Hardware Mutual Casualty v. Same

Bond, C. J., delivered the opinion of the Court. Recovery was had in these two suits on a policy of automobile insurance issued to the owner, by judgment creditors of a person using the car with the owner’s consent, and held liable for damages caused in a collision. The insurer denies liability under the terms of the policy. The cases have been argued together.

Vaughn S. Gordy was the owner, and his policy contained the omnibus clause insurance “not only the named insured but also any person while using the automobile and any person or organization legally responsible for the use thereof * * * provided further that the actual use is with the permission of the named insured.” Gordy kept the car for the use of his granddaughter, Mrs. Jaqueline W. Phillips, and her mother, and Mrs. Phillips regularly kept the key and did all the driving. While out in it, she had, shortly prior to the collision, at the request of Philip C. Harrison who accompanied her, let him drive, and the collision occurred while Harrison was driving. A truck owned by Engel and Spector was struck and damaged, and certain machines being carried in it, owned by the appellee, Mitnick, were also damaged. There is no evidence that the owner, Mr. Gordy, ⁶⁰⁶ knew of Harrison’s driving the car, or had consented to it; on the contrary, the only testimony on the point was that he had instructed his granddaughter to let nobody but herself drivé it.

A suit by Engel and Spector against Mr. Gordy, Mrs. Phillips, and Harrison, tried first, resulted in a directed verdict for Mr. Gordy, and -judgment against the other two defendants. The judgment against Harrison was entered by default. A suit by Mitnick, then called for trial, was’ disposed of by a stipulation that in view of the identity of evidence relied upon in both suits, if the judgment against Mrs. Phillips in the first suit should be affirmed on appeal she would confess a judgment in favor of Mitnick for $1,200, and that if no appeal should be entered by her she would still confess judgment for that sum. She did not appeal, and the judgment against her in the Mitnick suit was entered accordingly.

No satisfaction was obtained on either judgment or writs of fieri facias, and suits were entered by these judgment creditors of Mrs. Phillips on the policy held by Mr. Gordy. In addition to a defense on the terms of the policy, there is one of a failure of Mrs. Phillips (if she be taken to be one of the insured) to co-operate in resisting the suits by making a misrepresentation to the insurance company’s agents and attorneys. There is evidence that when she had reported the accident to them she had stated that she was driving the car when it occurred, with her grandfather’s consent, and on that statement the insurer had instructed its attorneys to defend the suits then entered. But four months later she made known to the agent and the attorneys that Harrison had been driving then.

She had made the first statement deliberately to avoid worrying her grandfather, who was old. Upon her correcting it, she signed an agreement that continuation of the insurer’s attorneys in the defense of the suits should not be construed as a waiver of its rights, if any, to deny liability under the policy. ⁶⁰⁷ This court is unable to agree with the contention that the granddaughter, Mrs. Phillips, was not under this policy an insured for whose judgment debt the insurer would in any case be liable. It is argued that the words “person using,” and “use,” in the omnibus clause, refer to the actual driving of the car, not to taking the car out and controlling the trip while driven by another. But using a car in the ordinary acceptation of the words seems clearly to include a borrower’s making use of it by riding while driven by another.

Mrs. Phillips was “still the director of the enterprise, still the custodian of the instrumentality confided to [her] keeping, still the master of the ship.” Grant v. Knepper, 245 N. Y. 158, 165 , 156 N. E. 650, 652 , 54 A. L. R. 845; Arcara v. Moresse, 258 N. Y. 211 , 179 N. E. 389 ; Johnson v. O’Lalor, 279 Mass. 10 , 180 N. E. 525 . And see Appleman, Automobile, Liability Insurance, 1938 Ed., p. 107 and cases cited. The case is to be distinguished