not so written. And such arguments must be addressed to the Legislature, whose power to protect the public in this area far exceeds ours.

At the present time, New Jersey’s Motor Vehicle Security-Responsibility Law is satisfied by a liability policy that covers any person using the insured automobile “with the express or implied consent of the insured.” L. 1952, c. 173, §§ 24-26, N. J. S. A. 39:6-46-48. Until the Legislature chooses to set a higher standard, we cannot. The liberal construction that we give to insurance contracts in favor of coverage cannot go to the extent of refusing to give effect to their legally-unforbidden terms. The insurance contract in question contains a limitation of coverage that looks to the named insured’s instructions as to the use of the insured automobile. However we may view this limitation in terms of the protection of the injured public, we are not at liberty to ignore it.

Affirmed.