American Indemnity Company v. Davis

• Decision Date: 31 October 1958
• Docket Number: No. 17023.,17023.
• Citation: 260 F.2d 440
• Parties: AMERICAN INDEMNITY COMPANY, Appellant, v. C. E. DAVIS et al., Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

260 F.2d 440 (1958)

AMERICAN INDEMNITY COMPANY, Appellant, v. C. E. DAVIS et al., Appellees.

No. 17023.

United States Court of Appeals Fifth Circuit.

October 31, 1958.

Travers Hill, Atlanta, Ga., B. D. Murphy, Atlanta, Ga., of counsel (Powell, Goldstein, Frazer & Murphy, Atlanta, Ga., on the brief), for appellant.

Eugene A. Epting, Athens, Ga., R. Lee Chambers, Augusta, Ga., C. Winfred Smith, Gainesville, Ga., William O. Carter, Hartwell, Ga. (Erwin, Nix, Birchmore & Epting, Athens, Ga., Joseph & Carey Skelton, Hartwell, Ga., Payne & Heard, Elberton, Ga., on the brief), for appellees.

Before HUTCHESON, Chief Judge, and TUTTLE and JONES, Circuit Judges.

TUTTLE, Circuit Judge.

This appeal presents two simple but important questions of coverage of an automobile public liability insurance policy. The first is: does a "replacement" automobile owned jointly by the named insured and his son come within the terms "an automobile ownership of which is acquired by the named assured"? The second is whether the trial court erred in concluding, as a matter of law, that statements made by the son at the time of the accident did not breach the agreement of the insured to "cooperate."

In a declaratory judgment suit in which appellant sought, after an accident involving an automobile at least jointly owned by its named insured, to have a declaration of no liability the real issues boiled down to those enumerated above. An affirmative answer to the two questions would require affirmance here of the judgment below.

Dealing first with the ownership question, we note that neither party cites a Georgia court decision answering this precise point. Appellee cites as Georgia cases supporting the proposition that "if there is any ambiguity in an insurance policy the Courts will construe the contract favorably" to the insured, the following: Massachusetts Benefit Life Association v. Robinson, 104 Ga. 256, 30 S.E. 918, 42 L.R.A. 261; Penn Mutual Life Ins. Co. v. Milton, 160 Ga. 168, 127 S.E. 140, 40 A.L.R. 1382; and Christensen v. New England Mutual Life Ins. Co., 197 Ga. 807, 30 S. E.2d 471, 153 A.L.R. 794. Appellant, not disagreeing with this abstract principle, cites as the most recent Georgia authority "concerning ambiguities in insurance contracts," Wolverine Ins. Co. v. Jack Jordan Inc., 213 Ga. 299, at page 302, 99 S.E.2d 95, at page 97, from which it quotes:

"It is well settled that the courts of Georgia, if there is any ambiguity in an insurance policy, will construe the contract most favorably to the insured. (Citing cases.) But it is equally well settled that no construction is required or even permissible when the language employed by the parties in their contract is plain, unambiguous, and capable of only one reasonable interpretation. In such an instance, the language used must be afforded its literal meaning and plain ordinary words given their usual significance, and this rule applies equally as well to insurance contracts as to any other contract."

Applying this rule, with which we fully agree, we must determine whether the words "an automobile, ownership of which is acquired by the named insured," given their literal meaning and their usual significance, can comprehend anything other than sole ownership as to the replacement automobile. Appellant directs its argument principally to the proposition that the term "named insured" is not ambiguous. To this we agree, as did the able trial court. This, however, does not answer the question. Whatever is meant by "ownership" all agree it must have been acquired by C. E. Davis. Here the question is: does joint ownership of C. E. Davis and his son, Jackie, qualify as "ownership." Since "ownership" in its literal sense includes joint as well as sole "belonging," the use of the more general term "ownership" comprehends the qualified terms "sole" and "joint" ownership. The term is ambiguous and thus, by the authority of the Georgia cases cited by appellant itself, the construction placed on the phrase by the trial court must be affirmed.

Much of the dispute over the lack of cooperation question arises from the form of the question put to the jury by the trial court.¹ The question was phrased:

"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?"

Appellant contends that a negative answer to this question could not be a proper predicate to the court's finding that there was not a failure to cooperate. Its argument was that such statement, if false, constituted failure to co-operate; that the questions of bad faith and purpose of prejudicing the rights of the company were irrelevant.²

No Georgia cases are cited by either party...