American Indemnity Company v. Davis

• Decision Date: 04 September 1957
• Docket Number: Civ. A. No. 348.
• Citation: 155 F. Supp. 47
• Parties: AMERICAN INDEMNITY COMPANY, Plaintiff, v. C. E. DAVIS, Jackie Clyde Davis, Marion E. Herndon, Mary George Bond, and Estella Phinizy, Defendants.
• Court: U.S. District Court — Middle District of Georgia

155 F. Supp. 47

AMERICAN INDEMNITY COMPANY, Plaintiff, v. C. E. DAVIS, Jackie Clyde Davis, Marion E. Herndon, Mary George Bond, and Estella Phinizy, Defendants.

Civ. A. No. 348.

United States District Court M. D. Georgia, Athens Division.

September 4, 1957.

COPYRIGHT MATERIAL OMITTED

Powell, Goldstein, Frazer & Murphy, Atlanta, Ga., Travers Hill, Atlanta, Ga., of counsel, for plaintiff.

C. Winfred Smith, Gainesville, Ga., for defendants Davis.

Carey Skelton, Jos. S. Skelton, Hartwell, Ga., Erwin, Nix, Birchmore & Epting, Athens, Ga., Eugene A. Epting, Athens, Ga., of counsel, for defendant Herndon.

Payne & Heard, Elberton, Ga., Howard B. Payne, Elberton, Ga., of counsel, for defendant Bond.

Mixon & Chambers, Augusta, Ga., William O. Carter, Hartwell, Ga., R. Lee Chambers, Augusta, Ga., of counsel, for defendant Phinizy.

DAVIS, Chief Judge.

This is a declaratory judgment action brought by the plaintiff Insurance Company for a declaration of "the status, duties and liabilities of the complainant" to the defendants, in connection with a policy of insurance issued by plaintiff Company to defendant, C. E. Davis and certain suits filed against said Davis and his son, Jackie Clyde Davis. In effect, the plaintiff here seeks a declaration of "no coverage", so as to be relieved from the defense of (as well as possible ultimate liability) certain damage suits now pending. The damage suits were filed by three of the defendants against two of their co-defendants in this action.

All of the damage suits arose out of an accident involving a 1956 Mercury automobile owned by defendant, C. E. Davis, or by C. E. Davis and his son, defendant Jackie Clyde Davis, jointly. The other defendants in this case have filed damage suits against C. E. and Jackie Clyde Davis. Two of these are now pending in this Court and one is pending in the State Court. The defendants in the damage suits have called on the plaintiff here, The American Indemnity Company, to defend those actions in accordance with the policy of insurance issued by plaintiff Company to C. E. Davis.

The defendants Davis, as well as the other defendants, contend that this policy affords coverage while the plaintiff Company seeks a declaration of no coverage.

Only one provision of the policy is here in dispute. It is undisputed that the automobile covered by the policy, when issued to C. E. Davis on June 5, 1956, was a 1952 Chevrolet. The car involved in the accident on July 22, 1956, was a 1956 Mercury, purchased on July 7, 1956. The only provision of the policy which could be construed to extend coverage to the Mercury is Section IV(a) (4), generally referred to as the "newly acquired automobile" provision. That provision provides that the term automobile includes

"Newly Acquired Automobile—an automobile, ownership of which is acquired by the named insured, who is the owner of the described automobile, if the named insured notifies the company within thirty days following the date of its delivery to him, and if either it replaces an automobile, described in this policy or the company insures all automobiles owned by the named insured at such delivery date * * *."

It is admitted that the Company did not insure all cars owned by the named insured, and it can qualify under this provision only if it was a replacement car. It is also admitted that the named insured gave the required notice mentioned in the provision.

In its suit, plaintiff contends that the 1956 Mercury was not a replacement car, that it was not acquired by the named insured and, in the alternative, that defendant, Jackie Clyde Davis, has breached the cooperation clause contained in Section 16 of the policy by making certain contradictory statements as to who was driving the Mercury at the time of the collision.

This case was tried before a jury and the following questions were submitted to the jury:

"One—Was the 1956 Mercury automobile which was involved in the collision the joint property of Jackie Clyde Davis and C. E. Davis?"

The jury failed to agree upon an answer to this question.

"Two—Was the 1956 Mercury automobile which was involved in the collision solely the property of C. E. Davis?"

The jury failed to agree upon an answer to this question.

"Three—Was the 1956 Mercury automobile which was involved in the collision solely the property of Jackie Clyde Davis?"

The jury answered "No".

"Four—Was the 1956 Mercury automobile which was involved in the accident used by C. E. Davis in the same manner and for the same purposes as the 1952 Chevrolet had been used?"

The jury answered "Yes".

"Five—Has Jackie Clyde Davis, since the collision, made statements that he was driving the 1956 Mercury when the collision occurred?"

The jury answered "Yes".

"Six—If your answer to Number 5 is `Yes', was such statement made in bad faith and for the purpose of prejudicing the rights of the insurance company, and did it prejudice the insurance company?"

The jury answered "No".

When informed that the jury could agree upon answers to only four of the questions, counsel for all parties stipulated that the verdict should be received and that, if the Court could dispose of the case on the basis of that verdict, all parties would be bound by the answers given by the jury; but that, if the case could not be disposed of on the basis of those answers, a mistrial should be declared and all issues re-submitted.

The defendants, by motion, are now contending that judgment can be rendered in their favor on the basis of the answers agreed upon by the jury. This the plaintiff strongly contests.

Here, it might be well to restate the plaintiff's original contentions: 1. The 1956 Mercury was not a replacement for the 1952 Chevrolet. 2. The 1956 Mercury was not acquired by the named insured. 3. The defendant, Jackie Clyde Davis, has breached the cooperation clause of the policy, so as to release the plaintiff from liability on the policy.

For reasons which will be detailed, the Court concludes that the verdict of the jury disposes of contentions (1) and (3), leaving for consideration only the second contention.

The jury found that the Mercury was used by C. E. Davis in the same manner and for the same purposes as the 1952 Chevrolet. This question was drafted by counsel for the plaintiff, and its affirmative answer establishes as a fact that the Mercury was a replacement for the Chevrolet. There is no dispute on this point now, though it was strenuously contested during the trial. The plaintiff does not deny that the verdict of the jury disposes of this contention.

As to contention (3), the jury did determine that Jackie Clyde Davis had previously stated that he was driving the Mercury at the time of the accident, which statement clearly contradicts his testimony during the trial. They also determined, however, that this contradictory statement was not made in bad faith for the purpose of prejudicing the Insurance Company, and it did not prejudice the company. This finding was demanded by the evidence, since the plaintiff had the burden of proof and there was no evidence which would justify even an implication of bad faith. According to the plaintiff's own evidence the statement was made on a stretcher in the hospital, immediately after the accident, and while Jackie Clyde was being treated for injuries sustained. There is no evidence that the statement has been repeated or adhered to by him. On the contrary, the evidence indicates that the statement was only made once. The Court concludes that this would not be...