Peninsula Insurance v. Knight

McWilliams, J., delivered the opinion of the Court. Our task here is to construe, in the context of facts to be related, an exclusionary clause in a policy of insurance issued by the appellant (Peninsula) to the appellee, Ronald Lester Knight (Ronald). Peninsula denied coverage to Ronald because the claims against him arose out of bodily injury to persons “related [to him] by blood or marriage and * * * [who are] resident [s] of the same household as [Ronald],” namely, his father Robert L. Knight and his mother Frances A. Knight. The words “resident” and “household” are the sand in the gears.

In 77 C.J.S. Resident at 305 (1952) it is said: “The word ‘resident’ is in common usage, and many definitions of it are to be found in the decisions. It is, nevertheless, difficult to give an exact, or even a satisfactory, definition, for the term is flexible, elastic, slippery and somewhat ambiguous.” Judge Prescott (later Chief Judge), writing for the Court, commented on the plasticity of the words “reside” and “residence” in Gallagher v. Board of Supervisors of Elections, 219 Md. 192, 202 (1959) : “It seems to be universally acknowledged that the words ‘reside’ and ‘residence’ are legal ‘legerdemains’ of no small importance. This Court has stated that ‘[a] 11 agree that the word “residence” is, in itself susceptible of different meanings,’ Shaeffer v. Gilbert, 73 Md. 66, 69 , 20 A. 434 , and ‘[t]he term residence is one which is used to signify different things.’ Harrison v. Harrison, supra [ 117 Md. 607 ]. In his noted work, The Conflict of Laws, Professor Beale in Volume I, Section 10.3, states: ⁴⁶⁴ ‘Residence, then, is a word which may bear different shades of meaning according to the context.

It may mean something more than domicil: a domicil, namely, at which the party actually dwells. On the other hand, it may mean something less than domicil: a dwelling-place adopted for the time being, but without such an intention of permanent abode as to create a domicil there. ‘The word “residence” is often used in statutes. When it is used, there is room for difference of interpretation. As used in a statute, the word may mean a domicil; or it may mean a dwelling-place, which lacks the legal requirements of domicil.’ “There is little doubt that the terms ‘reside’, ‘residence’ and ‘domicile’ have been somewhat puzzling to the Courts, textwriters and lexicographers not only in this country but throughout the world.

Kennan, Residence and Domicile, Ch. 1. Some states have made statutory definitions of one or more of the terms; but, where there is none, all Courts seem to agree that they must be construed in accordance with the context and the purpose of the constitution, charter, statute or instrument in which they are found.” (Emphasis added.) When Peninsula issued its policy to Ronald, on 29 May 1965, he was living with his wife and two children at 918 Hanover Street, Salisbury, Maryland. In March 1966, dissatisfied with his pay check at the Campbell Soup Company in Salisbury, he quit and went to work for Proctor Silex Corporation in Arbutus, a suburb of Baltimore. At first he spent several nights a week with relatives in Severna Park, several nights with his mother and father in Queenstown and the rest of the time with his wife in Salisbury.

Queenstown is 65 miles closer to Baltimore than Salisbury. Worn out by the commuting ⁴⁶⁵ he asked his father and mother to take them in until he could find a house nearer his work. In April they gave up the house in Salisbury and moved to the parental home. Ronald, his pregnant wife and the children occupied one bedroom, their furniture was stored in the attic and they shared the kitchen and other rooms with his parents.

They contributed $20 per week to the cost of food. Ronald tried, without success, to find a house near the Eastern Shore end of the Chesapeake Bay Bridge. Early in May he found a house, not yet finished, near Baltimore. Having been promised June occupancy he deposited $100 of the $118 monthly rental.

The baby was due around 18 May. Saturday, 14 May, was the date of the accident. Ronald’s wife and both of his parents were injured and taken to the hospital. His father and his wife were discharged several days later.

His mother stayed for nearly two weeks. The baby was born 31 May. The following excerpt from Ronald’s testimony explains the change in his plans: “Q. Did you continue with your plans to move to Baltimore? A. No, sir. “Q. Why?

A. Well, just seemed like since I had gone up to Baltimore the expense itself of running back and forth and finding a home and the baby and just everything just piled up at one time and it just seemed like here I had moved up there to get ahead, because it was a better job and more money and it was day shift, that I was — that I’d be getting ahead, but it just reversed itself, going backwards. All of my expenses of riding back and forth, I was just going deeper in debt. And, when the accident happened that was it. I called Campbell Soup Company the following day and asked if I could come back to work here and he said that I could.

And, I said, ‘Well, I’ll be back as soon as the baby is born.’ I didn’t want to move my wife until the baby was born. ⁴⁶⁶ “Q. And, then, you moved back to Salisbury on what date ? A. I come back June the first and I started work the June the second. “Q. When did your family come back? A. My wife came back a week later.” On 16 May, two days after the accident, Ronald gave a statement to Peninsula’s adjuster. The following is an excerpt therefrom: “I am living with my parents in Queenstown at Box No. 132 and I am working in Baltimore, Md. I work at Proctor Silex Corp. in Arbutus — as a maintenance mechanic.

I formerly lived in Salisbury, Md. and worked as a maintenance mechanic at Campbell Soup Co. I have been living with my parents for just under two months.” On 1 June 1967 Ronald’s parents filed suit against him and Donald Tolson to recover damages for their injuries. On 20 November 1967 Tolson, to his own use and to the use of Nationwide Mutual Insurance Company, 1 filed a cross-claim against Ronald. Peninsula concedes coverage as to Tolson’s cross-claim. Sheldon Seidel, general counsel for Peninsula, who had entered his appearance for Ronald in his parents’ suit, testified (in the case at bar) that he was unaware of the fact that Ronald had been living with his parents until, on 1 November 1967, he reviewed the answers to some interrogatories.

Peninsula then employed present counsel to file the petition for a declaratory judgment which is the subject of this appeal. Ronald, Tolson, Nationwide and Ronald’s parents were named as defendants. The parents, answering the petition, declared that Ronald was “merely a temporary guest in their household” at the time of the accident and not “ ‘a resident of the same household’ as or with” themselves. Nationwide, in its answer, took the position that “the home of the parents was merely an interim abode for ⁴⁶⁷ [Ronald] Knight during a move of his own family from Salisbury to Baltimore.” Tolson, in his answer, adopted the position (using the same language) taken by Nationwide.

The case was tried before Travers, J., sitting without a jury, on 25 September 1968. In an opinion filed 15 November, Judge Travers expressed the “belief that the parties never intended to exclude the policy holder from protection against liability in the suit instituted in this case.” He thought “that the most that can be made of his [Ronald’s] sojourn at the home in Queenstown was temporary in character and with no idea of, in any sense, of making it permanent.” On 2 December he filed the order from which this appeal was taken. I. The milieu for our decision here was set by Chief Judge Hammond in State Farm 2 v. Briscoe, 245 Md. 147, 151 (1967). He said, for the Court: “The purpose of the household exclusion is so obviously to protect the insurer against collusive or cozy claims, to exempt him from liability stemming from one whose natural ties and pulls are likely to favor a claimant who lives in the same household, that the courts have unhesitatingly recognized that purpose and excluded from policy coverage claimants who live in the same household as the named insured.

State Farm Mut. Automobile Ins. Co. v. James (4th Cir.), 80 F. 2d 802, 803-04 ; Tomlyanovich v. Tomlyanovich (Minn.), 58 N.W. 2d 855, 862 ; Puller v. Puller (Pa.), 110 A. 2d 175, 178 ; State Farm Mutual Automobile Insurance Co. v. Ward (Mo.), 340 S.W. 2d 635 .” In like vein, Judge Soper, over 30 years ago, in State ⁴⁶⁸ Farm v. James, 80 F. 2d 802 (4th Cir. 1936), announced the sentiments of his court: “If in accord with the general rule of interpretation, the meaning of the word ‘household’ in the policy under consideration is determined in the light of the situation in which it was used, there can be no doubt that it was intended to embrace such a person as the plaintiff in this case. Obviously the exception was intended to restrict the company’s liability, and the specific purpose was to safeguard the company against the natural and inevitable partiality of the assured to an injured person if he should happen to be a member of the same family circle.

This purpose, manifest to any reasonable person, was well described in Cartier v. Casualty Co., supra, 84 N.H. 526 , page 528, 153 A. 6, 7 [1931], as follows: ‘In considering the purpose of the excepting clause of the policy it is clear enough that it was meant to avoid the insurer’s liability to indemnify for injuries to members of the insured’s household, whether or not he was its head. The natural tendency of one insured to strengthen or enlarge the evidence of liability to members of his household for accidents insured against increases the hazard of liability under the policy in such cases over that for accidents to others. Without actual dishonesty, the disposition to favor those close to one reflects itself in opinions and judgments, and one insured is more likely to concede by admission or nonresistance blame for hurting a member of his household than for doing harm to others.’ ” Id. at 803-04. Since there seems to be no decision of this Court precisely in point Peninsula supports its position with decisions of other jurisdictions in which generally similar factual situations prevail.

The appellees, on the other ⁴⁶⁹ hand, support their contentions with decisions of still other jurisdictions in which contrary results have been reached on generally similar factual situations. The comment of a California appellate court, in Cal-Farm Ins. Co. v. Boisseranc, 151 Cal. App. 2d 775 , 312 P. 2d 401 (1957), suggests a likely reason for the conflicting decisions : “The parties refer to many cases which discuss the terms here involved. [Citing cases.] While the cases do not all appear consistent, it can generally be stated that, insofar as the cases involve insurance policies, they can be roughly divided into cases involving policies excluding from coverage of the policies members of the insured’s household, and those extending coverage to such persons.

Both attempt to apply the rules of construction above discussed. As a result, in the extension cases the questioned terms are broadly interpreted, while in the exclusion cases the same terms are given a much more restricted interpretation. This is necessary because in both situations the courts favor an interpretation in favor of coverage.* *. “These cases illustrate that the interpretation of the terms involved is not fixed but varies according to the circumstances of the case. They also demonstrate that most courts will interpret the terms so as to extend the coverage if this can be done under any reasonable interpretation of the facts.” Id. at 405-06.

The decisions relied upon by Peninsula, except for Jamestown Mut. Ins. Co. v. Nationwide, 266 N.C. 430 , 146 S.E. 2d 410 (1966), deal with exclusionary clauses. In Dressler v. State Farm, 376 S.W. 2d 700 (Tenn. 1963), the insurance afforded by the policy did not apply : “To bodily injury to the insured or any member of the family of the insured residing in the same household as the insured.” ⁴⁷⁰ Dr. Stanley Dressier, upon his graduation from medical school in Memphis, where he had been living with his wife and child, accepted an internship in Chattanooga where his parents lived.

Until they could find living quarters of their own they moved into the first floor apartment of the converted two story dwelling belonging to Dr. Dressler’s parents, who moved into the upstairs apartment. The two Dressier women planned the cooking together and shared the household food and maid expenses. Except for sleeping the downstairs apartment was always open to and used by Mrs. William Dressier as though it were her home. Dr. Dressier “was on the lookout for a suitable apartment,” but he had not rented one.

The “arrangement was regarded by all of the parties as temporary.” After discussing the cases cited by the parties the court said : “It is to be seen that no rule applicable alike to all cases can be formulated. Each case must be decided upon its own particular facts. Running through the cases, however, where a family relationship has been held to exist are such things as having the free use of the house, sharing expenses, cooking together and eating together at a common table. And, of course, the relationship of parent and child may be presumptive of a family relationship even though the child be an adult and married with children of his or her own.” Id. at 702 .

In Third Nat’l Bank v. State Farm, 334 S.W. 2d 261 (Ky. 1960), Joyce Sewell and her small daughter occupied a bedroom in the home of her parents, the MeBrayers, and shared the bathroom with her brother and his wife, Phyllis, who, with their child, occupied another bedroom. Joyce paid her parents $10 per week; the brother and his wife paid $12. Joyce worked and paid Phyllis $10 per week to look after her child. They all shared the use of the living room, kitchen and large bathroom.

The question arose, after an accident, whether ⁴⁷¹ Joyce and Phyllis were members of the same family who resided in the same household. There the court said: “We are impressed by the fact that the clear purpose of the exclusion was to protect the insurer from over-friendly law-suits, which nearly always would exist where plaintiff and insured defendant are bound by ties of kinship and are living together. In the light of this purpose we cannot escape the conclusion that the McBrayers and Joyce were all of the same family and lived in the same household.” Id. at 263 . In Rathbun v. Aetna Casualty and Surety Co., 144 Conn. 165 , 128 A. 2d 327 (1956), Ina, Joseph, Charles and their mother lived together until July 1941 when Ina married and moved out.

Four months later her husband joined the armed forces, whereupon Ina stored her furniture and resumed living with her mother and brothers. She went to work and paid her mother for her room and board. She intended to leave her mother’s home and return to her husband upon his return. In January 1942 Joseph, while driving Ina’s car, injured Rathbun.

Although Ina’s arrangements with her mother were clearly temporary, the court held that since Ina and Joseph were members of the same household Joseph was not covered under the terms of