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Nationwide Mutual Insurance Co. v. Baer2/1/1994
LEWIS, Judge.
The facts of this appeal arise out of a single vehicle accident in which Marvin Cannon ("Cannon") and Jarred Robinson ("Robinson") were killed. The facts leading to this accident reveal that Mark Anthony Phillips ("Phillips") was the owner of a 1976 Ford pickup truck which he used in his farming operations. Robinson, Cannon and David Holton ("Holton") were all employed by Phillips to put in tobacco. On 23 July 1990, at approximately noon, Phillips instructed Holton to take the 1976 Ford pickup truck and drive Cannon and Robinson home for lunch. En route Holton stopped at a local convenience store to buy his own lunch. As Holton came out of the store, Cannon slid behind the wheel and began slowly driving away with Robinson as a passenger. Holton then jumped in the passenger side of the truck. Defendants contend, and the trial court so found, that Cannon was operating the truck with Holton's permission. Nationwide Mutual Insurance Company ("Nationwide") claims that Holton repeatedly asked Cannon to stop the truck. Holton knew Phillips had forbidden Cannon to drive the truck. Regardless of the circumstances, Cannon drove approximately four miles before losing control of the truck and causing it to overturn, killing Cannon and Robinson. At the time of the accident, Cannon did not have a valid driver's license and he had been specifically instructed by Phillips not to drive the truck, which was known to Holton. Nationwide had in effect a liability policy issued to Phillips which covered the 1976 Ford pickup truck.
Robinson's mother, Marlene Williams, filed suit against Holton, Phillips, and Cannon's estate for wrongful death, negligent infliction of emotional distress, and negligent entrustment of a chattel. That suit is currently pending in Cumberland County. However, prior to the resolution of the Williams suit, Nationwide filed the present declaratory judgment action seeking a determination of its liability coverage, if any, for Cannon's actions. In filing its declaratory judgment action, Nationwide relied on the language of its policy which excluded from coverage anyone using the covered automobile without a reasonable expectation that he was entitled to do so.
A trial was held in Cumberland County on 9 November 1992, before the Honorable W. Russell Duke, Jr. Judge Duke concluded that Cannon was not in lawful possession of the 1976 Ford pickup truck, nor did he have a reasonable expectation that he was entitled to operate the truck. Judge Duke therefore concluded that the Nationwide policy did not extend coverage to Cannon and entered judgment in favor of Nationwide. Defendants appealed.
In interpreting any insurance policy, the most fundamental rule of construction is that the language of the policy controls. See Smith v. Nationwide Mut. Ins. Co., 328 N.C. 139, 400 S.E.2d 44 (1991). In addition, "when a statute is applicable to the terms of a policy of insurance, the provisions of that statute become terms of the policy to the same extent as if they were written in it, and if the terms of the policy conflict with the statute, the provisions of the statute prevail." Baxley v. Nationwide Mut. Ins. Co., 334 N.C. 1, 6, 430 S.E.2d 895, 898 (1993). In this case, the applicable statute is N.C.G.S. ยง 20-279.21(b)(2) which provides in pertinent part that an owner's liability insurance policy
shall insure the person named therein and any other person, as insured, using any such motor vehicle or motor vehicles with the express or implied permission of such named insured, or any other persons in lawful possession, against loss from the liability im
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