The Missouri Financial Responsibility Law requires that each vehicle operated in this state be covered under a liability insurance policy or bond meeting the minimum statutory limits. The named insured on the policy is, of course, provided liability coverage under the policy issued for that vehicle. In addition, the permissive use of the vehicle by an omnibus insured, using the vehicle with the owner's permission, will also be extended coverage -- but only for use within the scope of the permission.
Permissive use by an omnibus insured has been the subject of extensive litigation around the United States. Essentially, three rules have developed. They are the initial permission rule, the conversion rule, and the minor deviation rule.
Missouri follows the latter “minor deviation” rule.
Under the “minor deviation” rule, if the use made by the permissive user is not a gross violation of the terms of the bailment, coverage is still afforded. The permission to use the vehicle can be either express or implied.
For example, if a person borrows a vehicle from a friend or family member for an extended period while their own vehicle is being repaired, the permissive use may be general and with no restrictions.
At the other end of the spectrum, employee use of an employer's vehicle usually is restricted to the business of the employer, and may be restricted to a particular task or even a particular route.
Much of the coverage litigation around the country on the subject of permissive use of a vehicle by an omnibus insured involves employee use of an employer's vehicle.
It is well settled that coverage should not be defeated where the permissive user has a reasonable basis to believe they are using the vehicle within the scope of permission, either express or implied.
The issue in litigation often is not whether the user had express permission to use the vehicle, but rather whether an effective limitation had been placed on how, and where, the permissive user made use of that express permission during the course of the day. Restrictions use of the vehicle must be explicit and more than vagaries. For example, a mother's admonition to her son not to use a vehicle as a taxi is not a termination of permission. It is an overly vague restriction that still allows a permitted use of the vehicle.
Ohio Casualty Insurance Co. v. Safeco Insurance Co. 768 S.W.2d 602 (Mo. App. E.D. 1989), clarifies the point. If express permission to use the vehicle has had been given but is to be restricted by limitations, those limitations must be explicit nor left to inference. Implied permission to make use of the vehicle in the manner used sometimes be determined from the facts and circumstances of the case, usually arising from the course of conduct of the parties over a period of time.
Where a vehicle was used for personal reasons, and that use is with the owner or supervisor's knowledge, Ohio Casualty teaches that implied permission exists. Ohio Casualty teaches that where the owner (Haynes) was aware that her crew members would make use of a van on road trips for personal reasons (getting something to eat, seeing a movie, going to the laundromat, etc.) then implied permission existed where some of the crew members took the van into another state, got drunk, and got into a collision. The common course of conduct over time implied the permission.
Cameron Mutual Insurance Co. v. Bollinger, 834 S.W.2d 848 (Mo. App. S.D. 1992) teaches that restrictions (such as a restriction as to route) must be explicit and a lack of restrictions is to be taken as a tacit approval. Acquiescence in a common practice effectively shows implied permission.
Bollinger unquestionably had express permission to drive a truck for purposes of his employment with the owner. The owner did not issue any specific instructions or restrictions, and common practice allowed Bollinger to make personal use of the truck.
Bollinger combined personal errands with business purposes, and was on his way home from feeding the owner's cattle when the collision occurred.
The court in Bollinger determined it was not necessary to look closely at whether use of the truck to pick up some children and transport them since Bollinger clearly had express permission to use the truck. The court found that the absence of an explicit restriction is a strong indication that all uses are permissive, and implied permission may be derived from a lack of objection or lack of specific restraints put on the use of the vehicle. The court held that:
"It was obvious that by not putting restrictions on Bollinger, the Cooks were aware that he might use the vehicle for purposes other than connected with their farm or the sale barn".
As a result, the court determined that Bollinger was afforded coverage.
As mentioned, use of a vehicle by employees is a common theme in such cases. In Kemp v. MFA Insurance, 468 S.W.2d 700 (Mo. App. W.D. 1971) an employee using a vehicle with permission commonly made use of it through a routine of eating lunch. The question was whether or not the lack of express permission to the employee to drive the car to the cafe for lunch could be implied. No direction or route was dictated, and the employee's common use of the vehicle to eat lunch at the cafe was not mentioned.
The Kemp court determined that coverage existed because the employee's use of the vehicle was in no way unusual or unnatural under the common course of conduct generally related to that vehicle's use. The court held that the absence of a specific prohibition against a natural or a foreseeable use is strongly indicative that use is permissible. The owners recognized that the employee normally used the truck to travel to the cafe for lunch, and nothing in the evidence gave any indication that the owner desired to alter or prohibit the employee from his common course of action.
Prior use of the vehicle without restriction on personal business by an employee was the theme in the oft-cited case of Hauser v. Hill, 510 S.W.2d 765 (Mo. App. E.D. 1974). In Hauser, an employee drove a vehicle from his place of employment to his home to eat lunch. Hauser teaches that there are three different situations that can warrant a conclusion of permission to drive by an employee:
- Operation within the scope of employment;
- Use generally; and
- Conduct or practice reasonably indicating a right to assume permission.
The court noted that permission has a negative connotation, and that the absence of a prohibition against an expected or foreseeable or natural use of the vehicle may be strongly indicative that such use is in fact permissible.
In Hauser, the employee would take the vehicle home for lunch, sometimes he would deviate from his delivery routes for personal errands and reasons. One day, on a personal trip having nothing to do with business, the collision occurred.
The employees were generally told not to use the vehicle for personal purposes, but no specific instruction had been given to the employees not to take the vehicle for lunch. That said, employees did not make use of the vehicle during non-business hours.
The question was whether the employee had a reasonable basis to believe that he had permission to use the vehicle for personal purposes on that day. The ready availability of the vehicle, his frequent use of the vehicle throughout the day, his known use for personal errands, and his prior use of the vehicle for similar purposes all indicated to the court that any personal use restrictions was viewed neither by the employee or his employer in a strict sense - - and coverage was afforded.
Similarly, in Auto Owners Insurance Co. v. McGaugh, 617 S.W.2d 436 (Mo. App. W.D. 1981), express permission was given to use the vehicle, and the only issue was whether the scope of the permission impliedly included the act occurring at the time of the collision. In McGaugh, it is unquestioned that McGaugh had permission to use the automobile. The question was whether stopping at bars and drinking were included within the original permission. The court again stressed that such a decision is a factual conclusion to be arrived at by a jury, with the burden of proof lying on the carrier to prove an exclusion.
Proof of exclusions, effectively meaning that proof was made of a non-permitted use, is not always insufficient to defeat coverage. If the trip served multiple purposes, and even one purpose was within the scope of permission, then coverage is extended for the trip without exception.
In Rainwater v. Wallace, et al., 174 S.W.2d 835 (Mo. 1943), the court addressed the use of an employer's vehicle by an employee for the dual purpose of both the employer's business and personal business. In Rainwater, Wallace was employed as a foreman in a tree surgery business operating under the name Midwest Tree Experts. Wallace was provided with a vehicle to take to and from work, to haul tools and other necessary gear, and the truck was garaged at Wallace's home. The owner was aware that Wallace occasionally used the truck for personal trips, and did not place a specific restriction barring Wallace or other foremen from occasional personal use of the vehicles.
On the day of the collision, Wallace and his wife took the work truck to a realty company to obtain a list of houses they were considering purchasing. At the same time, Wallace planned to inspect some trees at the realtor's home for the purpose of bidding the tree trimming/removal job.
Wallace had told his employer that he would be looking at a house later in the day.
The court determined that Wallace's trip at the time of the collision served a dual purpose, one of which was in direct connection with the business and the other was not. The court held that:
"It is a well established rule of this state that a servant does not step without the scope of employment as a matter of law by joining some private business of his own with that of his master's, except where he makes a marked deviation from his master's business".
In Rainwater, the court noted that Wallace was on a trip of dual purpose, one for his employer and the other with his wife on personal matters, one being no more important than the other.
The court found that Wallace had not stepped outside the scope of his employment simply because he intended to accomplish a mission of his own as well as the mission of his employer.
Even in the face of specific instructions, deviations may sometimes be considered acceptable. In American Family Insurance v. Arnold Muffler, 21 S.W.3d 881 (Mo. App. E.D. 2000), the employee delivered parts, and did so under a written policy requiring the employee to travel the most direct route possible, and that any deviation required prior contact and approval by the dispatcher.
Instead, the employee took a different route in order to stop and pick up her child's homework at the babysitter's. In returning, a collision occurred. The question was whether the deviation made by the employee is a major or minor deviation from the permission given to use the vehicle.
The court determined that coverage existed because there was no specific route listed for that particular trip.
Following a similar theme, the case law is clear that even non-permitted use of a vehicle does not trump a permitted purpose for a trip. The court examined these issues in United Fire & Casualty v. Tharpe, 46 S.W.3d 99 (Mo. App. S.D. 2001) . The vehicle was being driven by Hyman, employed by Sunshine Lighting Company installing light fixtures.
It is unquestioned that Sunshine Lighting permitted its out of town employees, including Hyman, to drive company vehicles after work hours to obtain meals. While out of town, Hyman picked up some friends, went drinking, then to a party, and on the way to a restaurant was involved in a collision. Sunshine Lighting had a specific policy prohibiting non-employees in the vehicle and a specific policy against driving the vehicle when drinking. That said, the collision occurred on the way to a restaurant and Hyman was permitted to use the vehicle to obtain meals.
The insurance carrier argued that, in essence, Hyman made concurrent uses of the vehicle; one being a permissive use going for a meal while the other being non-permissive uses (transporting non-employees and drinking) and, as such, the non-permitted use trumped the permitted use.
The court did not agree.
Citing Rainwater, the court engaged in an extensive examination of the law around the country. Citing a North Carolina case (Hawley), the court held:
"Where the violation of instructions consists merely of carrying guests in the vehicle, a substantial number of courts have held that, if the employee's use of the vehicle was otherwise permitted, the fact alone that the employee permitted riders in the vehicle will not serve to annul permission of the employee so as to take the employee out of the protection of the omnibus clause".
The court found that the express permission given to Hyman to make use of the vehicle to obtain a meal was not annulled by violation of any "no passenger" rules. Equally, the court found that "We agree with the trial court that violation of a rule concerning use of firm equipment by employees while drinking is not sufficient to terminate automatically the employee's express permission for actual use of the vehicle at the time an accident occurs.
The case of Bituminous Casualty v. McDowell, 107 S.W.3d 327 (Mo. App. E.D. 2003), is mentioned as a contrast, highlighting the types of cases and facts in which coverage is not found. In McDowell, the employer had a written policy, adequately transmitted to all employees including McDowell, that employer owned vehicles were never to be used for personal use. McDowell was aware of that policy. While the employer-provided company trucks for transportation to and from work, the trucks were actually kept in a locked and fenced yard accessible only by the employees given keys. The owner never had authorized personal use of the company vehicle at any time. The employee had not informed the employer that he was going to make use of the truck on a personal errand, and did not ask permission.
Management employees (of which McDowell was not one) were permitted to use company vehicles to travel to and from work. The court determined that as a matter of company policy since management employees were permitted to use company vehicles to commute did not establish a course of conduct by which McDowell, not a management employee, could infer implied permission to use the vehicle for personal errands.
McDowell knew that the vehicle was not to be used for personal use, and stated he had never previously used a company vehicle to run personal errands, nor was he aware of any other employee in the company using a company vehicle to run personal errands either with or without permission. Coverage was, of course, denied.
Truck Insurance Exchange v. Hunt, 590 S.W.2d 425 (Mo. App. S.D. 1979), teaches that where an insurer seeks to avoid coverage because of an exclusion, the burden of proof lies on the carrier.
When permissive users, employers, or anyone loaning a vehicle have questions about coverages, restrictions and limits, they should seek advise from a Rolla Missouri Auto Accident Lawyer who can examine the insurance policy in question in light of the case law surrounding permissive use by an omnibus insured.
By: Joseph W. Rigler
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