Title: Cascade Insurance Co. v. Glacier General Ins. Co.
Citation: 479 P.2d 259
Docket Number: 11734
State: Montana
Issuer: Montana Supreme Court
Date: January 4, 1971

479 P.2d 259 (1971) CASCADE INSURANCE COMPANY, and Milbank Mutual Insurance Co., Plaintiff and Respondents, v. GLACIER GENERAL INSURANCE COMPANY, Richard Daniels et al., Defendants and Appellants. No. 11734. Supreme Court of Montana. January 4, 1971. Knight, Dahood &amp; Mackay, Anaconda, David M. McLean, argued, Anaconda, for appellants. Corette, Smith &amp; Dean, Butte, R.D. Corette, Jr. argued, Butte, for respondents. DALY, Justice. This is a declaratory judgment action by plaintiff Cascade Insurance Company, hereinafter referred to as Cascade, against Glacier General Assurance Company, et al., hereinafter referred to as Glacier General, to resolve a coverage question under an omnibus clause contained in Glacier General's liability policy. The omnibus clause extends coverage to any person using or operating an insured automobile with the consent of the named insured. If the person using the insured vehicle in this case was a "permitted user" and entitled to coverage and a defense, then Cascade would be liable only as an excess carrier, if any. Trial was had before the district court without a jury and from an adverse judgment Glacier General moved to amend the findings of fact and conclusions of law and for a new trial. After these motions *260 were denied, Glacier General appealed from the final judgment. Betty M. Roark, the registered owner and named insured under Glacier General's liability policy obtained the automobile for her minor son, Dean Patrick Roark, age 18, as a principal user while he attended college in Dillon, Montana. Mrs. Roark testified that her son was listed as the principal user and a higher premium rate was paid therefor. Both Mrs. Roark and her son testified that he was told by his mother not to loan out the car while at college. Dean Patrick Roark, James Waylett and Douglas Daniels were close college friends and had made arrangements to share an apartment at Dillon. On December 8, 1966, while all three were together, Roark and Waylett arranged to go to Billings and permission was granted Douglas Daniels by Roark to use Roark's automobile in their absence. Daniels had been permitted the use of the automobile one time prior to this date by Roark. There is a conflict in the testimony as to whether the permission for the use of the automobile was restricted to the city of Dillon. The day following, on December 9, 1966, Douglas Daniels while proceeding from Dillon to Missoula in the Roark automobile, accompanied by two college friends, became involved in an accident which demolished the automobile and injured the passengers. As a result of this accident Joseph L. Peterson, one of the passengers, brought a personal injury suit against Douglas Daniels. Douglas Daniels, a minor aged 18 1/2 at the time of the accident, is the son of Richard Daniels, insured by Cascade. Its policy provides liability coverage for a non-owned automobile driven by any relative of Richard Daniels. Coverage is expressly limited to such non-owned automobiles driven with the express consent of the owner of the automobile. The findings of the trial court briefly stated were: that on December 9, 1966, Dean Patrick Roark offered to loan his automobile to Douglas Daniels; that Roark controlled and had broad dominion over the automobile; that no restrictions were placed upon the scope of permission or use of the automobile and as a matter of law Douglas Daniels had permission to use the automobile owned by Betty Roark at the time and place of the accident; that under the provisions of the respective insurance policies Glacier General is obligated to provide primary insurance coverage to the extent of its policy limits for Douglas Daniels and provide him with a defense; that Cascade must afford excess coverage over and above that afforded by Glacier General to the extent of its policy limits. We recognize the conflict in the testimony concerning any limitation as to the scope of the use by Douglas Daniels when he was loaned the automobile by Patrick Roark. However, the testimony of Daniels and the letter from James Wayleft (deceased at time of trial) indicating no restrictions as opposed to Roark's testimony, is in our view substantial evidence to support the trial court's findings on this point. Strong v. Williams, 154 Mont. 65, 460 P.2d 90. This leaves as the controlling issue to be decided under the fact situation presented here: Whether, as a matter of law, Douglas Daniels was a "permitted user" under the omnibus clause of the policy issued to Mrs. Betty Roark by Glacier General. Cascade and Glacier General argue in their briefs that Montana by statute, section 53-438, R.C.M. 1947, requires insurance companies to include an omnibus clause in the following language: In its reply brief Glacier General modified its contention to the extent that the statutory requirement is contained in the Motor Vehicle Financial law and consequently only required under that section. It argues further there is no evidence in the record to indicate that Glacier General must comply in this case and set forth Glacier General's omnibus clause as follows: Glacier General's contention is correct; however, this does not answer our problem here. This being a case of first impression in this Court both parties have relied heavily on Judge Jameson's discussion in National Farmers Union Property &amp; Cas. Co. v. State Farm Mut. Auto. Ins. Co., 277 F. Supp. 542 (D.Mont. 1967). In that case Judge Jameson suggests the following from 7 Am.Jur.2d, Automobile Insurance §§ 116, 117, p. 431, to be a well summarized treatment of the general rules to be applied to the construction of omnibus clauses: In National Farmers Judge Jameson stated: "We start with the premise that an `omnibus clause, for reasons of public policy, is to be liberally construed'" and approved the langauge of Jurd v. Pacific Indemnity Company, 57 Cal. 2d 669, 703, 21 Cal. Rptr. 793, 795, 371 P.2d 569, 571: Commenting that Montana has such a statute, section 53-438, R.C.M. 1947, Judge Jameson further stated: In Williamson the Court of Appeals for the Ninth Circuit quoted with approval the following language of a New Jersey case, Baesler v. Globe Indemnity Co., 1960, 33 N.J. 148, 162 A.2d 854, 856, 857: In Williamson the circuit court further said: Glacier General relies almost entirely upon Judge Jameson's opinion and cited authority in National Farmers Union Property &amp; Cas. Co. v. State Farm Mut. Auto. Ins. Co., supra, and argues persuasively for a strict construction here, based on the facts presented in that case and urging the coverage exists only on a finding of the second permittee serving a "purpose of the original permittee". Cascade argues that Judge Jameson in National Farmers tended to speak out for a more liberal construction particularly in states with statutory authority indicating a legislative intent to broaden insurance coverage as a matter of public policy to protect the public, particularly in cases of family relations where complete unfettered dominion is granted by the insured. A close examination of National Farmers and all cited authority therein, reveals a definite trend toward liberalization, especially in states with a statutory mandate, as in Montana. Each case must be examined *263 on its own facts, considering the extent of the dominion granted to the first permittee, together with the reasonable foreseeability of the particular use to which such permittee puts the automobile. The relationship of the parties becomes a factor to consider. These considerations become necessary since the strict prohibition not to loan an automobile is now viewed as an admonition with reasonable exceptions. Judge Jameson, in National Farmers, 277 F. Supp. at p. 550, recognized the exception of beneficial use in his fact situation and strongly inferred a more liberal interpretation in the following language: In the instant case our facts reveal a contract of insurance, drawn by the insurance company, the terms of which are so fluid that it vests the insured with the authority to determine who shall be the beneficiary of the contract. It requires no notice or that any other condition be met. It can be extended to any number of persons at any time without any advance in price or consideration. The election to confer or withhold the benefit can be made orally after the occurrence of the accident; therefore, increased risk or expanded exposure could not be a factor for consideration. Rather, public policy would demand that only those the insured knowingly wished to exclude would be denied benefits, viewed at the time any restriction is placed on the use. Under our fact situation, it is highly questionable that there was an intention by the insured to deny insurance benefits as opposed to the protection and conservation of a valued asset at the time the instructions were given not to loan the automobile, any more than it could be reasonably assumed that the insured would intend to withhold benefits from the first permittee, Pat Roarck, if he were prohibited the use of the automobile for 30 days for disciplinary purposes and this prohibition was violated and an accident occurred. The use to which the first permittee put the automobile in a loan to a college friend with whom the first permittee was to share an apartment was a reasonably foreseeable use to be anticipated by the insured. Considering the family relationship between the insured and the first permittee, together with the unfettered dominion over the automobile away from home, this insured clothed the first permittee with the ostensible authority to engage in the simple transaction of permitting a friend to use the automobile. This is true particularly when it was not shown that any restrictions were within the knowledge of the second permittee and, in fact, he had used the automobile on at least one other occasion. Finally, we must also be mindful of the victims of a driver's negligent actions however remote they may be to the consideration of the insured inasmuch as the legislature has seen fit to consider their plight by the enactment of section 53-438, R.C.M. 1947. The judgment of the trial court is affirmed. JAMES T. HARRISON, C.J., and HASWELL, CASTLES, and JOHN C. HARRISON, JJ., concur.