Glens Falls Insurance Company v. Gray, 24035.

Citation386 F.2d 520
Decision Date04 October 1967
Docket NumberNo. 24035.,24035.
PartiesGLENS FALLS INSURANCE COMPANY, Appellant, v. A. R. GRAY, Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)

COPYRIGHT MATERIAL OMITTED

H. O. Pemberton, Keen, O'Kelley & Spitz, Tallahassee, Fla., for appellant.

J. Robert McClure, Jr., L. Ralph Smith, Jr., Fokes, Peeples & McClure, Tallahassee, Fla., for appellee.

Before WASHINGTON,* TUTTLE and SIMPSON, Circuit Judges.

WASHINGTON, Circuit Judge:

The Glens Falls Insurance Company ("the Company") has appealed from a judgment of the District Court, upholding the right of the appellee Gray ("the insured") to receive benefits under a family automobile liability insurance policy issued to him by the Company for the year February 12, 1961 to February 12, 1962.

The insured is in the business of selling groceries, and dealing in real estate and used automobiles in Perry, Florida. He held a family automobile insurance policy issued by the Company for the year February 12, 1960 to February 12, 1961, which covered two automobiles, a 1955 Ford and a 1957 Ford, owned by him when the policy was issued. On January 10, 1961, prior to the time for renewal of this policy, he, as the parties' stipulation reads, "came into the possession of" a 1955 Oldsmobile under an agreement of purchase. He testified that, before the date for renewal of the policy, he told Sidney Edwards, the agent who represented the Company and who had handled his insurance since about 1949, that he had acquired the Oldsmobile, but that he did not desire it to be covered by his policy because it "was inactive" and had to undergo extensive repairs; and that after the repairs were completed he would decide whether to keep the Oldsmobile or to sell it.

The insured procured a renewal policy from the Company for the year February 12, 1961-February 12, 1962, the policy stating that he then owned the two Fords covered by the previous policy. On February 20, 1961, he eliminated the 1957 Ford from the policy, and an endorsement was made on the policy to that effect. Also on February 20, 1961, he acquired legal title to the Oldsmobile, obtained automobile tags for it, and was given a receipt for payment of the sales tax on the purchase.1 It was stipulated that he did "actually own" the Oldsmobile "from February the 20th, 1961." He became the registered owner with the Motor Vehicle Commission on March 28, 1961.

Subsequently, about the end of April, 1961, the repairs on the Oldsmobile were completed and the insured decided to keep it and drive it. In July, 1961, he and James Ward, his associate in the used car business, drove in the Oldsmobile to Mayo, Florida, to talk to Edwards, agent for the Company, in his office. The insured there told Edwards that he had decided to keep the Oldsmobile and that he wanted it covered by his policy. He testified that he later, at the end of July or the first part of August, telephoned Edwards to confirm this, and that he understood from Edwards that the Oldsmobile was covered by the policy. Ward testified that he was present for a part of the time at the July interview, that he went out to get the serial number of the Oldsmobile for Edwards, that he gave it to Edwards, and that Edwards told the insured not to worry, that he was fully covered by insurance. On August 11, 1961, Edwards died of a sudden heart attack. His records contain no reference pertaining to these conversations.

On January 27, 1962, while the insurance policy was in effect, the insured, driving the Oldsmobile, was involved in an accident in which two persons were killed. He himself was hospitalized and incurred medical expenses. A judgment was entered against him in one suit, the amount of which he has paid, and he is defendant in another suit. His driver's license was suspended for thirty four months following the Company's denial of coverage under the policy, and he paid a chauffeur to drive him during this period. In the instant suit — which was filed in a Florida court and was removed to the District Court because of diversity of citizenship — he claims coverage under the policy for these items and for attorneys' fees incurred by him in defending the suits filed against him and those incurred in this suit.

The District Court empanelled a jury to hear the evidence and to answer three interrogatories. At the conclusion of the hearing the jury found that during July, 1961, a conversation between Edwards and the insured took place with respect to insurance coverage for the insured's Oldsmobile; and that the insured informed the Company of his ownership of the Oldsmobile for the purpose of coverage. The jury reported that it was hopelessly deadlocked on the third interrogatory as to whether or not there was an agreement between Edwards and the insured that the Oldsmobile would be covered by the Company under the existing policy. Following receipt of the jury's verdict, the District Court recorded the verdict on the first two interrogatories and declared a mistrial as to the third interrogatory. Subsequently the District Court entered a Partial Summary Judgment in favor of the insured, declaring that the Oldsmobile is covered by the insurance contract and that the Company is liable under the terms and conditions in the policy with respect to the accident on January 27, 1962, for such damages as may be proved to flow from it. Subsequent orders were issued, which fixed the amount of the damages with respect to various items. Final judgment was entered and the Company appealed.

I.

We have concluded that we must affirm the District Court's holding that the Company is liable under the policy, with respect to the accident involving the Oldsmobile, for such damages as are covered by the policy.

1. We can not accept the Company's argument that the District Court erred in not entering summary judgment in its favor, on a motion made by it well before the hearing was concluded.

The District Court denied the motion for summary judgment filed by the Company, and a similar motion filed by the insured — both motions on the ground that there was at that time a genuine issue as to material fact which should be resolved by a jury. The interrogatories submitted to the jury disclose the factual issues which the District Court had in mind. The denial of summary judgment before conclusion of the hearing was clearly proper.

2. The Company argues that the District Court erred in holding, in its Order for Partial Summary Judgment in favor of the insured, that the Oldsmobile is covered by the insurance contract. Although the District Court did not set forth in detail the reasoning by which it arrived at this conclusion, its holding must be approved.

The Company's position is founded on Paragraphs 2 and 14 of the "Conditions" of the policy reading, so far as material, as follows:

"2. Premium: If the named insured disposes of, acquires ownership of or replaces a private passenger, * * * automobile, * * *, he shall inform the company during the policy period of such change. Any premium adjustment necessary shall be made as of the date of such change in accordance with the manuals in use by the company. The named insured shall, upon request, furnish reasonable proof of the number of such automobiles * * * and a description thereof.
* * * * * *
"14. Changes: Notice to any agent or knowledge possessed by any agent * * * shall not effect a waiver or a change in any part of this policy or estop the company from asserting any right under the terms of this policy; nor shall the terms of this policy be waived or changed, except by endorsement issued to from a part of this policy."

It is insisted that the insured can not benefit from the jury's finding that during the policy year the Company had received notice of ownership for purpose of coverage before the accident,2 since the Oldsmobile was owned before the policy year began and it was not added to the policy by written endorsement during the policy year. The Company's position thus seems to hinge on its view that ownership of the Oldsmobile was acquired in the year preceding the policy year.3

(a) We turn first to the question whether ownership of the Oldsmobile was acquired during the policy year for purposes of Condition 2. The term "acquires ownership" used in that Condition is open to several interpretations as to its meaning, at least in the circumstances here, and the policy itself does not undertake to define it. It is a well established rule in Florida, as elsewhere, that conditions set forth in an insurance policy which are ambiguous are to be construed strictly against the insurance company and in favor of coverage.4

It is clear, of course, that the insured acquired legal title to the Oldsmobile during the policy year, and, as stipulated, that he did "actually own" it from February 20, 1961.5 We regard this stipulation as determinative that "actual" ownership was acquired during the policy year. There was no further evidence which would compel the District Court to find, in opposition to the stipulation, that ownership was acquired along with possession in the preceding year.6

We need not, however, rest our decision on this stipulation alone, for here we are concerned with the year in which ownership was acquired for a particular purpose — that of automobile liability insurance. For this purpose, "ownership" of the Oldsmobile in any meaningful sense was acquired during the policy period. The facts outlined above indicate that, before the policy year began, the insured had possession only of an unusable automobile. The possession of an automobile needing major repairs — which was not intended to be used and was not used until after the repairs were completed during the policy year — can hardly be thought to be ownership for liability insurance purposes,7 since the principal purpose of such insurance is to provide coverage for an automobile which is to be driven and which may become involved in an accident or other...

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