Alabama Farm Bureau Mut. Ins. Co., Inc. v. Davis
| Decision Date | 18 January 1978 |
| Citation | 354 So.2d 15 |
| Parties | ALABAMA FARM BUREAU MUTUAL INSURANCE COMPANY, INC. v. Charles DAVIS, as Administrator of the Estate of Eugene Jackson Davis. Civ. 1252. |
| Court | Alabama Court of Civil Appeals |
H. E. Nix, Jr. of Hill, Hill, Carter, Franco, Cole & Black, Montgomery, for appellant.
George B. Azar, Montgomery, for appellee.
This appeal is the result of a civil action in the Circuit Court of Montgomery County seeking recovery under the uninsured motorist provisions of an insurance policy issued by appellee, Alabama Farm Bureau Mutual Insurance Company, Inc.
The action was initiated by the appellant, Charles Davis, who was acting as the administrator of the estate of Eugene Jackson Davis. The case was heard without a jury and after the presentation of evidence by both parties the trial court found that Eugene Jackson "Jack" Davis was killed in a motor vehicle collision involving three cars. Although there was liability insurance on the vehicle which Davis was driving, neither of the drivers of the other two cars had automobile liability insurance at the time of the collision. Consequently, both of these drivers were uninsured motorists as defined in the insurance policy issued by Farm Bureau. The trial court determined that the proximate cause of Davis' death was the negligence of one of the uninsured drivers. The court also held that the insurance policy purchased for the automobile in which Davis was killed by the car's owner, David Garrett, was in force on the date of the fatal collision and that Davis was driving the vehicle with the permission of Garrett. Accordingly, the court ruled that Davis was insured under the uninsured motorist provisions of the Farm Bureau policy and rendered a judgment in favor of Davis' estate in the amount of $10,000. From that judgment Farm Bureau appeals.
The primary question before us is whether Garrett (the named insured) possessed an insurable interest in the automobile at the time of Davis' accident sufficient to support recovery by the latter's estate under the uninsured motorist provisions of the policy. Farm Bureau contends that the policy was void because Garrett had no insurable interest in the insured automobile and that as a consequence of this fact, the trial court erred in holding that the estate of Jack Davis could recover under the policy's uninsured motorist provisions. Conversely, the administrator of Davis' estate claims that Garrett held the title to the vehicle in question and as such had an insurable interest in it. We conclude that Garrett had an insurable interest in the vehicle in question and that the trial court was correct in permitting the estate of Davis to recover under the policy's uninsured motorist coverage.
The evidence adduced at trial indicates that Garrett and his brother-in-law, Jack Davis, agreed to purchase an automobile. The two men traveled to Birmingham and purchased a Ford Mustang. Although Davis provided the money for the down payment on the car, it was Garrett who entered into a security agreement with the Ford dealer for the additional financing of the automobile's purchase price. At the time of the sale Garrett also received a federal excise tax refund on the car. The bill of sale and license tag registration were issued in the name of Garrett. Davis, however, took possession of the car and made the monthly payments on it.
Due to the financing arrangements entered into with the Ford dealer, the new automobile was insured with an insurance company other than Farm Bureau. However, the original insurance on the car expired approximately a year after the purchase of the vehicle.
At the time the original policy on the automobile expired, Garrett carried liability insurance coverage with Farm Bureau on another car which he owned. In order to take advantage of the special "two-car discount" on insurance premiums which Farm Bureau offered to automobile owners who had two cars insured with Farm Bureau, Garrett telephoned his insurance agent and had the Ford Mustang which Davis and he had purchased insured. Garrett paid all the premiums on the policy and kept the policy in his possession at all times.
Our legislature has provided that all automobile liability policies contain uninsured motorist protection unless such protection is rejected by the insured. Title 32, chapter 7, section 23, Code of Alabama 1975 (formerly Title 36, section 74(62a)). In this regard, uninsured motorist protection is an integral part of automobile liability insurance. Consequently, uninsured motorist coverage, like liability coverage, must be supported by an insurable interest in the insured. And the test of an insurable interest in an automobile liability policy, as well as the uninsured motorist provisions contained in that policy, is whether the named insured would be liable to others for injury to persons or property arising out of the operation of the insured automobile. Employers National Insurance Co. v. Holliman, 287 Ala. 123, 248 So.2d 717 (1971); Bendall v. Home Indemnity Co., 286 Ala. 146, 238 So.2d 177 (1970).
In support of its contention that Garrett did not have an insurable interest in the vehicle in question, Farm Bureau relies on the above cited cases of Bendall and Holliman as being factually similar to the case at bar.
A comparison of the cited cases and the case at bar reveals the following facts:
Bendall and Holliman Davis
------- -------- ------
(1) The named insured (1) The named insured
used the car occasionally used the car occasionally
but never claimed any but at all times asserted
ownership interest; his ownership interest
by (a) retaining
a set of keys to the car
(b) requiring the principal
operator to register
the automobile
in the name of the insured
(c) by removing
the tape player and other
items from the vehicle
after it was involved in
the automobile accident
and (d) by holding legal
title to the vehicle
(2) the named insured (2) the named insured did
always asked permission not ask permission of the
of the principal operator principal operator to use
to use the car; the car although insured
did generally inquire as
to whether the principal
operator of the automobile
planned to use it
(3) the named insured (3) the named insured
never limited the principal generally did not limit
operator's use of the car; the principal operator's
use of the car, but on
one occasion he did contramand
the right of a
third party to use the
car even though the
insured knew that this
right had been conferred
on the third party by the
express permission of the
operator;
(4) the care was garaged (4) the car was garaged
at the home of the principal at the home of the insured
operator; during a period
when the principal operator
resided in the home
of the insured;
(5) the insurance premiums (5) the insurance premiums
were paid by the were paid by the
principal operator; insured;
(6) the insurance policy (6) the insurance policy
was kept by the principal was kept by the insured;
operator;
(7) the license tag registration (7) the license tag registration
was in the name was in the name
of the principal operator of the insured and he
or a third party. prevented any change in
the registration to another
person's name.
* insured = David Garrett
* principal operator = Jack Davis
We suggest that a careful examination of the facts in the cited cases and the case at bar as set out above will readily reveal their dissimilarities and, as a consequence, the cited cases cannot be relied on as factually supportive of the conclusion that Garrett had no insurable interest in the vehicle in question.
To recapitulate the facts in the present case, Garrett was the sole obligor on the security agreement and note of indebtedness for the purchase price of the automobile and therefore had a financial interest in protecting himself against liability arising out of the use of the car. Garrett was also obligated to pay the insurance premiums on the vehicle and had he failed to do so he would have lost his protection against liability as well as his "two-car discount" on the rate of his insurance premiums. Finally, Garrett held legal title to the automobile and as the owner of the vehicle was potentially liable for its use. These facts indicate an insurable interest and the necessity for purchasing insurance on the automobile. Consequently, we are not disposed to hold that the trial court erred in ruling that Garrett possessed an insurable interest in the car driven by Davis. 1
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