Grant v. Emmco Ins. Co.

• Decision Date: 08 May 1978
• Docket Number: No. 85,85
• Citation: 243 S.E.2d 894,295 N.C. 39
• Court: North Carolina Supreme Court
• Parties: Douglas B. GRANT v. EMMCO INSURANCE COMPANY.

Page 894

243 S.E.2d 894

295 N.C. 39

Douglas B. GRANT v. EMMCO INSURANCE COMPANY.

No. 85.

Supreme Court of North Carolina.

May 8, 1978.

Morgan, Bryan, Jones, Johnson, Hunter & Greene by K. Edward Greene, Dunn, for plaintiff.

McLean, Stacy, Henry & McLean by Everett L. Henry, Lumberton, for defendant.

LAKE, Justice.

A motion to dismiss for failure of the complaint to state a claim upon which relief can be granted is the equivalent of a demurrer under the old practice for failure of the complaint to state a cause of action. Sutton v. Duke, 277 N.C. 94, 176 S.E.2d 161 (1970). Consequently, in passing upon such a motion, the allegations of the complaint are deemed to be true and the motion should not be allowed unless the complaint affirmatively shows that the plaintiff has no cause of action. Smith v. Ford Motor Co., 289 N.C. 71, 83, 221 S.E.2d 282 (1976); Consumers Power v. Power Co., 285 N.C. 434, 439, 206 S.E.2d 178 (1974); Forrester v. Garrett, Comr. of Motor Vehicles, 280 N.C. 117, 184 S.E.2d 858 (1971); Sutton v. Duke, supra. We turn, therefore, to the question of whether the Court of Appeals was correct in its conclusion that it clearly appears upon the face of the complaint, including the policy of insurance and the lease agreement incorporated therein, that no facts which could be proved, pursuant to these allegations, would entitle the plaintiff to any relief in this action.

It is firmly established law that, in the construction of an insurance policy, nontechnical words, not defined in the policy, are to be given the same meaning they usually receive in ordinary speech, unless the context requires otherwise. Trust Co. v. Insurance Co., 276 N.C. 348, 354, 172 S.E.2d 518 (1970); Insurance Co. v. Shaffer, 250 N.C. 45, 108 S.E.2d 49 (1959); Powers v. Insurance Co., 186 N.C. 336, 119 S.E. 481 (1923); 11 Couch on Insurance 2d, § 42:191 (1963). Where there is no ambiguity in the language used in the policy, the courts must enforce the contract as the parties have made it and may not impose liability upon the company which it did not assume and for which the policyholder did not pay. Trust Co. v. Insurance Co., supra; Williams v. Insurance Co., 269 N.C. 235, 152 S.E.2d 102 (1967); Motor Co. v. Insurance Co., 233 N.C. 251, 63 S.E.2d 538 (1951). However, a contract of insurance should be given that construction which a reasonable person in the position of the insured would have understood it to mean and, if the language used in the policy is reasonably susceptible of different constructions, it must be given the construction most favorable to the insured, since the company prepared the policy and chose the language. Trust Co. v. Insurance Co., supra; Williams v. Insurance Co., supra; Insurance Co. v. Insurance Co., 266 N.C. 430, 146 S.E.2d 410 (1966); Mills v. Insurance Co., 261 N.C. 546, 135 S.E.2d 586 (1964); 13 Appleman, Insurance Law and Practice, § 7465 (rev.ed.1976); 7 Blashfield Automobile Law and Practice, §§ 292.6, 292.7 (3d ed. 1966); 11 Couch on Insurance 2d, § 42:191 (1963).

As we said in Insurance Co. v. Insurance Co., supra:

"When an insurance company, in drafting its policy of insurance, uses a 'slippery' word to mark out and designate those who are insured by the policy, it is not the function of the court to sprinkle sand upon the ice by strict construction of the term. All who may, by any reasonable construction of the word, be included within the coverage afforded by the policy should be given its protection. If, in the application of this principle of construction, the limits of coverage slide across the slippery area and the company falls into a coverage somewhat more extensive than it contemplated, the fault lies in its own selection of the words by which it chose to be bound.

"In the construction of contracts, even more than in the construction of statutes, words which are used in common, daily, nontechnical speech, should, in the absence of evidence of a contrary intent, be given the meaning which they have for laymen in such daily usage, rather than a restrictive meaning which they may have acquired in legal usage."

In the absence of a contrary provision therein, a policy of automobile insurance applies only to the vehicle specifically described therein as the insured vehicle. Beck Motors, Inc. v. Federal Mutual Insurance Co., 443 S.W.2d 200 (Mo.App., 1969); Annot., 127 A.L.R. 486 (1940). In the present case, had the policy contained no provision further extending its coverage, the only vehicle within the coverage of the policy would have been the 1973 Ford tractor owned by the plaintiff and the judgment of the trial court would have been correct. However, in order to make its policy more attractive to potential customers, the company extended the coverage of its policy to include, not only the designated vehicle owned by the insured, but also a vehicle not so designated if "such vehicle is newly acquired by the named insured during the policy period," and if "it replaces a described covered vehicle, or as of the date of its delivery this insurance applies to all covered automobiles," and if "the named insured notifies the company within 30 days following such delivery date," (Emphasis added.)

Thus, the policy provides that a "covered automobile" includes a "newly acquired" motor vehicle if "as of the date of its delivery this insurance applies to all covered automobiles." It is, obviously, not clear whether the date of delivery, contemplated in this provision of the policy, is the date of the delivery of the newly acquired vehicle or the date of the delivery of the policy. However, this term of the policy is even more obscure in its meaning than that. It states that the "newly acquired" vehicle is covered by the policy, even though it does not replace a described covered vehicle, if "this insurance applies to all covered automobiles." (Emphasis added.) The purpose of the company in inserting this alternative provision into the policy definition of a "covered automobile" is a baffling mystery for, obviously, the policy applies, at any given date, "to all covered automobiles."

We observe that the language in this policy varies, in several respects, including this alternative provision, from that used in the comparable provisions in policies of other companies which have come into courts for construction in cases hereinafter cited. It would seem plausible that the company here meant to say "owned automobiles," so as to extend the coverage to a "newly acquired automobile," provided, at the time the policy was issued, all vehicles owned by the named insured were insured by him with this company. That is a provision frequently found in other such policies, but it is not what this policy says, and we cannot rewrite the policy by construction.

Certainly, we cannot construe this exceedingly ambiguous language in favor of the company. By hypotheses, this policy applied, both on the date the policy was delivered and also on the date the International tractor was leased, to "all covered automobiles," for a "covered automobile" is, necessarily, one to which the policy applies. Giving this provision its literal meaning, a "newly acquired" vehicle is a "covered automobile," even though it does not replace a "described covered vehicle."

Many of the policies involved in the cases hereinafter cited extended the coverage therein to a vehicle the "ownership" of which was "newly acquired." This policy does not so state. We are, therefore, not required in this case to determine whether the term "ownership," so used, would demand that the insured acquire the absolute ownership of, or the registered title to, the vehicle in order to bring it within the term "newly acquired," as used in this policy. The term here used is "newly acquired * * * during the policy period." The purpose of this provision is to limit the extension of the coverage to a vehicle acquired after the issuance of the policy. Insurance Co. v. Shaffer, supra; 7 Am.Jur.2d, Automobile Insurance, § 101 (1963); Annot., 34 A.L.R.2d 936, 940 (1954). Thus, it would not, in absence of the ambiguity above noted, apply to a retired vehicle still owned by the insured on the date the policy was issued and thereafter repaired by him and returned to service.

In the present case, if the International tractor was "acquired," within the meaning of this policy, it was "newly acquired." The complaint alleges that the International tractor was leased by the plaintiff from the owner thereof for a fixed period of 21 days, beginning after the issuance of the policy. By the express terms of the lease agreement, the plaintiff undertook to return this tractor to the lessor "in the same condition," ordinary wear and tear and certain specified risks excepted. The lease agreement did not authorize either party thereto to terminate it at will. Therefore, by this agreement, the plaintiff acquired the legal, non-terminable right to use the vehicle as if he were its absolute owner for the specified period. This circumstance distinguishes the present case from a mere temporary, gratuitous loan of a vehicle terminable at the will of the lender, or a mere gratuitous, temporary exchange of vehicles belonging to the insured and a friend, which was the case in Clarno v. Gamble-Robinson Co., 190 Minn. 256, 251 N.W. 268 (1933). It is a matter of common knowledge, of which we may take judicial notice, that today it is not unusual for motor vehicles to be leased for specified periods. If the defendant company did not intend its policy to cover such a leased vehicle, it could easily have so stated. In the silence of the policy upon this question, we conclude that the International tractor was an "acquired" motor vehicle within the meaning of this policy, and, consequently, a "newly acquired" one.

Assuming, for the sake of argument, that the above mentioned, ambiguous, alternative provision in paragraph (b)(i) of the definition of " covered automobile" is not...