Petition for Writ of Certiorari — Ranger Insurance v. Culberson

Supreme Court brief1972

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IN THE APR 94 187?

‘SUPREME COURT OF THE UNITED. STATES —

OCTOBER TERM, 1971

No. ‘ 7 FY | 2 . >.

RANGER INSURANCE COMPANY,

Petitioner,

MIRIAM G. CULBERSON, Executrix,

and CAROL BROWN MACLEAN, Executrix,

Respondents.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

GAMBRELL, RUSSELL, KILLORIN,

WADE & FORBES

E. SMYTHE GAMBRELL.

SEWELL K. LoacIns

LLoyD SUTTER

Attorneys for Petitioner

Counsel of Record:

E. SMYTHE GAMBRELL

4000 First National Bank Tower

Atlanta, Georgia 30303

April 24, 1972.

TABLE OF CONTENTS

ee er GE ee ee ie Orel ee ii

uN CI cc ce a ee ery Pe chetay 1

Jurisdiction ......... EE Ge Me aera es Ay erty att 2

Questions Presented .............. De neta Ee 2

Statement of the Case ......................... 3

Reasons for Granting We oe es ie aa

1. The Circuit Court Failed to Follow

the Rule of Erie R. Co. v. Thompkins ..... 8

2. The Circuit Court Relied upon an

Erroneous and Unwarranted Factual

Assumption to Circumvent Erie which

calls for this Court to Exercise

its Supervisory Power .................. 12

IRS ea ee hae ee eh ats 16

a RR RRR tr ater aei ete ori gece wae ee la

SE i Sa es id been evo caps eaeuas . Ib

TABLE OF CITATIONS

Cases ' ;

Angel v. Bullington, 330 U.S. 183 (1947) ._... 8

Canal Insurance Company v. Doughtery,

247 F.2d 508 (5th Cir. 1957) ©. ....... .. 14

Erie R. Co. v. Thompkins, :

304 U.S. 64 (1938) ssid.“ wn. 8,9, 11,12

Green v. American Tobacco Co., 304 F.2d 86

(5th Cir. 1962), rev’d and rem’d

325 F.2d 673 (5th Cir. 1963), cert. |

denied 377 U.S. 943 (1964) ....._.. 12

Guaranty Trust.Co. of New York v. York,

326 U.S. 99 (1945)... .. 8

Float-Away Door Co. v. Continental Casualty

Co., 372 F.2d 701 (5th Cir. 1967), cert. denied

389 U.S. 823 (1967) . = eee «ae

Klaxon Co. v. Stentor Elec. Mfg. Co.,

313 U.S. 487(1941) eee 11

Lineas Aereas Columbiana Expresas v.

Travelers Fire Ins. Co., 257 F.2d 150

(Sth Cir. 1958) se GIES ee

National Insurance Underwriters v. Bequette,

280 F.Supp. 842 (D.Alaska 1968) | 10,15

National Surety Corp. v. Western Fire &

Indem. Co., 318 F.2d 379 (5th Cir. 1963) .. 15

New York Life Insurance Co. v. J ackson,

304 U.S. 261 (1938)... a det es ders Be Mae 8

Ruhlin v. New York Life Ins. Co.,

wee UD. Bee CIES)... oe eee 8

ili

The Farmers and Merchants Bank of

Manchester v. Ranger Insurance Co., 125 Ga.

App. 166, S.E.2d (1971), cert.

denied Feb. 28, 1972 ......... 9,10, 11, 12,15

Statutes

28 U.S.C. §1254(1) kee toe 2

eee eee 3

Rules .

a. Ff &@. & 2 | See oer

Rule 8(c), Fed. R. Civ. P. ..... 1 heres OP Ge 3

Rule 54(b), Fed. R. Civ. P. ............ oe:

Rule 19b),S.Ct.R....0......... _... 14,16

Treatises

1 Barron & Holtzoff, Federal Practice §8

(Wright Ed. 1960) .................. 8

1A Moore’s, Federal Practice 0.306 (1959) .. 8

Miscellaneous

Federal Aviation Administration

Statistical Handbook of Aviation

a aka oI RC AS ch ey eee aa

Selected Regional Statistics, Department

of Transportation, Federal Aviation

Administration (Oct. 1971) ..... eA RAs 8

IN THE

~ SUPREME COUT OF THE UNITED STATES

OCTOBER TERM, 1971

No.

RANGER INSURANCE COMPANY,

Petitioner,

MIRIAM G. CULBERSON, Executrix,

and CAROL BROWN MACLEAN, Executrix,

Respondents.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT |

Petitioner, Ranger Insurance Company (“Ranger’’),

‘respectfully prays for a writ of certiorari to review the

judgment and opinion of the United States Court of

Appeals for the Fifth Circuit, entered December 28,

1971. ?

Opinions Below

The opinions’ of the United States District Court for

the Northern District of Georgia and the opinion of the

1This petition evolves from two separate actions decided on

motions for summary judgment at the trial court level. Ranger

United States Court of Appeals for the Fifth Circuit are

not yet officially reported, but appear in 11 Avi. L. Rptr.

18074 and 12 Avi. L. Rptr. 17172 respectively and in

Appendix A hereto as la, 7a, 13a and 15a respectively.

Jurisdiction |

The court of appeals’ opinion was entered December

28, 1971 (A. 15a). Ranger’s petition for rehearing and

rehearing en banc were denied January 26, 1972 (A.

42a). The court of appeals judgment and mandate (A.

44a) was stayed by order of February 11, 1972, pending

filing of this petition on or before April 25, 1972 (A.

46a). This petition is timely filed. This Court’s jurisdic-

tion is invoked under 28 U.S.C. §$1254(1).

Questions Presented

1. May the court of appeals in a diversity action

ignore and fail to even cite a controlling decision of the

Insurance Co. v. Culberson, N.D. Ga., C.A. No. 12362, was com-

menced on January 13, 1969 and involves a $10,097.12 claim by

Ranger against the Culberson estate for the aircraft hull loss

under Ranger’s subrogation rights pursuant to the aircraft

policy’s “breach of warranty endorsement.” MacLean v. Cul-

berson v. Ranger Insurance Co., N.D. Ga., C.A. No. 12886 was

commenced on July 16, 1969 and is a $750,000.00 wrongful death

action brought by the Executrix of the deceased passenger

(“MacLean”) against the estate of the deceased (“Culberson”);

a third party action was instituted on September 12, 1969,

against Ranger on Culberson’s aviation liability insurance pol-

icy. Ranger appealed as a matter of right the district court

order granting the cross-motion for summary judgment to Cul-

berson’s Executrix in No. 12362 and appealed pursuant to Rule

54(b), Fed. R. Civ. P., the district court order granting Culber-

son’s motion for summary judgment on the third party claim

in No. 12886. The appeals were consolidated by the appellate

court as No. 71-1515 pursuant to Rule 3(b), Fed. R. App. P.

Georgia Court of Appeals decided only two weeks pre-

viously and involving the same provision of the same

aviation insurance policy and hold that coverage exists

where the state court has unequivocally held that it

does not.

2. Whether the circuit court’s basing of its decision

on an assumption directly contrary to the undisputed

facts in the record calls for an exercise of this Court’s

power of supervision.*

Statement of the Case

The district court had jurisdiction under 28 U.S.C.

$1332 over the concurrently decided diversity actions

involving unambiguous aviation liability and hull dam-

age insurance policy provisions affecting claims ex-

ceeding $10,000.00 in each action.

Nature of the Cases

Before this Court on petition for writ of certiorari are

two cases consolidated for disposition on appeal! both of

which turn on the question of whether, as a matter of

law, coverage under an aircraft insurance policy issued

to William A. Culberson was suspended at the time of

the crash during a violent thunderstorm in New Jersey

on August 30, 1967 which was fatal to both Culberson

and his passenger, MacLean, and which resulted in a

2Ranger further believes that the trial and appellate courts

also erred in rejecting Ranger’s contentions with respect to

two policy exclusion provisions (A. 4a-5a, 30a-32a). Similarly.

Ranger submits that the circuit court’s reliance upon Rule 8(c).

Fed. R. Civ. P. (A..22a n.1) is erroneous. While Ranger does not

urge these errors as grounds for granting this petition, it re-

serves the right to do so in its brief on the merits if this peti-

tion is granted.

total loss to the aircraft. Ranger ‘submits that coverage

was suspended and that it was reversible error to hold

Ranger liable under the policy for either the personal

injury claims or aircraft hull loss.

The Evidentiary Record

Culberson’s application to Ranger for an aviation lia-

bility and hull damage insurance policy stated that he

held an FAA private pilot certificate with a single en-

gine rating and a total of 100 logged hours, 15 in re-

tractable gear aircraft, while other pilots who would be

permitted to fly the insured aircraft were required to

hold a pilot certificate and 200 total logged hours, 25

in retractable gear aircraft. On the basis of that appli-

cation information, much of which was copied directly

into the policy declarations, Ranger issued its policy No.

_AC1-107096 which provided, inter alia:

“Item 7. Pilot clause: Only the following

pilot(s) will operate the aircraft while ‘in

flight’ and while holding proper pilot certifi-

cate(s) with appropriate ratings as required by

the Federal Aviation Agency:

W. A. Culberson or any other private or com-

mercial pilot having a minimum of 200 total

logged hours, including at least 25 hours in re-

tractable gear aircraft.”

In addition to the foregoing basic policy, Ranger at-

tached thereto a standard form endorsement rider on

which were checked only those specific endorsements

_ Ranger considered necessary on the basis of the infor-

mation Culberson supplied in his policy application. In .

his uncontradicted affidavit submitted in support of

Ranger’s summary judgment motion in the district court,

Ranger’s Senior Vice President who wrote the Culber-

son policy testified:

“There are many variations of the endorse- |

ments which are used depending upon the

particular risk involved. For convenience the

endorsements are printed together to be at-

tached to the basic policy, the applicable en-

dorsement being indicated by an ‘X’ on the

endorsements page. Many such endorsement

pages exist, one example of which can be found

as endorsement page number one to the policy

issued to Mr. Culberson.

Item Four on endorsement page number one,

[a provision mentioning student pilots which

was relied upon by the court of appeals ma-

jority ] which was not a part of Mr. Culberson’s

policy, is never used where a policy is issued

to an individual insured. Item four is only

added as an exclusion to a policy written for a

‘flying club.’ The reason for the exclusion con-

tained under number four of the endorsement

page number one is that in the company’s un-

derwriting experience flying clubs are par-

ticularly prone to violations of the Federal

Aviation Administration regulations mentioned

therein. For example, the company’s experience

is that flying club members quite often violate

the recent flight experience requirements of

Section 61.47 of the Federal Aviation regula-

tions relating to the number of takeoff and land-

ings required in the last ninety days before a

pilot may fly with passengers. Because of that

particular hazard which substantially increases

the risk an underwriting decision was made to

add to all flying club policies the exclusion con-

tained in Item Four. Except for the happen-

stance that Items One and Two were applicable

to Mr. Culberson’s situation Item Four would

not have even been included in the policy pack-

, | . 6

age issued to Mr. Culberson since it has no

relevance to a policy written for an individual

insured.

Item Three of that same endorsement page

is added whenever the company is informed

that a student pilot is to fly the aircraft. Had

Ranger Insurance Company been informed that

Mr. Culberson held only a student pilot license

it would have required the addition of the en-

dorsement numbered three on endorsement

page one. If that endorsement had been applied

to the policy Mr. Culberson would have had no

coverage at any time during the flight in which

he met his death because it was not under the

direct supervision of a flight instructor. How-

ever, Ranger Insurance Company had no

knowledge that Mr. Culberson had only a stu-

dent pilot license as it had been represented to

the company that he held a private pilot license

with a single engine rating. Attached to this

affidavit is a copy of the application for in-

surance which was the company’s only knowl-

edge with regard to Mr. Culberson’s. flying

licenses and ratings.”

In fact, Culberson held only a “student pilot” certifi-

cate Which contained the following limitation on its face

in two places:

“LIMITATIONS-PASSENGER CARRYING PROHIBITED”

MacLean held no pilot certificate at all.

There is no dispute that Culberson crashed during a

thunderstorm while carrying MacLean as a passenger

and in direct violation of the prohibition against carrying

passengers which was a part of his “student pilot” certi-

ficate. As a result, at the time of the accident, Culberson

was without the “proper pilot certificate” required for

compliance with the policy “pilot clause.”

As Judge Dyer in his appellate court dissent observed

(A. 37a-38a):

The limitations of coverage in the policy are

perfectly clear and Culberson was bound by

them. He knew that his student pilot certificate

prohibited him from carrying passengers any

time, any where. He knew that the “Including

Passengers” provision would only be applicable

when either a private or commercial pilot certi-

ficate holder, as specified in his policy, was

flying the aircraft with passengers. He. knew

that his policy required him to have a proper

pilot certificate. This could only mean that he

was within the policy coverage if he flew the

aircraft alone and that there would be no

coverage while passengers were aboard.

Notwithstanding the uncontroverted evidentiary rec-

ord outlined above, the circuit court majority errone-

ously concluded that it “must assume that Ranger fully

intended to insure a student pilot’’ because Ranger did

not check the student pilot exclusion on its form en-

dorsement rider (A. 21a) and therefore affirmed the

district court judgment holding that there was coverage

during the period of Culberson’s non-compliance with

the policy “pilot clause” provisions.

Reasons For Granting The Writ

The errors of the circuit court cry out for correction

by this court. Not only has the circuit court directly

ignored controlling state law to substitute its own view,

it has cast doubt on the validity of the thousands of

aviation insurance policies issued annually in this coun-

try thus adversely affecting both insureds and insurers.*

As the matter now stands neither insured nor insurer -

knows the meaning of this keystone clause in aviation

insurance coverage. The bench, the bar and the public

have an urgent need for this Court to review this case

involving an issue of substantial public importance.

1. Under the rule of Erie the circuit court was

required to follow controlling Georgia law

and to hold that, under the facts, aviation

liability insurance coverage was suspended.

Since 1938 when it decided Erie R. Co. v. Thompkins,

304 U.S. 64, 78, 58 S.Ct. 817,- 822, this Court has con-

tinuously held in civil diversity cases that on matters of

substantive law the Federal courts must follow the ap-

propriate state law. See generally, 1 Barron and Holtzoff,

Federal Practice §8; p. 32 (Wright ed. 1960); 1A Moore’s

Federal Practice {0.306, p. 3201 ff (1959). Further, this

Court, applying Erie has held that state law governs

the interpretation to be given a specific provision of an

insurance contract. Ruhlin v. New York Life Ins. Co.,

304 U.S. 202, 205, 58 S. Ct. 860, 861 (1938); New York

Life Ins. Co. vf Jackson, 304 U.S. 261, 58 S.Ct. 871

_(1938) (per curiam). “For purposes of diversity juris-

diction a federal court is ‘in effect, only another court

of the State.’” Angel v. Bullington, 330 U.S. 183, 187,

67 S.Ct. 657, 659 (1947); Guaranty Trust Co. of New

York v. York, 326 U.S. 99, 108, 65 S.Ct. 1464, 1469

’There are 714,778 active pilots in the United States and 133,-

814 aircraft eligible for civil aircraft registration. Federal

Aviation Administration Statistical Handbook of Aviation

(December 1970). Selected Regional Statistics, Department

of Transportation, Federal Aviation Administration (October

1971).

(1945). The reason underlying the Erie rule was clearly

expressed by this Court in York:

Erie R. Co. v. Thompkins was not an endeavor ©

to formulate scientific legal terminology. It ex-

pressed a policy that touches vitally the proper

distribution of judicial power between State

and federal courts. In essence, the intent of that

decision was to insure that, in all cases where a .

federal court is exercising jurisdiction solely

because of the diversity of citizenship of the

parties, the outcome of the litigation in the fed-

eral court should be substantially the same, so

far as legal rules determine the outcome of a

litigation, as it would be if tried in a State

court. The nub of the policy that underlies Erie

R. Co. v. Thompkins is that for the same trans-

action the accident of a suit by a non-resident

litigant in a federal court instead of in a State

court a block away, should not lead to a substan-

tially different result.

326 U.S. at 108, 65 S.Ct. at 1470. What has happened in

the instant case is precisely what this Court sought by

Erie to avoid.

In The Farmers and Merchants Bank of Manchester v.

Ranger Insurance Company, 125 Ga. App. 166, S.E.2d

(1971), certiorari denied by Supreme Court of Geor-

gia (Feb. 28, 1972) (see Appendix B hereto), the Georgia

Court of Appeals dealt with a fact situation identical to

that in the instant case: Ranger Insurance Company is-

sued a liability and hull damage insurance policy to John

C. Loftin. An accident occurred while Mr. Loftin, holding

only a “student pilot” certificate, was operating the in-

sured aircraft with a passenger in violation of the express

limitations of his FAA certificate prohibiting passenger _

carriage. As with the instant case, the Ranger policy“ pilot

clause” in Farmers and Merchants Bank conditioned

coverage upon operation of the aircraft in flight by Lof--

tin (or any other pilot having a minimum of 300 total

logged hours) while holding appropriate FAA pilot cer-~

tificate and ratings (A. 2b). The Georgia Court of Ap-

peals, agreeing with the rationale of National Insurance

Underwriters v. Bequette, 280 F.Supp. 842 (D.Alaska

1968), held that for that flight with a passenger in viola-

tion of insured’s FAA “student pilot” certificate and the

policy pilot clause there was no coverage (A. 3b).*

On December 14, 1971, following denial of rehearing

by the Georgia Court of Appeals of its decision in Farm-

ers and Merchants Bank, Ranger filed with the ‘circuit

*Both Bequette and Farmers Merchants Bank, hold that cov-

erage was “excluded” for the flight without the appropriate

FAA certificate required by the pilot clause. Relying on the ©

rationale of the Fifth Circuit’s decision in Lineas Aereas Co-

lumbiana Expresas v. Travelers Fire Ins. Co., 257 F.2d 150 (5th

Cir. 1958), Ranger has generally considered that “suspension”

rather than “exclusion” of coverage is the more appropriate

term for the period when an insured operates the aircraft with-

out a proper certificate. As the Fifth Circuit recognized in

Lineas:

It is just such consideration that has led to the de-

velopment of the principle expressly acknowledged by

Lace [the insured] in the briefs here, of suspension of

coverage. It is, of course, true that development of the

law along these lines has come from the desire to avoid

an outright forfeiture. Consequently, coverage is not

permanently destroyed. It is suspended so long as, but

only so long as, the violations of the specified basic

policy requirements continue.

257 F.2d at 155. However, if a loss occurs during the uncovered

period, the effect is identical whether coverage is considered

“excluded” or “suspended”: the insurer is not liable for any

loss.

court’ a supplemental brief attaching thereto as Exhibit

_ Aacertified copy of the state court decision and arguing .

as above that Farmers and Merchants Bank is controlling

and requires reversal of the district court with directions

that summary judgment be entered for Ranger in both

cases.

In its decision of December 28, 1971—12 days after re-

_ceipt of Ranger’s supplemental brief—the circuit court

failed to consider or even to cite the controlling Farmers

and Merchants Bank case. The issue in the state court

case and the instant Federal court actions is identical: is

coverage suspended when a student pilot operates the in-

sured aircraft with a passenger aboard in violation of his

FAA certificate limitations and without the “proper cer-

tificate” required by the policy pilot clause. Disregarding

_ Clear state law and policy and ignoring Erie, the circuit

court majority erroneously held there was coverage. The

opinion of the dissenting judge, on the other hand, was

consistent with the Georgia decision and should have

been the decision of the circuit court.

While the majority opinion in this case recognized that

Georgia law, under the Erie principle, was controlling,

citing Float-Away Door Co. v. Continental Casualty Com-

pany, 372 F.2d 701 (5th Cir. 1967), cert. denied, 389 U.S.

823, 88 S.Ct. 58 (1967) and Klaxon Co. v. Stentor Elec.

Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020 (1941) €A. 17a), it

‘ disregarded the Farmers and Merchants Bank case and

held that there is coverage in an identical factual situa-

tion where a Georgia court has held there is no coverage,

thus violating the very Erie principle which it acknowl-

5The certifed mail return receipt indicated that circuit court

Deputy Clerk Hill received the supplemental brief on Decem-

ber 16, 1971.

‘12

edges to be controlling in these diversity insurance con-

tract actions.

In its petition for rehearing and rehearing en banc,

Ranger specifically argued that Farmers and Merchants

Bank was controlling and that the circuit court’s conflict-

ing decision should be reversed on rehearing with direc-

tions that judgment be entered for Ranger. Again that

state court decision was appended to the Ranger petition®

Again the circuit court ignored, failed to cite or appar-

ently even consider the controlling state case® and sum-

marily denied Ranger’s petition, with Judge Dyer dis-

senting for the reasons originally stated (A. 43a). ’

This Court should grant certiorari in this case to in-

sure that its long-established Erie principle will be fol-

lowed by the circuit court and the conflict created

between the Federal and State Courts eliminated.

2.. The circuit court’s erroneous and factually

unsupported “assumption” that Ranger

“fully intended to insure a student pilot” on

on the basis of which the circuit court

circumvented the Erie principle calls for

this Court to exercise its power of super-

vision.

The circuit court majority circumvented Erie by re-

sorting to assumption of unwarranted facts to abrogate

6Ranger deserved to be shown the same concern for evolving

and controlling state law in the instant case that the Fifth Cir-

cuit showed the tobacco industry in Green v. American Tobacco

Co., 304 F.2d 70, on rehearing certification of question to Flor-

ida Supremé Court, 304 F.2d 86 (5th Cir. 1962), rev’d and rem’d

-in accordance with state court decision, 325 F.2d 673 (5th Cir.

1963) applying 154 So.2d 169, Fla. 1963), cert. denied 377 U.S.

943 (1964), where newly decided state law was recognized by

the Fifth Circuit as controlling despite an initial decision to

the contrary.

- the plain “pilot clause” language. Judge Dyer, in his dis-

sent, stated (A. 36a):

It bears repeating that Ranger did not know and

was not charged with knowledge that Culberson

held a student pilot’s certificate. In the face of

a record showing only that Ranger’s informa-

tion was that Culberson held a private pilot’s

certificate, the failure of Ranger to check the

omitted exclusion cannot provide this court:

with the basis for an assumption “that Ranger

fully intended to insure a student pilot.” Quite

the contrary is true, for if Culberson had held a

private pilot certificate as Ranger thought he

did, the student pilot exclusion would have been

inapplicable.

The district court and circuit court majority, in effect,

hold that if hindsight shows that a particular policy rider

exclusion, available but not applicable, would also have

excluded the risk in addition to the “pilot clause” cover-

age conditions then, as a matter of law, the court must

assume that the risk was intended to be covered and re-

fuse to apply the otherwise clearly applicable suspension

of coverage principle. Such a holding is outrageous and

clearly erroneous.

The insured, not the insurer, is in the best position to

know what type FAA certificate he holds and what limi-

tations or prohibitions are imposed upon his flight ac-

tivities. And most important, the insured is in the best

position to make certain his flight activities are confined

to such as fall within the ambit of the risk covered by

his aviation insurance policy. As Judge Dyer stated in

his dissent (A. 37a):

[I1]f Culberson was going to fly in violation of

his FAA certificate and thereby increase the

risk for passengers covered, Ranger should

have been made aware of it and given an op-

portunity to decline the risk. In my view,

Ranger was entitled to rely on the information

furnished to it and the district court should not

have ignored it.

Judge Dyer was absolutely correct when he stated in

dissent: “the majority requires no compliance with the

pilot certificate which expressiy forbade Culberson from

carrying passengers” (A. 34a). It is exactly that which

causes the substantial adverse impact that the circuit

court’s decision will have upon the aviation insurance

industry.

This Court should exercise its power of supervision to

require the Fifth Circuit to adhere to its proper judicial

function when disposing of insurance contracts.

Supreme Court Rule 19(1)(b) provides that this Court

will consider grant of a writ of certiorari:

Where a court of appeals . . . has so far departed

from the accepted and usual course of judicial

proceedings .. . as to call for an exercise of this

court’s power of supervision.

It is a well-recognized principle that it is not the func-

tion of courts to write or rewrite insurance contracts they

are called upon only to construe. Thus; whether or not

the trial or yppellate court considers a particular condi-

tion of a policy to be reasoriable or unreasonable from an

underwriting viewpoint is not a proper basis for contract

construction. As the Fifth Circuit held in Canal Insur-

ance Co. v. Dougherty, 247 F.2d 508, 512 (5th Cir. 1957):

We start with the proposition that our func-

tion is not to write insurance contracts. We are

not underwriters. We must apply them as writ-

ten by the parties [citing cases], even though

the result compelled by the plain words used

may appear or be thought to appear to be un-

reasonable, unduly harsh, or stringent. We can-

not ignore them. We cannot substitute others

for them. So at the start we must ascertain

whether the words used really have a doubt or

create uncertainty which needs construction. If

not, the words control.

Similarly, the Fifth Circuit held in National Surety Corp.

v. Western Fire & Indem. Co., 318 F.2d 379, 387 (5th

Cir. 1963):

A provision of a contract, which is clear and

unambiguous and not subject to more than one

interpretation, is not open to construction, even

if giving effect to its literal terms will work a

hardship on one of the parties. The rule has

been applied to insurance contracts. [Citations

omitted ].

The district court in Bequette, upon which the Georgia

Court of Appeals relied in Farmers and Merchants Bank,

supra, held:

A court cannot and should not do violence to

the plain terms of a contract by artificially cre-

ating ambiguity where none exists. In situations

in which reasonable interpretation favors the

insurer, and any other would be strained and

tenuous, no compulsion exists to torture or twist

the language of the contract. An insurance com-

pany has the right to limit the coverage of a

policy issued by it and when it has done so, the

plain language of the limitation must be re-

spected.

The foregoing insurance contract judicial construction

rules were specifically raised by Ranger before the cir-

cuitcourt. —

As Judge Dyer recognized in his dissent (A. 34a): “The

Pilot Clause” under the “Declarations” in the policy is-

sued by Ranger to Culberson means exactly what it says

and says exactly w!. .t it means.

In repudiating long standing rules c: -ontract law by

relying on an unwarranted assumption to circumvent the

Erie rule and find coverage despite the plain meaning of

the “pilot clause” conditions and the uncontroverted evi-

dence of the breach thereof, the circuit court has “so far

departed from the accepted and usual course of judicial

proceedings . . . as to call for an exercise of this court’s

power of supervision,” Supreme Court Rule 19(1)(b),

such that certiorari should be granted to reestablish the

proper standard of judicial review of an unambiguous in-

surance contract.

Conclusion

A Federal court of appeals sitting as “only another

court of the State” of Georgia has patently ignored Geor-

gia law which is “four-square” on all points. The conflict

and uncertainty thereby created require grant of this

petition for writ of certiorari to correct clear error.

Respectfully submitted,

E. SMyTHE GAMBRELL

Of Counsel for Petitioner

Atlanta, Georgia

April 24, 1972

APPENDIX A

Opinions and Judgments of the District Court

UnitTep STATES DistricT COURT

NORTHERN DISTRICT OF GEORGIA

ATLANTA DIVISION

Crvit Action No. 12362

——: —- 8

RANGER INSURANCE COMPANY

versus

Mrs. Miriam G. CULBERSON

i 2

ORDER

This action involves a claim by Ranger Insurance Com-

pany (hereinafter referred to as “Ranger” ) upon a prom-

issory note executed by W. A. Culberson, herein repre-

sented by his administratrix, Mrs. Miriam G. Culberson

(hereinafter referred to as “Culberson” ). Presently pend-

ing before the court are summary judgment motions by

Ranger and Culberson thereby placing at issue the ques-

tion of liability under the promissory note. For the fol-

lowing reasons, the court hereby grants defendant’s mo-

tion for summary judgment, and denies plaintiff’s motion

for similar relief.

On November 3, 1967, Ranger paid to Michigan Na-

tional Bank the sum of $10,097.12 in settlement of the

breach of warranty coverage under a Ranger aircraft

insurance policy issued to W. A. Culberson. In considera-

tion for said payment, Michigan National Bank assigned

to Ranger a promissory note dated July 31, 1967, payable

to Hill Aircraft and Leasing Corporation by W. A. Cul-

berson which promissory note had been previously as-

signed to Michigan National Bank.

On the date that Mr. Culberson purehased the aircraft

in question he obtained an aircraft insurance policy from

Ranger to cover him for personal liability and any dam-

ages which might be sustained to his plane while he was

in operation thereof. He then held a student pilot cer-

tificate issued by the F.A.A. which was valid until Janu-

ary 31, 1968.

On August 30, 1967, Mr. Culberson took off from East

Point, Georgia, on a cross country flight for business

reasons. He stopped at Morristown, New Jersey, where

Bruce A. MacLean boarded the plane. After take-off from _

Morristown, and while Mr. Culberson was the pilot in

command, the aircraft crashed in the vicinity of Oxford;

New York, killing both occupants. Ranger paid $10,097.12

to the lien holder of the insured aircraft, Michigan Na-

tional Bank, in exchange for the assignment of the prom-

issory note and mortgage given by Mr. Culberson. Ranger

in this action seeks to recover from Mr. Culberson’s es-

tate the money paid Michigan National Bank.

Plaintiff contends that the policy, as executed, pre-

cludes recovery by its insured because of W. A. Culber-

son’s actions in operating the airplane with a passenger

aboard. In support of this conclusion, plaintiff relies on

the following policy provisions:

Item 7. Pilot clause:

Only the following pilot(s) will operate the air-

craft while ‘in flight’ and while holding proper pilot

certificate(s) with appropriate ratings as required

by the Federal Aviation Agency:

W.A. Culberson or any other private or commer-

cial pilot having a minimum of 200 total logged

hours, including at least 25 hours in retractable

gear aircraft. (italicized portions typewritten).

Exclusions

This policy does not apply:

pes:

2. to any occurrence or to any loss or damage oc-

curring while the aircraft is operated, while in

flight, by other than the pilot or pilots set forth

under Item 7 of the Declarations;

3. to any Insured:

(a) who operates or permits the aircraft to

be operated in any manner which requires a

special permit or waiver from the Federal

Aviation Agency, whether granted or not, un-

less this Policy is specifically endorsed to in-

clude such operation.

Plaintiff avers that inasmuch as W. A. Culberson was not

certified to carry passengers and that his doing so was in

violation of Section 61.73 of the Federal Aviation Agency ~

Regulations, 14 C.F.R. §61.73, any insurance he may have

had was suspended during the term of his flight with

MacLean aboard.

It has been the long standing policy of the courts to

interpret insurance coverage so as to effect the broad

purpose for which it was designed. Paddleford v. Fidelity

& Casualty of New York, 100 F.2d 606 (7th Cir. 1938),

cert. denied, 306 U.S. 664 (1939). Therefore, in situations

such as that before the court, any doubt as to the coverage

under the policy should be resolved in favor of accord-

ing the insured the benefits of the policy. Ga. Code Ann.

§20-704(5); Boston Ins. Co. v. Gable, 352 F.2d 368 (5th

Cir. 1965), cert. denied, 389 U.S. 823.

Clearly under the provisions quoted above and under

the cases construing same, W. A. Culberson was author-

ized to fly the airplane, and plaintiff's claim that his ac-

tions violated Exclusion Two will not stand. cf., Lineas

Aereas Colombianas Expresas v. Travelers Fire Ins. Co.,

257 F.2d 150 (5th Cir. 1958); Electron Machine Corp. v.

American Mercury Ins. Co., 297 F.2d 212 (Sth Cir. 1961)

(both cases involved unauthorized pilots, but indicate the

conclusions would have been contra had the pilot been

among those permitted to fly the airplane under the

policy ).

A closer question exists as to Exclusion Three of the

policy wherein a failure to obtain a special permit or a

waiver from the F.A.A. will bar recovery under the pcl-

icy. Plaintiff contends that the insured was required to

obtain a waiver in order to fly passengers under the

terms of his flying certificate, and that lis failure to do

so thereby invalidates his coverage during the pendency

of his fatal flight. Defendant asserts that such a con-

Struction of the provision would invalidate insurance

coverage in nearly every plane crash, since most, if not

all, airplane mishaps are caused by some violation of

F.A.A. regulations. Additionally, defendant argues that

had plaintiff desired to exclude specifically the events

herein involved, it had the power at hand to doso, namely

by including among the further endorsements to the

policy, Endorsement No. Four which reads in part:

. The following Exclusion is added the “Exclusions”

of the Policy:

10. Under Coverage A, B, C, D, E, and G to any

Insured who operates or permits the aircraft to

be operated:

(b) in violation of any regulation pertaining to

pilot certificates.

Said provision was deliberately omitted when Ranger

chose to make applicable Endorsements Number One and

Two on the same page. Finally, defendant contends that

Ranger knew and permitted W. A. Culberson to carry

passengers because the coverage on the policy was ex-

pressly made to include liability to passengers. See, Item

4.D. under coverages. °

The two most closely analogous cases to the one at bar

reach opposite conclusions on the point in question, i.e.

whether coverage is suspended because of violations of

F.A.A. regulations. In Underwriters at Lloyds of London

v. Cordova Airlines, Inc., 282 F.2d 659 (9th Cir. 1960),

the insured crashed while carrying a planeload of dyna-

mite in violation of C.A.B. regulation, and despite the

fact that a waiver could have been acquired upon request.

The court therein held the policy coverage to have been

suspended and relieved the insurance company from lia-

bility thereunder. On facts nearly identical to those con-

sidered herein, however, the court in Firemen’s Fund Ins.

Co. v. McDaniel, 187 F.Supp. 614 (N.D. Miss.), aff’d 289

F.2d 926 (5th Cir. 1961), held that the insured was au-

thorized under the policy to fly the airplane, whether he

had a certification or not. The court pointed to the fact

that government regulation of aircraft liability insurance

is informal, and that it is possible to write insurance upon

a person without regard to whether he is certified to

_carry passengers. In other words, a person may be in-

sured as to activities which his certificate does not per-

mit. Likewise, a company could place more stringent

requirements on insured than does the government reg-

ulation. Consequently, the court finds that inasmuch as

the insured could pilot the aircraft in flight, with or

without passengers aboard, the coverage would be in °

effect, whether he was certified or rated as a pilot by

the governmental board or not. Id., at 618. This conclu-

sion is equally applicable to the case at bar, and the

court hereby adopts a similar holding.

The court is additionally swayed by the fact that Ranger

intentionally omitted an available exclusion which would

have foreclosed consideration of the instant case,-and the

fact that Ranger deliberately and expressly typed the

prefix “In-” before the provision applicable to passenger

coverage. A contrary holding would invalidate airplane

liability coverage in a significant number of cases con-

trary to the intent of either party at the time of purchas-

ing said insurance.

Consequently, the court hereby grants defendant’s cross

motion for summary judgment and, accordingly, denies

plaintiff's summary judgment motion. Ranger is, there-

fore, liable under the terms of the policy, and, as such,

may not recover from the estate of W. A. Culberson the

amount heretofore paid the Michigan National Bank on

the promissory note.

So ordered this the 4th day of December, 1970.

/s/Albert J. Henderson, Jr.

Judge, United States District Court

for the Northern District'of Georgia

UniITED STATES DISTRICT CouRT |

NorTHERN District oF GEORGIA

ATLANTA Division

——_4e) >

RANGER INSURANCE COMPANY

versus .

Mrs. Miriam G. CULBERSON

Civit Action No. 12,362

CarRoL Brown MacLean, As Executrix

versus

Miriam G. CuLBersoN, As Administratrix

versus.

RANGER INSURANCE COMPANY

Civiz Action No. 12,886

——e} —

ORDER

Ranger Insurance Company (hereinafter sometimes

referreu to as “Ranger” ) moves the court to amend and

modify its prior order, dated December 4, 1970, which

granted the summary judgment motion of Mrs. Miriam

G. Culberson and denied Ranger’s motion for similar

relief. Ranger contends: (1) that the court misconstrued

the “Pilot Clause” of the insurance policy, (2) that the

deceased's failure to have an instrument rating remained

unrebutted by Mrs. Culberson, and (3) that the court

should enter a final judgment on the third-party com-

plaint in Civil Action No. 12,886 pursuant to Rule 54(b)

of the Federal Rules of Civil Procedure.

Movant alleges that the court erroneously held W. A.

Culberson to have been properly certified under the

“Pilot Clause”. The said clause reads as follows:

Item 7. Pilot Clause

Only the following pilot(s) will operate the air-

craft while ‘in flight’ and while holding proper pilot

_ certificate(s) with appropriate ratings as required

by the Federal Aviation Agency:

W. A. Culberson or any other private or commer-

cial pilot having a minimum of 200 total logged

hours, including at least 25 hours in retractabie

gear aircraft. (italicized portions typewritten).

The crux of movant's argument is that W. A. Culber-

son's valid student pilot certificate was in some way sus-

pended during the pendency of his flight with Mr. Mac-

Lean aboard, and that thereby Mr. Culberson, at the time

of the accident did not hold a “proper pilot certificate” as

is required by the quoted clause above.

The cases of Electron Machine Corp. v. American Mer-

cury Ins. Co., 297 F. 2d 212 (5th Cir. 1961): and Lineas

Aereas Colombianas Expresas v. Travelers Fire Ins. Co.,

257 F. 2d 150 (5th Cir. 1958 ), asserted by Ranger as sup-

porting their conclusion, dealt with factual situations un-

like that presently before the court, because the pilots

actually operating the aircraft therein was wholly unau-

thorized to fly at any time under the terms of the policy.

Mr. Culberson, however, as the named insured was spe-

cifically designated as competent to pilot the aircrait in

question. Therefore, if Mr. Culberson is to be consid-

ered as a pilot without a proper certificate, his existing

and valid certificate must have been in “suspension at

the moment of loss.

On the “suspension” question, Ranger cites the coses

of National Insurance Underwriters v. Bequette, 260 F.

Supp. 842 (D. Alaska 1968); and Roach v. Churchman.

___ F. 2d ——_, 11 Avi. 17,733 (9th Cir. 1970), as sup-

port for its position. The court notes the similarity of

the clauses and facts before the district court in Beque'te.

supra, but refers movant to the exclusionary ciause

(“Item H of the Exclusions”) quoted by the court as

requiring the conclusion reached. It was the joinder of

the “Pilot Clause” and the “Exclusionary Clause” that

required the court to hold that there existed no ambi-

guity in the contract as written. The point made by Mrs.

Culberson that had Ranger desired to exclude the con-

duct herein involved, the adoption of Exclusion 4 wou d

have foreclosed further dispute in the matter. It is jut

such an exclusion before the court in Bequette (“Item

H”) that is omitted here, and thusly further substant.-

ates the court's prior determination. Grigsby v. Houst.”

Fire & Cas. Ins. Co., 113 Ga. App. 572 (1966). similar

contains a definitive exclusionary clause.

Movant's reliance on Roach, supra, is equally m)-

placed. The court therein held that the insurance cove -

age was not in suspension at the time of the crash mere

because the pilot had failed to practice night landing

and take-offs within ninety days of the fatal flight. «

10a

required by F.A.A. Regulations. The only statement in

the case which lends support to the position of Ranger is,

... While the pilot's act of carrying a passenger at

night in apparent contravention of $61.47 may have

been negligent or even intentional, it did not violate

any express term of his pilet’s certificate.

Id., at 17,735. Consequently, only by implication can the

court determine that the Eighth Circuit Court of Ap-

peals might have held the contrary if faced with a ques-

tion such as the one here. The court finds this inade-

quate precedent for such a holding on the present facts.

An example of how Ranger might have drawn its pol-

icy so as to avoid doubt, is exhibited by the case of Er-

port Ins. Co. v. Mercantile National Bank of Hammond,

— F. Supp. ___, Civil Action No. 4692 (N. D. Ind.

March 19, 1968) (also cited by movant). The comparable

“Pilot's Clause” reads as follows:

The insured warrants that the aircraft will be op-

erated only by pilots possessing a valid and effec-

tive pilot certificate and all flights will be within

the limitations of the operating privilege of the

pilot’s certificate and rating. (emphasis added )

The policy further provided that:

This policy does not apply:

V. To any operation of the aircraft, with the per-

mission of the named insured, in violation of the

operating privilege of the pilot's certificate and the

rating. :

Clearly, under these provisions, no reasonable argument

can be made that a pilot operating his airplane in viola-

tion of his certificate would be’ excliided from insurance

lla

coverage while such disability persists. Unfortunately for

Ranger, the policy issued neither had the clarity of the

above quotations nor the obvious intent as evidenced

thereby. A reasonable construction of the entire policy in

question simply fails to exclude the insured’s apparent

conduct.

The court refuses to create ambiguity where none ex-

ists. Electron Machine Corp. ¥. American Mercury Ins.

Co., supra. An insurance policy is to be construed as rea-

sonably understood by the insured. Stevens Industries,

Inc. v. Maryland Cas. Co., 391 F. 2d 411 (5th Cir. 1961).

Movant had means at hand to exclude what it now con-

tends was hereinbefore intended. Upon a reconsideration

of the arguments presented, the court finds that in inas-

much as Mr. Culberson did possess a valid student cer-

tificate and in light of the fact that an insurer may cover

flights in direct contravention of the express limitations

found on said certificate, Ranger’s failure to explicitly

exclude such a contingency required that all doubts be

resolved in favor of the insured. Boston Ins. Co. v. Gable,

352 F.2d 368 (5th Cir. 1965) cert. denied, 389 U.S. 823.

Ranger asserts in its second-ground, that Mrs. Culber-

son’s motion for summary judgment should be denied

because movant has raised an issue as to the lack of

“proper instrument flight rating”. This contention is

amply rebutted by. the case cited by Ranger, Roach v.

Churchman, supra. -The court therein specifically held

that a similar violation, in the absence of a particular |

exclusion, would not justify the declination of coverage.

Further, the coyrt notes that “ratings” are not given

pilots with “Student Certificates”, and, therefore, the

failure of deceased to possess an “instrument flight rat-

ing” should not work to his detriment.

12a

Finally, Ranger requests that final judgment be en-

tered on the third-party complaint in Civil Action No.

12,886. Finding no objection thereto, the court hereby

grants movant’s request and directs the clerk to enter

final judgment in accordance with this order.

In summary, the court having considered the renewed

arguments of movant, hereby affirms its prior adjudica-

tion as consistent with the law as it now exists. Judgment

shall hereby be entered on the third-party complaint in

Civil Action No. 12,886.

So ordered this the 22nd day of January, 1971.

/s/ Avsert J. HENDERSON, Jr.

Judge

United States District Court for

the Northern District of Georgia

18a

Unitep States District Court

NORTHERN DISTRICT OF GEORGIA

‘ATLANTA DIVISION

—_——=<e >

Crvi. Action No. 12,886

Caro, Brown MacLean, As Executrix,

vs. ,

Miriam G. Cutserson, As Administratrix,

vs.

RANGER INSURANCE COMPANY,

———

FINAL JUDGMENT PURSUANT TO RULE 54(B)

————

On order having been signed by Judge Albert J. Hen-

derson, Jr., on January 22, 1971 and filed in the Clerk’s

Office on January 26, 1971 granting the Motion of

Defendant-Third Party Plaintiff, Miriam G. Culberson,

for summary judgment against Third Party Defendant

Ranger Insurance Company, and the Court having

granted Ranger’s request for entry of final judgment pur-

suant to Rule 54(B) of the Federal Rules of Civil Pro-

cedure and thus having certified that there is no just

reason for delay, and expressly directing entry of fina!

judgment on said Third Party claim against Ranger In-

surance Company, it is

l4a

ApJUDGED that (1) Ranger Insurance Company is lia-

ble to defendant Miriam G. Culberson for all sums that

may be adjudged to be due by said defendant to plaintiff

under and by virtue of plaintiff’s claim in this civil action

to the extent of the limits of the Ranger Insurance Com-

pany’s policy in question; (2) said insurance policy was

in full force and effect on the date of the alleged crash

and covered the liability, if any, of defendant to plaintiff

by virtue of plaintiff’s claim herein; (3) defendant Ranger

Insurance Company is liable and obligated under said

policy to defend Miriam G. Culberson, as administratrix,

against the claims made by the plaintiff herein and to pay

to the policy limits any judgment that may be rendered

herein against defendant in favor of plaintiff; and (4)

the taxation of costs in this action shall await entry of

final judgment on plaintiff's claim against defendant.

Dated: January 29, 1971.

CLaupDE L. Goza

By: (illegible)

Deputy Clerk, U.S. District Court

Northern District of Georgia

Approved and Ordered

filed of Record:

/s/ ALBERT J. HENDERSON

U.S. District Judge

15a

Opinion of the Court of Appeals

In THE

United States Court of Appeals

For THE FirtH Circuit

No. 71-1515

RANGER INSURANCE COMPANY,

Plaintiff-Appellant,

versus

Mrs. Mirtam G. CULBERSON, as Executrix

of the Estate of W. A. Culberson,

Defendant-Appellee,

CaroL Brown MacLean, as Executriz,

Plaintiff-Appetlee,

versus

Miriam G. CULBERSON, as Administratrizx,

* Defendant-Third Party

Plaintiff-Appellee,

versus

RANGER INSURANCE COMPANY

Third Party

Defendant-Appellant.

Appeals from the United States District Court for

the Northern District of Georgia

16a

(December 28, 1971)

Before GEWIN, GOLDBERG: AND DYER,

Circuit Judges.

GOLDBERG, Circuit Judge: The facts of these two con-

solidated cases, both the tragic and the technical, are not

in dispute. An airplane crash in New York claimed the

lives of two men, and we are asked to construe the insur-

ance policy that allegedly covered one of them, the pilot.

The district court, on cross-motions for summary judg-

ment, held that the policy was in effect during the acci-

dent. We affirm.

W. A. Culberson, the'insured and the pilot of the pri-

vate airplane, styled a Cessna 210A, purchased his air-

plane and an insurance policy during the same day. These

transactions and the delivery of the policy took place in

the State of Georgia, where Mr. Culberson resided. At

that time and at the time of the crash, Mr. Culberson held

a valid student pilot’s license. About a month after pur-

chasing the airplane and insurance, Mr. Culberson flew

from his home in East Point, Georgia, to Morristown, —

New Jersey, where he picked up B. A. MacLean as a

passenger. It was on the next leg of the journey that the

plane crashed near Oxford, New York, in a violent thun-

derstorm, killing both men.

Appellant Ranger Insurance Company, the insurer,

paid $10,097.12 to an aircraft lienholder under a war-

ranty endorsement in the policy, thereby becoming the

assignee of a promissory note that had been secured by

Culberson’s mortgage to the aircraft seller. Ranger then

sued Culberson’s estate on the subrogated note to recover

17a

its payment. Ranger argued that Culberson’s coverage

was suspended during the accident because of violations

of the policy. Thereafter, the executrix of passenger Mac-

Lean sued Culberson’s estate in federal court, asking

$750,000 for wrongful death. Culberson’s execuirix filed

a third-party complaint, against Ranger, seeking judg-

ment that Ranger is bound to defend or to indemnify the

Culberson estate under its policy. After the actions were

consolidated by the district court, both Ranger and Mrs.

Culberson, executrix of Culberson’s estate, moved for

summary judgment in both actions. F.R.Civ.Pro. 56(b).

The district court granted Culberson’s motions and de-

nied those of Ranger. Ranger was held liable under the

policy to defend and to indemnify the Culberson estate,

and not entitled to recover its warranty payment. Ranger

appeals.

Under Georgia conflicts law, it is the place of the de-

livery of the insurance contract that controls in the diver-

sity suit, Float-Away Door Co. v. Continental Casualty

Co., 5 Cir. 1967, 372 F.2d 701, cert. denied, 1967, 389 U.S.

823, 88 S.Ct. 58, 19 L.Ed.2d 76; Pink v. AAA Highway

Express, Inc., 1941, 191 Ga. 502, 13 S.E.2d 337, aff'd,

1941, 314 U.S. 201, 62 S.Ct. 241, 86 L.Ed. 152; Klaxon Co.

v. Stentor Elec. Mfg. Co., Inc., 1941, 313 U.S. 487, 61 S.Ct.

1020, 85 L.Ed. 1477. In our case, the contract was made

and delivered in Georgia to a Georgia resident, and we

shall look to Georgia law. That law requires that policies

be interpreted liberally and in favor of coverage. Johnson

v. Mutual Life Ins. Co., 1922, 154 Ga. 653, 115 S.E. 14.

In addition, any lack of clarity or any ambiguity in the

policy is considered the responsibility of the insurance

company, for it is the company that drafts the policies

and must be required to draft clearly. Ga. Code Ann.

§ 20-704; Cherokee Life Ins. Co. v. Baker, 1969, 119 Ga.

18a

App. 579, 168 S.E.2d 171; Boston Ins. Co. v. Gable, 5 Cir.

1965, 352 F.2d 368, cert. denied, 389 U.S. 823; Float-Away

Door v. Continental Casualty, supra. At the same time,

this court has no intention of stretching for ambiguity

when it is not there, and the plain meaning of the policy

obviously controls. Canal. Ins. Co. v. Dougherty, 5 Cir.

1957, 247 F.2d 508.

Both parties ask this court, as they asked the district

court, to construe the language of an insurance policy.

The policy is a standard one, mostly printed but with

additional forms and riders typewritten or checked. All

additional materials were prepared by Ranger on its own

stationery. The policy before us-is not a paradigm of

clarity, and if there be ambiguities in the construction,

the constructor must allow a green light to coverage in

passing upon its words. If there be a red light, it, of

course, will not be ignored; but even a yellow caution

brings us much nearer the green one, calling for cover-

age. On appeal, Ranger asks us to conclude as a matter of

law that the district judge was wrong in his assessment

of this policy. On the contrary, we quite agree with the

district judge’s assessments of both policy and law.

That concluded, we pose our question for review as a

matter of law: Was it the intention of the parties from

the terms of the policy, as such terms would reasonably

be understood by the insured, that Culberson would be

covered under the circumstances that later occurred? Ga.

. Code Ann. § 20-702; Stevens Industries, Inc. v. Maryland

Casualty Co., 5 Cir. 1968, 391 F.2d 411, cert. denied, 392

US. Gor, _.... SALA. : L.Ed.2d —____; Loftin v.

U. S. Fire Ins. Co., 1962, 106 Ga. App. 287, 127 S.E.2d 53;

Royal Indemnity v. McClatchy, 1960, 101 Ga. App. 507,

114 S.E.2d 394. We must look at the policy as a totality,

using the usual rules of construction of contracts, Ga.

19a

Code Ann. § 56-2419; Float-Away Door Co. v. Continental

Casualty Co., supra; Stevens Industries, Inc. v. Maryland

Casualty Co., supra.

On appeal, Ranger argues that Culberson’s coverage

was “suspended” during the alleged transgressions of the

policy. This is in accord with the accepted principle of

our court that a violation of an insurance provision does

not operate to cancel a policy, but only to suspend its ap-

plication to any accident that occurs during the violative

acts. Lineas Aereas Colombianas Expresas v. Travelers

Fire Ins. Co., 5 Cir. 1958, 257 F.2d 150. Specifically,

Ranger’s “suspension” argument centers around the fact

that Culberson carried a passenger, admittedly in viola-

tion of the FAA regulations, and contrary to a provision

that was stamped on his student certificate. From that

fact, Ranger contends that coverage was suspended by

any one of three clauses in the policy.

I. THE PILOT CLAUSE

One of the provisions in Culberson’s policy provided:

“Only the following pilot(s) will operate the

aircraft while ‘in: flight’ and while holding

proper pilot certificate(s) with appropriate rat-

ings as required by the Federal Aviation Agency:

W. A. Culberson ar any other private or

commercial pilot having a minimum of 200

total logged hours including at least 25

hours in retractable gear aircraft.”

[The italicized portion was typewritten by

Ranger; the rest was printed. ]

Ranger’s argument goes as follows: Culberson would

be covered only “while holding a proper certificate...

with appropriate ratings; because Culberson flew with a

Snencamnimen

passenger, his certificate was “improper” and his ratings

“inappropriate.”

Ranger begins its first argument under the Pilot Clause

by contending that Culberson’s certificate was not

“proper” within the sanctions of the Pilot Clause because

his carrying of a passenger violated the face of his stu-

dent certificate. The certificate had the notation “Pas-

senger Carrying Prohibited” stamped in two places We

cannot agree.

We do not read the word “proper” as requiring exact

compliance with the face of the certificate. It is quite

proper for an insurance company to insure a pilot for any

permutation of circumstances, whether or not that per-

mutation involves conduct that violates the certificate or

the FAA regulations. Fireman's Fund Ins. Co. v. Mc-

Daniel, N.D. Miss. 1969, 187 F Supp. 614, aff'd, 5 Cir.

1961, 289 F.2d 926. It is the policy, not the pilot's cer-

tificate nor the FAA regulations, that sets the perimeters

of insurance coverage.

In viewing the totality of the policy, on eein Gab

omitted form paragraphs are parts of a written document.

They serve to explain the intent of the parties, just as

typewritten or handwritten statements serve to clarify or

to change the sense of printed paragraphs. See Royal In-

demnity v. John F. Cawrse Lumber Co., D. Ore., 1965,

245 F.Supp. 707; Aetna Life and Casualty Co. v. Charles

S. Martin Distributing Co., 1969, 120 Ga. App. 133, 169

S.E.2d 695; Fireman's Fund v. McDaniel, supra. Ranger

included an additional page of printed exclusions in Cul-

berson’s policy. The page had four exclusions, with boxes

to the side that Ranger was to check if applicable to the

policy. Of the four exclusions printed on the page, only

two were checked by Ranger as applying to Culberson.

*Culberson dealt directly only with the Guy Hill Insurance

Agency, Ranger's agent. Urder Georgia law the insurer is

estopped to deny any misconduct or negligence by its agents,

and the company is deemed to have construcitve knowledge of

that

representations to Guy Hill. Culberson's application to Ranger

for insurance was signed only by Guy Hill, not by Culberson

himself, and we have no indication in the record that Culber-

son even saw that document. Compare J v. Franklin Life

Ins. Co., 1968, 117 Ga. App. 389, 160 S.E.2d 612: State Farm Mu-

tual Automobile Ins. Co. v. Anderson, 1963, 107 Ga. App. 348,

130 S.E.2d 144

22a

In the answer to an interrogatory and in an affidavit submit-

ted by the vice-president of its underwriters, Ranger asserts

that it did not have actual knowledge that Culberson was only

a student pilot. This assertion, of course, does not answer in any

way any of the factual or legal questions raised by the trans-

action that took place between Culberson and Guy Hill. Under

the circumstances of this case, with the exception of actual mis-

representation by Culberson, Ranger is charged with know]-

edge of whatever took place in Guy Hill's office, even if what

took place was that, through the negligence of the agent. noth-

ing at all was said regarding the status of Culberson’s license.

Without Culberson’s signature on the application to Ranger,

the court below could only conclude that the information on the

application came about through the negligence of the agent,

the misconduct of the agent. or the misrepresentations of

Culberson.

On appeal and in its brief in support of its motion for sum-

mary judgment below. Ranger raised the inference that Cul-

Pro. 8(c): Sysems Inc. v. Bridge Electronics Co., 3 Cir. 1964,

335 F.2d 465. Ranger did not raise in the district court any ques-

23a

Ranger not only omitted the exclusion that specifically

forbade coverage to student pilots, but also omitted an

exclusion that read as follows:

“The following Exclusion is-added to the Ex-

clusions of the Policy: . . . to any Insured who

operates or permits the aircraft to be operated

... in violation of any regulation pertaining to

pilot certificates.” [Emphasis added. ]

Ranger's failure to check that exclusion is of some con-

sequence in its argument that an infringement of the

pilot certificate is an “impropriety” that negates cover-

age under the Pilot Clause. This omission is even more

significant in light of the one extant Georgia case on the

question of Pilot Clauses and non-compliance with the

pilot certificate. In Grigsby v. Houston Fire and Casualty

Co., 1966, 113 Ga. App. 572, 148 S.E.2d 965, the court held

that the pilot’s failure to complete the required number

of practice take-offs and landings and his failure to ob-

tain a current medical certification violated the terms of

his pilot's certificate, and therefore suspended coverage.

However, the insurance policy in Grigsby contained an

exclusion specifically providing that there should be no

coverage when the aircraft was operated “in violation of

any regulations pertaining to Airman’s Certificates.” The

exclusion that Ranger chose to omit in Culberson’s policy

suspended coverage whenever there were operations “in

violation of any regulation pertaining to pilot certifi-

cates.” While not precisely the same, the language and,

entire argument on appeal is addressed to policy construction:

Ranger does not seek a remand for a trial. Without the

resentation issue Ranger must rely only on the written insur-

ance policy to claim lack of coverage, construed under the pre-

sumption that Ranger, through its agent, fully intended that

the policy read precisely as it was made out to Culberson.

24a

we think, the intent of the two passages are close enough

to lend weight to our concern with Ranger’s omission.

Ranger, through an affidavit from the vice-president of”

its aviation managers, argues that the omitted exclusion

was intended to be applicable only to “flying clubs.” True

or not, that is not quite relevant to our inquiry here. We

wish to know what Culberson’s reasonable expectation

was when he read that exclusion page, saw two items

checked as applicable, and saw the “pilot certificate” ex-

clusion left unchecked as inapplicable. We feel that the

words compel only one reasonable meaning, and that is

that the omitted provision is intended to apply to who-

ever is insured. Without further explanation in the policy,

Ranger cannot at this date stamp an “only applicable to

flying clubs” into the policy.

In sum, if Ranger wished to suspend coverage in the

event of any violation of Culberson’s pilot’s certificate,

then it should have specifically said so in the policy. We

do not read that specificity into the word “proper” in

Ranger’s behalf, and we find support for our decision in

the fact that Ranger itself chose not to include easily-

available form language that would have readily pro-

vided the necessary specificity.

The case of Roach v. Coachman, 8 Cir. 1970, 431 F.2d

849, does not support Ranger on this point. There is one

statement by the Eighth Circuit regarding violation of a

pilot’s certificate, but the context of that statement

makes it quite inapposite here. The policy provision in

Roach specifically stated that a violation of the certificate

would suspend coverage, a stipulation very much akin to

the Grigsby provision and to Ranger’s omitted exclusion.

We might also note that the holding of Roach was that a

violation of certain sections of the FAA regulations would

not operate to suspend coverage under two separate ex-

25a

clusions, one that suspended coverage in case of violation

of the pilot certificate and another that suspended cover-

age in case of “unlawful purpose.” We find the rationale

of that holding quite in concert with our decision here.

Secondly, with respect to the Pilot Clause, Ranger in-

sists that Culberson’s admitted violation of the Federal

Aviation Regulations in carrying a passenger operated to

make his certificate “improper.” 14 C.F.R. § 61.3(a).

Again, we cannot agree. We would assume that an

“effective” certificate is a “proper” one, however one

might wish to muddle those words about. The FAA regu-

lations provide specifically that any pilot certificate (in-

cluding a student certificate ) ceases to be “effective” only

if it is “surrendered, suspended, or revoked.” 14 C.F.R.

§ 61.9. None of the three “ifs” attached to Culberson’s

certificate. The student certificate provides on its face

only that the certificate might be revoked by the carrying

of a passenger in violation of the regulations.~ Thus the

fact that Culberson carried a passenger did not, ipso

facto, revoke or suspend his certificate. See United States

v. Eagle Star Ins. Co., 9 Cir. 1952, 196 F.2d 317, rev’d on

other grounds on reh., 1963, 201 F.2d 764. Mr. Culberson

held a perfectly “proper” certificate at the time of his

accident, even though his conduct was regulated by the

FAA, and the certificate remained “proper” until it was

suspended or revoked by discretionary act of the FAA.

See Hall’s Aero Spraying, Inc. v. Underwriters at Lloyd’s

of London, 5 Cir. 1960, 274 F.2d 527; see also Roach v.

Coachman, supra.

If Ranger wishes us to read the general term “proper”

2“A violation of this limitation may result in the REVOCA-

TION FOR ONE YEAR of this certificate or any pilot certifi-

cate subsequently issued.” [Emphasis added]

26a

as requiring that any transgression of an FAA regulation

should operate as an “impropriety” of sufficient intent

to suspend coverage, then our declining to read a general

word so broadly should come as no surprise, for we have

declined to do so before. Hall’s Aero Spraying v. Lloyd’s

of London, supra; accord, Roach v. Coachman, supra.*

Words of exclusion in insurance policies should be given

small tolerance when insurance companies choose to use

words of imprecision. Indeed, the logic of Ranger’s argu-

ment for exclusion would be to engraft as exceptions to

coverage the violation of every proscribed ‘peccadillo of

FAA regulations. The cases cited by Ranger in its sup-

port go to the heart of coverage, and it cannot be that

every impaired capillary blocks coverage. Almost all air-

plane accidents involve some violation of the Federal

Aviation Regulations. Even “careless flying,” or simply

negligence, is a violation. See 14 C.F.R. $ 91.9. The Roach

case construed a similar argument:

*Ranger’s asserted construction might also be contrary to

Georgia policy:

“No policy of insurance issued or delivered in this state

covering any loss, expense, or liability arising out of

the ownership, maintenance, or use of an aircraft shall

exclude or deny coverage because the aircraft is oper-

ated in violation of civil air regulations pursuant to

Federal, State or local laws or ordinances. This sec-

tion does not prohibit the use of snecific exclusions or

conditions in any such policy which relates to any of

the following:

(a) Certification of an aircraft in a stated category

by the Federal Aviation Administration.

(b) Certification of a pilot in a stated category by

the Federal Aviation Administration.

(d) Establishing limitations on the use of the air-

craft.”

Ga. Code Ann. § 56-2439. [Emphasis added]

27a

“Applying this analysis, the insuring agree-

ments become illusory in effect since few ac-

cidents occur without the aircraft’s owner or

pilot violating one or more of the very detailed

regulations promulgated by the Federal Avia-

tion Administration.”

431 F.2d at 853.

To read into the general word “proper” all violations of

the regulations would be to hoodwink most insurance

purchasers, for it would make a nullity of most cover-

age. Purchasers believe, and with good reason, that they

have bought insurance to protect themselves from pre-

cisely those degrees of negligence or outright carelessness

that FAA regulations might condemn. Insurance is pro-

cured to protect the violator, and every violation cannot

nullify coverage. Any intent to use general words as a

blunderbuss and every single regulation as birdshot can-

not be reasonably upheld. If an insurance company has

an intent to deny coverage in a specific set of circum-

stances, then it should so delineate. See Moulor v. Amer-

ican Life Ins. Co., 1884, 111 U.S. 335, 4 S.Ct. 466, 28 L.Ed.

447.

Ranger’s third and final argument with regard to the

pilot clause is that the coverage should be suspended be-

cause Culberson did not have a “proper instrument flight

rating.” In the Roach case, supra, the Eighth Circuit was

faced with a similar argument concerning a full-fledged ©

pilot who did not have proper “instrument flight rating”

because he did not complete the required number of prac-

tice flights before flying at night. We have a student

pilot. The pilot clause of Roach specifically allowed for

suspension of coverage during acts in violation of the

pilot certificate. Our pilot clause does not. Yet even

under the former circumstances, the Roach court held

28a

that a general term in the pilot clause could not be in-

terpreted to suspend coverage during any and all viola-

tions of the Federal Aviation Regulation. We took a

similar approach in Hall’s Aero Spraying, supra, on

which the Eighth Circuit relied in Roach.

But we find another element controlling the “appro-

priate rating” issue in our case.” “Ratings” of any sort

are not given to student pilots, according to the regula-

tions that we are asked to apply. 14 C.F.R. § 61.16(d)(1)

and § 61.16(b). It was therefore quite impossible for Cul-

berson, at any time, to receive an “instrument flight rat-

ing” or any other rating. And we are now asked to con-

clude that this fact suspended insurance coverage.

Actually, what Ranger asks us to do is to invalidate the

insurance policy. ii the absence oi flight ratings is an ‘in-

appropriate” rating within the ambit of the pilot clause,

then, with no possibility of flight ratings of any sort,

Culberson would be. flying in constant violation of his

policy; whatever he did would have an “inappropriate”

rating. We refuse to hold that Culberson contracted to

pay a premium of $553 per year for a policy that was

“suspended” ab initio. When Ranger agreed to insure a

student pilot, it was charged with the knowledge that he

could not obtain any flight ratings whatsoever while he

held that type license. Ranger is estopped from trying to

raise “appropriate ratings” from the dead at this point.

The case of Lineas v. Travelers Fire Insurance, supra,

cited. by Ranger in its brief with regard to the pilot

clause, is quite inapposite. In Lineas, a diversity action

controlled by Florida law, the company insured an air-

plane for cargo purposes. The pilot clause of that policy

provided that the airplane should be flown only by those

regular pilots of the insured who held ticenses issued by

United States or Colombian authorities. The insured

29a

made his airplane available to a co-adventurer for flights

within the borders of Mexico, knowing that under Mex-

ican law the craft would have to be registered as a “Iex-

ican airplane and would have to be piloted by Mexican

pilots. The airplane crashed in Mexico, with Mexican

‘pilots at the controls, while it was carrying passengers

and no cargo. The incidents of Lineas operated to change

fundamentally the matrix of the risks that the company

had agreed to insure. The Mexican pilots who: were in

command when the airplane crashed were entirely out-

side the whole species of pilots specified in the pilot

clause. In our case the pilot flying the airplane was

well within the clause, specifically named in fact. The

Mexican pilots of Lineas were not authorized to fly the

plane at any time. Culberson was clearly authorized to

fly the airplane. And, as we have discussed above, the

pilot clause did not operate to forbid the carrying of pas-

sengers. Whether other provisions of the policy would

suspend coverage in the event of passenger carriage re-

mains to be explained. We refer now only to the pilot

clauses of our case and of Lineas. We might add, how-

ever, that the ill-fated flight of Lineas involved a purpose

entirely without the very specific purpose for which the

insurance company had contracted, the carrying of cargo.

In our case Culberson’s flight was entirely within the

purposes that Ranger agreed to cover.* Therefore, we

find Lineas inapplicable to our policy and our set of facts.

4The policy in Lineas did have a provision that excluded cov-

erage in the event that the flight’s purpose were one that

required a special FAA permit (unless that purpose were en-

dorsed by the company on the policy), or in the event that the

flight were for an “unlawful” purpose. The former proviso is

similar to Ranger’s Exclusion Three, but the Lineas court did

not construe that proviso. It rested its decision on the pilot

clause and on the overall intent of the parties. See also Electron

Machine v. American Mercury Ins. Co., 5 Cir. 1961, 297 F.2d 212.

30a ®

II. EXCLUSION TWO

The second provision of the policy on which Ranger

bases this appeal reads as follows:

“This policy does not apply...to any occur-

rence or to any loss or damage occurring while

the aircraft is operated while in flight, by other

than the pilot or pilots set forth under Item 7 of

the Declarations [the Pilot Clause ].”

Ranger argues that the accident occurred when the air-

plane was operated by “other than the pilot set forth”

under the Pilot Clause, thereby suspending the coverage

during such activity. However, if the pilot clause and at-

tendant facts cannot suspend coverage, then we find it

quite impossible to conclude that Item Two of the printed

exclusions works the suspension that Ranger seeks.

It is uncontroverted that Culberson flew the airplane,

and that Culberson is specifically named in the typed

portion of the Pilot Clause. Exclusion Two does not in-

corporate by its terms all of the Pilot Clause; it refers

only to those pilot(s) “set forth” in the clause. Exclusion

Two specifically omits any reference to or incorporation

_of the printed part of the Pilot Clause, which is the part

of the clause that included the phrase “while holding a

proper pilot certificate ... with appropriate ratings as re-

quired by the Federal Aviation Agency.” It was that

printed phrase that drew our attention in our discussion

of the entire Pilot Clause above. Without reference to

“propriety” or “appropriateness,” Exclusion Two simply

requires that the airplane be operated only by the “pilot

_.. set forth under Item 7 of the Declarations [the Pilot

Clause ].” It is our conclusion that the exclusion does not

apply to these facts. The airplane was’ at all times oper-

ated by Culberson, the specifically named pilot of the ~

3la

referent Pilot Clause. Under similar circumstances, we

have held that a pilot specifically named is clearly cov-

ered, even if flying in violation of the regulations. Fire-

man’s Fund v. McDaniel, supra. In fact, our understanding

of Exclusion Two brings our case almost four-sguare with

McDaniel. In McDaniel, as here, the name of the pilot

was specifically typed into the clause, along with an

“other pilots” phrase similar to that in the Ranger policy.

As here, the student pilot in McDaniel carried a passen-

ger when he crashed. In spite of the fact that the com-

pany in McDaniel had included almost precisely the same

two exclusions that Ranger omitted here, the district

court held that the specifically-named student pilot had

been insured to fly the aircraft for any purpose. We

affirmed that part of the holding. Without further pro-

vision by Ranger, McDaniel controls on the issue of

Ranger’s Exclusion Two, and that exclusion does not bar

coverage to the named insured under these circum-

stances. |

: II. EXCLUSION THREE

The final policy provision that: Ranger contends sus-

pended Culberson’s insurance coverage provides:

“This policy does not apply . . . to any insured

. . who operates or permits the aircraft to be

operated in any manner which requires a spe-

cial permit or waiver from the Federal Aviation

Agency, whether granted or not, unless this

Policy is specifically endorsed to include such

operation.”

Ranger argues that Culberson violated a regulation by

carrying a passenger [14 C.F.R. § 61.3(a)], that he did

not obtain a waiver from the FAA for the act of carrying

a passenger [49 U.S.C.A. § 1421], and that Ranger did

not endorse the carrying of a passenger.

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We conclude that Exclusion Three does not apply to

" suspend coverage in this instance. Even if applicable to

Mr. Culberson under McDaniel, the terms of Exclusion

Three were met. The policy did not require a waiver by

the FAA; it required only an endorsement of “such op-

eration” by the.company. We have already concluded

that Ranger is to be charged with knowledge that Culber-

son, at his application as well as at his death, was a stu-

dent pilot and no more. We then note that passenger

coverage is specifically “in”-cluded in the policy, the “in”

having been typed into a blank space in the policy, in

capital letters, by Ranger. For that “in,”, Culberson paid

an additional premium of $175 per year, almost 50% more

than the premium without the passenger coverage. _

Ranger argues that the passenger proviso relates only to

the “other pilots” that are mentioned in the typed portion

of the Pilot Clause and not to Culberson himself. We find

this quite an improbable construction. There is certainly .

nothing in the provision itself to indicate that the “in”

clusion goes to one part of a conjoined sentence and not

to the other. Moreover, the fact that Culberson’s name is

specifically typed into the clause indicates to us that the

passenger proviso, which falls on the same page and in

close proximity of the Pilot Clause, was fully intended to

‘apply to Culberson. .-This is another one of those occasions

in which a construction seems compelled by the words..

_ If Ranger intended to convey something less by checking

‘this proviso and charging the additional premium, then

that should have been clearly stated. By “in’’-cluding the

passenger coverage provision, Ranger specifically en-

dorsed his “operation” of the aircraft with a passenger

aboard for the purposes of Exclusion Three.

In a sense broader than the three clauses we have dis-

cussed above, we feel that Ranger contracted for pre-

33a

cisely the matrix of risks that eventualy came to fruition.

Compare Underwriters at Lloyd’s of London v. Cordova,

9 Cir. 1960, 283 F.2d 659. Ranger insured a student pilot

and “in’’-cluded passenger coverage, omitting specific ex-

clusions that might have foreclosed the entire issue.

The clumps of words in an insurance policy might seem

like so much insignificant jabberwocky to those who fol-

low insurance law, perhaps worse to those who only

stumble into the field. Jabberwocky it might be. Insig-

nificant it is not. On those clumps of words rests the in-

tent of the insurance coverage. Some insurance policies,

their riders, exclusions, folds-in and folds-out, and ap- —

pendages, are festooned in such -ways that mechanical

knowledge is a help in unfolding and laying them out so

that the policies are in physically readable form. An in-

sured, who is presented with forms and discussion in

widely varying degrees of clarity, is entitled to know the

precise nature of the insurance coverage that his pre-

miums are buying. It is all too clear that contract

language, while at times a great explainer, is at times a

great obscurer. It is incumbent upon insurance companies

to state clearly the perimeters of their coverage to those .

who entrust their security to them: Partly in the hope

that that ciarity might eventually come to pass, this case

is affirmed. .

AFFIRMED

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34a

Dyer, Circuit Judge, dissenting:

I respectfully dissent. The crucial issue in this appeal

is whether “The Pilot Clause” under the “Declarations”

in the policy issued by Ranger to Culbersons means ez-

actly what it says and says exactly what it means. The

The pilot’s clause provides: |

“Only the following pilot(s) will operate the

aircraft while ‘in flight’ and while holding

proper pilot certificate(s) with appropriate rat-_

ings as required by the Federal Aviat

Agency:

W. A. Culberson or any other private or

commercial pilot having a minimum of 200

total logged hours including at least 25

hours in retractable gear aircraft.”

[The italicized portion was typewritten by

Ranger; the balance was printed. |

The majority opinion introduces the unsupportable as-

sumption “that Ranger fully intended to insure a student

pilot.” It then charges Ranger “with knowledge that Cul-

berson, at his application as well as at his death, was a

student pilot and no more.” Finally, it flatly states that

“Ranger insured a student pilot .. .” Upon this premise

then the majority “does not read the word ‘proper’ as re-

quiring exact compliance with the face of the [pilot’s]

certificate.” In fact, the majority requires no compliance

with the pilot certificate which expressly forbade Culber-

son from carrying passengers. There is not one iota of evi-

- dence in the record to support the majority’s assumption,

charge or conclusion that Ranger knew that Culberson

was a student pilot. Cn the contrary, the only informa-

tion that Ranger had was that Culberson held a private

pilot’s license.

The district court decided this case on cross motions

for summary judgment. Before the court was the follow-

bad

35a

ing: Ranger’s answer to an interrogatory that the policy |

was based on an application which stated that Culberson,

the named insured, was a private pilot, and the applica-

tion submitted by an insurance agent which contained

the name and address of Culberson and detailed informa-

tion that was copied directly into the “Declarations” of

the policy, i.e., the policy period from August 1, 1967 to

August 1, 1968, that the aircraft would be tied out at Ful-

ton County Airport, the specific coverages and premium

charges, a description of the aircraft, the purposes of use,

and a loss payable clause to the mortgagee, Michigan Na-

tional Bank, in the amount of $10,100. The application

further contained pilot information showing that Culber-

son held a private pilot’s certificate with a single engine

rating with a total of 100 logged hours, 15 in retractable

gear aircraft, and described other pilots who could op-

erate the insured. aircraft with a private license and 200

total logged hours, 25 in retractable gear. There was also

the uncontradicted affidavit of Parks, Senior Vice Presi-

dent of the aviation managers of Ranger, in which he

stated that “Ranger Insurance Company had no knowl-

edge that Mr. Culberson had only a student pilot license,

as it had been represented to the company that he held

a private pilot license with a single engine‘rating.” The

district court also had before it the policy with the pilot

clause limitations which tracked the information in the

application, and a certified copy of Culberson’s Student

Pilot Certificate issued January 21, 1966, on which was

marked in two places, “PASSENGER CARRYING PRO-

HIBITED.” .

I would have no hesitancy in joining with the majority

had Ranger issued the policy as written with knowledge

-that Culberson was a student pilot. The insurer may

knowingly undertake a risk although it involves pilot

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36a

conduct that violates his certificate or FAA regulations.

And an insurer may be bound if the typewritten portion

of the pilot’s clause names the insured “as a person au-

thorized to operate this aircraft in flight, without regard

to his certification or rating as a pilot” even though the

insured is a student pilot. Firemen’s Fund Insurance .

Company v. McDaniel} N.D. Miss. 1960, 187 F. Supp. 614,

aff'd 5 Cir. 1961, 289 F.2d 926. But this is, of course, not

. this case. Furthermore, the form, omitted as inapplicable,

excluding coverage when the aircraft was being operated

by a student pilot not under the direct supervision of a

FAA flight instructor, would, as the majority suggests,

be of considerable moment to explain the intent of the

parties, but only if Ranger was aware of Culberson’s stu-

dent pilot certificate. If Ranger knew this, then the omis-

dence of Ranger’s intent to insure Culberson, notwith-

standing he held only a student pilot certificate.

It bears repeating that Ranger did not know and was

not charged with any knowledge that Culberson held a

student pilot’s certficate. In the face of a record showing

only that Ranger’s information was that Culberson held a

private pilot’s certificate, the failure of Ranger to check

the omitted exclusion cannot provide this court with the

basis for an assumption “that Ranger fully intended.to in-

sure a student pilot.” Quite the contrary is true, for if

Culberson had held a private pilot certificate as Ranger.

thought he did, the student pilot exclusion would have

‘been inapplicable.

The majority seems to take the position that the infor-

“mation furnished Ranger that Culberson was a private

pilot cannot be considered because Ranger did not plead

fraud and misrepresentation, nor was this issue consid-

ered by the court below. As we have shown, the applica-

(37a

tion for insurance, the uncontradicted affidavit, and the

answer to interrogatory were before the district court in

support of Ranger’s motion for summary judgment. They

were not submitted for the purpose of showing fraud but

for the evidentiary purpose of showing that the policy

was written“in conformity with the information Ranger

possessed. This makes'F.R.Civ.P. 8(c) inapposite. The

crucial. issue of whether this information was properly

raised in the district court and hence:properly before us

cannot be glossed over in a footnote as the majority at-

tempts to do. If Culberson had held a private pilot’s cer- |

tificate, as was Ranger’s information, “Liability Includ-

ing Passengers” would have been an appropriate cover- -

age; Exclusion No. 3 covering student pilots, would have

been inapplicable and the words “with appropriate rat- -

ings” in the pilot clause would have had significance, in

contrast to the fact that “ratings” of -any sort are not

given to student pilots. But if Culberson was going to

fly in violation of his FAA certificate and thereby in-

crease the risk for passengers covered, Ranger should

have been made aware of it and given an opportunity to

decline the risk. In my view, Ranger was entitled to rely

on the information furnished to it and the district court

should not have ignored it. )

But assuming arguendo that Ranger had no informa-

tion concerning what type of certificate Culberson held,

it was, of course, entitled to limit the coverage of the

policy in any manner it deserved. The limitations of cov-

erage in the policy are perfectly clear and Culberson was

bound by them. He knew that his student pilot certificate

prohibited him from carrying passengers any time, any

where. He knew that the “Including Passengers” provi-

1It is noteworthy that the application also referred to Cul-

berson as having a single engine rating.

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sion would only be applicable when either a private or

commercial pilot certificate holder, as specified in his pol-

icy, was flying the aircraft with passengers. He knew

that his policy required him to have a proper pilot cer-

tificate. This could only mean that he was within the-

policy coverage if he flew the aircraft alone and that

there would be no coverage while passengers were’

aboard. .

Equating the word proper, as used in the insurance

policy, with the word effective, which is. not used in the

policy, is, I deferentially suggest, an unwarranted exer-

cise in semantics by the majority. We have repeatedly

stated that

* * * our function is not to write insurance con-

tracts. We are not underwriters. We must apply .

them as written by the parties * * * even though

the result compelled by the plain words used

may appear or be thought to appear to be unrea-

sonable, unduly harsh, or stringent. We cannot

— ‘them.- We cannot substitute others for

them. .

Canal Insurance Company-v. Dougherty, 5 Cir. 1957, 247

"F.2d 508, 512. Of course, Culberson’s student pilot cer-

tificate was effective until it was suspended, surrendered

_or revoked, but it was, nonetheless, an improper certifi-

cate when used by a student pilot to carry passengers.

That the FAA did not revoke Culberson’s certificate after

his death seems wholly immaterial. Neither Halls’ Aero

Spraying, Inc. v. Underwriters at Lloyds London, 5 Cir.

1960, 274 F.2d 527, nor Roach v. Churchman, 8 Cir. 1970,

431 F.2d 849, are to the contrary. In Hall’s the aircraft

crashed while crop dusting without a state permit. This

activity was not within the exclusion prohibiting the op-

eration of an aircraft “for any unlawful purpose.” In

fl Be.

- 39a

Roach the court found that “the pilot’s act * * * did not

violate any express term of his pilot’s certificate.” (Em-

phasis added).

We are not ‘concerned, as the majority suggests, with

an attempt to “hoodwink” the insurance purchaser by

nullifying coverage for simple negligence, careless flying

or some other violation of the regulations. The word

“proper” refers solely to and modifies “pilot certificate”

and clearly has nothing to do with avoiding ay for

tortious conduct.

Whether v we accept the fact that Ranger was informed

that Culberson held a private pilot’s certificate, or

whether Ranger was without knowledge that Culberson

held only a student’s pilot certificate, the policy as wrif-

ten and accepted by Culberson insured him while he*was

flying the aircraft without passengers (even though the

issuer might not have agreed to this coverage had it

known that it was insuring a student pilot, McDaniel,

supra); but coverage was suspended during the time that

‘ Culberson was operating the aircraft with a passenger

because this was expressly prohibited in his certificate.

Lineas Aereas Columbiana Expresas v. Travelers Fire

Ins. Co., 5 Cir. 1958, 257 F.2d 150. In Lineas Judge Brown

made it clear that “underwriting is the business of esti-

mating risks.” In doing so may not an insurer have prop-

erly taken into account that a student pilot is. less »

qualified than one who has obtained a private pilot’s cer-

tificate; that one holding a private pilot’s certificate is

authorized to carry passengers while a student pilot is .

forbidden to do so; and finally that covering a pilot in

. flight while he was doing what was expressly forbidden

by his certificate would expose the insurers to almost in-

calculable risks?

40a

It is just such considerations that have led to the

of coverage. It is, of course, true that develop-

ment of the law along these lines has come

from the desire to avoid .an outright forfeiture.

_Consequently coverage is not permanently de-

stroyed. It is suspended as long as, but only so

long as, the violations of the specified basic pol-

icy requirements continue. Equally clear, cov-

erage is revived the moment the breaches or .-

conditions.cease. But until that time there is no

insurance for while the proscribed activity con-

tinues, the insurance is suspended as if it had

never been in force. Travelers Protective Asso-

ciation of America v. Prinscen, 291 U.S. 576,

982, 54 S.Ct. 502, 504, 78 L.Ed. 999, 1003.

Lineas, supra at 155. See also Electron Machine Corp.

v. American Mercury Insurance Co. 5 Cir. 1961, 297

F.2d 212.

The foctual distinction that the majority makes be-

tween Lineas and the case sub judice, i.e., that in Lin-

_-eas. the Mexican pilots were entirely outside those spe-

cified in the pilot’s clause, while here Culberson was

authorized to fly the aircraft, continues to disregard

- the fact that from the time a passenger came aboard

Culberson was also entirely outside the specie of: pilot

specified in the pilot’s clause. |

In this diversity case, as the majority points out,

Georgia law is controlling. In Grigsby v. Houston Fire

& Casualty Ins. Co., Ga. App. 1966, 148 S.E. 2d 925, the .

Georgia Court of Appeals cited Lineas with approval

_ and held that a pilot clause almost identical to the one

in: issue here was “a valid and. binding one.” Although

there was no coverage due to a violation of a regulation

pertaining to pilot certificates under an exclusionary

all

fee:

a 4la

clause in Grigsby, the court also relied upon the condi-

tions of the pilot clause. Obviously, the court would not

have discussed the pilot clause except for the fact that

its violation also suspended coverage.

The district court and the majority seem unwilling

to give effect to the sound precedent established by this

court that: .

The hazards against which a company is to in-

sure are usually in the category of its business

and the courts will not undertake to review its

judgment or to hold it to the coverage of risks

which it has expressly excluded.

Electron, supra at 214.

I would reverse the judgment of the district court

with directions to enter judgment in favor of Ranger.

ee eenernee

42a

Order of Court of Appeals Denying Rehearing

In THE

United States Court of Appeals

- For THe FirtH Circuit

No. 71-1515

Rancer INSURANCE COMPANY,

Plaintiff-Appellant,

versus

Mrs. Miriam G. CuLBERSON, as Execyfrix

of the Estate of W. A. Culberson,

Defendant-Appellee,

Caro, Brown MacLean, as Executriz,

Plaintiff-Appellee,

versus

Miriam G. CuLBerson, as Administratriz,

Defendant-Third Party

Plaintiff-Appellee,

43a

- Appeals from the United States District Court for

the Northern District of Georgia

ON PETITION FOR REHEARING AND

PETITION FOR REHEARING EN BANC

(Opinion Dec. 28, 1971, 5 Cir., 1971, ___ F.2d ____).

(January 26, 1972)

Before Gew1n, GOLDBERG and Dyer,

Circuit Judges.

Per CurtaM: The Petition for Rehearing is DENIED

and no member of this panel nor Judge in regular active

service on the Court having requested that the Court be

polled on rehearing en banc, (Rule 35 Federal Rules of

Appellate Procedure; Local Fifth Circuit Rule 12) the

Petition for Rehearing En Banc is DENIED.

Dyer, Circuit Judge, dissenting:

For the reasons heretofore stated, I dissent from the

denial of the petition for rehearing.

. 44a .

Judgment of the Court of .Appeals

Unrrep States Court of APPEALS

For THE Firtu Circuit

OcToBER TERM, 1971

No. 71-1515

D. C. Docker Nos. 12362 & 12886

RANGER INSURANCE COMPANY,

Plaintiff-Appellant,

versus

Mrs. Miriam G. CULBERSON, as Executrix

of the Estate of W. A. Culberson,

Defendant-Appellee,

Caro, Brown MacLean, as Executriz,

Plaintiff-Appellee,

versus

Miriam G. CULBERSON, as Administratriz,

Defendant-Third Party

Plaintiff-Appellee,

versus

RANGER InsuRANCE COMPANY

Third Party

Defendant-Appellant.

45a

Appeals from the United States District Court for

the Northern District of Georgia

Before Gew1n, GOLDBERG and Dyer, Circuit Judges. |

JUDGMENT

This cause came on to be heard on the transcript of

the record from the United States District Court for the

Northern District of Georgia, and was argued by counsel;

ON CONSIDERATION WHEREOF, It is now here

ordered and adjudged by this Court that the judgment

of the said District Court in this cause be, and the same

is hereby, affirmed;

It is further ordered that plaintiff-appellant and third

party defendant-appellant pay to defendant-appellee,

plaintiff-appellee, and defendant-third party plaintiff-

appellee, the costs on appeal to be taxed by the Clerk

_ of this Court. | ;

December 28, 1971

Dyer, Circuit Judge, dissenting.

Issued As Mandate:

46a

Order of Court of Appeals Staying Mandate

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 71-1515

‘

RANGER InsuRANCE CoMPANy, |

| Plaintiff-Appellant,

versus

Mrs. Miriam G. Cutserson, as Executrix

of the Estate of W. A. Culberson,

' Defendant-Appellee,

_-—<e>——

Caro. Brown MacLean, as Executriz,

Plaintiff-Appellee,

versus

on G. CuLBERSON, as Administratrizx,

Defendant-Third Party

Plaintiff-Appellee,

versus

RANGER INSURANCE COMPANY

Third Party

Defendant-Appellant.

ON CONSIDERATION OF THE APPLICATION of

the plaintiff-appellant in the above numbered and en-

titled cause for a stay of the mandate of this Court therein,

to enable plaintiff-appellant | to apply for and to obtain a

writ of certiorari from the Supreme Court of the United

States, IT IS ORDERED that the issue of the mandate of

this Court in said cause be and the same is stayed for a

ates

47a

period of 74 days; the stay to continue in force until the

final disposition of the case by the Supreme Court, pro-

vided that within 74 days from the date of this order

there shall be filed with the clerk of this Court the cer-

tificate of the clerk of the Supreme Court that certiorari

petition has been filed. It is further ordered that the clerk

shall issue the mandaté upon the filing of a copy of an

order of the Supreme Court denying the writ, or upon the

expiration of 74 days from the date of this order, unless

the above mentioned certificate shall be filed with the

clerk of this Court within that time.

- J/s/ Irvine L. GopBerc

United States Circuit Judge

. Dated: February 11, 1972

UNITED STATES COURT OF APPEALS

: FIFTH CIRCUIT

OFFICE OF THE CLERK

February 14, 1972 -

Edward W. Wadsworth

Clerk |

Room 408—400 Royal St.

New Orleans, La. 70130

Mr. Sewell K. Loggins

Attorney at Law

4000 First National Bank Tower

Atlanta, Georgia 30303

No. 71-1515—Ranger Ins. Co. vs. Mrs. Miriam G.

Culberson, etc., and Carol Brown MacLean,

Mandate Stayed to: April 25, 1972

(See Order Enclosed )

Dear Sir:

The court has this day granted a stay of the issuance

of the mandate to the date as shown above. If during the

period of the stay there is filed with the clerk of this

court a notice from the clerk of the Supreme Court that

the party who has obtained the stay has filed a petition

for the writ in that court, the stay shall continue until

final disposition by the Supreme Court. Upon the filing

of a copy of an order of the Supreme Court denying the

petition for writ of certiorari the mandate shall issue im-

mediately under Rule 41, FRAP.

Under revised Rule 21(1) of the Supreme Court effec-

tive July 1, 1970, a record is no longer required in. con-

nection with an application for writ of certiorari, and

me ee

49a

therefore will not be routinely prepared by this office

(38LW 3502). 3

Enclosed is a copy of the opinion, judgment and order. .

denying rehearing which are still required by the Su-

preme Court to be siete as an appendix to your

petition. :

Very truly yours,

: Epwarp H. WapswortH, Clerk

By CLAUDETTE STAIGER ©

Deputy Clerk

enc. ‘

ce and enc. (Copy of Order):

_ Mr. Robert D. Feagin, III

Mr. Glover McGhee

Messrs. Pindar, McElroy, Connell & Foley

Mr. Alan J. it

P. S. to Mr. Loggins: I have already sent you a copy of

the opinion judgment, and order denying rehearing on

February 11, 1972.

APPENDIX B

‘ Opinion of the Georgia Court of. Appeals

, In THE

Court or APPEALS

GEORGIA

_—_——14ea) >

No. 46478

_ KS >

THE FARMERS AND MERCHANTS BANK OF -MANCHESTER

versus

RANGER INSURANCE COMPANY

DECEMBER 10, 1971

JORDAN, Presiding Judge. This is an action by the

‘owner and lienholder of an aircraft against an insurer

to recover for the loss in a crash on June 27, 1970. The

plaintiffs appeal a summary judgment for the insurer.

The facts are stipulated and undisputed. The named

insured, John .C. Loftin, was operating the aircraft at

the time of the loss, and was carrying a passenger. He

held a student pilot certificate, and under Federal Avia-

tion Regulation § 61.73(a) (1) a student pilot may not

act as pilot in command of an aircraft carrying a pas-

senger.

The presence of a passenger had no casual connection

with the loss, but the insurer denied coverage on the

basis that the policy excluded coverage during a flight

with a student pilot in command while carrying a pas-

senger, relying on the following provisions of the policy:

ah fi aS i 5. oh FE IRR

Ee a eT OT

“EXCLUSIONS

“This policy does not apply:

“2. to any occurrence or to any loss or damage occur-

ring while the aircraft is operated in flight by other than

the pilot or pilots set forth under item 7 of the Declara-

tions;

“DECLARATIONS

“7. PILOT CLAUSE: Only the following pilot or

pilots holding valid and effective pilot and medical cer-

tificates with ratings as required by the Federal Aviation

Administration for the flight involved will operate the

aircraft in flight: “JOHN C. LOFTIN: OTHERWISE,

.ANY PRIVATE OR COMMERCIAL PILOT HAVING

A MINIMUM OF 300 TOTAL LOGGED HOURS.”

While § 56-2439 of the Insurance Code, Ga. L. 1968,

p. 1414, expressly prohibits the issuing or delivering in

this State of an insurance contract covering the loss of

an aircraft which excludes or denies coverage because

the aircraft is operated in violation of Federal, State, or

local civil air regulations, the exceptions as stated in this

statute include exclusions or conditions with respect to

pilot certification by the FAA, pilot experience, and

limitations on the use of the aircraft. In our opinion the

contractual provisions here involved are clearly within

the exceptions under § 56-2439, not only in relation to

pilot certification by FAA and pilot experience, but also

as limiting the use of the aircraft by restricting the oper-

ation in flight to a pilot or pilot meeting stated _—

fications.

We also think the provisions of the policy are clear,

-and require no construction, to reach the conclusion that

the pilot clause as a whole applies to John C. Loftin. He,

as well as any private or commercial pilot having 300

total logged hours, was authorized to operate the aircraft

in flight, only if he held a valid pilot certificate “for the

flight involved.” The flight here involved was one with

a passenger, not covered by his student pilot certificate,

and expressly excluded from the coverage afforded by

the policy: See, to the same effect, National Insurance

Underwriters v. Bequette, (USDC, Alaska) 280 F. Supp.

842. "eI

. !

Judgment affirmed. Bell, C. J., Hall, P. J., Eberhardt,

Pannell, Deen, and Quillian, JJ +, concur. Evans, J., dis-

sents. Whitman, J., not participating due to illness.

EVANS, Judge dissenting. In 1968 the General As-

sembly of Georgia amended Chapter 56-26 of the Code

(Title 56, Code of 1933, .as amended; Ga. L. 1968, pp.

1414, 1415) to add a new Section thereto (§ 56-2439),

having for its announced purpose the prohibiting of in-

surers from excluding or denying coverage in insurance

contacis “because an aircraft has been operated in vio- _

lation of Federal, State or local law.” Of course, this law

would authorize certain specific exclusions or conditions

in the policy as to certajn matters therein set forth. Sec-

tion 56-2439 reads as follows:

“No policy of insurance issued or delivered in this

State covering any loss, expense or liability arising

out of the ownership, maintainance or use of an

_ aircraft shall exclude or deny coverage because the

aircraft is operated in violation of civil air regula-

tions pursuant to Federal, State or local laws or

ordinances.

NN a RS ee Re ee ee i mane

SITE ODO rny 4

en : ?

& {PH RIT eet ar

“This section does not prohibit the use of specific

exclusions or conditions in any such policy which

relates to any of the following:

“(a) Certification of an aircraft in a stated category

by the Federal Aviation Administration.

“(b) Certification of a pilot in a stated category by

the Federal Aviation Administration.

“(c) Establishing requirements for pilot experience.

“(d) Establishing limitations on the use of the air-

In complete disregard of this statute, the Ranger Insur-

ance Company, on the 10th day of January, 1970, issued

a policy of insurance on an aircraft owned by John C.

Loftin with a loss payable clause in favor of Farmers and —

Merchants Bank of Manchester, Georgia.

It is well settled that a policy of insurance which is

written in violation of the laws of Georgia will be con-

strued as if such offensive language were not in the pol-

icy, since existing and valid statutory provisions enter

into and form a part of all contracts of insurance to which

the statute is applicable. Gulf American Fire & Cas. Co.

v. McNeal, 115 Ga. App. 286, 292 (4) (154 SE2d 411);

Employer Liability Assurance Corp. v. Hunter, 184 Ga.

196, 202 (190 SE 598); Nelson v. Southern Guaranty

Ins. Co., 221 Ga. 804, 807 (147 SE2d 424). Section

56-2439 was therefore a part of the policy issued on

January 10, 1970.

The exclusionary language in the policy which. vio-

lates the Georgia statute, and which must be completely

disregarded in determining the rights of the insured and

the insurer, is as follows:

“Pilot Clause: Only the following pilot or pilots

holding valid and effective pilot and medical certifi-

cates with ratings as required by the Federal Avia-

tion Administration for the flight involved will

operate the aircraft in flight. JOHN C. LOFTIN:.

otherwise, any private or commercial pilot having a

sided) of 300 total logged hours.” (Emphasis

The majority opinion holds that because the pilot and

owner had only a student's license and had a passenger

in the plane at the time of the mishap, and that he was

thus not complying with Federal regulations, that there

is no insurance coverage in this case. To this I cannot

agree. This conclusion can be reached only by disregard-

ing the mandate of the Georgia statute of 1968, to wit:

Code Ann. § 56-2439, supra. Of course, specific exclusions

were authorized under the law as to pilot experience and

use of the aircraft, as well as certificates of a pilot or

aircraft in a stated category by the Federal Aviation

Administration, but this was not done here. (See the

exact language set forth above). Rather than specific

exclusions, this policy sought to set forth a general ex-

clusion, to wit: “as required by the Federal Aviation

Administration for the flight involved,” which is a gen-

eral, and not a special exclusion, and is a catch-all clause

to cover a multitude of sins. The law specifically states

this general exclusion will no longer be allowed in air-

craft policies. The only way insurance coverage can be

disallowed under this policy is by taking the following

language from the pilot certificate, “student pilots are

prohibited from carrying passengers,” and thereby void

the policy because Loftin had violated Federal Aviation

Administration regulations. This cannot be done under

the policy where specific exclusions authorized by the

1968 statute (Code Ann. 56-2439, supra) have not been

used in the policy, but instead, general exclusions, re-

quiring “valid and effective pilot and medical certificate

with ratings as required by the Federal Aviation Admin-

istration for the flight involved” have been inserted in

I, therefore, dissent because this policy is violative of

the above law, and the general exclusionary language

in the policy must be completely disregarded in deter-

mining the rights of the insured. I would reverse the

judgment granting the motion for summary judgment

in favor of the defendant Ranger Insurance Company.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.