State Farm Mutual Automobile Insurance Co. v. Ragatz

SD 123 FARM MUTUAL AUTOMOBILE STATE COMPANY, Plaintiff

INSURANCE Appellee, Bumpous Jeffrey RAGATZ,

Randy D. S. Pfeifle, A.

and Deborah

Defendants, Company, City& Appellant.

Defendant

No. Dakota.

Supreme of South Court 9, 1997. Sept. Briefs

Considered on

Decided Oct. accident, of given Ragatz

time Groton, to drive the vehicle to Dakota to a South retrieve bed from the of Ragatz’s parents. present home Also Ragatz, the vehicle with the time of the accident, Bumpous Jeffrey were and Debo- Pfeifle, also of rah roommates Carl and gatz. Bumpous brought and Pfeifle suit injuries they sustained as a of the result accident. enough 3.] Ever since was old Carl

drive, by Carl had been instructed David not anyone to let else drive David’s vehicle. pickup While David did allow Carl use the mid-December, 1994, undisputed isit gave David never Carl to let Ra- gatz pickup and neither Carl nor Ragatz requested such Al- though specifically David did not instruct anyone not to let pickup Carl else drive the when Carl pickup borrowed the that Decem- ber, Carl testified that these admonitions apply years continued as he advanced and that he broke rule loaning David’s pickup Ragatz. David’s [¶ 4.] was under policy a Roy Richardson, Roseclose, A. ofWise City. insurer, issued Farm & David’s Sauck, Wyly, Aberdeen, plaintiff Wise & Farm, seeking declaratory State filed suit a appellee. and judgment City that Farm responsible & was Bantz, Gosch, Wager Cremer, Ronald A. of providing insurance for the acci- Sommers, Aberdeen, Peterson & for defen- subsequent dent. State Farm’s motion for appellant. dant and summary judgment granted. was City’s cross-motion for GILBERTSON, Justice. was denied. (Farm City [¶ 1.] Farm & present: The following issues are City) appeals grant the trial of court’s provision 1. Whether the omnibus of summary judgment to State Farm Mutual Farm Policy State 32-35-70 (State Farm) Automobile Insurance Co. require provide State Farm summary judgment City. denial of to Farm & coverage to Ragatz permissive as a We affirm. user of the owner’s vehicle? 2. Whether of summary judg- AND FACTS PROCEDURE ment in prop- favor of Farm State controversy arose, er? (David) McGaugh David had an automobile policy issued State Farm which AND ANALYSIS DECISION pickup. covered his 1976 Chevrolet In mid- provi- 1. Whether omnibus December, 1994, gave permission of the State Farm son, (Carl), his adult Carl McGaugh to use require SDCL 32-35-70 State Farm to pickup because Carl’s vehicle had broken liability coverage provide days later, down. A pickup few David’s permissive a user of owner’s vehi- involved an accident. At the time cle? pickup driven being Randy Ragatz (Ragatz), Carl’s roommate. Construction insurance con- Carl was question the vehicle at the a tract is reviewable de novo. Vostad, any person while other Mut. Auto. (S.D.1994). Likewise, scope car use is within the its if you your spouse; consent question of law. a statute is construction Chilton, re Estate person organization liable one use of such car above insureds. proper Summary judgment is when 8.] [¶ added). (Emphasis material fact and genuine is no issue of there judgment as a In is entitled to to find moving party order favor [¶ Ins., policy, Ragatz of Krambeck v. Sunshine of under the State Farm Farm matter law. (S.D.1993); 131, City to required 132 Garrett demonstrate that 505 N.W.2d (S.D. BankWest, 833, permis- Inc., express implied or there either N.W.2d 1990). from the insured to SDCL 32- Summary judgment will be affirmed sion support 35-70. any basis which would if there exists King Han- ruling. v. John

the trial court’s The facts uncontested that Ra- cock Mut Life gatz express permission not did receive from (S.D.1993). insured, David, pickup. to use the genuine then whether there was issue responsi- South Dakota’s fact for trial issue of material court of 32-35-113(1) permits motor bility SDCL implied flowing David to consent from re- to demonstrate financial vehicle owners gatz. nega- The court in the trial answered mo- “[hjaving in force on the sponsibility by agree. tive. We policy liability of insur- tor vehicle an owner’s provided in 32-35-70.” ance as SDCL In own mid-December Carl’s inoperable. vehicle became Carl asked for part: provides in 10.] SDCL 32-35-70 father, permission from his and received liability re- policy An of insurance owner’s David, use pickup. his Neither Carl nor ferred to in 32-35-68 shall insure Ragatz asked for any per- person named therein and fact, pickup. In David re- operate insured, vehicle son as insured peatedly told his son not to let others drive unth the or vehicles This restrictive admonition be- his vehicle. insured, against the named of gan 14 and when Carl was continued imposed law loss appears years. City to con- several ownership, damages arising out of specifically not tend that since did maintenance, use or vehi- of vehicle against third-party repeat prohibition cles within the United States.... permis- very gave moment he use at the added). (Emphasis to use the vehicle in December sion the restriction somehow David had waived In accordance with SDCL 32-35- impliedly permitted Ragatz Farm at issue contained the State vehicle. 4,§ following provision under sometimes previous has occa- to as the omnibus clause. This Court referred question of to consider the when your ear ... When we refer implied permis- to have the mittee is deemed means: policy’s the owner under sion of you; 1. provision. & Sur. Co. Western Cas. omnibus your spouse; Anderson, recognized person the “wide var- of the first named The Western Court relatives declarations; defining among the states iation”1 split authority among juris- permittee is based an omnibus insured 1. There also a whether, permit- implied permission, even the first regard when absent notice dictions with anyone not to let else use the contrary, tee was instructed a second authority See Allstate insured’s vehicle. use a when first named (Me.1979); Lyons, permit given not A.2d tee has been instructions Lanoha, N.W.2d third-party Some hold that a second Auto. use. courts Application of scope and decided the Western expansive classifications Family analysis the more support and American tempered reading of a favor more summary judgment. trial court’s 32-35-70: past the instant con long-standing duct of the insured reflect a without a

[I]mplied consent will arise practice showing prohibition against third-party of course conduct use of his ve owner known to the There hicle. is no evidence a course of implication him to an that would lead between the insured and conduct particular venture. implication lead to an would David had Ragatz permission pick to use David’s (citing National Farmers Ronholm, up. There was no actual be Property Union & Cas. Co. v. (N.D.1967) (failure by 322 the owner tween David and the time of the N.W.2d object use would not to the be deemed had known less consent)). one week. knowledge than David had no permitted parties son that his third to use his The United States District vehicle, so own David cannot be said to have Court District for the of South Dakota in respect. in this Howe, Family v. Group American Insurance 369, (D.S.D.1984), F.Supp. sought 584 372 Thus, necessary it determine refine forth the test set us in Western the effect Carl’s disobedience. stating implied permission upon arises (1) following the expressly consideration of factors: the If owner of the ear forbids insured; (2) past conduct of the permittee another, his car to lend between the driver and the permittee nevertheless allows a insured; (3) and, usage practice permittee second to drive car viola- parties period of over extended orders, tion of the named insured’s prior question.2 to the use These factors the insurer is not while liable the second appropriate they are consistent with permittee is driving, theory on the that a totality analysis our of the circumstances prohibition against delegation is a restric- Furthermore, Western. the district court upon [Thus, tion the use of the vehicle. properly placed proof burden of permittee] second not an omnibus party attempting to show the driver insured. implied permission since the driver stranger (Rev.Ed.) vehicle policy. was a Id. 12 on Couch 2d Benson, (1996); 118, (1974); Neb. 901 United Services Auto. Ass’n v. 215 Kan. P.2d 523 330 Cas., Sizemore, (La. Property Malmay 1986); National Farmers Union 119 & v. So.2d 493 620 397, (1995); Metropolitan Co., N.M. P.2d 538 Pennsylvania 891 v. Bond Nat. Mut. Cas. Ins. 289 Acord, 444, Property 379, (1981); Ins. Co. v. W.Va. Liab. 195 424 Md. A.2d 765 State Farm Fire & (1995) (implying coverage Ricks, 465 S.E.2d 901 (Mo.Ct.App. Co. v. Cas. 902 S.W.2d 323 exist). would 1995); Security Hoff, Co. v. Cas. 54 Ohio 426, (1978); per- St.2d 377 Other courts take the view that a N.E.2d 509 Colonial second Ins. Co., 564, Or.App. authority mittee have Co. v. Allstate Ins. does not when the 90 752 P.2d (1988); expressly Kemper Neary, named insured directs the first 1290 Federal Ins. Co. v. 135, persons (1987); Pa.Super. tee not to let third drive the vehicle. See 366 530 929 A.2d Keeler LittleJim, Co., 151, Shelter F.2d Mut. Ins. 927 1132 v. Ins. Allstate 261 S.C. 198 S.E.2d 793 (10th law); Cir.1991) (1973); (applying 612, King, Oklahoma Gillen Norman v. 163 Vt. 659 A.2d Cir.1967) (8th (1995). v. Globe 377 F.2d Indem. 328 1123 law); (applying Royal Arkansas Indem. Co. v. (6th Cir.1966) Clingan, (applying 364 154 F.2d also State See Farm Mut. Auto. Ins. Co. v. law); 212, (1960), Kersey, Tennessee Concord Gen. Mut. Ins. Co. v. 171 Neb. 106 N.W.2d 31 Hills, (D.C.Me.1972) Davis, F.Supp. (applying grounds, 1090 on overruled Arndt v. Vicente, 726, law); (1969); Maine Hawaii v. AIG Ins. Co. Inc. Neb. 163 N.W.2d 886 Andrews v. 249, (1995); 496, 78 Hawai'i Commercial Cas. Ins. 128 Neb. Gonterman, (1935); Ronholm, Farm Mut. Auto. N.W. 653 Ed.) (Ind.Ct.App.1994); (Rev. 45:352, Schneberger N.E.2d § v. on Couch Insurance 2d at Glenn, (Iowa 1970); (1981). Gangel 696-99 (1981).3 accept permission” the “initial rule. 45:410, reason to § responsibility law creates a Our Essentially, three views different “strong public favoring monetary pro- regard with expressed have been compensation for the tection and benefit actual clauses where scope of omnibus injured through negligent opera- those (1) the strict or exceeded: been mission of a vehicle.” tion Cimarron Co. (2) rule; rule; the minor deviation conversion Croyle, (3) or initial rule. the liberal However, strong poliey public is con- once ini- “conversion rule” According trolled statute and thus not absolute the owner permission is tial every pres- fact conceivable situation. The must permittee, not, responsibility of financial laws have ence time, specified place and uses conform facto, ipso mandated that courts find cover- the time of parties as of intended age expressly an insured where restricts on Insur- granting vehicle’s use. See Shelter Mut. strict 847. Under the “con- ance (10th LittleJim, Cir.1991); 927 F.2d 1132 from the slightest rule” the version King, Norman v. 163 Vt. A.2d 1123 time, preclude place use restrictions will Id. the omnibus clause. under interprets ac- [¶ 22.] This Court statutes spectrum At the other end of the ordinary cording plain meaning. to their and permission” “initial or liberal rule the is Cimarron, pres- at 886. the upon City. this Court urged case, merely ent 32-35-113 mandates SDCL rule as the authorities refer Some in accordance with SDCL rule, per high once or water” because “hell requires im- 32-35-70 which “the or is in the first given to use a vehicle mission permission plied of the named insured.” instance, any wholly is subsequent deviation implied permission, respect With the first coverage un will not defeat immaterial and permittee merely through a which is conduit an omnibus clause. United States Fidel der implied from the permission flows named Co., Fire Ins. ity Co. v. Millers Mut. & Guar. permittee. the second The Cir.1968) (8th (applying F.2d omnibus clause is mission envisioned law; Accident & Illinois Konrad Hartford “something more than mere sufferance or 503, 137 Ill.App.2d N.E.2d 855 Indem. steps prevent.” taking without tolerance 45.469, (1956)); § at Couch on Insurance Mendenhall, 205 Neb. M.F.A. Ins. Co. 852. (1980). permission implied City& contends that do not find We loaning prohibited Carl responsibility here. David Dakota’s South 32-35-113, throughout public policy David’s vehicle Carl’s adolescence strong is a permittee Believing overly and the a mate- named insured second the rule to be harsh in limited finding permission. developed rial in some courts have meth- factor circumstances Williamson, by finding avoiding a 331 F.2d ods of severe result Farm Mut. Auto. (9th Cir.1964). Couch notes that harsh no rela- has familial secondary per- may avoided and the tionship McGaughs result been and not be con- recovery will "when the exception. mittee be allowed sec- under this sidered an omnibus insured operating permittee vehicle for or on ond is finding has also noted a Couch permittee.” insured, on of the first Couch Insur- behalf previ- permission a where named who omitted). 45:411, (citations § ance acquiesced ously delegation, prohibited in gatz was the vehicle his own benefit “repeated pattern delegation.” on In- and not on behalf of Carl. 45:411, omitted). (citations § at 782-83 surance knowledge no that In the David had instant willing where Another instance courts prohibition against Carl ever violated his implied permission is where the first find delegation past, could not said to so he be passenger tee is a in the vehicle while second delegation Ragatz. have to Carl’s driving. permittee is Cascade Ins. Co. Glacier exceptions which have been As none Mont. General Ins. jurisdictions apply factually recognized in other undisputed is was not It us, we do not determine to the case now before pickup at the time of the accident. appropriate is Dakota whether or not it South Some courts consider familial adopt permittees or them. between first second “material,” life. When taking and into his adult confronted “minor” or into ac- testified, deposition, Carl count with this at a the “extent deviation in actual dis- time, broken.” purpose “Rules are made to be Prior to the tance or which given, David neither had reason to vehicle was and other be- factors.” Couch § knowledge lieve nor Carl had ever on A bro- deviation third-party ken his rule use. is material if “alien foreign it is or possession pickup original permitted objective obtained use of the operation.” on or (citations omitted). day without Id. the accident David’s Carl’s is authority. knowledge certainly objective or material since the permission granted David was that Carl adopt Today we interme temporarily, the vehicle diate moderate “minor deviation” rule which sits the harsh between results of the 2. Whether sum- conversion and initial rules. The mary judgment in favor of State Farm provides “minor deviation” rule that once proper? conferred, protection af forded the omnibus clause will not termi 15-6-56(e) 28.] SDCL concerns nate unless the commits a material form of for summary judgments affidavits violation or deviation from the terms of the provides part: contemplated conferred at the When a motion in the first in supported provided § as made 15- stance. See Farmers Auto. Ins. Co. v. 6-56, party may adverse not rest Noel, (W.D.Mo.1962); F.Supp. Mt. allegations the mere or denials his Williams, Beacon Ins. Co. v. F.Supp. response, pleading, but his affidavits (D.C.Md.1969); Couch on Insurance provided 15-6-56, otherwise must at 863. specific set forth showing facts that there the following advances con- genuine is a issue for trial. If he does not cerning approach: the intermediate respond, summary so judgment, if appro- This is the most approach reasonable priate, shall be entered him. problem in that it furthers public policy victims, compensating reviewing summary judg recognizes permittees ments, are engaged only we genuine decide whether a may stray various activities and issue of material fact existed and whether the exact permission, letter of their applied. law correctly and it If there exists attempts be fair insurer in support ruling, that it basis to the trial court’s will not expose insurer possible to all affirmance of a proper. is Garrett, arising from use of the vehicle with 837. There is noth the initial ing affidavit, by way insured. the record either deposition, interrogatories, answers or ad Wilkerson, Id. at 866. See Hall v. also party setting missions of a forth facts to (3d Cir.1991); F.2d 311 James v. Aetna Life deposition controvert testimony of David Cas., Ariz.App. 546 P.2d 1146 deposition along and Carl. This testimony, (1976); Kobetitsch v. American Mfrs. with pleadings, only was the source (Fla.Dist.Ct.App.1980); So.2d 76 information upon which the motion for sum Chitwood, Cameron Mut. mary judgment could be based. Uncontro- (Mo.Ct.App.1980); S.W.2d 492 Vigi- James v. testimony verted was the that David not lant Ins. 925 (Tex.App.1984); S.W.2d authorized, expressly impliedly, Ragatz Grant, Foote 56 Wash.2d Thus, use his vehicle. there is a sufficient flexible, This rule reflects balanced support summary judgment basis to in favor approach, permittees between and automo- appellant’s State Farm. findWe addition bile owners and their insurers. al contentions to be without merit. Application [¶26.] of this rule re determination, quires a whether the deviation We affirm. pickup Ragatz, was also SABERS, lend there AMUNDSON

KONENKAMP, express JJ., history admonitions.4 concur. unambiguously law South Dakota C.J., MILLER, concurs result. permis- requires express either Justice, MILLER, concurring in re- Chief my perspective From the law is settled sion. sult. no the facts are clear. There was ex- press Ragatz general agree- Although I am David’s vehicle. What more needs drive holding, I no majority see ment with be said? rules, as the adopt one the Couch need ¶ disagree I in 24. further majority has done ¶ necessary it expression in 18 that is its

with the effect of Carl’s disobedi-

to determine The “minor rule” that

ence. adopts triggered permis- “once

majority only In this not conferred.” any kind Carl to no

there benefit; excep- using the for Carl's Carl was noting again that the not bears four It also vehicle; passenger no majority to in footnote in which cites tions McGaughs; permission despite relationship with the found familial courts have "repeated contrary, ap- pattern of never in a are not admonitions to the easy delegation.” plicable case: here. This is

Case Details

Case Name: State Farm Mutual Automobile Insurance Co. v. Ragatz

Court Name: South Dakota Supreme Court

Date Published: Oct 29, 1997

Citation: 571 N.W.2d 155

Docket Number: None

Court Abbreviation: S.D.