Before McLAUGHLIN, KALODNER and STALEY, Circuit Judges.
In Pennsylvania, is a person who is allowed to drive an automobile by one who has been given the owner's permission to use the car for a specific purpose, an additional insured under the terms of the owner's public liability automobile policy which extends coverage to "any person while using the automobile * * * provided the actual use of the automobile is by the named insured or with his permission?"
That is the issue presented by the instant appeal - novel in the sense that the precise question has never been decided by the appellate courts of Pennsylvania nor any of its inferior courts as far as our research and that of counsel has revealed. The facts are detailed in the opinion of the court below.*fn1 They may be summarized as follows:
Emil Schick, Sr. (Senior), owned an automobile. Once or twice a week he granted permission to use the car to his son, Emil Schick, Jr. (Junior), who lived with him. Junior did not own an automobile. He was obliged to obtain permission whenever he wanted to use Senior's car; he never used it without permission; he had never been given permission, express or implied, to allow anyone else to drive the car; he never considered that he had such permission.
On the evening of January 6, 1950, Junior asked for and received permission to use the automobile to go to the Yorktown Theatre in Jenkintown, a suburb of Philadelphia. He then drove to Messina's Inn in Ardsley, Pennsylvania, about three miles beyond Jenkintown.*fn2 There he met a group of friends including Mr. and Mrs. DeMaison. After a time they decided to drive to a diner in Willow Grove, some three or four miles distant. Junior told Mrs. DeMaison to "go ahead and drive" Senior's car and she proceeded to do so.*fn3 He sat alongside her. After the car had travelled about two and a half miles there was an accident. The other car was damaged and Junior was injured. The owner of the damaged car and Junior each brought suit against Mrs. DeMaison in the state courts.
At the time of the accident Senior carried a public liability policy with the Merchants Indemnity Corporation of New York (Merchants). The policy contained an omnibus clause which provided:
"Definition of Insured: With respect to the insurance for bodily injury liability and for property damage liability the unqualified word 'insured' includes the named insured and also includes any person while using the automobile and any person or organization legally responsible for the use thereof, provided the actual use of the automobile is by the named insured or with his permission."
Mrs. DeMaison's husband owned an automobile which was insured by the plaintiff, The Aetna Casualty and Surety Company (Aetna). The Aetna policy also contained a clause insuring both Mr. and Mrs. DeMaison in the event either of them was involved in an accident while driving another car. As to the latter, the Aetna policy applied only as excess insurance above whatever public liability insurance might cover such other car.
Aetna filed a Petition for Declaratory Judgment in the District Court,*fn4 seeking a decree defining the respective coverage or coverages, if any, of its policy and Merchants' policy. At the conclusion of the testimony and arguments, the District Court found that Mrs. DeMaison's operation of the car was with the permission of the named insured (Senior), and held, therefore, that Mrs. DeMaison was an additional insured under Merchants' policy. Accordingly, it further decreed, (1) the policy of insurance issued by Merchants constituted the primary coverage for the accident; (2) the policy of Aetna constituted only excess insurance, effective only when the monetary limits of Merchants' policy had been consumed; and (3) Merchants had the obligation of defending all actions brought against Mrs. DeMaison arising out of the accident.
The District Court made it clear in its opinion that it regarded its disposition to be dictated by the ruling of the Superior Court of Pennsylvania, (an intermediate appellate court) in Conrad v. Duffin, 1945, 158 Pa.Super. 305, 44 A.2d 770.*fn5 It construed that case to lay down the broad and inflexible rule that "insurance companies * * * are not relieved from liability where a permitted driver uses a car by allowing another person to drive it."*fn6
It was on that premise that the District Court held that Mrs. DeMaison had "permission" to drive even though it had made the specific finding of fact, 114 F.Supp. at page 108 of its opinion, "* * * that Emil, Sr. had given Mrs. DeMaison no permission to drive and that he would not have given anyone other than Emil, Jr. permission to drive, had he been asked this permission."*fn7 In that connection it may be observed that the District Court made it clear that it considered immaterial, under Conrad v. Duffin, supra, the fact that Senior had not, nor would he have, given permission to Mrs. DeMaison to drive.
Under these circumstances the District Court's finding that Mrs. DeMaison was driving with the "permission" of Senior must be regarded as an ultimate finding of fact and on that score it is well-settled that an ultimate finding as to liability-creating conduct is but a legal inference from other facts which is reviewable free of the impact of the clearly-erroneous rule pertaining to findings of fact.*fn8
On this appeal Merchants contends that the District Court erred in its interpretation of the holding in Conrad v. Duffin, supra; that there the facts were materially different; that the prevailing view in other jurisdictions is contra to that of the District Court and that ...