Flester v. Ohio Cas. Ins. Co.

• Decision Date: 27 July 1973
• Docket Number: No. 314,314
• Citation: 269 Md. 544,307 A.2d 663
• Parties: Gary Alan FLESTER et al. v. The OHIO CASUALTY INSURANCE COMPANY
• Court: Maryland Court of Appeals

Page 544

269 Md. 544

307 A.2d 663

Gary Alan FLESTER et al. v. The OHIO CASUALTY INSURANCE COMPANY

No. 314.

Court of Appeals of Maryland.

July 27, 1973.

Charles C. Bowie, Jr., Rockville (Brault, Scott & Brault, Rockville, on the brief), for appellants.

Francis L. Young, Chevy Chase (Brown & Young, Chevy Chase, on the brief), for appellee.

Argued before MURPHY, C. J., and McWILLIAMS, SINGLEY, SMITH, DIGGES and LEVINE, JJ.

LEVINE, Judge.

Whether appellant (Flester) was covered by automobile liability insurance for his 1956 Ford Thunderbird on May 10, 1970 is the ultimate question presented by this case. He appeals from a judgment of the Circuit Court for Prince George's County (McCullough, J.) declaring that such coverage was not provided by appellee (Ohio Casualty) for an accident occurring on that date.

In April 1969, Ohio Casualty issued to Flester a policy covering two automobiles, a 1962 Ford Fairlane and the Thunderbird. That policy was effective from April 21, 1969 to April 21, 1970. Having decided to relegate the Thunderbird to 'classic car' status, Flester called his insurance agent (Marton) in August 1969 and requested that it be removed from the policy; and that it be replaced by a 1967 Mercury Cougar. This was accomplished by a written endorsement to the policy effective on August 7, 1969. ¹

On August 10, 1969-just three days after it had been added to the policy-the Cougar was heavily damaged in an accident. As a consequence, Flester found it necessary to reactivate the Thunderbird. These developments were reported by Flester to Marton on August 11. On that same day, Marton mailed an accident report to the insurer, and also furnished a copy to Flester. The final sentence in that report states: 'While the Cougar is being repaired, this agency is binding coverage on Mr. Flester's 56 Ford Hdtop (the Thunderbird) which was just removed from policy.' (emphasis added). Marton says Flester informed him that he planned to have the Cougar repaired and returned to use. On that basis, Marton states, it was agreed that the agency 'would temporarily bind coverage' on the 'Thunderbird during the period of repairs on the '67 Cougar.'

Flester's version concerning that part of the conversation differs slightly, as shown by the following excerpts from his testimony:

'Q What did you tell Mr. Marton as to that? A He asked me if I thought the car would be repaired to that point. I told him then I didn't think so; that I thought the car was a total loss.

'Q And was there any conversation concerning the 1956 Thunderbird? A He said, yes, he said, I could drive that car and the company would bind coverage on it until the car was repaired or replaced.

'Q Did you notify the agency that your 1967 Mercury Cougar, which was involved in the accident of August 1969, was repaired or not? A No, because it never was repaired.

'Q Did you tell Mr. Marton that it wasn't to be repaired or something along that line? A I don't ever recall telling them that it was not, no.' (emphasis added).

Shortly after the accident was reported to Ohio Casualty, it paid to Flester the sum of $2115 as the fair market value of the Cougar immediately prior to the accident. He then elected to repurchase the car for its salvage value which was fixed at $170. As the cost of repairs would have exceeded the $2115, the car was declared a total loss.

Marton testified he learned from Flester in late August that he had decided to replace the Cougar rather than repair it. As he recalls, Flester had either located another 1967 Cougar or was searching about for one. Flester indicated that these arrangements would be completed within a week of that discussion. Nothing further transpired, however, and in October-Marton puts it between the 9th and 15th-the latter called Flester, who then led him to believe that he was still negotiating for another 1967 Cougar. The only remaining personal contact Marton had with Flester-prior to the May 1970 accident-was in December 1969. On that occasion, Marton visited the automobile parts establishment at which Flester was employed to make some purchases. Other than that the replacement had not yet been acquired, nothing further was said. Marton, in any event, is quite emphatic in stating that after Flester revealed his plan to replace rather than repair the Cougar, the binder was only intended to cover the Thunderbird for the period of time required to purchase another Cougar-ten days to two weeks.

Flester says-and this is borne out by Marton's records-that at no time between August and the May 10, 1970 accident was he told by Marton or anyone on behalf of Ohio Casualty that the Thunderbird was not covered, or that the binder was withdrawn. In October he received a premium notice which he paid. ² He also recalls that they did have one more conversation subsequent to August, in which Flester said he was still looking for a Cougar, and Marton told him to report when he succeeded. On the other hand, Flester used the Thunderbird continuously through the remainder of 1969 and early 1970-until the second accident-apparently without the knowledge of Marton or Ohio Casualty.

In early April of 1970, a renewal policy issued by Ohio Casualty-effective for one year beginning April 21-was forwarded by Marton to Flester. That policy listed as the two insured vehicles the Ford Fairlane and the same Cougar which had been damaged. The Thunderbird was not mentioned. Flester says that he never examined that policy and, therefore, did not notice what cars were listed in the typewritten schedule. For that matter, neither did Marton. Flester says his sole concern was the premium which he promptly paid. This indifference on Flester's part was not unprecedented; he also testified that he had never read the accident report which specified that Marton was binding the Thunderbird while the Cougar was 'being repaired.'

On May 10, 1970, while Flester was operating the Thunderbird with one William D. Maske (Maske) riding as a passenger, it was involved in an accident. As a result, Maske sustained peersonal injuries and brought suit against Flester. Whether the latter was covered by Ohio Casualty for that claim, as we noted at the outset, is the ultimate question posed by this case. If the accident had no other positive consequences, it seems to have awakened Flester to the contents of his policy. Marton says that when Flester reported the accident on May 13, the latter also requested that the Thunderbird be added to the policy and that the Cougar be eliminated. Curiously enough, this was accomplished by a written endorsement dated May 18, effective on May 13.

To further add to the strange sequence of events, on May 25, 1970 Ohio Casualty filed with the then Department of Motor Vehicles an SR-21 form signifying that it had insured the Thunderbird for the May 1970 accident. This action was rescinded sometime later by Ohio Casualty, which claimed that the form had been filed inadvertently. A fitting climax to this unusual chronology was Flester's purchase in June 1970 of another 1967 Cougar, which was then added by written endorsement to the existing policy.

At the conclusion of the trial, Judge McCullough declared that the Thunderbird was not covered by Ohio Casualty for the May 10, 1970 accident; and therefore it was neither required to defend the action brought by Maske against Flester, nor liable for any judgment which might be rendered in that suit. In doing so, he concluded that there was an oral binder issued by Ohio Casualty's agent with the intent to cover the Thunderbird while the Cougar was being repaired or until it was replaced; that the binder was effective until the issuance of the April 1970 policy, but not thereafter. We think Judge McCullough decided the case correctly, and we shall affirm the judgment.

In urging reversal, Flester contends: (1) That the trial judge erred in ruling that the oral binder did not cover the May 10, 1970 accident; and, in any event, (2) that the court should have reformed the April 1970 policy to conform with the oral binder.

(1)

Flester advances his initial contention in two parts. First, he argues that the parties entered into an oral contract on August 11, 1969 which was new and separate from any written policy, and had its own termination date; and that this contract was in effect on the day of the May 1970 accident. In short, he maintains that an oral contract of insurance was entered into which was to cover the Thunderbird until the damaged Cougar was replaced by another; and since this did not occur until June 1970, the oral contract was operative until the latter date. Hence, he argues, Ohio Casualty's action in denying coverage for the Thunderbird amounted to a cancellation of insurance without the prior notice required by Maryland Code (1957, 1968 Repl. Vol.) Art. 48A, § 240A and Code (1957, 1967 Repl. Vol.) Art. 66 1/2, § 142, which were then in effect.

The second facet to his principal contention is that the court below erred in ruling that the policy issued in April 1970 'was the written policy contemplated by the oral binder'; and that the binder therefore merged into that written policy. In effect, he contends that since the written policy issued in April 1970 omitted any reference to the Thunderbird, it was not 'the policy with respect to which (the binder) was given.' Since, for this reason, there was no merger of the binder into the 1970 written policy, he claims that it survived issuance of the latter, and covered the accident.

We think that the two issues, as framed by Flester, overlap to some extent; and we shall consider them together as part of the larger question, i.e., whether the oral binder afforded coverage to Flester for the May 1970 accident. The parties and the trial judge seem to have been in agreement that the conversation of August 11, 1969, between Flester and Marton, resulted in a commitment on behalf of Ohio Casualty which, in the parlance of the...