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Chicago Motor Club v. Travelers Indemnity Co.

MARCH 11, 1965.

INTER-INSURANCE EXCHANGE OF THE CHICAGO MOTOR CLUB AND ROBERT SPAETH, PLAINTIFFS-APPELLANTS,

v.

THE TRAVELERS INDEMNITY COMPANY, A CORPORATION, AND L. ROY BRAINERD, DEFENDANTS-APPELLEES.



Appeal from the Circuit Court of Cook County; the Hon. WILLIAM G. EOVALDI, Judge, presiding. Affirmed.

MR. PRESIDING JUSTICE DEMPSEY DELIVERED THE OPINION OF THE COURT.

Rehearing denied April 15, 1965.

This is a declaratory judgment action involving the application of the "omnibus clause" of an automobile liability insurance policy.

The plaintiff, Inter-Insurance Exchange of the Chicago Motor Club, brought the action against the defendant, the Travelers Indemnity Company, and asked for a declaration of the rights and obligations of the respective companies under a policy issued by Travelers to its co-defendant L. Roy Brainerd and covering a Plymouth automobile owned by him. The omnibus clause of the policy insured any other person while operating the Plymouth provided the actual use of the automobile was by the named insured or with his permission.

On December 24, 1956, the Plymouth was involved in a collision with another auto. At the time of the accident the Plymouth was being driven by a 16-year-old youth named Robert Spaeth. He was accompanied by Max Brainerd, the 17-year-old brother of Roy Brainerd, the named insured. Two lawsuits arising from this occurrence were filed against Spaeth and Roy Brainerd.

On the date of the occurrence the mother of Robert Spaeth owned an auto which was insured by Inter-Insurance. The Inter-Insurance policy provided that relatives of Mrs. Spaeth who lived in her household were covered by the policy while driving other automobiles. A proviso limited this coverage to "excess insurance over any other valid and collectible insurance available to the insured . . . or relative . . . under a policy applicable with respect to said automobile or otherwise." Inter-Insurance claimed that its only coverage of Robert Spaeth was excess insurance and that he was primarily covered as an additional insured under the omnibus clause of Travelers' policy. Travelers denied that its policy covered Spaeth because it claimed that he drove the Plymouth without Roy Brainerd's permission. The declaratory judgment action ensued and the trial judge, without making special findings of fact or law, found the issues for Travelers. The principal issue in the trial court, as it is in this court, was whether Spaeth's use of the Plymouth was with the permission of Roy Brainerd.

The uncontroverted facts are few. Roy Brainerd operated a gasoline service station. He held another job as a mechanic and when he worked at this other job his younger brother Max was in charge of the station. The Plymouth was used at the station for service calls but Max also drove it to and from work and occasionally for social purposes. On the afternoon of December 24th Max was alone at the station. During the afternoon he drank a considerable amount of whiskey and became sick and intoxicated. Robert Spaeth, who lived two blocks away, came to the station about 5:30 p.m. and found Max in this condition. A short time later Roy Brainerd arrived. Roy was angry with his brother. He asked Spaeth to get some coffee for Max and gave him money and the keys to his personal car for this purpose. After Spaeth returned in Roy's car with the coffee he walked Max outside in the cold air in order to sober him up. Spaeth and Max then got into the Plymouth which was parked at the station. Spaeth drove the car away from the station with Max as a passenger. It was dark and the streets were icy and the accident occurred moments later.

The remaining evidence is in conflict. Roy Brainerd testified that the Plymouth was not to be used by Max unless he himself knew about it and that Max could use the car at night for social purposes only if he was given permission. He added that he never objected to Max using the car "on a date or anything like that." He said that on the night in question he did not hear any conversation between Max and Spaeth and that he did not see Max enter the Plymouth. He said he had been waiting on customers and when he saw the car move toward the street he ran outside, went up to the side of the car, pounded on it and shouted for Spaeth to stop, but that Spaeth just looked at him and sped off. Brainerd said that before Spaeth started the car he had no conversation with him and had no idea where he was going. He then returned to his customers and continued to wait on them until he heard about the accident.

In an evidence deposition read at the trial Spaeth said he had seen Max drive the Plymouth on several occasions both at and away from the station, that he understood the car belonged to Max, that he had accompanied Max on service calls, had driven the car himself a few times and had never felt that he had to ask Roy's permission to use it. He testified that he had no conversation with Roy about the Plymouth before he drove it away from the station. He said that Max wanted to go for a ride, that the keys were in the car, and that after entering it he rolled down the windows on both sides and stopped for oncoming traffic before pulling out into the street. He said that Roy, who had been waiting on customers, was talking on the telephone inside the station and did not come out to the car, or tell him not to use it or did not motion for him not to do so. He said that subsequent to the collision he saw Roy who "told him off" but that Roy was angry with him not for taking the car but for having had an accident with it.

Max Brainerd testified that he lived with Roy, drove the Plymouth to and from work, had general permission to use it as far as the service station was concerned and that he used it a couple of times to go out on dates. He said that after he became sick Spaeth walked him around the station and helped him into the Plymouth. He said he did not know where Roy was at the time, did not talk to him and did not see him after he got into the car. He said he did not recall the car being in motion, that he "passed out" and the next thing he remembered was waking up in the hospital. His version of what took place in the car was contradicted by Spaeth's deposition. Spaeth said that Mac called his attention to the headlights not being on and continued to talk to him during the mile-long ride.

From this evidence it must be concluded that Roy Brainerd did not give Spaeth permission to drive the Plymouth and that he did not expressly authorize his brother to grant permission to Spaeth or to others. The residual questions left unanswered are whether Max had implied authority to grant permission to others and, if so, whether this permission was given to Spaeth, and finally, if it was, whether such permission was revoked before Spaeth drove the car away.

Courts have had frequent occasion to determine when and under what circumstances an automobile may be considered to have been used with the permission of the named insured. A body of case law has developed from factual situations where the named insured permits a second person to use his automobile and this person in turn permits a third person to drive the auto. In the recent case of Hays v. Country Mut. Ins. Co., 28 Ill.2d 601, 192 N.E.2d 855, an analogous situation was before the court. The named insured permitted his 16-year-old daughter to use his car for the evening. Permission was not given to his 15-year-old son who accompanied his sister on her trip to town. During the evening the son, in the absence of his sister, told teenage friends they could use the car. Later, his friends took it from its parking place — it required no key — and after driving it for some time had an accident. Neither of the named insured's children were passengers in the car at the time of the accident. The court held that the limited permission granted to the daughter could not be construed to imply permission for the loan of the car to others and that there was no coverage under the omnibus clause. The court stated that the requirement of permission should not be read out of the insurance contract and refused to accept the theory that the insured's permission to one user inherently carries with it, without more, a delegation of authority to the permittee to grant permission to a third person to use the vehicle.

On the other hand, the court in Hays cited with approval several cases which recognized factual circumstances where it would be implied that the third person was operating the insured's automobile within the scope of the permission granted to the original permittee:

"Of course the named insured may by express authorization delegate to his permittee the power to grant permission to others, and circumstances surrounding the original permission may support an implication of such an authorization. Thus where the permittee is in every practical sense the owner of the car, and the named insured holds title for convenience, the general custody and control of the permittee is usually held to empower him to grant permission to others within the scope of an omnibus clause, at least in the absence of express prohibition. (See e.g., Hinckley v. National Surety Co., 99 N.H. 373, 111 A.2d 827 (1955); Firemen's Fund Indemnity Co. v. Freeport Insurance Co., 30 Ill. App.2d 69; cf. Norris v. Pacific Indemnity Co., 39 Cal.2d 420, 247 P.2d 1 (1952).) If the original permittee retains control of the car, but turns over its physical operation to a third person while remaining a passenger, an implied permission has been found in the continued use and control of the original permittee. (See Standard Accident Insurance Co. v. New Amsterdam Casualty Co., 249 F.2d 847 (7th cir 1957); Fireman's Fund Indemnity Co. v. Freeport Insurance Co., 30 Ill. App.2d 69.) Even where the original permittee is not a passenger, an inference of permission has been sustained where the third person is engaged on some errand or activity for the benefit, advantage, or purposes of the original permittee. (See Aetna Life Insurance Co. v. Chandler, 89 N.H. 95, 193 Atl 233 (1937).) A course of conduct, establishing that the original ...


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