Galford v. Nicholas, Adm.

Bruñe, C. J., delivered the opinion of the Court. The plaintiff, Herbert A. Galford, appeals from a judgment of the Circuit Court for Montgomery County in favor of the sole appellee, National Indemnity Company, entered upon the appellee’s motion for summary judgment. Galford was a ²⁷⁷ guest-passenger in an automobile owned and operated by one Hollis Lynn Nicholas. The car went off a road in Maryland and struck a tree.

Nicholas and another occupant of the car were killed, and Galford was injured. He brought this suit in two counts: the first (not pertinent on this appeal), for damages due to alleged negligence of Nicholas, against his Virginia domiciliary administrator and his Maryland ancillary administrator; the second, for a declaratory judgment against Nicholas’ administrators and also against National Indemnity Company (National), as Nicholas’ insurer. 1 Nicholas was a resident of Virginia, and in 1957 he was a minor. In that year he was twice convicted in Virginia of reckless driving, and, presumably because of those convictions, his license to operate an automobile was revoked for a year by the proper Virginia authority. (See Virginia Code, 2 Section 46.1-417.) On or about May 13, 1959, he obtained the reinstatement of his driver’s license, as permitted by Virginia law, by furnishing proof of his financial responsibility.

Such proof was furnished by a certificate issued by National showing that it had issued to Nicholas an operator’s policy, dated May 12, 1959, and designated by its number, complying with the requirements of the Virginia Financial Responsibility Law. At that time Nicholas did not own an automobile. He acquired one early in June, and on his application stating ²⁷⁸ among other things that he was covered by liability insurance issued by National and referring to the above policy by number, he was issued a title therefor and registration tags by the Virginia Division of Motor Vehicles on June 4, 1959. No change was made in National’s policy, no owner’s policy was obtained, and no new certificate was filed by National.

(We suppose that no check of National’s certificate previously filed was made, though this is not stated.) The accident which killed Nicholas and another and severely injured Galford occurred in Maryland a little over a month later, on July 10, 1959. The controversy here is whether National’s operator’s policy issued to Nicholas in Virginia pursuant to the Motor Vehicle Safety Responsibility Act of Virginia (referred to herein as the Virginia Financial Responsibility Law) does or does not afford protection to Galford for injuries sustained by him in an accident which occurred in Maryland when Nicholas was the driver of a car which he owned. The case involves the terms of National’s policy and the Motor Vehicle Laws, particularly the Financial Responsibility Laws, of the two States. The appellant contends that National’s liability should be determined under the Financial Responsibility Law of Maryland.

He starts with the proposition that an operator’s policy offered to show proof of financial responsibility under the Maryland Law must cover any automobile operated by the insured, whether owned by him or not. For reasons stated below in comparing the Virginia and the Maryland Laws on this subject, we shall accept this proposition as correct. For this proposition to be of any avail to the appellant, however, it must be established that the Maryland Financial Responsibility Act does apply. This result might be reached on any of three possible grounds: (i) that the Virginia law under which the policy was issued and certified so requires; (ii) that the policy itself so provides; or (iii) that the Maryland Financial Responsibility Law itself can and does so require.

We shall turn first to the Virginia law since Nicholas had to furnish proof of financial responsibility to get his driver’s license reinstated under Section 46.1-438 (b) of the Virginia ²⁷⁹ Code. One of the means of furnishing such proof under Section 46.1-468 is by proof that “[a] policy or policies of motor vehicle liability insurance have been obtained and are in full force and effect.” Under the Virginia Financial Responsibility Law either of two types of policy is acceptable. One is an owner’s policy, which, under Section 46.1-504 of the Virginia Code, shall designate or accurately describe all motor vehicles with respect to which coverage is to be granted, and shall insure the named insured and any other person using any such vehicle with his permission “against loss from any liability imposed by law for damages, caused by accident and arising out of the ownership, use or operation of such motor vehicle or motor vehicles within this State [or] any other state in the United States * * * subject to a limit * * * with respect to each motor vehicle” of $15,000 for bodily injuries or death as to any one individual and $30,000 in any one accident and $5,000 as to property damage in any one accident. The other acceptable type of policy is an operator’s policy, which is described in Section 46.1-505 of the Virginia Code.

Such a policy covers “damages * * * because of bodily injury to or death of any person and injury to or destruction of property arising out of the use by him [the insured] of any motor vehicle not owned by him, within the territorial limits and subject to the limits of liability set forth with respect to an owner’s policy.” (Emphasis supplied.) A comparison of the Virginia Financial Responsibility Law with that of Maryland will show that the corresponding Maryland provision omits from the words above italicized “not owned by him.” See Code (1957), Art. 66½, § 140, which reads as follows: “When the person required to give proof of financial responsibility is not the owner of a motor vehicle, such person may give proof of financial responsibility as required by this article by means of an operator’s policy of insurance, insuring such person in the operation of any motor vehicle.” (Emphasis supplied.) ²⁸⁰ The difference between the two types of statute seems clear, and it has been recognized by the courts. Both North Carolina and South Carolina have had statutes of the same type as the Virginia Financial Responsibility Law, and they have been held not to require that the coverage under an operator’s policy extend to motor vehicles owned by the insured. See Booth v. American Casualty Co., 261 F. 2d 389 (C. A., 4); Lynn v. Farm Bureau Mutual Automobile Ins. Co., 264 F. 2d 921 (C. A., 4), and cases therein cited.

Such was also the law of Oregon, which (prior to 1955) had a statute like the Virginia statute. Ohm v. Firemen’s Fund Indemnity Co., 211 Or. 596 , 317 P. 2d 575 . As was said by Perry, C. J., in the latter case ( 211 Or. at 601 ) : “The fact that an operator’s policy is specifically referred to, distinctly and separately from an owner’s policy, and the liability coverage for ownership is more extensive than that of a nonowner, shows conclusively that the legislature intended an operator’s policy to retain its distinction, but still remain within the sanction of the Act as a whole.” An opposite result has been reached under the Maryland statute because of the obvious difference in language. See Inland Mutual Ins.

Co. v. Stallings, 162 F. Supp. 713 (D. C., Md., Thomsen, C. J.), affirmed, 263 F. 2d 852 (C. A., 4, opinion by Sobeloff, C. J.). Judge Sobeloff clearly pointed out the distinction between the two types of statute in the Inland case. If further emphasis upon this difference were needed, it might readily be found in the fact that Judge Sobeloff also wrote the opinion in Lynn v. Farm Bureau Mutual Automobile Ins. Co., supra.

The same construction of the Maryland statute was recognized by this Court, though such construction was not there contested, in Liberty Mutual Ins. Co. v. American Automobile Ins. Co., 220 Md. 497, 499 , 154 A. 2d 826 . In the instant case, an endorsement forming a part of National’s policy headed “Non-Owner’s Policy” thus stated an exclusion from coverage: “The insurance does not apply * * * as respects the named insured, to any automobile owned by the named insured.” This exclusion from coverage under an operator’s policy is expressly authorized by Virginia Code, Section 46.1-505 when such a policy (as distinguished from ²⁸¹ an owner’s policy) is offered or certified as proof of financial responsibility under the Virginia Financial Responsibility Act.

We find nothing in the Virginia statutory geographical coverage requirements applicable to such a policy to lead to a different conclusion. It would be a strange construction of those requirements to find in them an implied negation of what seems to us an explicit statement of a permissible exclusion. Keeping the above endorsement in mind, we next examine Condition 9 of the policy (which is said to be a standard clause). Condition 9 reads, in pertinent part, as follows: "Financial Responsibility Laws—Coverages A and B: 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 *, such insurance as is afforded by this policy for bodily injury liability * * shall comply with the provisions of such law which shall be applicable with respect to any such liability arising out of the ownership, maintenance or use of the automobile during the policy period to the extent of the coverage and limits of liability required by such law, but in no event in excess of the limits of liability stated in this policy.” The simple but salient fact is that National’s policy was not certified as proof of financial responsibility under the law of Maryland.

We find nothing in the Virginia law or in Condition 9 which reads or requires reading into the policy the terms of the financial responsibility law of any state other than Virginia—the state in which the policy was issued and in which it was certified to enable a resident