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Charles N. Baptist v. Bankers Indemnity Insurance Co.

decided: April 19, 1967.

CHARLES N. BAPTIST, PLAINTIFF-APPELLANT,
v.
BANKERS INDEMNITY INSURANCE COMPANY, DEFENDANT-APPELLEE



Lumbard, Chief Judge, and Medina and Kaufman, Circuit Judges. Lumbard, Chief Judge (concurring).

Author: Medina

MEDINA, Circuit Judge.

Charles N. Baptist appeals from a judgment entered in favor of Bankers Indemnity Insurance Company which he sued by way of subrogation to the rights of David Shanen, with whom Baptist was involved in an automobile accident. The damage claim was tried to the court and a jury and resulted in a verdict for defendant. There was also a count seeking reformation of the policy of insurance out of which Shanen's rights were said to have arisen. After the conclusion of the jury feature of the case the reformation count was tried to the court without a jury and this count was dismissed on the merits. The factual issue on the first trial was whether David Shanen was the owner of the car he was driving at the time of the accident. The jury found he was the owner and this led to judgment for Bankers Indemnity on the first count because cars owned by him and operated by him for his own business or pleasure were not covered by the policy. The opinion of Chief Judge Timbers, relating to the disposition of the reformation count, is reported at 245 F. Supp. 33.

Appellant's brief contains no narrative of the facts, chronological or otherwise. It is asserted that there are so many alleged errors "that it is impractical to take them up in any really logical order or even to cover all of them." Our study of the transcript and the exhibits, however, has enabled us to understand the chronological sequence of events and place the various matters of controversy in some reasonable relation to one another. Further consideration in the light of our factual survey disclosed that almost all the contentions of appellant were without merit. A few warrant brief discussion and this discussion will follow immediately after our chronological statement.

I

Chronological Survey 1951-1962

Long prior to the time Baptist was injured Harold Lefflbine owned, maintained and operated a small gasoline filling station and automobile repair shop, known as Harold's Tydol Service Station, at 66 South Street in Stamford, Connecticut. Bankers Indemnity Company had issued its standard garage liability policy to Harold Lefflbine d/b/a Harold's Tydol Service Station, as the named insured, to be effective for a one-year period beginning February 26, 1952. This policy applied to all cars owned by or operated in the business and as agent of the named insured, but it plainly excluded coverage "to any partner, employee, director, stockholder or additional insured with respect to any automobile owned by him, or by a member of his household other than the named insured." In other words, if any partner, employee, director or stockholder owned a car and had an accident while operating that car in the business and as agent of the named insured the policy applied and Bankers Indemnity was required to defend an action brought against the named insured for damages arising out of the accident and to indemnify the named insured up to the amount provided in the policy or $25,000. But if such a person had an accident while driving his own car for his own pleasure or on business not connected with the filling station and repair shop, this person was not covered by the policy.

David Shanen, with some years of experience in gas service station operation, garage repair and auto wrecking, agreed to team up with Lefflbine. On April 1, 1952 a new corporation was formed with the name Harold & Shanen's Auto Service, Inc. Of the 30 shares of common stock 28 were issued to David Shanen, who was to become President and to pay for the stock with $1000 in cash and property of the value of $1500. The property was agreed to be two cars owned by David Shanen, a 1949 Chevrolet sedan purchased by him on August 1, 1951 and a Ford tow truck. As the affairs of the new corporation were conducted on an informal basis, there never was any legal transfer or bill of sale passing title to these two cars to the corporation. David Shanen's 17 or 18 year old son Allen was to have 1 share and he was made Secretary and Treasurer. Lefflbine also was to have 1 share and he was made Vice-President. The business was to operate the filling station and repair shop, also to buy and sell used cars.

Also on April 1, 1952 Bankers Indemnity issued its endorsement to Lefflbine's policy, changing the name of the insured to "Harold Lefflbine and David Shanen d/b/a Harold & Shanen's Auto Service, Incorporated." Otherwise the policy coverage and all its terms remained as before.

As Conn.G.S. Sec. 14-165 et seq. was not enacted until 1957 and there were no statutory provisions for certificates of title or automobile title registration, Lefflbine and David Shanen, in the name of the corporation, applied for and obtained a number of dealer's plates and one of these was affixed to the 1949 Chevrolet.

On December 26, 1952 while David Shanen was driving the 1949 Chevrolet he had a collision with a car driven by Baptist and Baptist was injured.

On December 27, 1952 Baptist filed his report of the accident with the Connecticut Department of Motor Vehicles stating that he was the owner and operator of his car and that "Dave Shanen" was the owner and operator of the Chevrolet bearing used dealer's License No. OA-39.

We then come to a period during which David Shanen seems to have disappeared. He was then separated from his wife, "was not at home and could not be located." The 1949 Chevrolet was at the filling station. So, according to appellant's counsel, the son Allen, "to protect his family's interest" and "acting on his own behalf" proceeded to make a deal with Lefflbine by which he "bought" the 1949 Chevrolet from Lefflbine, received a promissory note for $1000 and turned over the stock to Lefflbine. There was nothing to connect this transaction with David Shanen, nor is it claimed that any corporate action was taken. The trial judge properly rejected this evidence. The wisdom of this course became apparent when the proof developed the fact that David Shanen promptly reappeared and "recovered" the 1949 Chevrolet from his wife. He later had a dispute with his wife over the car, but, as stated in appellant's brief, he prevailed "without going to court."

On January 14, 1953 David Shanen placed a chattel mortgage on the 1949 Chevrolet to secure a personal loan. In this transaction he, of course, represented he was the owner of the car. This was evidently done while his wife was still in possession of the car, as his statement of February 6, 1953 for Bankers Indemnity says his "former wife" still has it. In the same statement he says the car is "owned by Harold & Shanen's Auto Service, Inc. It belongs to the corporation. I was using my car for the business. * * * I don't believe the ownership was transferred. I wouldn't think it would have to be transferred back. I used the car when I was in the business. She uses it now."

On April 2, 1953 David Shanen settled for $24.16 his claim for damage to the 1949 Chevrolet in the accident on December 26, 1952 with Motors Insurance Corporation representing the collision insurance carrier that had issued a policy in connection with the conditional sale contract with David Shanen at the time he bought the 1949 Chevrolet in 1951. While this settlement was made on April 2, 1953 it was obviously based on a claim that David Shanen owned the 1949 Chevrolet on December 26, 1952, the date of the accident as recited in the document, Exhibit 16.

On April 24, 1953 David Shanen signed what is probably the most important document in the case. It is his report of the accident to the Connecticut Department of Motor Vehicles. This report is typewritten and sworn to before Alphonse C. Jachimczyk, a Commissioner of the Superior Court. In this report David Shanen states that he was the owner of the 1949 Chevrolet involved in the collision of December 26, 1952 with Baptist. David Shanen testified he consulted with Jachimczyk when preparing the report and that, although Jachimczyk was a lawyer he consulted him as a friend.

As part of this accident report is a detachable sheet, described as S.R. 21, in which the person making the report is required to set forth data concerning any insurance carried by him. David Shanen included the name of the insurance company and the number of the policy. This S.R. 21 was sent by the Commissioner to the insurance company with a request that it be returned in 15 days "if no policy was in effect as alleged." There are 6 little boxes to be checked as follows:

With regard to an automobile liability insurance policy for the policyholder named on the reverse side hereof, the undersigned insurance company advises you in accordance with the items checked below.

1. No policy was in effect on the date of accident.

2. Our policy for the named policyholder applies to him as the operator but it does not apply to the owner of the vehicle involved in the accident.

3. Our policy applies to the owner of the vehicle, but does not apply to the operator of the vehicle involved in the accident.

4. Our policy affords bodily injury coverage only.

5. Our policy affords property damage ...


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