APPEAL from the Circuit Court of Champaign County; the Hon.
BIRCH E. MORGAN, Judge, presiding.
MR. JUSTICE SIMKINS DELIVERED THE OPINION OF THE COURT:
This is an action brought under the provisions of Section 57.1 of the Civil Practice Act by Maryland Casualty Company, the appellant, against the Iowa National Mutual Insurance Company and others for a declaration of its rights and duties under a certain insurance policy. Various other requests for declaratory relief were filed by the defendants and at the close of all the evidence the trial judge, by way of directed verdicts, made certain rulings which are the basis of this appeal. The facts established at the trial are essentially undisputed. It is the application of those facts to certain well-defined rules of law that has engendered this appeal.
On July 21, 1968, Robert E. Smythe of Hoopeston, Illinois, was the owner of two automobiles, one of these automobiles was a 1968 Buick Skylark titled in Robert Smythe and his wife, Mae, and covered by a policy of liability insurance issued by the plaintiff Maryland Casualty Company (hereinafter referred to as Maryland Casualty) wherein Robert Smythe was the named insured. This policy contained the following provision, commonly referred to as an "omnibus clause":
"Persons Insured: Under the liability and medical expense coverages the following are insured:
(a) with respect to an owned automobile
(2) 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 * * *."
Living with Mr. Smythe on the date in question was his twenty year old son, Thomas. Although Thomas did not own an automobile, he was allowed to use either of the family automobiles whenever he desired and had driven the 1968 Buick on three or four occasions prior to July 21, 1968.
During high school, Thomas had had the use of an automobile owned by his father. On one particular occasion in his senior year Thomas had either loaned this particular automobile to a fellow student or had left the keys in it with the result that a classmate named Charles Knight drove the automobile. When Mr. and Mrs. Smythe learned of this incident they warned Thomas in specific language never to allow anyone other than a member of the family to use a family automobile. Prior to July 21, 1968, this was the only occasion on which Mr. Smythe specifically instructed his son never to allow non-family members to drive a family automobile. On re-direct examination, Mr. Smythe testified as follows:
"Q. Mr. Smythe, did you object to Tom using let anyone else drive the car?
Q. And can you tell the jury what you meant when you answered Mr. O'Brien's questions he just read from awhile ago, when you said, Tom when you said Tom was to use his own common sense?
A. After this Knight situation I laid down the rules that nobody in the family would loan anybody a car. I didn't think that I would have to repeat that everytime they went out. I thought his common sense ."
However, an exception to this rule was granted for a friend of the Smythe family, Clem Miller. Clem Miller was a young man who had known the Smythe family since he was 4 or 5 years old. A frequent visitor in the Smythe home, Clem was treated as "one of the family" and was allowed to drive the Smythe family automobiles.
While he was a student at Southern Illinois University in Carbondale, Illinois, Thomas had become friends with two young men whose names were William Horton and John Higgins. Horton lived in Rankin, Illinois, and he and Thomas often drove back and forth to school together. The evidence revealed that the only time Horton had ever been in the Smythe home was on one occasion when he had brought Thomas home from Carbondale. On this occasion he was in the Smythe home for approximately five minutes and met Thomas' father, Robert, and his brother. At that time there was no conversation between Horton and Robert Smythe relative to Horton's use of an automobile owned by the Smythe family. Furthermore, Horton had never met Mrs. Smythe and had never driven an automobile owned by the Smythe family before July 21, 1968.
On July 21, 1968, a Saturday, Thomas Smythe took the 1968 Buick Skylark owned by his father and drove to a party in Boswell, Indiana. At the party he met both William Horton and John Higgins. Horton had a pick-up truck that was owned by his father, Donald Horton, and John Higgins had driven to the party in his own automobile, a 1964 Chevrolet Impala "SS". During the course of the party Smythe told Horton that "they" had a new automobile, referring to the 1968 Buick. This was the first time Horton had learned that the Smythe family possessed this particular automobile. Called as an adverse witness at the trial by counsel for Maryland Casualty, Horton was asked whether or not Thomas had told him who the automobile belonged to and he replied as follows:
"Well, not * * * exactly. He said something about his dad owned it, and then later on he said something about his mother did. I never paid much attention to him."
At some point during the evening these three young men agreed to meet at a gasoline station in Hoopeston, Illinois, and then proceed to Danville for something to eat. There was also some conversation about trading automobiles for this trip. Smythe had driven Higgins' Chevrolet around Boswell earlier in the evening and testified that he liked to drive this automobile because he wanted to impress some young ladies. Accordingly, Higgins asked Horton if he could drive Horton's pick-up truck to Hoopeston and Horton granted him permission to do so. Shortly after Higgins left, however, Horton changed his mind about going to Danville and asked Smythe to stop Higgins and ask him to return the truck. Smythe then got in Higgins' Chevrolet and caught up with him about two miles outside of Boswell. Higgins refused to drive back to the party and proceeded on to Hoopeston.
When the party was over both Horton and Smythe prepared to leave for Hoopeston. Smythe got into the Higgins vehicle and Horton got into the Smythe Buick. Smythe's testimony indicated that he did not engage in any conversation with Horton about which automobile to drive. Horton, on the other hand, testified that when they left the party Smythe told him that he wanted to drive Higgins' Chevrolet and that Horton should drive the Buick to Hoopeston. At no time during the evening did Smythe ever inform either Horton or Higgins that his father had instructed him never to allow anyone other than a family member to operate the automobile. On the way to Hoopeston, Horton was involved in a collision with another automobile. As a result of that collision a personal injury suit was filed against Horton in the Circuit Court of Vermilion County by Charles B. McElhaney and Harold E. Morlan.
While the Vermilion County suit was pending, Maryland Casualty instituted this declaratory judgment action in the Circuit Court of Champaign County naming as defendants Iowa National, William Horton, Charles B. McElhaney and Harold E. Morlan. At the time of the collision in question William Horton's father was insured by a policy of liability insurance issued by Iowa National which contained the following language:
"Persons insured: Under the liability and medical expense coverage, the following are insureds:
(b) with respect to a non-owned automobile,
(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 object 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 omission of an insured under (b)(1) or (2) above." (Emphasis added).
In its complaint, Maryland Casualty prayed for a determination that it was not obligated under its policy with Robert Smythe to defend or indemnify William S. Horton from the suit filed against him by Charles B. McElhaney and Harold E. Morlan. William Horton filed an answer denying the allegations of Maryland Casualty's Complaint and requested the Court to declare his rights as an insured under the policy issued by Iowa National. The other named defendants also answered the complaint and sought a declaration that between Maryland Casualty and Iowa National, one company be declared the primary insurer of William S. Horton and one company the excess insurer.
At the close of all the evidence the trial judge entered directed verdicts declaring that as a matter of law Maryland Casualty was the primary insurer of William Horton and Iowa National was the secondary or excess insurer. Both Maryland Casualty and Iowa National have appealed from these rulings.
• 1 Initially, we note that the standard the trial court was required to follow in determining whether or not to direct a verdict is the "Pedrick Rule" enunciated by the Supreme Court as follows:
"In our judgment verdicts ought to be directed and judgments n.o.v. entered only in those cases in which all of the evidence, when viewed in its aspect most favorable to the opponent, so overwhelmingly favors movant that no contrary verdict based on that evidence could ever stand." Pedrick v. Peoria & Eastern R.R. Co. (1967), 37 Ill.2d 494, 510, 229 N.E.2d 504, 513-14.
With this in mind, we are of the opinion that the trial court erred in directing verdicts in both instances.
I. The Appeal of Maryland Casualty.
• 2, 3 The omnibus clause of the policy issued by Maryland Casualty to Robert Smythe afforded coverage to any person using or operating the automobile in question with the permission of the named insured, Robert Smythe. There is no question, therefore, that if Thomas Smythe had been involved in a collision on the day in question he would have been covered by Maryland Casualty's policy since the record clearly reveals that he had permission from his father to use the automobile. Thomas Smythe occupied the position of the "original" or first permittee. However, at the time of the collision the Smythe Buick was being operated by William Horton, the "subsequent" or second permittee. The question presented by this portion of the appeal is whether or not William Horton, the subsequent permittee, was using or operating the automobile in question with the permission of Robert Smythe, the insured, at the time of the collision. Normally, the claimant under a policy of insurance "bears the burden of Proof on the question of coverage." (Hays v. Country Mutual Ins. Co. (1963), 28 Ill.2d 601, 605-06, 192 N.E.2d 855.) Here, since suit was instituted by the insurer, Maryland Casualty bore the burden of proving that William Horton was not an insured under the policy.
• 4 The law in Illinois with respect to coverage of a subsequent permittee under an omnibus clause of an insurance policy was set forth by the Supreme Court in Hays v. Country Mutual Ins. Co. (1963), 28 Ill.2d 601, 192 N.E.2d 855. *fn1 A detailed discussion of the factual situation presented in Hays would unduly prolong this opinion. Suffice it to say that in Hays the Supreme Court noted that a subsequent permittee could be covered under the terms of an omnibus clause similar to the one in question if there was either express or implied permission from the named insured and enumerated four factual situations in which implied permission from the named insured and enumerated four factual situations in which implied permission could be established. Hence, in any given case involving a subsequent permittee under an omnibus clause four hypothetical alternatives could be present: (1) The named insured expressly prohibited the original permittee from allowing third persons to use or operate the insured vehicle; (2) The named insured neither expressly prohibited, nor expressly allowed the original permittee to grant the use of the insured vehicle to third persons; (3) The named insured expressly authorized the original permittee to grant third persons permission to use or operate the insured vehicle; and (4) the circumstances surrounding the initial grant of permission from the named insured to the original permittee are such that the original permittee was clothed with implied authorization to grant third persons permission to use or operate the insured vehicle.
With respect to the first alternative, the record in this case clearly revealed that on at least one prior occasion the named insured, Robert Smythe, expressly prohibited the original permittee, Thomas Smythe, from allowing third persons to use or operate family automobiles. At the time of the collision in question, July 21, 1968, Thomas Smythe was twenty years of age. Thomas, his father and his mother all testified that when Thomas was a senior in high school another boy had driven a family automobile that had been entrusted to Thomas' care. When Mr. and Mrs. Smythe learned of this, they informed Thomas that "it better not happen again" (Mrs. Smythe) and that "under no circumstances was he to loan the car to anyone" (Mr. Smythe). This unrebutted evidence without more, would have been sufficient to direct a verdict in favor of the Plaintiff, Maryland Casualty, since it established that the named insured expressly prohibited the original permittee from ever allowing a third person to use or operate a family vehicle. However, the record in this case also revealed that this was the only occasion on which Robert Smythe ever expressly prohibited Thomas from allowing others to use a family automobile. As we have noted earlier, Mr. Smythe felt that he did not have to repeat his prohibition each time Thomas used a family automobile and felt that Thomas would use his "common sense." Viewing this evidence in its aspect most favorable to the defendants, we cannot declare that Maryland Casualty would have ...