Hughes v. Glens Falls Ins. Co.

• Decision Date: 04 June 1971
• Docket Number: No. 2,CA-CIV,2
• Citation: Hughes v. Glens Falls Ins. Co., 485 P.2d 597, 15 Ariz.App. 7 (Ariz. App. 1971)
• Parties: Henry HUGHES and Barbara Smith Hughes, husband and wife, Appellants, v. GLENS FALLS INSURANCE CO., a corporation, Appellee. 576.
• Court: Arizona Court of Appeals

Page 597

485 P.2d 597

15 Ariz.App. 7

Henry HUGHES and Barbara Smith Hughes, husband and wife, Appellants, v. GLENS FALLS INSURANCE CO., a corporation, Appellee.

No. 2 CA-CIV 576.

Court of Appeals of Arizona, Division 2.

June 4, 1971.

Rehearing Denied July 1, 1971.

Hillock & Richards by M. L. Hillock, Tucson, for appellants.

Lesher & Scruggs, P.C. by John A. Wasley, Tucson, for appellee.

HOWARD, Judge.

This is an appeal from an order of involuntary dismissal entered by the trial court below.

The facts as stipulated to by the parties on appeal are as follows. ¹ On December 29, 1962, Barbara Smith Hughes was injured while riding in a 1955 Chevrolet sedan owned by one M. J. Stegall, and driven by his son. At the time of the accident, Stegall owned a family automobile policy issued by the appellee, Glens, Falls Insurance Company. Stegall testified that he had had liability insurance with appellee for several years through the Rottman Insurance Agency, and that the policy in question was renewed or reissued on December 8, 1962 for a period of one year by the Rottman Insurance Agency of Willcox, Arizona. Shortly after Stegall purchased the 1955 Chevrolet and in July or August of 1962, he advised the Rottman Agency that he had acquired the 1955 Chevrolet and asked if it could be added to his policy which was in effect then and which only described a 1962 Dodge Dart automobile. Although Stegall was willing to pay any additional premiums called for, he was advised by Rottman that the 1955 Chevrolet could not be added to this policy. Stegall did not feel or believe when he left the Rottman Agency that he had obtained liability coverage for the operation of the Chevrolet and he took no further steps to obtain liability coverage covering this automobile until after the accident occurred. Following the accident, Stegall gave notification to the Rottman Insurancy Agency and was told that he had no insurance coverage. When Stegall was sued by the appellants he did not initially ask the appellee to defend him and did not send to the appellee or any of its officers or agents the summons and complaint served upon him by appellants. Subsequently, the attorney for the appellants forwarded to the appellee a letter demanding that the appellee defend the personal injury action which had been filed against Stegall. This letter stated that entry of any default would be withheld for over thirty days to afford appellee an opportunity to defend the action and contained a copy of the summons and complaint. Shortly thereafter, appellee advised appellants' attorney that it would not undertake to defend the action stating that it had no obligation to do so. Thereafter, appellants obtained a $65,000 default judgment against Stegall.

This suit was brought against appellee to obtain payment on the insurance policy which appellants claim afforded coverage of the accident in question. Appellants appeal from the adverse judgment of the trial court.

The dispute in this case revolves around the interpretation of the insurance policy which was in existence at the time of the accident. The policy is entitled 'Family Automobile Policy.' Under Part One, Coverage A of the policy, the appellee agrees to pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury and '* * * arising out of the ownership, maintenance, or use of the owned automobile * * *'

The definitions under Part One of the policy describe 'owned automobile' as meaning 'a private passenger, farm or utility automobile or trailer owned by the named insured, and includes a temporary substitute automobile;'

As part of the insurance policy, there is included a 'daily report,' item 4 of which, under the head 'Description of Owned Automobile or Trailer,' describes only a 1962 Dodge Dart 4-door. Item 5 of this daily report further states 'The total number of private passenger, farm and utility automobiles owned on the effective date of this policy by the named insured does not exceed one, unless otherwise stated herein:'

Paragraph 2 of the conditions of the policy provides:

'2. If the named insured disposes of, acquires ownership of or replaces a private passenger, farm or utility automobile, or with respect to Part III, a trailer, he shall inform the company during the policy period of such change. Any premium adjustment necessary shall be made as of the date of such change in accordance with the manuals in use by the company. The named insured shall, upon request, furnish reasonable proof of the number of such automobiles or trailers and a description thereof.'

The appellee contends that since the 1955 Chevrolet was not listed as an owned automobile in the renewal policy it was not covered. In support of its position the appellee refers to the cases of Iowa National Mutual Insurance Company v. Fidelity and Casualty Company of New York, 256 Iowa 723, 128 N.W.2d 891 (1964); Preferred Risk Mutual Insurance Company v. Continental Insurance Company, 172 Neb. 179, 109 N.W.2d 126 (1961); Wise v. Strong, 341 S.W.2d 633 (Mo.App.1960). An examination of the cases cited by appellee reveals them to be inapposite. They do not deal with the effect of a renewal policy. In fact, in the case of Wise v. Strong, supra, the existence of the additional car was concealed from the insurer by the insured. In the case at hand the insured specifically asked for coverage of the 1955 Chevrolet, which coverage was rejected by the insurance agent.

In order to make a proper determination of this case, we find it necessary to first examine the effect of the refusal to insure the Chevrolet under...