Dairyland Insurance Company v. Crane, Civ. 69-152S.

• Decision Date: 14 July 1972
• Docket Number: No. Civ. 69-152S.,Civ. 69-152S.
• Citation: 344 F. Supp. 839
• Parties: DAIRYLAND INSURANCE COMPANY, Plaintiff, v. Ralph CRANE, Sr., et al., Defendants.
• Court: U.S. District Court — District of South Dakota

344 F. Supp. 839

DAIRYLAND INSURANCE COMPANY, Plaintiff, v. Ralph CRANE, Sr., et al., Defendants.

No. Civ. 69-152S.

United States District Court, D. South Dakota, S. D.

July 14, 1972.

Deming Smith, of Davenport, Evans, Hurwitz & Smith, Sioux Falls, S. D., appeared in behalf of the plaintiff.

Sam W. Masten, Canton, S. D., appeared in behalf of the defendant Crane.

Gerald L. Reade, of Brady, Kabeiseman, Light & Reade, Yankton, S. D., appeared in behalf of the defendants Ramsleys and Hoffmans.

MEMORANDUM DECISION

NICHOL, Chief Judge.

Plaintiff, Dairyland Insurance Company (Dairyland), seeks declaratory relief under 28 U.S.C.A. Sec. 2201 to determine its obligation, if any, to defend or pay damages on behalf of defendant, Crane, under an automobile liability insurance policy it issued to Crane. Federal jurisdiction is based on diversity of citizenship under 28 U.S.C.A. Sec. 1332.

Dairyland issued the automobile insurance policy in question to defendant, Ralph E. Crane, Sr., on June 29, 1964. The policy was thereafter renewed quarterly to and including May 21, 1967.

Crane replaced the automobile described in the liability policy three times prior to May 21, 1967, notifying Dairyland of the changes on December 5, 1964, March 15, 1965, and again on December 11, 1966. The automobile described in the liability policy on December 11, 1966, through May 21, 1967, was a 1952 Chevrolet pickup.

In February of 1967 Crane discontinued use of the 1952 Chevrolet pickup when its engine became unusable. On March 28, 1967, he purchased a 1950 Chevrolet sedan in Iowa for the purpose of using its engine in the 1952 pickup. Crane had the Iowa title transferred to him on March 28, 1967, and applied for a South Dakota title on March 31, 1967, which he received on May 8, 1967. He obtained South Dakota license plates on March 31, 1967, for the 1950 Chevrolet and drove the car from Sioux City, Iowa, to his home near Burbank, South Dakota, on April 1, 1967.

After Crane got the 1950 Chevrolet home, he decided to junk out the 1952 pickup and fix up the 1950 Chevrolet since he ran into too much difficulty in switching engines. Thereafter he switched the tires, radiator, generator and battery from the 1952 Chevrolet pickup to the 1950 Chevrolet sedan, and he adjusted the brakes on the 1950 Chevrolet.

Crane drove the 1950 Chevrolet for the first time since he obtained it on April 1, 1967, about three miles on or about May 15, 1967, in order to purchase groceries.

On May 21, 1967, Crane was involved in a two-car accident in Nebraska while driving the 1950 Chevrolet sedan. As a result of this accident, Crane has been sued in state circuit court by defendants, Ralph Ramsley, Sr., Mabel Ramsley, Joseph B. Hoffman, Sr., Joseph D. Hoffman, and Geraldine H. Hoffman.

Crane claims coverage under Dairyland's newly acquired automobile clause and seeks to have Dairyland defend the suits against him in state court. In its policy with Crane, Dairyland agreed that:

. . . in consideration of the payment of the premium and in reliance upon the statements in the declarations and subject to the limits of liability, exclusions, conditions and other terms of this policy . . . (t)o pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury, sickness or disease, including death at any time resulting therefrom, sustained by any person, caused by accident and arising out of the ownership, maintenance or use of the automobile, and injury to or destruction of property, including loss of use thereof, caused by accident and arising out of the ownership, maintenance or use of the automobile.

The word "automobile" was defined as:

(1) Described Automobile—the motor vehicle or trailer described in this policy or, if none is so described, any private passenger automobile owned on the effective date of this policy by the named Insured or by his spouse if a resident of the same household;

. . . . . .

(4) Newly Acquired Automobile—an automobile, ownership of which is acquired by the named Insured or his spouse if a resident of the same household, if (i) it replaces an automobile owned by either and covered by this policy, or the company insures all automobiles owned by the named Insured and such spouse on the date of its delivery, and (ii) the named Insured or such spouse notifies the company within thirty days following such delivery date. The insurance with respect to the newly acquired automobile does not apply to any loss against which the named Insured or such spouse 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.

It is Dairyland's contention that these policy provisions should be read expressly. Therefore, since Crane did not notify Dairyland of the delivery and replacement of the 1952 Chevrolet pickup with the 1950 Chevrolet sedan within 30 days of delivery of the 1950 Chevrolet sedan on April 1, 1967, and the accident occurred more than 30 days after the delivery of the replacement automobile (the 1950 Chevrolet sedan), Dairyland did not provide any coverage under the policy for the 1950 Chevrolet on the date of the accident, May 21, 1967.

The defendants claim the 1950...