# Petition for Writ of Certiorari — Ranger Insurance v. Culberson > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385606_0780%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1972 - **Citation:** 407 U.S. 916 ## Text a tere 4a Ow a ae IN THE APR 94 187? ‘SUPREME COURT OF THE UNITED. STATES — OCTOBER TERM, 1971 No. ‘ 7 FY | 2 . >. RANGER INSURANCE COMPANY, Petitioner, v. 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. i 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 ii 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, v. 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 2 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. 3 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. 4 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, 9) 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 7 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- 8 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). 9 (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 10 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. 11 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. 13 - 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- 14 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 yo 15 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- 16 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 7 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 a 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- 2a 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 3a 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 4a 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: 5a . 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: 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 8a 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 9a 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 —_——= Crvi. Action No. 12,886 2 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. (c) Establishing requirements for pilot experience. (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. : ; | Pade gale Tange ee ae Te Te ON Oe TT ea Se eee ee ee Se See ere eee ad . DB saeite dec ernssscataninesith deernantacbiietets ic 32a 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 TOA ANE OO RES NR sa SERN TE TORT eRe co PROTO RP eta es%, Boetay 9 * “46 AER ANY as Aldi ibbdts Bis ° Mba abs emi abiliOn tg bots 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 ° . 2. i CL NN IE IN IE PE TSE NNT TT TT TTF ae s ‘ Po A ARR ete i Ls Ta SLA a fas tae Bd ge ale . 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- sion of the exclusion would have been compelling evi- © 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. WORE Sarre ae EER SITE LE ME nee Mi aii hati Ree: * : 4 . oo ray . " : Dota > ee . » a oe Pe ee en eee Gadd DY etc heap 38a , ‘ 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 development of the principle * * * of suspension © 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, _-——— s 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 OF 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: ee ah fi aS i 5. oh FE IRR Ee a eT OT 2b “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. 3b ee 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 4b “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- 7 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. ae --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385606_0780%3A1. Public record. Not legal advice.