Birch v. Harbor Ins. Co.

• Decision Date: 26 July 1954
• Citation: Birch v. Harbor Ins. Co., 126 Cal.App.2d 714, 272 P.2d 784 (Cal. App. 1954)
• Court: California Court of Appeals
• Parties: BIRCH et al. v. HARBOR INS. CO. Civ. 4838.

Page 784

272 P.2d 784

126 Cal.App.2d 714

BIRCH et al. v. HARBOR INS. CO.

Civ. 4838.

District Court of Appeal, Fourth District, California.

July 26, 1954.

Lindley, Lazar & Scales, John H. Barrett, San Diego, for appellant.

Luce, Forward, Kunzel & Scripps, Edgar A. Luce, Jr., San Diego, for respondents.

BARNARD, Presiding Justice.

This is an action by a judgment-creditor against an insurance company which had issued a policy to the judgment-debtor. The policy, describing a 1950 Ford, was issued to one Martin on July 5, 1950, for a term of one year. On the evening of November 22, 1950, Martin acquired and took delivery of a 1935 Chevrolet. On the afternoon of December 22, 1950, Martin was involved in an automobile accident while driving the Chevrolet. As a result of that accident the Birches obtained a judgment against Martin for $3,114.97. The defendant herein denied liability on the policy, and this action followed.

There was evidence that Martin was assured by the agent from whom he ordered the policy, both before and after the accident, that he was automatically covered in the event he acquired an additional car. Without a finding on the matter of estoppel, the court found that the defendant company insured all automobiles owned by Martin at the date the Chevrolet was delivered to him; that the accident occurred within 30 days following the date of such delivery; that under the terms of the policy there was automatic coverage for a newly acquired car for a period of 30 days following the date of its delivery; and that this policy covered the use of said Chevrolet by Martin on the date and at the time of the accident. The defendant has appealed from the judgment which followed.

Appellant's sole contention is that the trial court's decision was based upon an erroneous interpretation of the wording of the policy. It is argued that under any reasonable interpretation of the language used in the policy there was no coverage, since no notice was given to the company by the insured within 30 days following the date on which the Chevrolet was delivered to him.

The questioned language appears in a part of the policy headed 'Insuring Agreements'. Subdivision I deals with coverage, including liability for damage arising from the 'use of the automobile.' A portion of Subdivision IV, reads as follows:

'IV. Automobile Defined, Trailers, Two or More Automobiles, Including Automatic Insurance.

'(a) Automobile. Except where stated to the contrary, the word 'automobile' means:

'(1) Described Automobile--the motor vehicle or trailer described in this policy:

'(2) Utility Trailer--(not here involved);

'(3) Temporary Substitute Automobile--(not here involved);

'(4) 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; but the insurance with respect to the newly acquired automobile does not apply to any loss against which the named insured has other valid and collectible insurance. The named insured shall pay any additional premium required because of the application of the insurance to such newly acquired automobile. '

The appellant contends that these provisions were intended for the protection of the assured; that they obviously contemplate some change of situation with respect to the described automobile; that the only conclusion to be drawn is that the insurer wished to provide protection where there would normally be none in the absence of some carry-over provision; that the company was entitled to fix reasonable limits within which this additional coverage should be effective; that the 30 days was a reasonable period of limitation within which to comply with the requirement of giving notice; that the Chevrolet was an additional car rather than a replacement; that the clause with respect to the company insuring all automobiles owned by the insured was 'designed to cover situations in which an assured has a constant normal turnover of vehicles' and where the newly acquired vehicles will be identified and added to the policy at a later date, usually the end of the month; and that the provision that the insured shall pay any additional premium required indicates that 'the insurer recognizes no obligation to furnish free insurance other than as specifically set forth.'

While the interpretation of such a policy has not been considered in any decision in this state, there are a number of such decisions in other jurisdictions. In Continental Casualty Co. v. Trenner, D.C., 35 F.Supp. 643, the insured traded in his car on another without notifying the company and the collision occurred more than ten days later. The policy, under a clause headed 'Automatic Insurance for Newly Acquired Automobiles', provided that the insurance should also apply to another vehicle acquired, as of the date of delivery, but subject to the condition that this provision should not apply "unless the named insured notifies the company within ten days following the date of delivery of such other automobile". In referring to that provision the court said: 'The clause does give unconditional automatic insurance for newly acquired automobiles, but for a limited period only.' It was then held that the automatic insurance did not extend beyond the 10 days, in the absence of notice within that time.

In Hoffman v. Illinois Nat. Casualty Co., 159 F.2d 564, 566, the Circuit Court of Appeals for the Seventh Circuit affirmed a judgment in favor of the insured. Under a similar policy, providing for automatic insurance for a newly acquired automobile, if it replaced the automobile described in the policy, it was further provided that this agreement should not apply "unless the Named Insured notifies the Company within 30 days following the date of delivery". The accident happened within 30 days and it was argued that no notice was given before the accident, and that the insured did not intend the second vehicle to replace the first. The court there said:

'Since the language of the policy is to be construed in accordance with the principle that the test is not what the insurer intended its words to mean, but what a reasonable person in the position of the insured would have understood them to mean, it is clear that when the first tractor was wrecked and the second tractor was acquired and used in its place, a reasonable person in such a situation, from the language used, would have reasonably assumed that all coverage with respect to the first tractor was terminated and that the policy, without notice, was automatically transferred as of the date of the delivery of...