Summary
In Southern Fire Casualty Co. v. Vincent Wholesale Distributors, Inc., No. 02A01-9404-CV-00070, 1995 WL 522834 (Tenn. App. Sept. 5, 1995), the principles in Card were applied to facts involving a second permittee.
Summary of this case from Tennessee Farmers Mut. Ins. Co. v. MooreOpinion
C.A. No. 02A01-9404-CV-00070.
September 5, 1995.
Weakley Circuit No. 1391, Hon. David Hayes, Judge
P. ALLEN PHILLIPS, Waldrop Hall, P.A., Jackson, Attorney for Plaintiffs.
JEFFREY A. GARRETY, Garrety Sanders, P.C., Jackson, Attorney for Defendants.
AFFIRMED.
Southern Fire Casualty Company ("Southern Fire") filed a complaint for declaratory judgment in the Circuit Court of Weakley County to have that court determine whether Southern Fire was obligated to provide coverage and to pay any possible judgment against the estate of April D. Osborne, as a result of an automobile accident in which Edward Clay Wolfe and April Osborne were killed. Following a bench trial, the trial court found that there was no such obligation and entered judgment for Southern Fire. On appeal, defendants William and Linda Wolfe and the Estate of Clay Wolfe raise as the sole issue whether the trial court erred in finding no coverage. For the reasons stated below, we affirm.
We begin with the uncontradicted facts. Joe and Linda Vincent provided a 1988 Chrysler LeBaron for their daughter Kelly. Mrs. Vincent purchased the LeBaron for Kelly's use. The car was titled and registered in the name of Linda Vincent, but it was insured under a policy issued by Southern Fire to Vincent Wholesale Distributors, Inc., under an automobile fleet liability insurance policy. The corporation was owned by Vincent's father and two uncles, but Vincent was never involved with them in the operation of the business. Because of the policy's lower rates, all of the family's vehicles were insured under the corporation's fleet policy. At the appropriate time, Vincent paid the corporation his proportionate share of the premium based upon his obligation. The agent representing Southern Fire was aware that Kelly had possession and use of the car, as he had a list of the cars insured under the policy and knew who was driving them. No part of the premiums was ever paid by Kelly.
The policy contains the following provision:
The following are "insureds:"
a. You for any covered automobile
b. Anyone else while using with your permission a covered "auto" you own, hire or borrow. . . .
Under the terms of the policy, "You" is defined as the named insured shown in the declarations — i.e., Vincent Wholesale Distributors, Inc.
After finishing her freshman year at the University of Tennessee at Martin (UTM) in the Spring of 1989, Kelly enrolled in summer school. Although she lived with her parents during her first year, she moved in for the summer with her life-long friend, April Osborne, and a new college acquaintance, Heather Lilly.
Although there is some dispute as to what occurred on the night of the accident, the parties agree on the following three events. Several students from UTM held a party which the three roommates attended. April left the party with Clay Wolfe in the Vincent LeBaron. During the early morning hours of June 17, 1989, Clay Wolfe and April were involved in an automobile accident in which they sustained fatal injuries.
Here the testimony begins to differ. Kelly testified that on the night in question, she and Heather went to Kelly's boyfriend's apartment to watch movies. Later, Kelly and Heather returned to their apartment where they, along with April, prepared to go to a local nightclub. At the nightclub they heard about the party being thrown by several UTM students, and after returning to the duplex, decided to attend themselves. Kelly testified that she drove the LeBaron to the party, with April and Heather riding as passengers. When she arrived at the party, Kelly placed her keys under the seat of the car because she did not want to carry her bulky key chain with her. At no time during the party did Kelly converse with April. When Kelly left the party at 2:00 a.m., she went outside and the LeBaron was gone.
Kelly testified that when she discovered her car was missing, she threw a fit of anger. She stated that she had not given April permission to drive the car that night and that the two had not had any discussion about April driving the car. April did not tell Kelly that she was leaving the party, and Kelly did not see her leave. Kelly acknowledged that when other people had driven the car, they had first obtained permission from her to do so. She stated that she was not concerned that April might take the LeBaron that night because April had never given her any reason to think that she would do such a thing.
Jack Usrey testified that Kelly was upset when she came out and saw that the car had been taken. Another UTM student testified that he saw the LeBaron being driven from the party by a male and that April was riding in the passenger seat.
Heather King, who described herself as a "casual friend" of Kelly, testified that she had seen other people driving the LeBaron, but "just on occasion." She also testified that prior to the night of June 16, 1989, she had seen April drive the LeBaron one time without Kelly in the car.
Heather Lilly testified that April, not Kelly, had driven the LeBaron to the party and that she and Kelly rode as passengers. She stated that April placed the keys under the floor mat at Kelly's direction when they arrived there. Heather testified that she believed that April had Kelly's permission to drive the LeBaron to the party. She also testified that at one point when the LeBaron was in the shop, April had driven a rental car that was being used by Kelly.
Following the hearing, the trial court subsequently filed a memorandum opinion, in which it made the following findings of fact:
(1) Joe Vincent and his wife, Linda Vincent, purchased a 1988 Chrysler LeBaron automobile for their daughter, Kelly Vincent. This LeBaron automobile was titled in Linda Vincent's name. The vehicle was insured through a fleet policy of liability insurance issued to Vincent Wholesale Company, a corporation owned and controlled by Milburn
Vincent, Joe Vincent's father. This insuring of the LeBaron on a fleet policy was done for the convenience of the parties and there is no question but the fleet liability policy was in full force and effect on all relevant dates to the LeBaron.
(2) The real owner of the vehicle was Linda Vincent as the vehicle was registered to her; it was financed in her name and she placed it, along with her husband, in the possession of their daughter.
(3) That said vehicle was provided to Kelly Vincent for her sole use and possession.
(4) That during this period of possession, Kelly was a student in her freshman year at University of Tennessee-Martin, sharing an apartment with April Osborne and Heather Lilly.
(5) April Osborne and Kelly Vincent had been friends since their high school days.
(6) Joe Vincent and Linda Vincent had instructed their daughter, Kelly, not to permit anyone to operate any vehicle provided her — including the 1988 LeBaron. This occurred as late as June 16, 1989.
(7) Heather King had observed individuals other than Kelly Vincent driving her LeBaron convertible around Martin.
(8) On the evening of June 16, 1989, April Osborne drove Kelly Vincent's automobile to the party. Kelly Vincent and Heather Lilly were passengers in the car.
(9) The keys to the LeBaron were left on the floorboard of the vehicle; April Osborne placing them under the floor mat upon the direction of Kelly Vincent.
(10) April Osborne did not have express permission to leave the party in Vincent's LeBaron vehicle.
(11) Kelly Vincent was unaware her vehicle had been driven from the party by April Osborne on the evening of June 16, 1989.
Based on the above findings, the court held that Kelly was using the LeBaron as a first permittee of her mother. Because of her parents' express prohibition of Kelly's right to delegate use of the car to other drivers, Kelly lacked the authority to delegate use of the LeBaron to April. April's use of the car was not within the implied permission of Kelly as first permittee.
It is well settled that in the absence of facts showing that express or implied permission from the named insured to a second permittee, the second permittee is not covered under the omnibus clause of the insurance policy. See Schultz v. Tennessee Farmers Mutual Ins. Co., 404 S.W.2d 480, 482 (Tenn. 1966). Where the named insured is unaware of use by a second permittee, coverage will not exist, even where the first permittee is given complete dominion over the car. Id. at 484.
The general rule regarding coverage of second permittees is set forth by our Supreme Court in American Automobile Ins. Co. v. Jones, 45 S.W.2d 52, 53 (Tenn. 1932):
The insurer has a right to assume that the risk he undertakes shall not be enlarged. The extent of the risk is the basis of all tabulated premium charges. And this is one of the forms of insurance, of which fire policies are an illustration, wherein there is a recognized personal element resting on standards of character, responsibility, and competence. In this class of cases, theoretically, certainly, the insurer looks first to the standing and reputation of the named assured, and trusts him to select and delegate responsible [persons], only, the "use" or operation — controlling, guiding, driving — of its cars covered, and on this theory agrees to cover such "additional assured." No power passes, in the contemplation of the parties, to such an agent to delegate in turn this responsibility. Such a diversion of use can hardly be said to be impliedly with the consent of the named assured, or within the contemplation of the insurer. It is a departure too radical and foreign, and involves an unjustifiable extension of the risk covered by the contract.
If the named insured authorizes the first permittee to drive the car and specifically instructs him not to let anyone else drive it, or if the first permittee gives the car to the second permittee "against the instructions of the owner," clearly the second permittee is not covered. Messer v. American Mutual Liability Ins. Co., 241 S.W.2d 856, 857 (1951).
However, there is still no coverage even when the named insured gives the first permittee unqualified dominion over the car, unless some other circumstances appear. Card v. Commercial Casualty Ins. Co., 95 S.W.2d 1281, 1285-85 (1936). In Card, we find this statement of the law:
It is not necessary that the named insured signify his "permission" in any particular manner. It is sufficient if he signifies the permission by a course of conduct, and under some circumstances mere silence may be sufficient. In this sense "implied permission" from the named insured would be sufficient to bring a driver within the additional assured clause.
But such "implied permission" must be the act or conduct of the named assured. It must amount to an intended selection of the person to operate the car. No implied permission can arise merely because a man obtained possession of the car, without the knowledge of the named assured, regardless of what permission was given by other persons. Of course, the named assured could transmit his permission through an agent or in any other manner. The essential point is whether the named assured exercise his personal discretion and grants his own permission to the particular person.
Id. at 1285.
This case having been decided by the trial court without a jury, our scope of review is de novo upon the record in the trial court, and all findings of that court come to us with a presumption of correctness. Absent an error of law, unless the evidence preponderates against such findings, we must affirm. In our opinion, the evidence does not preponderate against the finding of the trial court. Accordingly, the judgment of the trial court is affirmed. Costs in this cause on appeal are taxed to defendants, for which execution may issue if necessary.
_____________________________________ TOMLIN, P.J., W.S.
_____________________________________ McLEMORE, SP. J. (CONCURS)
_____________________________________ FARMER, J. (CONCURS)