Brief for the Respondents in Opposition — Wendlinger v. Hardware Mutual Casualty Co.

Offlies - Suscome Oourt, U. S

E'It.wGD

APR 10 3945

CHAMLES ELMORE OROPLEY

Supreme Court of the Anited States

OCTOBER TERM, 1944,

ROBERT M. WENDLINGER§ Petition er,

vs.

HARDWARE MUTUAL CASUALTY COMPANY,

A CORPORATION, Respondent,

BRIEF OF RESPONDENT IN OPPOSITION TO

MOTION AND PETITION FOR

WRIT OF CERTIORARI

Hunton, WILLIAMS, ANDERSON, GAY AND Moore,

Attorneys for'Respondent.

THomas B. Gay,

ARCHIBALD G, RoBERTSON,

Of Counsel.

Richmond, Virginia,

April 6, 1945.

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THE WILLIAM BYRD PRESS, INC,

RICH MOND, VIRGINIA

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TABLE OF CONTENTS

. PAGE

INTRODUCTORY STATEMENT ........... 1

STATEMENT OF FACTS uo. 3

THE ISSUE PRESENTED........0occc000.. 6

The Petition Contains Unwarranted Statements 7

Insurance Policies Are Construed in Favor of

a I ee 7

Petitioner Cannot Recover Under the Additional

Interests Endorsement oooccccccccccccccccoooc.. 8

The Circuit Court of Appeals for the Fourth

Circuit Has Ruled Consistently... cc.

No Question of Partnership Dissolution Is Pre-

RS ere a Ae icin

No Question of Territorial Limitation Is Pre-

sented ........... a

The Theory of the Respondent... 13

CONCLUSION .......... 19

ve

LIST OF AUTHORITIES

PAGER

Chenbrenner v. U.S. Fidelity & Guaranty Co.,

292 U. S. 80 AT Tete ie ot SSL

Constitution Indemnity Company v. Lane, 67 Fed.

(2nd) 433 ......... Mh AIR ieieelaiisictieun. ae

Code of Virginia, Section 4826(a)_ Sworn :

Culver v. Webb, 244 Wis. 478, 12 N. W. (2nd) 731... 8

Ellis v. New Amsterdam Casualty Co. (1938),

169 Va. 620................ fA ELAR en RSME ART AD Se 17

Georgia Casualty Co. v. Waldman, 53 Fed. (2nd)

Hardware Mut. Casualty Co. v. Wendlinger, 146

Fed. (2nd) 984.0... mae & { &

Indemnity Insurance Company of North America

v. Davis’ Admr. (1923), 150 Va. 778... «17

Midwest Dairy Corp. v. Ohio Insurance Co., 356

Hil. 389, 190 N. EF. 702. sabes 8

Newton v. Employers Liability Assurance Corp.,

Lid. (Ath Cir.), 107 Fed. (2nd) 164.8, 11, 14, 17,18

Lavine v. Indemnity Insurance Co. of North Amer-

ica, 260 N.Y. 399, 183 N. E. 897 14, 16-17

iii

IN THE

Supreme Court of the United States

OCTOBER TERM, 1944.

ROBERT M. WENDLINGER, Petitioner,

vs.

HARDWARE MUTUAL CASUALTY COMPANY,

A CORPORATION, Respondent.

BRIEF OF RESPONDENT IN OPPOSITION TO

MOTION AND PETITION FOR

WRIT OF CERTIORARI

i.

INTRODUCTORY STATEMENT

Robert M. Wendlinger recovered judgment in the

principal sum of $4500.00 against Mildred Barbee in

Hustings Court, Part I, of the City of Richmond, Vir-

ginia, on July 30, 1943, for personal injuries he sus-

tained by reason of the negligent operation of an auto-

mobile by Mildred Barbee in the said City of Richmond

on October 31, 1942.

Robert M. Wendlinger later instituted this civil

action in the aforesaid Court to enforce payment by

Hardware Mutual Casualty Company of the aforesaid

1

2

judgement under the terms of an ‘‘Autemobile Garage

Liability Policy’? issued by the Company to ‘‘J. W.

Ramsey and Duncan Barbee, D/B/A Ramsey and Bar-

bee, North Fifth Street, Auburn, Sangamon County,

Tllinois*’, where they conducted the business of an

‘Automobile Dealer or Repair Shop’’.

The action was removed by respondent Hardware

Mutual Casualty Company to the United States District

Court for the Eastern District of Virginia at Richmond,

and trial by jury was had on the 14th day of November,

1944.

Respondent defended the action upon the ground that

under the terms of its policy respondent was liable for

injuries occasioned by an automobile when owned and

operated by the named insured, and for injuries oc-

casioned by an automo)ile owned by the named insured

and operated by another with the consent of the named

insured only when such automobile was used principally

for **Automobile Dealer or Repair Shop” purposes at

the specified location in Auburn, Ilinois, or for pleasure

purposes incident to such use at that location.

The facts were not disputed at the jury trial, and after

all testimony had been introduced, both parties moved

for a directed verdict. The District Court sustained the

plaintiff’s motion and directed a verdict in favor of the

plaintiff; and the jury accordingly returned a verdict

of $4500.00 for the plaintiff.

Respondent Hardware Mutual Casualty Company

moved to set aside the verdict and for entry of final

judgiment in favor of respondent, but the Court over-

ruled the motion and on the 19th day of June, 1944,

entered final judgment upon the verdict for the plaintiff

(R50).

Respondent Hardware Mutual Casualty Company

moved to set aside the judgment, but the Court over-

3

ruled that motion. Respondent appealed to the United

States Cireuit Court of Appeals, Fourth Circuit; and

on the 26th day of December, 1944, that Court reversed

the judgment of the District Court and directed entry

of judgment for the defendant Hardware Mutual

Casualty Company in the District Court. The decision

of the Circuit Court of Appeals is reported as Hardware

Mut. Casualty Co. v. Wendlinger, 146 Fed. (2nd) 984.

Robert M. Wendlinger will hereinafter be designated

sometimes as the plaintiff and sometimes as petitioner,

and Hardware Mutual Casualty Company will herein-

after be designated as the respondent,

References are to the printed record accompanying

the Petition for Writ of Certiorari. Italics are supplied

unless otherwise stated.

II.

STATEMENT OF FACTS

1. Respondent’s policy No. 223706 (R 14A-14D)

Was issued on July 28, 1942, with ‘Additional Interests

Endorsement”’ effective for one year from August 21,

1942. Under ‘* Declarations’ the policy insured ‘4, W.

Ramsey and Duncan Barbee, D/B/A Ramsey and Bar-

bee, North Fifth Street, Auburn, Saneamon County,

Illinois”? (R 14A), against liability for personal injury

($10,000.00 each person ; $20,000.00 each accident) and

property damage ($5,000.00 each accident) to others

(R 14A). Under the ‘‘ Additional Interests Endorse-

ment” (R 11-14) the policy also protected ‘any other

person”? as *‘insured’’ ‘tif the named insured’s opera-

tions are classified as ‘automobile dealer or repair shop’

and only with respect to the use, for such business opera-

tions or for pleasure purposes, of any automobile

covered under such classification’.

“a

4

2. The insured’s operations were classified under

Item 4 of the ‘‘ Declarations’’ (R 14A) of the policy as

‘Automobile Dealer and Repair Shop’ within the

meaning of the ‘‘Additional Interests Endorsement”’

above mentioned; and ‘‘Coverage A’’, in respect to

“Bodily Injury Liability’’, obligated the Company

(R14B):

“To pay on behalf of the insured all sums which

the insured shall become obligated to pay by reason

of the liability imposed upon him by law for dam-

ages, including damages for care and loss of serv-

ices, because of bodily injury, including death at

any time resulting therefrom, sustained by any

person or persons, caused by accident and arising

out of the operations hereinafter defined as are in-

dicated by specific premium charge or charges in

Item 4 of the“ Declarations”.

3. The estimated advance premium charged of $117.44

was stated in Item 4 of the *‘ Declarations”’ to be based

upon an estimated annual payroll of the ‘‘ Automobile

Dealer and Repair Shop’? operated by the named in-

sured of $8,000.00 (R 14.4). ‘* Definition of Operations”,

‘Division 1°, of the policy regarding *‘ Automobile

Dealer or Repair Shop” is as follows:

‘The ownership, maintenance, occupation or use

of the premises herein designated, including the

public ways immediately adjoining, for the purpose

of an automobile dealer or repair shop, and all op-

erations either on the premises or elsewhere which

are necessary and incidental thereto, including re-

pairs of automobiles or their parts, and ordinary

repairs of buildings on the premises and the me-

chanical equipment thereof; and the ownership,

maintenance or use of any automobile for any pur-

5

pose in connection with the above defined opera-

tions, and also for pleasure use’’.

4. Under “Exclusions’’ ‘*(b)’* the policy excluded

from coverage under the foregoing ‘Definition of Op-

erations’’, ‘* Division 1°’, the ‘‘ownership, maintenance

or use for pleasure purposes of any automobile not

covered by or in charge of the named insured for use

principally in such operations”? (R 14B).

5. About August 10th, 1942, some ten days after the

policy sued upon was issued to Messrs, Ramsey and Bar-

bee, Duncan Barbee arrived in Petershure, Virginia:

and about a week later he took up residence at No. 1113

Grove Avenue, Richmond, Vireinia (R 30), having ob-

tained work as an instructor at Camp Lee, Virginia

(R 30). Barbee drove from Auburn. Illinois, to Rich-

mond in a 1942 Chevrolet sedan owned by Ramsey and

Barbee, and brought his wife, Mildred Barbee. with

him (R 30). It had been agreed between the partners

that Ramsey would continue to conduct the automobile

business at Auburn, Illinois. Barbee relinquishing his

salary while away, but not his share of the profits from

the business, and that he would return at any time if

needed (R31). Counsel for petitioner are in error when

they state in their Petition (P.2) that Barbee and Ram-

sey agreed ‘that Barbee would seek employment else-

where temporarily’’. Their aereement was that Barbee

would seek employment elsewhere indefinitely.

6. Barbee rented out his residence in Auburn, Tllinois

(R 31), leased an unfurnished apartment at No. 1113

Grove Avenue, Richmond, Virginia (R 32, 34, 40, 41.

484A), fora term of one vear, and bought furniture for

it (R 32). He resided there with his wife until his return

to Auburn, Tlinois, in February, 1943 (R 30-32). After

arriving in Virginia, Barbee and his wife used the 1942

6

Chevrolet sedan ‘‘for everything vou would normally

use a ear for’? (R32). On the night of October 31, 1942,

Mrs. Barbee ran down and injured petitioner, Robert

M. Wendlinger, in Richmond while she was driving the

automobile with the consent of her husband (R 16).

7. The business of Ramsey and Barbee in Auburn,

Tilinois, improved to such an extent that Ramsey re-

quested Barbee to return to the business, and Barbee

accordingly resigned his employment at Camp Lee and

returned to Auburn, Tlinois, in February, 1943 (R31).

8. Petitioner, Robert M. Wendlinger, instituted

his action as aforesaid against Mildred Barbee in

Hustines Court, Part TT, of the City of Richmond, and

recovered judgement of $4500.00 against her. Execution

upon that judement having been returned unsatisfied,

petitioner instituted this action to enforce payment by

respondent under the terms of its policy issued as

aforesaid.

ITI.

THE ISSUE PRESENTED

Counsel for petitioner erroneously state in their Peti-

tion (p. +) that the question presented is ‘whether or

not the clause contained in the policy ‘aud also for pleas-

ure use’ and the clause contained in the additional in-

terests endorsement ‘for pleasure purposes’, mean

pleasure purposes as generally understood, or the nar-

rower and restricted interpretation, placed thereon by

the Circuit Court of Appeals**. (Italics by Petitioner).

To the contrary the facts demonstrate that the real

issue presented is whether under the terms of the policy

respondent is liable for injuries occasioned by an auto-

mobile owned by the named insured and operated by

another with the consent of the named insured only when

7

such automobile is used principally for ‘Automobile

Dealer or Repair Shop’? purposes at the specified loca-

tion in Auburn, Illinois, or for pleasure purposes inci-

dent to such use at that location.

SY.

ARGUMENT

THE PetittIon Conratns UNWARRANTED STATEMENTS

The Petition (P. 4) asserts that *‘the United States

Circuit Court of Appeals for the Fourth Cireuit has

decided an important question of law which has not

been, but should be settled by this Court and has decided

the same in a way in conflict with applicable decisions

of this and other Courts, and has construed coverage

of a policy of automobile liability insurance rigidly in

favor of the insurer, rather than liberally in favor of

coverage of the insured, contrary to all leading authori-

ties on this question”’.

Actually the opinion of the Court shows that the

Court has correctly applied familiar principles of in-

surance law; Hardware Mut. Casualty Co. v. Wend-

linger, 146 Fed. (2nd) 984.

The Petition (P. 4) asserts that ‘‘the question pre-

sented here is of general interest as thousands of these

and similar liability policies of insurance are in effect

throughout the country’: but there is nothing in the

record to warrant any such statement.

TNsURANCE Poricies ARE CONSTRUED IN FAVOR

OF THE INSURED

Respondent admits that insurance policies must be

construed strictly against the insurer and in favor of the

8

insured, as was held in Midwest Dairy Corp. v. Ohio

Insurance Co., 356 Til. 389, 190 N. FE. 702, and in A. 8.

Chenbrenner v. U. S. Fidelity & Guaranty Co., 292

U. S. 80, which are cited for petitioner in support of

the proposition which is conceded; but in this case

(Hardware Mut. Casualty Co. v. Wendlinger, 146 Fed.

(2nd) 984, 989) the Cirenit Court of Appeals for the

Fourth Circuit has said:

‘*As heretofore indicated, we find no ambiguity in

the policy sued on in this case.”’

PETITIONER CANNOT RECOVER UNDER THE

ADDITIONAL INTERESTS ENDORSEMENT

Counsel for petitioner argue that the Circuit Court of

Appeals for the Fourth Circuit violated the rule that

insurance policies must be construed strictly against the

insurer and in favor of the insured, and that the Court

failed to give any force or effect to the ‘* Additional In-

terests Endorsement”’ attached to the policy; but the

very words of that endorsement exclude coverage in

this case.

To support their argument, counsel for petitioner cite

Culver v. Webb, 244 Wis. 478, 12 N. W. (2d) 731; but

the Cireuit Court of Appeals for the Fourth Circuit

analyzed that case in its opinion in the case at bar. After

discussion of Newton v. Employers Liability Assurance

Corp., Ltd., Fourth Circuit, 107 Fed. (2d) 164, where

the insurer was held liable on a garage public liability

policy when the plaintiff was injured in Norfolk, Vir-

evinia, by an automobile driven by a salesman employed

by the insured, the Court said in the case at bar; Hard-

ware Mut. Casualty Co. v. Wendlinger, 146 Fed. (2d)

984, 987:

9

“*** The question here is whether the automobile

is covered by the garage policy at all; and, because

it is not covered, questions as to the applicé bility of

the agra coverage clause do not arise. And in

Culver v. Webb, 244 Wis. 478, 12 N.W. 2d 731,

the ichailind insurer was again held liable on a

similar garage policy which did contain the ex-

clusion clause like the one in the instant case, but

the facts did not bring the clause into play and it

Was apparently not invoked by the defendant. In

other cases involving garage policies, similarly if

not identically worded, where the facts showed that

the automobile causing the injury was not being

used in connection with the described garage opera-

tions, the Insurer was held not liable. Barrett v. Em-

plovers Liability Assur. Corporation, 5 Cir, 118

F, 2d 799; Lavine v. Indemnity Ins. Co., 260 N.Y.

399, 183 N.E. 897; Hardware Mut. Casualty Co. v.

Hiveason, 175 Tenn. 357, 134 S.W. 2d 169; Maas

v. Harvey, 200 La. 736, 8 So, 2d 683."

Counsel for petitioner argue that construction of the

phrase ** for pleasure purposes”’ by the Circuit Court of

Appeals for the Fourth Circuit nullifies the ** Additional

Interests Endorsement’ of the policy: and in support

of their argument, counsel for petitioner cite Georgia

Casualty Co. Vv. Waldman, 53 Fed. (2nd) 24. That ease.

however, has no pertineney to the issue in the instant

case, It decided, in construing the provisions of a policy

extending coverage to any other person while operating

a private passenger type automobile ‘for pleasure and

business purposes*’ that the language quoted was broad

enough to coyer pleasure operations of such other per-

son When an individual, although the named insured was

a corporation and obviously could not engage in pleas-

ure driving. It also affirmed the. decision of the trial

court that, on the facts of the case, the automobile was

10

shown to have been driven by the operator at the time

of the accident with the consent of the named insured.

Neither issue is involved in the instant case. Mrs. Bar-

bee was admittedly driving the automobile owned by

Ramsey and Barbee with the consent of her husband,

Dunean Barbee, and the use to which she was putting

it was at most a pleasure use within the meaning of that

term as employed by the policy. It was not, however,

such a pleasure use as was covered by the provisions of

the policy at the time of the accident.

Tn the ease at bar the “ Additional Interests Endorse-

ment’’ was attached to the policy for the purpose of ex-

tending its coverage, under certain conditions, to two

classes of persons other than the named insured, that is

(1) to any employee of the named insured, and (2) to

any other person or corporation provided that, as to

the latter class, “‘the named insured’s operations are

classified as ‘automobile dealer or repair shop’ and only

with respect to the use, for such business operations or

for pleasure purposes, of any automobile covered under

any such classification’. Under the terms of the en-

dorsement ‘all other conditions and provisions (of the

policy) remain unchanged”? (R 12-14).

The Petition erroneously asserts (P. 9):

“The purpose and effect of this endorsement was

to change or nullify the ‘exclusion’ provisions of

the poliey limiting the insurance coverage to opera-

tions in connection with the business. In other

words, to suit the needs of the parties, the terms of

the policy were expressly changed to cover opera-

tions ‘for pleasure purposes of any automobile

covered under such classification’. No limitation or

restriction of any nature whatsoever was placed

upon operation of any automobile for pleasure pur-

poses. ”’

1]

Actually the ‘Additional Interests Endorsement”’

does no such thing when read in the light of the “other

conditions and provisions” of the poliey which are stated

in such endorsement to ‘remain unchanged?’ Under its

provisions relating to ‘Exclusions’? it is expressly

stated that the poliey does not apply to the ‘use for

pleasure purposes of any automobile not owned by or

in charge of the named insured for use principally in

such (automobile earage and repair shop) operations”?

(R14). The automobile invelyed in the instant case

was hot beine so used at the time of the accident, It was

being used by Mr. and Mrs. Barbee * for everything vou

would normally use a car for when operated in connee-

tion with their residence in Richmond, Virginia, and

Mr. Barbee’s employment as an instructor at Camp Lee,

Virginia.

THe Cirevrr Courr or AppeaLs ror THE Focrru

Cirevrr TWas Ruiep Consistenthy

Counsel for petitioner areue that the Circuit Court

of Appeals for the Fourth Cirenit placed a different

construction on similar language in a garage liability

poliey in Vewton v. Employers Liability Assur. Corp.,

107 Fed. (2nd) 164.

But the Newton case involved a determination of a

question whether under Section 4326(a) of the Vireinia

Code an insurance company was liable for injuries oc-

easioned to a third person by an automobile when

operated by a person other than the insured, and under

circumstances for which the owner would not be held

responsible. The Cirenit Court of Appeals for the

Pourth Cirenit held the language of the statute was

broad enough to impose such liability if the automobile

Was being operated by such third person with the per-

12

mission, express or implied, of the owner, although the

owner would not have been liable under the cireum-

stances.

No QuESTION OF PARTNERSHIP DISSOLUTION

Is PRESENTED

Counsel for petitioner erroneously assert that the Cir-

cuit Court of Appeals for the Fourth Circuit erred in

treating this case as though the partnership between

Ramsey and Barbee had been dissolved, for there is

nothing in the opinion of the Court to warrant any such

assertion. The question before the Court is whether or

not the automobile by which Wendlinger was injured

was then being used for ** Automobile Repair Shop Pur-

poses’? at the specified location in Auburn, Ilinois, or

for pleasure purposes incident to such use at that loca-

tion so as to render the insurer liable; and the Court

held the automobile was not being so used when Wend-

linger was injured.

No Question oF TerrrrortaL Limitation [Is PRESENTED

Counsel for petitioner assert that ‘the fact that the

accident out of which this litigation grows, happened in

Virginia, rather than in Illinois, the place of residence

of the insured, does not destroy the insurance coverage

of the ear in question, for there is no territorial limita-

tion contained in the policy, but on the contrary it ex-

pressly recites that it applies to ‘accidents which occur

during the policy period within the United States of

America, Canada, or Newfoundland’ ”’.

The provision of the policy limiting4ts-coverage to

accidents which oceur during the policy period within

the United States of America, Canada, or Newfound-

13

land is of a general nature and is obviously intended to

make its printed provisions, as a policy form, applicable

anywhere in the territory designated. It was manifestly

not intended to ertend the coverage of a particular

policy to the entire continental United States in view

of the language of the policy under review relating it to

the “automobile dealer or repair shop” of J. W. Ramsey

and Duncan Barbee D/B/A Ramsey and Barbee, con-

ducted at North Fifth Street, Auburn, Sangamon

County, Illinois, and the provisions of the ‘* Additional

Interests Endorsement”’ to the same effect. In this con-

nection the Circuit Court of Appeals for the Fourth

Circuit in its opinion said (/ardware Mut. Casualty

Co. Vv. Wendlinger, 146 Fed. (2nd) 984, 988) :

**(4) Counsel for the appellee also refers to the

printed provision of the policy which reads: ‘This

policy applies only to accidents which occur during

the poliey period within the United States of Amer-

ica, Canada, or Newfoundland.’ This is a very cus-

tomary provision in automobile policies. It, of

course, applies to accidents resulting from the use

of any automobile meluded in the policy; but it

obviously does not apply to accidents arising from

the use of an automobile not within the coverage

of the policy. Lavine v. Indemnitr Ins. Co. 260

N.Y. 399, 183 N.E. 897.”’

THE THEORY OF THE RESPONDENT

Respondent contends that at the time of the accident

resulting in petitioner's injuries on October 31, 1942,

the automobile of Ramsey and Barbee, then being op-

erated by Mildred Barbee in Richmond, Virginia, was

not covered by the policy sued upon for the reason that

it was not then being used principally for ‘* Automobile

Dealer or Repair Shop” purposes at the specified loca-

14

tion at Auburn, Illinois, or for pleasure purposes inci-

dent to such use at that location.

The automobile was being used by Mrs. Barbee in

Richmond, Virginia, at most for a ‘* pleasure’ purpose

within the meaning of that /erm as used in the policy.

The policy did not, however, cover use for pleasure pur-

poses unless the automobile in) question was then

*‘owned by or in charge of the named insured (Ramsey

and Barbee) for use principally in such (Automobile

Dealer or Repair Shop) operations’. Paragraph (b)

of the ‘* Exclusions’? clause of the policy expressly so

provides,

If Barbee had been operating the automobile at the

time of the accident in connection with an ‘automobile

dealer and repair shop’? which he or his firm was then

conducting in Richmond, Virginia, no recovery could

have been had since the coverage was confined to such

operations when conducted at their stated place of busi-

ness in Auburn, Illinois. Lavine v. Indemnity Insurance

Co. of North America, 260 N.Y. 399, 183 N.E. 897,

cited with approval on another point by the Circuit

Court of Appeals for the Fourth Circuit in Vewton v.

Employers Liability Assurance Corp., 107 Fed. (2d)

164.

Similarly, if Barbee had been transporting the family

laundry to his place of residence in Richmond when the

accident occurred, no recovery could have been had

since the policy expressly states that it does not apply

to ‘tuse for pleasure purposes’* of any automobile not

owned by, or in charge of the named insured, for use

principally in such (automobile dealer or repair shop)

operations. Barbee had kept the automobile in question

in Richmond since August 10th, more than two and one-

half months before the accident, and did not return to

Auburn, Illinois, with it until February, 1943, more

15

than three months thereafter. It was therefore obviously

not then being used principally in automobile dealer or

repair shop operations so as to effect coverage when

used for pleasure purposes incident to such use.

The policy was issued on the basis of an “Estimated

Advance Premium” of $117.44, which was computed at

stated rates on an estimated payroll of $8,000. Since

Barbee testified that while he was in Richmond he would

be paid no salary, it is obvious that respondent would

have had to adjust the premium on the basis of an actual,

rather than an estimated, payroll, and this in turn

plainly entitled respondent to have its coverage under

the policy limited to automobiles operated sclely in con-

nection with the insured’s place of business in Auburn.

or for pleasure purposes incident to such use at that

location.

If, therefore, Barbee, as one of the named insured,

would not have been protected under the terms of the

policy from liability arising out of the operation of an

automobile in Richmond, Virginia, either in connection

With an ‘tautomobile dealer or repair shop”’ business

Which he or his firm might have conducted in that city,

or, While operating such automobile for household or

pleasure purposes therein, it seems obvious that Mrs.

Barbee had no protection under the policy as an “in-

sured” within the meaning of the ‘Additional Interests

Endorsement’? for the reason that under the “Ex-

clusions’* clause of the policy protection was afforded

her only with respect to ‘use for pleasure purposes"

When such automobile was used principally in connec-

tion with an automobile dealer or repair shop “*purpose”’

at North Fifth Street, Auburn, IMlinois,

Wendlinger contended in the District Court and in

the Circuit Court of Appeals for the Fourth Circuit that

recovery should have been had against respondent in

16

view of the provisions of Section 4326(a) of the Code

of Virginia (commonly known as the Virginia Omnibus

Insurance Law) which, it was argued, was referred to

and made a part of the policy under the provisions of

paragraph 6 of its ‘*Conditions’’. This contention is un-

tenable for two reasons:

1. The policy provides that the protection afforded

**shall comply with the provisions of the motor vehicle

financial responsibility law of any state ... which shall

be applicable with respect to any such liability...”

The Virginia statute is, by its terms, applicable only to

policies ‘issued or delivered to any person in this state.”

The policy sued upon was neither issued nor delivered

to Ramsey and Barbee, nor to Mrs. Barbee, in the State

of Virginia. It was issued and delivered to Ramsey and

Barbee in the State of Illinois.

2. While Section 4326(a) of the Code of Virginia

extends the coverage of any policy ‘‘issued or delivered

to any person in this state’’ so as to protect the person

injured by an automobile when operated ‘‘by any per-

son legally using or operating the same by permission,

express or implied’’, of the owner, it was obviously not

the purpose of the statute to prevent limitation of

coverage in the sense that the insurer might not contract

as to the nature of the risks assumed, or under what cir-

cumstances they must arise, irrespective of who was

operating the automobile at the time of the accident.

The statute expressly provides that under the cireum-

stances contemplated ‘*... an action may be maintained

by the injured person or his or her personal representa-

tive, against such corporation (the insurer) under the

terms of the policy for the amount of the judgment in

said action not exceeding the amount of the policy.”

A similar New York statute was so construed in La-

17

vine V. Indemnity Insurance Co. of North America, 260

N. Y. 399, 183 N.E. 897, where it was said:

“While the policy in question must be read as if it

contained the extended liability clause provided for

under section 109 of the Insurance Law, it must be

deemed limited in amount and coverage as set forth

in the contract agreement. The primary purpose of

the extended liability clause contained in section 109

is to meet the defense in an action on the poliey that

the owner was not at the time of the accident operat-

ing the care personally or by his agent, although it

was being operated by a member of his family or

another with his consent, express or implied. The

purpose is not to make insurance compulsory or to

prevent limitation of coverage. Brustein ¥. New

Amsterdam Casualty Co., 255 N.Y. 137, 174, N.E.

304.

“The policy under consideration must be held

limited in coverage to the agreement of the parties

as expressed therein...”

The foregoing language of the New York court in the

Lavine Case was quoted with approval by the Circuit

Court of Appeals for the Fourth Cireuit in Newton v.

Employers Liability Assurance ( ‘orporation, supra.

The view thus affirmed by the Circuit Court of Ap-

peals for the Fourth Cireuit was recognized in In-

demnity Insurance Com pany of North America y.

Davis’ Admr. (1928), 150 Va. 778, where it was held

that in an action of this nature the plaintiff ‘‘. .. is seek-

ing only to enforce compliance on the part of the eom-

pany with the terms of its contract .. 2’. To the same

effect, see Ellis v. New Amsterdam ( ‘asualty Co. (1938),

169 Va. 620, 626, where it is stated, ‘In other words, the

uses to which this truek may be devoted are the uses

designated in the poliey.”’

18

Since the policy sued wpon did not, by its terms, cover

-pleasure uses except such as were incident to the use of

the automobile for “automobile dealer or repair shop”

purposes at Auburn, Hlinois, the provisions of Section

4326(a) of the Virginia Code are inapplicable, and in

no way extend the*coverage of the policy sued upon so

as to impose liability to petitioner upon the respondent.

In overruling respondent's motion to set aside the

verdict of the jury and to enter up judgment in its favor,

the learned Judge of the District Court stated that he

had ‘‘reached the conclusion that under the facts, about

which there is no dispute, the court correctly directed

the jury to returm a verdict for the plaintiff (R 49).

The learned District Judee stated that ‘*This con-

clusion is sustained by the following cases: Newton v.

Employers Liability Assurance Corporation, 107 Fed.

(2d) 164; Constitution Indemnity Company V. Lane, 67

Fed. (2d) 433: Georgia Casualty Company Vv. Waldman,

53 Fed. (2d) 24.”

As already shown, the Verrfon case involved a de-

termination of the question whether under Section

4326 (a) of the Code of Virginia an insurance company

was liable for injuries inflicted upon a third person

other than the insured, and under circumstances for

which the owner would not be held responsible; and

the Cirenit Court of Appeals for the Fourth Cireuit

held that the lnneuave of the statute was broad enough

to impose such liability if the automobile was being

operated by such third person with the permission, ex-

press or implied, of the owner, although the owner would

not have been liable under the circumstances,

Tn the Lave Case the automobile which injured the

plaintiff was being operated by the insured’s employee

in connection with the conduct of an indoor golf course,

operated by the insured in the same building in which he

19

conducted an ‘auto repair garage’’, and it was held that

since the policy insured against the operation of an

automobile *‘for any and all business purposes’’ the

defendant was liable, although the plaintiff was injured

while the automobile in question was being operated to

procure food, a portion of which was to be made into

sandwiches and sold to the patrons of the golf course.

In the Waldman Case the question primarily involved

was whether the automobile which injured the plaintiff

was being operated by a third person without the in-

sured’s consent. The Circuit Court of Appeals for the

Fifth Circuit held that the findings of the District Court

on this issue were supported by the facts.

v.

CONCLUSION

The record in this case presents no conflict of facts

upon which its decision depended, and the case presents

no unique feature or principle of general interest which

has not been settled. For the reasons hereinbefore stated,

the respondent submits that the judgement of the Circuit

Court of Appeals for the Fourth Circuit is in entire ac-

cord and harmony with the decisions of the Supreme

Court of the United States, and therefore that the Peti-

tion fora Writ of Certiorari should be denied.

Respectfully submitted,

Hunton, Witiiams, ANDERSON, Gay AnD Moore,

Attorneys for Respondent.

THomaAS B. Gay,

ARCHIBALD G. ROBERTSON,

Of Counsel.

Richmond, Virginia,

April 6, 1945.