Central National Ins. Co. v. LeMars Mutual Ins. Co. of Iowa
| Decision Date | 13 November 1968 |
| Docket Number | Civ. No. 3-679-W. |
| Citation | 294 F. Supp. 1396 |
| Parties | The CENTRAL NATIONAL INSURANCE COMPANY, Plaintiff, v. LeMARS MUTUAL INSURANCE COMPANY OF IOWA, Defendant. |
| Court | U.S. District Court — Southern District of Iowa |
Clyde Putnam, Jr., Des Moines, Iowa, for plaintiff.
Harold T. Beckman and John L. Peterson, Council Bluffs, Iowa, and Burton Dull, Le Mars, Iowa, for defendant.
This action was instituted by the plaintiff, the Central National Insurance Company, to recover damages arising out of the failure of defendant, the LeMars Mutual Insurance Company of Iowa, to defend certain claims against its assured, C. E. Overman. Jurisdiction is grounded upon diversity of citizenship.
The pertinent facts are substantially without dispute.
The Central National Insurance Company is a Nebraska insurance company writing automobile liability insurance, and the LeMars Mutual Insurance Company of Iowa is an Iowa insurance company likewise engaged in the business of writing automobile liability insurance policies. The plaintiff, the Central National Insurance Company, referred to hereafter as the plaintiff company, issued an automobile liability insurance policy on one Donald E. Overman of Glenwood, Iowa, which policy insured a 1952 Pontiac automobile owned by him for a policy period from January 7, 1961 to April 7, 1962. This policy provided limits of liability for one person killed or injured in the amount of $25,000, and subject to that limit the total limit of liability for more than one person killed or injured in any one accident is in the amount of $50,000, and property damages in the amount of $5,000.
The defendant company, the LeMars Mutual Insurance Company of Iowa, hereinafter referred to as defendant company, issued an automobile liability policy to one C. E. Overman of Villisca, Iowa, the father of Donald E. Overman, which insured a 1958 Chevrolet automobile for a policy period from July 27, 1961 to July 27, 1962. This policy provided limits of liability for one person killed or injured in the amount of $10,000, and subject to that limit a total limit of liability for more than one person killed or injured in any one accident in the amount of $20,000, and property damages in the amount of $5,000.
On January 6, 1962, C. E. Overman, insured of the defendant company, purchased and took possession of a 1949 Ford and a 1950 Ford automobile. He removed the engine from the 1949 Ford and installed it in the 1950 Ford. The 1950 Ford he considered to be a second automobile. At the time of the purchase and taking possession of the said 1950 Ford on January 6, 1962, he owned no other automobile other than the 1958 Chevrolet insured by the defendant company.
Donald E. Overman, the insured of the plaintiff company, having had some difficulty with his 1952 Pontiac insured by the plaintiff company, used his father C. E. Overman's 1950 Ford automobile with the latter's knowledge and consent for approximately two weeks before the accident occurred.
On February 5, 1962, at approximately 7:30 p.m. in Mills County, Iowa, Donald E. Overman while driving the said 1950 Ford automobile was involved in an accident, as the result of which one Frances Mary Buch was killed and Donald E. Overman was injured. Subsequent to that accident, Donald E. Overman commenced an action against the Administrator of the Estate of Frances Mary Buch for his personal injuries. Thereafter, the Administrator counterclaimed against Donald E. Overman and cross-petitioned against C. E. Overman, seeking damages in the amount of $75,000 for the death of Frances Mary Buch. Damages were also asked for property damage to the vehicle driven by her and owned by the Administrator.
Demand was thereafter made on behalf of the plaintiff company to the defendant company to appear and defend with the plaintiff company Donald E. Overman, their assured, and C. E. Overman, the assured of the defendant company on the said Counterclaim and Cross-Petition. This the defendant company refused to do. The plaintiff company then retained counsel to appear and defend the Counterclaim and Cross-Petition on behalf of Donald E. Overman and C. E. Overman. A trial was held which resulted in a verdict in the amount of $50,000 in favor of the Administrator of the Estate of Mary Frances Buch against Donald E. Overman and C. E. Overman, and likewise a verdict for property damage in favor of the Administrator as the owner of the car driven by Frances Mary Buch against Donald E. Overman and C. E. Overman in the amount of $1,547.50 and the costs of the action. Subsequent thereto, Donald E. Overman and C. E. Overman filed a Motion for New Trial. The court then ordered a remittitur of the said verdict to $25,000 and affirmed the property damage judgment. This remittitur was accepted by the Administrator of the Estate of Frances Mary Buch. The plaintiff company thereafter paid the $25,000.00 judgment in full, plus $1,102.74 interest thereon, and a property damage judgment, including interest, totaling $1,615.75, and court costs in the amount of $257.55. The plaintiff likewise incurred the expense of attorney fees in the defense of said Counterclaim and Cross-Petition in the amount of $2,876.10, which the parties have stipulated to be a fair and reasonable attorney fee.
The instant action was commenced by the plaintiff company against the defendant company to recover: (1) $10,000, which was the defendant company's limit of liability on one person killed or injured, plus (2) the full property damage judgment, including interest, totaling $1,615.65, plus (3) one-half of the interest of $1,102.74 on the $25,000.00 judgment, and (4) one-half of the Court costs of $257.55, and (5) one-half of attorney fees in the defense of said Counterclaim and Cross-Petition, together with interest at five (5%) percent on said amounts since the first day of April, 1965, which was the date the said judgment, interest and costs were paid by the plaintiff company.
The insurance contract of the defendant company with C. E. Overman provided as follows:
"With respect to the insurance for bodily injury liability and for property damage liability the unqualified word `insured' includes the named insured and, with the named insured as an individual, his spouse if a resident of the same household, and also includes any person or organization legally responsible for the use thereof, provided the actual use of the automobile is by the named insured or such spouse or with the permission of either."
The policy contract with reference to a newly acquired automobile and automatic insurance thereon provided as follows:
The plaintiff company in its insurance contract with Donald E. Overman afforded coverage to the assured while he was driving another person's automobile with such person's knowledge and consent. The policy provided:
The policy likewise provided that the insurance with respect to a temporary substituted automobile or a non-owned automobile would be excess insurance over any other valid and collectible insurance:
The plaintiff company contends that when C. E. Overman, the assured of the defendant company, purchased and took possession of the 1950 Ford automobile on January 6, 1962, there was automatic coverage for 30 days under the terms and provisions of the defendant company's Insuring Agreement IV; that the accident having occurred on February 5, 1962, at approximately 7:30 o'clock p.m., same was within the 30 day period; that the said 1950 Ford was therefore covered under the said policy by the defendant company; that defendant company was primary carrier by reason of Donald E. Overman driving the said car as a non-owned vehicle; and that the plaintiff company would be the excess carrier over and above the limits of liability as provided by the defendant company in its policy to C. E. Overman.
The defendant company contends that the automatic insurance provision of its policy did not extend coverage to C. E. Overman for a period of 30 days from the time he acquired the 1950 Ford, by reason of the fact that C. E. Overman did not intend to ask for coverage on the said 1950 Ford; and that the accident of February 5, 1962 did not occur within the 30 day period.
C. E. Overman testified that following the acquisition of the 1950 Ford on January 6, 1962, up to the accident of February 5, 1962,...
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