Ranger Insurance v. Nationwide Mutual Insurance

Lowe, J., delivered the opinion of the Court. Appeals frequently become necessary because a party assumes that a trial judge knows as much as he does. 1 Error occurs when the trial judge makes the same assumption. Ranger Insurance Company (Ranger) sued Nationwide Mutual Insurance Company (Nationwide) in the Superior Court of Baltimore City. The case was tried upon an “Agreed Statement of Facts” supplemented by a minimum of testimony and evidence.

The Agreed Statement of Facts hardly provided a skeleton of the case: “AGREED STATEMENT OF FACTS 1. On July 18, 1971 Budget Rent A Car rented to one John Carr an automobile which was involved in an accident on that day at the intersection of Belvedere Avenue and Bellona Avenue in Baltimore City, Maryland, while being operated by Carr. 2. At the time of the leasing of the vehicle, the rental agreement between Budget Rent A Car and Carr provided in pertinent part: ‘Customer shall be insured under Budget’s automobile liability insurance policy, but only if customer has no other liability insurance available to customer with respect to customer’s use of the rental vehicle. Limits of liability available under Budget’s automobile liability policy shall in no event exceed the limits specified in the Financial Responsibility Laws of this State.’ 3.

A copy of relevant portions of said policy of ⁴⁹⁰ automobile liability insurance issued by Ranger Insurance Company to Budget Rent A Car is attached hereto and is intended to be incorporated herein by reference. [2] 4. At the time of the accident of July 18, 1971, there was in full force and effect a policy of automobile liability insurance issued by Nationwide Mutual Insurance Company to Carr. A copy of relevant portions of said policy of automobile liability insurance issued by Nationwide Mutual Insurance Company is attached hereto and is intended to be incorporated herein by reference. 5. The accident of July 18, 1971 was caused solely by the negligence of Carr in his operation of the automobile rented by him from Budget Rent A Car.

As a result of said accident, bodily injuries and property damage have been settled by Ranger Insurance Company for the total sum of $5,000.00. Said settlement is fair and reasonable in amount.” Neither the record nor the extracts contain a policy from Ranger to Budget. More significantly, the relevant portions (i.e., an.alleged contingent clause) are nowhere to be found. The declaration, however, alleges that such policy did exist and that it contained a contingent insured clause insuring: “Any person or organization using a rental vehicle with the permission of the owner, but only if such person or organization has no other automobile liability insurance available to him for the limits of liability at least equal to the Financial Responsibility Limits, whether on a primary, contributory, excess, or any other basis with respect to his use of the rental vehicle.” By contrast, the Nationwide-Carr policy is in the record and ⁴⁹¹ was attached to the stipulation.

It contained an excess insurance clause which stated that: “ . .. the insurance with respect to temporary substitute automobiles ... shall be excess insurance over any other valid and collectible insurance.” Having settled the claim against Carr, after demand to defend Carr was made to Nationwide, Ranger sued Nationwide for indemnification, contending that its contingent clause prevailed over Nationwide’s excess clause, citing State Farm v. Universal Underwriters, 270 Md. 591 , as authority. At trial, Ranger produced no witnesses, but did introduce two exhibits: 1. a certificate issued by the Insurance Commissioner showing that a “Special Automobile Rental Liability Policy” was filed and approved by the State Insurance Division on December 15, 1971, and 2. the automobile rental agreement between John Carr and Budget. Nationwide then called an employee of the Insurance Division as its witness. Through him it introduced correspondence indicating that: 1.

On June 4, 1971 Ranger had submitted “a Special Automobile Rental Liability Policy for filing with your office.....” There is no indication who — if anyone — was the intended insured. 2. On July 9, 1971 a letter indicating disapproval was mailed by the Insurance Division to Ranger. The reason for disapproval was the policy’s “... failure to meet the Financial Responsibility Law....” 3. Ranger responded to that disapproval by letter dated July 15, 1971.

It recognized that the policy’s contingent insurance clause was one ⁴⁹² reason for the disapproval, but requested reconsideration. 4. An exchange of correspondence followed, including submission by Ranger of several registered amendments and endorsements. 5. After several endorsement proffers were rejected, the Insurance Division approved an endorsement on December 6, 1971 and the policy as a whole on December 15,1971. The trial judge decided that, under the Financial Responsibility Law, the Legislature intended: “ ... as a matter of public policy, that those who provide vehicles for hire must also protect the public by providing insurance coverage for those authorized to drive such rental vehicles.” He further held that the Insurance Commissioner’s initial rejection of the policy and the several endorsements was proper because Ranger’s policy did not provide primary insurance for Budget’s customers.

He held that Md. Code, Art. 66V2, § 8-101 reflected the intent of the General Assembly that such required insurance be primary insurance. That section reads: “(a) The Department 1 3 1 shall not register any motor vehicle, trailer or semitrailer to be rented, unless and until the person owning such vehicle shall certify financial responsibility as provided by this article, and such certification has been accepted by the Department, and the Department shall suspend the registration of any such vehicle whenever the Department ascertains that such owner has failed, or is unable, to maintain such proof of financial responsibility. (b) Certification required under this section shall cover every person using or operating a vehicle ⁴⁹³ under a rental agreement and shall also cover the person owning such motor vehicle. (c) Any person violating the provisions of this section shall be deemed guilty of a misdemeanor.” He, therefore, concluded that Ranger could not prevail against Nationwide because: “ . . .

(1) if the policy was in force, Ranger is primarily liable, and (2) if the policy was not in force, Ranger has no standing against Nationwide in a suit for indemnification.” Ranger does not question the judge’s alternate conclusion. Instead, Ranger disputes the holding that § 8-101 places the primary liability upon it. It further argues that the Insurance Commissioner wrongfully disapproved its policy and that it was, therefore, in force. From that premise it contends, as noted, that the contingent insured would prevail over Nationwide’s excess coverage clause.

But because Ranger failed to prove that the policy it allegedly issued Budget contained a contingent insured clause, we see no way we can reach the merits of Ranger’s arguments. For Ranger to have an enforceable claim against Nationwide it had to show, inter alia: that Nationwide issued an insurance policy to Carr and that the policy, by its terms, covered the July 18,1971 accident; that Ranger issued an insurance policy covering Carr and that the policy, by its terms, covered the July 18,1971 accident; and that Ranger’s responsibility was secondary to Nationwide’s. These prerequisites had to be more than merely alleged; they had to be proven either by evidence or by agreement between the parties. The first element was satisfied by the stipulation, in the Agreed Statement of Facts, that Nationwide insured Carr.

A copy of the pertinent terms of that policy was attached to the Agreed Statement of Facts. ⁴⁹⁴ While it was equally important that Ranger also establish that it insured Carr, the proof of this element was less than satisfactory. The existence of such a policy was only alluded to in the Agreed Statement of Facts, Nationwide never expressly admitted that Ranger had insured Carr, and a copy of that alleged policy was neither appended to the Agreed Statement of Facts nor introduced into evidence. Nevertheless, a fact-finder could reasonably infer that Ranger had issued some policy which purported to cover Carr. But a fact-finder would not be at liberty to speculate about the contents of that policy.

This is particularly true here, for the very heart of Ranger’s indemnification claim is its assertion that the policy contained a contractual absolution of responsibility to Carr and that,' by virtue of this particular clause, its responsibility to Carr was contingent upon Carr’s inability to collect insurance from Nationwide. It is, therefore, clear that Ranger must prove that its policy contained the alleged contingent insured clause. The only evidence before the court below of the contents of any Ranger policy was the blank form policy. This policy had been approved by the Insurance Commissioner on December 15, 1971, nearly 5 months after Carr’s accident.

Contrary to appellant’s contention in its brief, this policy was not appended to the Agreed Statement of Facts. Instead, it was attached to the certificate of approval from the Insurance Commissioner which was introduced at trial with the unenlightening proffer: “MR. SMALKIN: I would also