Appeal from judgment of Court of Common Pleas of Lycoming County, Feb. T., 1964, No. 80, in case of Penn-Air, Inc. v. Indemnity Insurance Company of North America.
Henry C. McCormick, with him Furst, McCormick, Lynn, Reed & Nichols, for appellant.
Martin M. Fine, with him Fine & Eisenbeis, for appellee.
Bell, C. J., Jones, Cohen, Eagen, O'Brien, Roberts and Pomeroy, JJ. Opinion by Mr. Justice Pomeroy. Mr. Chief Justice Bell concurs in the result. Mr. Justice Cohen dissents. Dissenting Opinion by Mr. Justice Roberts.
Penn-Air, Inc., the plaintiff-appellee, was a private airport operator whose business included the storage, maintenance and repair of airplanes. It purchased from Indemnity Insurance Company of North America, the
defendant-appellant, an aircraft policy which contained a "Hangar Keeper's Liability Endorsement". This appeal concerns a dispute between the two parties as to whether a loss sustained by appellee was or was not within the coverage afforded to appellee by the policy. The background facts, viewed most favorably to the appellee, the verdict winner below, are as follows:
Larry Herron, Inc., of Williamsport owned a twinengine airplane which it stored at Penn-Air's hangar. On May 5, 1960 Penn-Air had possession of the plane for the purpose of giving it a one hundred hour inspection, which was to include a flight check on the following day by Mr. Taylor, Penn-Air's president, who with his wife is owner of its capital stock. Following the check-up but before the flight check, one William Angle, who was an employee of Herron and the plane's pilot, and one Richard Littley, an employee of Penn-Air and its chief mechanic, took the plane up. In so doing, Angle was acting outside the scope of his employment and Littley was likewise acting outside the scope of his employment and without authority from Mr. Taylor.*fn1 After climbing to about 500 feet the plane suddenly lost altitude and crashed after having traveled about a mile and a half. The aircraft was burned and totally destroyed, and both Angle and Littley were killed instantly. Which of the two men was piloting the plane was never determined.
Prior to the present suit, Penn-Air was sued for the value of the airplane by Herron for breach of the contract of bailment. Following trial, the jury in that case returned a verdict in Herron's favor in the amount of $22,800. Penn-Air paid the judgment, with interest, and thereafter brought this suit for reimbursement claiming that the loss was covered by the insurance policy. The jury in the case at bar found for Penn-Air. The lower court overruled appellant's post trial motions, and this appeal followed.*fn2
Penn-Air's complaint averred that the Herron aircraft was destroyed when Penn-Air negligently failed to prevent Angle or Littley or both from taking unauthorized possession of the plane or from converting or stealing it; that the plane was destroyed as a result of "the unauthorized taking or theft"; and that the loss thus suffered was within the scope of Coverage B(1) or B(2) of the policy. Indemnity's answer denied coverage and asserted that the insured had not complied with the provisions of the policy as to timely notice of claim, proof of loss, and commencement of suit.
The coverage which Penn-Air carried with Indemnity was "Coverage B". The text of the insuring agreement relative to this coverage is as follows: "Indemnity Insurance Company of North America . . . Agrees with the insured . . . to afford those of the following coverages as specified in the declarations: Coverage B -- All Risks of Physical Damage While Not in Flight and Fire, Explosion and Lightning in Flight Except Following ...