Pennsylvania Threshermen & Farmers' Mutual Casualty Insurance v. Travelers Insurance

Prescott, J., delivered the opinion of the Court. This is an appeal by Pennsylvania Threshermen & Farmers Mutual Casualty Insurance Company (Pennsylvania) from a declaratory judgment in favor of the Travelers Insurance Company (Travelers), declaring complete responsibility of Pennsylvania for the full amount of a settlement negotiated by both parties for the personal-injury claim of one Leonard F. Carnes, Jr. Pennsylvania’s insured, Dundalk Signs, Inc. (Dundalk), at the time of Carnes’ injury, was principally engaged in sign painting and the painting and lettering of vehicles. Joseph W. Wolf was its president, chairman of its board of directors, owner of 50% of its stock and the active head in running its business. Prior to the date of the accident which gave rise to Carnes’ claim, Chester J. Bartko, Travelers’ insured and an occasional customer of Dundalk, delivered his bus to Dundalk for some painting and lettering work.

Dundalk usually closed at noon on Saturdays. However, upon the Saturday when Carnes was injured, Bartko phoned Wolf and asked if the bus were finished, and was advised that some lettering remained to be done. Bartko stated that he needed the bus that day so as to have it available for Monday, and Wolf thereupon told Bartko he would finish the job himself after closing hours and would wait for Bartko to come for the bus. This he did.

Bartko arrived about midafternoon in his own car but without an extra driver for the bus. Bartko lived only two miles from the Dundalk shop and he asked Wolf to drive the bus to his home, promising ²⁰⁹ that he would return Wolf to the shop in his car. Upon Wolf’s refusal to drive the bus, Bartko then suggested that he would drive it and that Wolf might follow him to his home in Bartko’s car, after which Bartko would return Wolf to the shop, where he could pick up his own car to go home. Wolf agreed to this arrangement.

The record discloses that it was not standard practice for Dundalk to pick up and deliver the vehicles it had painted, although it had done so occasionally for other customers. In short, whenever this service was requested it was performed free of charge even though not considered a part of Dundalk’s normal business and even though it involved an additional expense to Dundalk to send out an employee for this purpose. While driving Bartko’s car and preparing to turn into his driveway, Wolf collided with Carnes. At this time, Bartko had an insurance policy upon his car with Travelers.

The pertinent part thereof in relation to the case at bar is an exclusionary clause therein. It reads, in part, as follows: “III. Definition of Insured. (a) With respect to the insurance for bodily injury liability and for property damage liability the unqualified word ‘insured’ includes the named insured and, if the named insured is an individual, his spouse if a resident of the same household, and also includes any person while using the automobile and any person or organization legally responsible for the use thereof, provided the actual use of the automobile is by the named insured or such spouse or with the permission of either.

The insurance with respect to any person or organization other than the named insured or such spouse does not apply: “ (1) to any person or organization, or to any agent or employee thereof, operating an automobile sales agency, repair shop, * * * with respect to any accident arising out of the operation thereof * * After the collision, Carnes filed suit to recover for his injuries and named Dundalk, Bartko and Wolf as defendants. Before trial, Travelers and Pennsylvania mutually agreed to a ²¹⁰ settlement figure of $10,800 with releases to all defendants. This sum was accepted by Carnes under a stipulation between Travelers and Pennsylvania that each would advance $5,400 to consummate the settlement, but that neither insurer would thereby waive any defense in its claim of non-coverage, nor thereby admit liability for damages arising out of the accident. It was further agreed that the controversy over insurance coverage and liability should be resolved by litigation.

The lower court found that the Travelers policy, because of the repair shop exclusion, did not provide Wolf with insurance coverage, but that the Pennsylvania policy did provide such coverage, and accordingly ordered reimbursement by Pennsylvania to Travelers in the amount of $5,400. At the time of the accident, Dundalk had a policy with Pennsylvania. Pennsylvania agreed to pay on behalf of the “insured” all sums which the insured shall become legally obligated to pay as damages for bodily injuries to any person “caused by accident and arising out of the hazards hereinafter defined.” Thereafter, the policy contains the following pertinent provisions : “Definition of Hazards” ifc. í}j 5jt “Division 2 — Premises — Operations — Automobiles Not Owned or Hired “The ownership, maintenance or use of the premises for the purpose of an automobile repair shop * * *, and all operations necessary or incidental thereto; and the use in connection with the above defined operations of any automobile not owned or hired by the named insured * * *. * * * * * * “HI Definition of Insured “With respect to the insurance under coverages A, B, and D the unqualified word ‘insured’ includes the named insured and also includes (1) any partner, employee, director or stockholder thereof, while acting within the scope of his duties as such, and any person or organization having a financial interest in the busi ²¹¹ ness of the named insured covered by this policy * s(c » It is conceded that the business of Dundalk is such that it is an “automobile repair shop” under both policies. Pennsylvania contends that although Wolf was driving Bartko’s car, this was not a “use [of an automobile not owned or hired by the named insured] in connection with the * * * operations” of Dundalk, but was merely a favor, a gratuitous undertaking, or an accommodation.

In other words, Wolf was merely acting as Bartko’s agent, which rendered Travelers responsible, but not it; and, in any event, Wolf was not driving a vehicle upon which Dundalk had worked, so as to bring the vehicle within the coverage of its garage policy. We shall consider Pennsylvania’s arguments in the reverse order that they are presented in its brief. It asserts, as indicated above, that at the time of the accident, the operation of the Bartko automobile “was not in connection with the question of [the] garage business, but was * * * entirely outside of the scope of coverage of the garage policy.” We have been cited no case, and we have found none, wherein this Court has been called upon to construe the specific, pertinent language used in Pennsylvania’s policy under similar circumstances to those in the case sub judice. However, in interpreting insurance contracts where there is no ambiguity, words are to be given their customary and normal meanings.

U.S. F. & G. v. National Paving Co., 228 Md. 40 , 178 A. 2d 872 ; Haynes v. American Casualty Co., 228 Md. 394 , 179 A. 2d 900 . It is obvious that the automobile driven by Wolf was “not owned or hired by the named insured,” therefore, in order to determine his coverage, vel non, under the garage policy, we need only decide whether its use was “in connection with the above defined operations,” namely, “the ownership, maintenance or use of the premises for the purpose of an automobile repair shop, * * * and all operations necessary or incidental thereto * * (Emphasis ours.) In construing this and similar language in insurance contracts such as “any accident arising out of the operation” of a repair shop (the language used in Trav ²¹² elers’ policy), the Courts have been reluctant to attempt to set forth a hard and fast definition thereof, preferring to base their decisions upon the facts and circumstances of each particular case, in which due consideration is given to such factors as the nature of the transaction, its connection with the business, and whether it is a natural and/or necessary incident of the operation thereof, though not necessarily foreseen or expected. Allen v. Travelers Indemnity Co., 187 A. 512 (Vt.); Ocean Accident & Guarantee Corporation v. Blackstock, Ltd., 181 S. E. 364 (Va.); Phoenix Assur. Co. v. Ocean Acc. & Guar.

Corp., Ltd., 357 P. 2d 642 (Colo.). Compare U.S. F. & G. v. National Paving Co., supra. 1 In disposing of the particular question under discussion, Judge Jones stated: “The remaining salient point is whether the use of the automobile was in connection with Wolf’s operation of the repair shop. It is found that it was. Dundalk Signs had no rule or policy prohibiting the delivery of vehicles to customers, it carried insurance to cover this very thing, and the