State Automobile Mutual Insurance v. Williams

Levine, J., delivered the opinion of the Court. This appeal by State Automobile Mutual Insurance Company (State) is from a summary judgment granted to appellees, Diana 0. Williams and Donna L. Arnold, and their respective husbands, George H. Williams, III, and W. Perry Arnold. They had brought a declaratory judgment proceeding to determine liability under a family automobile policy issued by State to its insured, Robert H. Giese (Giese).

After cross-motions for summary judgment had been filed, the Superior Court of Baltimore City (Sodaro, J.) granted appellees’ motion, and from that ruling this appeal is taken. The facts are simple and undisputed. In recounting them, we shall make liberal use of the “Stipulation of ⁵³⁷ Facts” entered into between the parties. On March 24, 1969, Giese, who was employed at a location known as Sutton Place Apartments in the City of Baltimore, -desired to visit his mother-in-law who was a patient at Maryland General Hospital.

He asked Michael A. Taylor (Taylor), an employee of Maryland Management Company, which operated a parking garage in Sutton Place Apartments, to drive him to the hospital. Taylor, who knew Giese, agreed to do so, and used for that purpose an automobile belonging to Miss Lelia C. Walsh, a coworker of Giese. Neither Giese nor Taylor had obtained Miss Walsh’s permission to use her automobile on that occasion; nor did either one “reasonably” believe that he had her permission to use the car. Taylor drove Giese directly to the hospital, a distance of only five or six blocks, and, after having discharged him and while returning directly to his employer’s garage, collided with an automobile occupied by appellees.

As a result of that collision, they sustained personal injuries for which they filed suits against Miss Walsh, Giese, Taylor and their employers. The jury in that case returned verdicts in favor of appellees against Giese and Taylor in the total sum of $48,835.45, and also found that Taylor was acting as Giese’s agent while returning the Walsh car to Sutton Place Apartments. Having denied that it covered Giese for this accident because he did not have permission to use the Walsh car, State defended the claim against him pursuant to a “reservation of rights;” and has declined to pay the judgment entered on the verdicts. The dispute here focuses on the interpretation to be given the following provision in the policy issued to Giese by State, which we reproduce here in its exact typographical form: Persons Insured.

The following are insureds under Part I: (a) with respect'to the owned automobile, (1) the named insured and any resident of the same household, (Ü any other person using such automobile with the permission of the named insured, provided his actual operation or (if he is not operating) his other actual use thereof is within the scope of such permission, and ⁵³⁸ (3) any other person or organization but only with respect to his or its liability because of acts or omissions of an insured under (a) (1) or (2) above; (b) with respect to a non-owned automobile, (1) the named insured, (2) any relative, but only with respect to a private passenger automobile or trailer, provided his actual operation or (if he is not operating) the other actual use thereof is with the permission, or reasonably believed to be with the permission of the owner and is within the scope of such permission, and (3) any other person or organization not owning or hiring the automobile, but only with respect to his or its liability because of acts or omissions of an insured under (h) (1) or (2) above. State bases its contention that the policy does not cover Giese in this case upon the argument that under the proviso in (b), the named insured [Giese] is only covered “with respect to a non-owned automobile” if “his actual operation ... is with the permission, or reasonably believed to be with the permission, of the owner . . . .” And, it says, neither of those requirements is met here. In short, it urges upon us, as it did below, a construction whereby the proviso in (b) applies to both (b) (1) and (b) (2). Appellees, on the other hand, argue with considerable force that the proviso applies only to (2) and thus the lack of either permission or a reasonable belief of permission in this case does not relieve State of its contract to insure Giese.

Judge Sodaro agreed with this contention and held: “. . . that the unambiguous wording of the provisions covering ‘Persons Insured’ under Part I of the policy clearly demonstrates that the necessity for the ‘person insured’ to obtain the permission of the owner of a ‘non-owned automobile’ to operate the vehicle applies only to relatives of the insured.” In urging affirmance of the trial judge’s decision, appellees, joined by Giese, rely upon two authorities: McMichael v. American Insurance Company, 351 F. 2d 665 (8th Cir. 1965) and American Cos. Co. v. Aetna Cas., 251 Md. 677 , 248 A. 2d 487 (1968). ⁵³⁹ State, on the other hand, relies upon the following cases for support: Bright v. Ohio Casualty Insurance Company, 444 F. 2d 1341 (6th Cir. 1971); Gray v. International Service Insurance Company, 73 N. M. 158, 386 P. 2d 249 (1963); Harleysville Mut. Cas. Co. v. Nationwide Mut.

Ins. Co., 248 S. C. 398, 150 S.E.2d 233 (1966) and Indiana Lumbermen’s M. Ins. Co. v. Hartford A. & I. Co., 454 S.W.2d 781 (Tex. Civ.

App. 1970). Our own independent search has not revealed any additional authority that would be helpful. We think it will serve a useful purpose if, in reviewing the cases cited by the parties, we refer to them in their chronological order, with the exception of American Cas. Co. v. Aetna Cas., supra, which, for reasons that will become apparent, we shall discuss later.

It should be stressed that the conclusion and reasoning in each of these cases must be considered in light of the precise language and typography employed in the insurance policy of that case. In Gray v. International Service Insurance Company, supra, the facts leading to a declaratory judgment proceeding brought to determine liability under an insurance policy were substantially similar to those here, except that the “named insured” was operating a stolen vehicle. The pertinent part of the policy provided: “ * (b) With respect to a non-owned automobile, ‘ (1) the named insured, ‘(2) any relative, but only with respect to a private passenger automobile or trailer, provided the actual use thereof is with the permission of the owner” In the face of contentions similar to those advanced here, the court, being of the opinion that “with respect to a non-owned automobile, permission for its use was made a condition of coverage as to both the named insured and to a relative of the named insured,” held for the insurer. In McMichael v. American Insurance Company, supra, where a declaratory judgment proceeding had also been ⁵⁴⁰ brought under circumstances similar to those here, the comparable provision in the policy read: “‘(b) With respect to a non-owned automobile, (1) the named insured, (2) any relative but only with respect to a private passenger automobile or trailer, provided the actual use thereof is with the permission of the owner; * * *.’ ” Concluding that the permission proviso did not apply to “(1) the named insured,” and thus that lack of the owner’s permission failed to relieve the insurer of liability under the policy, the court said: “We believe that the spacing argument relied upon by the plaintiff is an extremely thin thread upon which to base a contention which deprives a named insured of coverage which he has reason to believe he has bargained for.

The wording of (b) (2) reads exactly the same, however it may be spaced. There is nothing in the record to indicate that the spacing is intentional rather than inadvertent. * * * “If coverage granted the named insured is to be restricted, we would expect to find the restriction in the exclusion clause. We find nothing in the exclusion clause of the present policy which contains any exclusion pertinent here.” 351 F. 2d at 667-68 (emphasis added). The McMichael court devoted considerable attention to Gray, supra, which was then the only case to have been decided that dealt with a “permission proviso,” but it distinguished that case on the sole basis that the non-owned automobile used by the named insured there was stolen.

We shall refer to McMichael again later in this opinion. ⁵⁴¹ In Harleysville Mut. Cas. Co. v. Nationwide Mut. Ins.

Co., supra, within a framework of facts and arguments basically similar to those presented here, Harleysville sought a declaration concerning its liability under a policy that provided: Persons Insured. The following are insureds under Part I: (a) With respect to the owned automobile, (1) the nemed insured and any resident of the same household, (2) any other person using such automobile, provided the actual use thereof is with the permission of the named insured; (b) With respact to a non-owned automobile, (11 the named insured, (2) any relative, but only with respect to a private passenger automobile or trailer, provided the.actual use thereof is with the permission ot the owner; fc) 'Any other person or organization legally responsible for the use of (1) an owned automobile, or (2) a non-owned automobile, if such automobile is not owned or hired by such person or organization, provided the actual use thereof is by a person who is an insured under (a) or (b) above wiln respect to such owned automobile or non-owned automobile. In affirming a declaration against the insurer, the court said : “. . . The intention that the permissive use proviso should modify (b), (1) and (2) is found in the placement of the word ‘provided,’ not on the same margin as the word ‘any’ above it, but all the way out to the margin at the beginning of (b) under the word ‘with.’ “After studying the contract in the light of the argument, it is apparent that the draftsman intended that the placement of the word ‘provided’ should have the significance ascribed to it by counsel.

We must conclude, however, that the device, in context, was inadequate for this purpose. In the printed policy, the location of the word ‘provided’ on the margin is so inconspicuous as to escape the attention of any save the most diligent and observant. The line above the proviso extends all the way to the right-hand margin and the line below it extends almost as ⁵⁴² far. The lines are closely printed.

There is no double spacing; nothing, as in (c), (2), to accent the shift in margin. Counsel cite in their brief some excellent textbook examples of the use of margins to achieve clarity in legal draftsmanship. In each instance, the spacing emphasizes the use of the device, and makes it conspicuous, in sharp contrast to this policy provision.” 150 S.E.2d at 284 (emphasis in original). We agree with State that the reasoning of the South Carolina court tends to support the position it takes before us, and that the court there would quite likely have reached a