Glacier General Assur. Co. v. State Farm Mut. Auto. Ins. Co.

• Decision Date: 18 January 1968
• Docket Number: No. 11244,11244
• Parties: GLACIER GENERAL ASSURANCE COMPANY, Plaintiff and Respondent, and Sherman L. Stuart, Plaintiff, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant and Appellant.
• Court: Montana Supreme Court

Page 533

436 P.2d 533

150 Mont. 452

GLACIER GENERAL ASSURANCE COMPANY, Plaintiff and Respondent, and Sherman L. Stuart, Plaintiff, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant

and Appellant.

No. 11244.

Supreme Court of Montana.

Jan. 18, 1968.

Worden, Worden, Thane & Robb, Missoula, Shelton, C. Williams (argued), Missoula, for appellant.

Erwin L. Anzjon (argued), Missoula, for respondent.

JAMES T. HARRISON, Chief Justice.

This is an appeal from a judgment for the plaintiff in an action to determine defendant's liability for claims, arising out of an automobile accident, which were paid by the plaintiff.

The case was submitted on an agreed statement of facts. From the statement of facts and the pleadings it appears that the defendant-appellant, State Farm Mutual Automobile Insurance Company (hereinafter called State Farm), issued a policy of insurance to one Emelyn Stuart to cover a 1955 Chevrolet. A renewal premium was paid on February 20, 1963, so that the policy remained in force for a period including April 22, 1963. On February 4, 1963, plaintiff-respondent, Glacier General Assurance Company (hereinafter called Glacier), issued a policy of insurance to one Sherman L. Stuart to cover a 1957 Cadillac. At 12:01 A.M. April 23, 1963, a change of automobile endorsement became effective changing the described automobile in the Glacier policy to a 1959 Chevrolet.

On April 8, 1963, Emelyn Stuart and her son, Sherman L. Stuart purchased, as joint tenants, a 1959 Chevrolet and transferred in part payment the 1955 Chevrolet insured under the policy issued by State Farm.

On April 22, 1963, Sherman L. Stuart was in an accident. Pursuant to its policy, Glacier paid claims resulting from that accident in the amount of $2,514.70.

State Farm denied liability for any portion of the claims paid by Glacier. Glacier brought this action to have State Farm share in the payment of the claims. The district court found that the State Farm policy covered the 1959 Chevrolet and that they were liable for one-half of the claims less amounts paid for medical coverage.

On this appeal, State Farm makes six contentions. The first contention we shall discuss is that the district court erred in finding Sherman Stuart a joint owner with his Mother of the 1955 Chevrolet. It appears that the district court was in error in this finding, but it was harmless error.

The gist of the matter is the proposition put forth by the appellant that the 'newly acquired automobile' clause of a policy covering a solely owned automobile should not extend to a replacement automobile which is jointly owned. The appellant cites no cases to support this theory and our research has divulged very little direct authority.

The applicable provision of State Farm's policy is as follows:

'Newly Acquired Automobile-means an automobile, ownership of which is acquired by the named insured * * *.' (Emphasis supplied.)

The question at this point is whether 'ownership' as used in the policy includes joint ownership.

In general the 'newly acquired automobile' clause is intended for the benefit of the insured and should be liberally construed in his favor. 12 Couch on Insurance 2d, § 45:185, p. 236. 'Ownership' of the newly acquired automobile means such ownership as an ordinary man would ascribe to it. It is the property right which he holds as owner, the right of user, and the interest in its protection which goes with a sense of ownership. Id. at § 45:187, p. 237.

Construing the provision in favor of the insured we find that joint ownership is included in the term 'ownership' as it is used in the policy. The case of American Indemnity Co. v. Davis, 260 F.2d 440, 442 (5th Cir. 1958), decided the question of whether joint ownership was included in the term ownership in the affirmative. That court said, '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.'

Since the policy covers a newly acquired automobile even if jointly owned, it was harmless error for the district court to find joint ownership in the 1955 Chevrolet.

The next contention with which we must deal is the finding of the district court that the 1959 Chevrolet was covered by the State Farm policy issued to Emelyn Stuart. Appellant's contention here is intertwined with the previous one and also its third one, which is the court's finding that Emelyn Stuart suffered a loss as a result of this accident.

Since we have found the policy covers a jointly owned automobile appellant contends there are two other factors which require the court to find that in this case the 1959 Chevrolet was not covered. The first is that the insured did not intend it to be covered by the State Farm policy. The second is that the insured did not satisfy the condition of the policy requiring notice within 30 days of acquiring the new automobile.

We find no merit in the first contention. There is insufficient evidence of intention of the insured one way or the other in the agreed statement of facts. Even if the insured did not intend to continue the State Farm policy such intention is immaterial if the policy is still in force and effect according to its terms. The policy was in effect for a time period, including the date of the accident, thus the policy covered the 1959 Chevrolet if the other requirement is met, regardless of the unexpressed intention of the insured.

The insured did not give notice to appellant within 30 days after acquiring the new automobile as was required by the 'newly acquired automobile' provision. That provision requires that 'the named insured, within 30 days following delivery date, applies to the company for insurance on such newly acquired automobile.' Since we have found that it is the terms of the policy which determine the coverage, not the contrary intention of the insured, it is the construction of this clause which determines if there was coverage on the 1959 Chevrolet.

The appellant cites one case dealing with such a provision. General Insurance Co. of America v. Western Fire & Casualty Co., 241 F.2d 289 (5th Cir., 1957). In that case the assured made application for insurance on the new car after the accident but prior to the expiration of the notice period. The court found the notice was sufficient. That case does not aid in the question before us because here there was no notice.

Although there are no Montana cases on the question there are cases in other jurisdictions where the accident happened during the notice period and no notice was given. The latest of these cases involved State Farm, the appellant herein, and the identical provision of its policy in dispute in the case at bar. That case was Hall v. State Farm Mutual Automobile Ins. Co., D.C., 268 F.Supp. 995, 997 (1966), aff'd. 4 Cir., 378 F.2d 371 (1967). In the Hall case, the court said:

'For accidents within the designated period, the general rule is that coverage of the newly acquired car automatically arises on acquisition and continues throughout the period. (Citing cases.) Since coverage is automatic throughout the designated period, it is immaterial that the insured (1) does not notify the company within the period that he has acquired an additional automobile and (2) never pays an additional premium.'

We follow the general rule and find that the State Farm policy issued to Emelyn Stuart was in full effect for the 30 days following the acquisition of the 1959 Chevrolet and that the 1959 Chevrolet was a newly acquired automobile under that policy.

In regard to appellant's third contention, we find that Emelyn Stuart did suffer a loss as a result of this accident. She was part owner of a damaged automobile after the accident. She had lost part of her consideration which she had supplied for the new automobile. The statement of facts contains nothing to show that Emelyn Stuart was anything but a bona fide owner. There is no showing that she was not a beneficial owner as well as title holder.

The next contentions with which we deal are to the effect that the court erred in failing to give effect to the 'other insurance' provision of the State Farm policy, and that the court erred in finding State Farm liable for any portion of the loss paid by respondent.

Appellant claims the court must decide that one insurer is primary and the other secondary. For this conclusion it relies upon Mountain States Mutual Casualty Co. v. American Casualty Co., 135 Mont. 475, 342 P.2d 748 (1959). However, that case does not decide that all questions concerning double coverage must be resolved by determining one company's coverage to be primary and other's secondary.

In the Mountain States case, different provisions of the two policies covered the accident. The appellant reasons that it was only a secondary insurer and respondent the primary insurer, relying heavily on the theory that under their policy the insured was covered as a newly acquired automobile, but under Glacier's policy the coverage was as the described vehicle. This position is grounded on the fact that the 'other insurance' clauses in the Glacier policy differ in regards to described automobiles and newly acquired automobiles.

Both policies have essentially the same 'other insurance' provision applying to newly acquired automobiles. The provision in respondent's policy reads as follows:

'The insurance with respect to the newly acquired automobile does not apply to any loss against which the named insured...