Engle v. State Farm Mutual Automobile Insurance

*130 BRITT, Judge. The only parties with interest remaining in the outcome of this litigation are plaintiffs, defendant Norman and defendant Fox, administrator. The consent judgments entered in the Norman and Fox cases provide that State Farm would pay its remaining coverage to these claimants. Farm Bureau agreed that if it is ultimately determined in this action that it did provide coverage to Silvers for the accident in question, it would pay its policy limits to both Norman and Fox’s administrator. These claimants agreed to accept either the remainder of State Farm’s coverage or that amount plus the limits of Farm Bureau’s coverage in each case (depending on the outcome of this action), in total settlement of their claims. Plaintiffs’ sole contention is that the trial court erred in finding and concluding that Silvers was in “lawful possession” of the MG at the time of the accident in question. They rely primarily on Insurance Co. v. Broughton, 283 N.C. 309, 196 S.E. 2d 243 (1973). In Broughton, the parties stipulated: Budget Rent A Car, the insured specifically named in the automobile liability insurance policy, by written agreement rented the insured vehicle to Car-raway, a qualified licensed driver who agreed to be bound by all provisions of the lease. The lease contained provisions that all authorized drivers of the rented vehicle must be 21 or older and licensed; and the renter agreed that the vehicle would not be used, operated or driven by any person except the renter, an additional driver shown on the agreement, or a qualified licensed driver over 21, with lessor’s permission first obtained. Very soon after renting the car, Carraway relinquished control of it to Massey who was only 19 and not a member of Carraway’s household. Carraway proceeded to use his own car while Massey used the rented car. Massey was involved in an accident and suit was brought to determine the insured’s liability. The Supreme Court, in an opinion by Justice Higgins, held that the owner of the rented vehicle obligated itself to be responsible for Carraway’s negligence but “Carraway could not, in violation of his own agreement, make the owner responsible for Massey’s negligence. No provision is made for owner’s liability either by the policy or by G.S. 20-279.21, as amended, until lawful *131 possession is first established. This may be done by express or implied permission of the owner.” The court upheld the trial court’s conclusion that as a matter of law Massey was not a person in lawful possession of the rented automobile and was not insured by the terms of the policy. The court further held that Massey was not within the coverage required by G.S. 20-281 as he did not come within any of the terms enumerated therein. In a concurring opinion, Justice Branch agreed with the conclusion reached in the majority opinion but took the position that the case was governed by G.S. 20-281, the statute relating to persons engaged in renting motor vehicles. He pointed out that G.S. 20-281 does not include as an insured “any other person in lawful possession”; and that it was not necessary or proper that the court consider whether Massey was in “lawful possession” at the time of the collision. While Broughton comes close to supporting plaintiff’s contention, we do not think it controls the case at hand due primarily to the difference in the facts in the two cases. In Broughton, Car-raway violated a written agreement which he entered into with the owner of the vehicle in question; in the case at hand, Harold did nothing more than disregard instructions given to him by his father. In Broughton, Budget Rent A Car did not know that its vehicle had been delivered to another driver until after the damage had been done; in this case, James knew on Friday morning that Harold had loaned the MG to Norman and others and he made no effort to get the MG back before the accident occurred on the following Sunday afternoon. Furthermore, for all practical purposes Harold was the “owner” of the MG. In Insurance Co. v. Chantos, 25 N.C. App. 482, 214 S.E. 2d 438, cert. denied, 287 N.C. 465, 215 S.E. 2d 624 (1975), this court held that where the original permittee, the son of insureds, gave another person express permission to use the vehicle, the other person was thereby placed in “lawful possession” under G.S. 20-279.21(b)(2). While Insurance Co. v. Chantos, supra, later found its way to the Supreme Court on another appeal, 293 N.C. 431, 238 S.E. 2d 597 (1977), that court did not disturb the principle just stated. In fact, the court restated principles which are applicable here as follows: *132 Under the Financial Responsibility Act, all insurance policies covering loss from liability growing out of the ownership, maintenance and use of an automobile are mandatory to the extent coverage is required by G.S. 20-279.21. The primary purpose of this compulsory motor vehicle liability insurance is to compensate innocent victims who have been injured by financially irresponsible motorists. The victim’s rights against the insurer are not derived through the insured, as in the case of voluntary insurance. Such rights are statutory and become absolute upon the occurrence of injury or damage inflicted by the named insured, by one driving with his permission, or by one driving while in lawful possession of the named insured’s car, regardless of whether or not the nature or circumstances of the injury are covered by the contractual terms of the policy. The provisions of the Financial Responsibility Act are “written” into every automobile liability policy as a matter of law, and, when the terms of the policy conflict with the statute, the provisions of the statute will prevail. (Citations omitted.) 293 N.C. 440-441. Chapter 1162 of the 1967 Session Laws reinstated the words “or any other persons in lawful possession” to G.S. 20-279.21(b)(2). The preamble to said chapter suggests very strongly that the reason for adding the quoted words was to alleviate the necessity of proving that the operator of a vehicle belonging to another had “the express or implied permission of the owner to drive [the vehicle] on the very trip and occasion of the collision”. We hold that the trial court did not err in finding as a fact and concluding as a matter of law that Silvers was in “lawful possession” of the MG at the time of the collision in question and in declaring Farm Bureau liable under its policy. The judgment appealed from is Affirmed. Judges Clark and Erwin concur.