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Byers v. Auto-Owners Insurance Co.11/21/2003
it was permissible under Kansas law for plaintiffs to assign their claims to their insurance company, under Missouri law this assignment would be against public policy and would be declared void. Therefore, the issue was whether the substantive law of Missouri or Kansas governed the claim. Despite the extensive contacts with Kansas, the Missouri court held that the law of the state where the collision occurred would be applied to determine the rights of the parties. The Gilmore court did not analyze the case under a contract provision at all, but analyzed it under Section 145(2) of the Restatement , a section that deals predominately with tort actions because it was an assignment of a personal injury claim. Id. at 167.
Additionally, Auto-Owners maintains that the issue of coverage is unrelated to the "insured risk." We disagree. The issue of coverage is at the core of almost every insurance policy dispute. In this case, Auto-Owners insured an automobile with full knowledge that it was garaged in the State of Arkansas and would be driven in the State of Arkansas by an Arkansas driver. When an accident occurred in Arkansas, the liability suit for damages was brought there, defended by Auto-Owners, and decided in the State of Arkansas applying Arkansas law. We find no error in the trial court's determination that Arkansas law applies to the issue of whether Klein was a permissive user of the vehicle in question.
Point I is denied.
In its second point, Auto-Owners claims the trial court erred in finding that Klein was a permissive user under the Arkansas "initial permission rule," because this rule does not extend permission to a third permittee. Although Auto-Owners spends the first portion of its argument detailing Tennessee law, the thrust of this point centers on whether Klein would be a covered driver under Arkansas law. Both parties admit that there is not an Arkansas case directly on point. As such, this court must ascertain how it believes the Arkansas Supreme Court would answer the question presented and so rule. See Dillard v. Shaughnessy, Fickel & Scott Architects, Inc., 943 S.W.2d 711 (Mo. App. W.D. 1997). In making this judgment, this court looks to prior decisions of the Arkansas Supreme Court, Arkansas statutes, and authority from other jurisdictions concerning the issue, especially those previously cited with approval by the Arkansas Supreme Court. D.L.C. v. Walsh, 908 S.W.2d 791, 797-800 (Mo. App. W.D. 1995)
In Commercial Union Ins. Co. v. Johnson, 745 S.W.2d 589 (Ark. 1988), the seminal case on this point, the Arkansas Supreme Court recognized and adopted the initial permission rule. The initial permission rule has been defined as follows: "if permission to use the automobile was initially given, recovery may be had regardless of the manner in which the automobile was thereafter used." Id . at 591 (quoting Arndt v. Davis , 163 N.W.2d 886, 888 (Neb. 1969)). In adopting the initial permission rule, the Arkansas Supreme Court quoted the discussion of J. Appleman in his treatise Insurance Law and Practice with approval:
[Those] states [adopting the initial permission rule] have arbitrarily adopted a doctrine that if the vehicle was originally entrusted by the named insured, or one having proper authority to give permission, to the person operating it at the time of the accident, then despite hell or high water, such operation is considered to be within the scope of the permission granted, regardless of how grossly the terms of the original bailment may have been violated. This rule is also, albeit less colorfully, known as the initial permission rule.
Commercial Union, 745 S.W.2d at 592 (quoting 6C J. Appleman Insurance Law an
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