Inghram v. Dairyland Mut. Ins. Co.

• Citation: 178 N.W.2d 299
• Decision Date: 23 June 1970
• Docket Number: No. 53957,53957
• Parties: Robert Louis INGHAM, A Minor by his Father, Next Friend and Conservator of his Property, Louis L. Inghram, and by Louis L. Inghram, Individually, Appellees, and Francis A. Rohif, Appellee, v. DAIRYLAND MUTUAL INSURANCE COMPANY, Appellant.
• Court: Iowa Supreme Court

Page 299

178 N.W.2d 299

Robert Louis INGHAM, A Minor by his Father, Next Friend and Conservator of his Property, Louis L. Inghram, and by Louis L. Inghram, Individually, Appellees, and Francis A. Rohif, Appellee, v. DAIRYLAND MUTUAL INSURANCE COMPANY, Appellant.

No. 53957.

Supreme Court of Iowa.

June 23, 1970.

Rehearing Denied Sept. 2, 1970.

Elliott R. McDonald, Jr., of McDonald & McDonald, of Davenport, for appellant.

John J. Carlin, of McCracken & Carlin, Davenport, for appellee, Francis A. Rohlf.

Robert A. Van Vooren and Thomas N. Kamp, of Lane & Waterman, Davenport, for appellees, Robert Louis Inghram, a Minor by his Father, Next Friend and Conservator of his Property, Louis L. Inghram, and by Louis L. Inghram, Individually.

RAWLINGS, Justice.

This appeal stems from an adjudication of law points in a proceeding initiated by plaintiff Francis A. Rohlf against defendant Dariyland Mutual Insurance Company. Trial court held Dairyland liable, under the automatic coverage clause of an automobile liability insurance policy, for failure to defend Mr. and Mrs. Rohlf in a negligence action brought against them. From final dispositive adjudication Dairyland takes appeal. We reverse.

Although the Inghrams are designated plaintiffs-appellees, Francis A. Rohlf defendant-appellee, and Dairyland Mutual Insurance Company defendant-appellant, Rohlf will be here dealt with as plaintiff, Dairyland as defendant.

The undisputed factual situation presented will be set forth in chronological order as best determined from a complex record.

December 29, 1963, Dairyland issued to Francis Allen Rohlf, the automobile liability policy in question, by which coverage was provided for a new 1963 Oldsmobile. The policy was thereafter renewed quarterly to and including January 6, 1965.

April 19, 1964, Rohlf replaced the 1963 vehicle with a 1964 Oldsmobile. No notice thereof was ever given Dairyland within 30 days after receipt of the replacement or otherwise.

September 7, 1964, Rohlf acquired another 1964 automobile of like make, replacing the one purchased April 19, 1964. Again no notice relative to this acquisition was given Dairyland within 30 days after purchase of the newly acquired car.

January 6, 1965, the second 1964 Oldsmobile, then operated by Mrs. Rohlf was involved in an accident which resulted in injury to Robert Louis Inghram, a minor pedestrian.

January 7, 1965, Dairyland commenced an investigation relative to the accident.

February 26, 1965, a 'Non-Waiver Agreement' was signed by Mr. and Mrs. Rohlf.

March 5, 1965, Dairyland gave notice to the Rohlfs it would not defend in any action commenced by reason of the accident, due to absence of policy coverage.

April 26, 1965, Inghrams commenced an action against Mr. and Mrs. Rohlf for damages resulting from the January 6, 1965, incident.

May 5, 1965, plaintiff filed a petition for declaratory judgment against Dairyland. Trial court sustained Dairyland's subsequent motion to dismiss because of failure by insured to give notice within 30 days after acquisition of the replacement vehicles. Leave was granted plaintiff to amend.

July 9, 1965, Rohlf filed amendment to the declaratory action, thereby seeking reformation of the policy, invoking estoppel against Dairyland because of failure to defend in the negligence action, and asking benefit of indemnity. Various motions were later filed.

October 13, 1966, trial court overruled Dairyland's motion for a stay of the Inghram v. Rohlf case, pending final adjudication in the declaratory proceedings.

October 18, 1966, trial of the negligence action commenced resulting in a $13,274.84 verdict for Inghram.

January 3, 1967, Rohlf moved for a separate adjudication of law points, to the effect Dairyland had a duty to defend in the negligence case which it unjustifiably refused to perform. As disclosed, infra, this was apparently superseded by a subsequent like motion.

January 7, 1967, an amendment to the adjudication of law point motion was filed by Rohlf alleging the insurer accepted renewal premiums, intended to provide coverage for any sole vehicle owned by the insured, and asked that a policy accordingly issue retroactively. Trial court did not rule on these issues so they are not here involved. See Bartels v. Hennessey Bros., Inc., Iowa, 164 N.W.2d 87, 92, and 5 C.J.S. Appeal and Error § 1460, page 634.

January 10, 1967, trial court sustained Dairyland's motion to dismiss the Rohlf petition for declaratory judgment as amended.

January 16, 1967, Rohlf filed a recast petition for declaratory judgment. A motion to dismiss as to this pleading was overruled March 13, 1967.

The same day Rohlf, for some undisclosed reason, filed a second motion for adjudication of law points, deemed to be a replacement for that filed January 3, 1967, He thus requested Dairyland be adjudged to have been under duty to defend in the negligence action, refused to do so, and by reason therof is estopped from raising any policy defense.

August 29, 1967, trial court entered a final adjudication in the law point action, adverse to Dairyland, from which this appeal is taken.

Errors assigned are, trial court erred in holding, (1) the policy provided coverage for the January 6, 1965 accident; (2) Dairyland had a duty to defend based upon allegations of the pleadings filed by Inghrams in their action against the Rohlfs; (3) Dairyland's failure to defend in that case estopped it from raising policy defenses; (4) Dairyland acted in bad faith, making it liable for entirety of the verdict against Rohlfs, and their attorneys' fees.

These assignments will not be separately considered.

I. We are satisfied that in holding as it did, trial court was erroneously persuaded to adopt the views expressed in Palmer v. Sunberg, 71 Ill.App.2d 22, 217 N.E.2d 463, and Sims v. Illinois National Casualty Co., 43 Ill.App.2d 184, 193 N.E.2d 123.

An examination of these and other like cases reveals they are factually distinguishable from that with which we are here concerned.

Even more significantly, they stand upon the Potential liability as disclosed by the pleadings theory, not here applicable, and attendant Unjustified refusal to defend. See in that regard, 7A Appleman, Insurance Law and Practice, section 4683; 8 Blashfield Automobile Law and Practice, section 343.16; and 1 Long, The Law of Liability Insurance, sections 5.01--5.02.

The foregoing, however, fails to reach or resolve the problem at hand, and as revealed, infra, ignores other singularly pertinent principles.

II. The original policy specifically provided liability coverage as to a new 1963 Oldsmobile and stated, in material part, under 'Insuring Agreements': 'IV Automobile Defined, Trailers, Private Passenger Automobile, Two or More Automobiles, Including Automatic Insurance:

'(a) Automobile. Except with respect to Coverage C--2 and where stated to the contrary, the word 'Automobile' means:

'* * *

'(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.' (Emphasis supplied)

'Renewal Certificates' thereafter issued contained this statement: 'In consideration of the payment of the premium stated herein, the above numbered policy is hereby renewed for the appropriate period, subject to the conditions of this Renewal Certificate And to the original Insuring Agreements, Exclusions, and Conditions of the policy and any subsequent endorsements added thereto. Attached to and made a part of the above numbered policy of DAIRYLAND MUTUAL INSURANCE COMPANY.' (Emphasis supplied)

So the question posed relates directly to the effect of failure on the part of Rohlf to give Dairyland notice within 30 days after acquisition of a replacement vehicle.

We need not here consider the result of failure to notify the insurer relative to purchase of the first nonaccident involved automobile. Stated otherwise our review will be confined to the matter of the second car acquired as though it were the sole replacement.

At the threshold 7 Blashfield Automobile Law and Practice, section 316.6, states: 'An 'automatic insurance' clause usually requires notice of the acquisition of a new automobile to be given the insurance company within a specified time after delivery, although the parties may dispense with the necessity of such notice by an express provision in the policy.

'* * *

'Compliance with provisions as to notice of the acquisition of a new vehicle is considered not to be a condition precedent to the taking effect of the automatic coverage provision, but rather to constitute a condition subsequent. In such cases the protection accorded by the automatic coverage provision attaches immediately on delivery to the insured of the after-acquired vehicle, and liability of insured based on an accident in which such vehicle is involved is covered during the period in which notice is to be given, even if insured has not given the required notice to the company at the time of the accident.

'As a condition subsequent, however, compliance with the notice requirement is generally essential to the continuation of coverage, and where timely notice is not given there is no coverage with respect to accidents occurring after the prescribed period has elapsed, Regardless of whether or not the insurance company was prejudiced by reason of such failure.' (Emphasis supplied).

Then, with reference to an insurer's duty to defend, as related to the pleadings in an action brought against an insured, 7A Appleman, Insurance Law and Practice, section 4684, says: 'As we have seen, by the express terms of the policy the insurer is generally required to...