LaSalle Nat. Ins. Co. v. Popham

• Decision Date: 17 March 1972
• Docket Number: Nos. 1,2,No. 46693,3,46693,s. 1
• Citation: 188 S.E.2d 870,125 Ga.App. 724
• Parties: LaSALLE NATIONAL INSURANCE COMPANY v. Charles K. POPHAM et al
• Court: Georgia Court of Appeals

Page 870

188 S.E.2d 870

125 Ga.App. 724

LaSALLE NATIONAL INSURANCE COMPANY v. Charles K. POPHAM et al.

No. 46693.

Court of Appeals of Georgia, Division Nos. 1, 2, 3.

March 17, 1972.

Syllabus by the Court

1. The facts alleged in the petition clearly disclose that this was properly a case for declaratory judgment determining the question of coverage under an insurance policy so that the insurer might know whether it must afford a defense to the actions pending.

2. Where an automobile owned by the insured in a liability policy, but not described in the policy, was exchanged or traded for another, the newly acquired vehicle does not become a substitute for the vehicle described in the policy.

3. An SR-22 filing by an insurance company which provides that it is based upon the issuance of an owner's policy covering the subject's operation of a particularly described vehicle does not extend to his operation of other vehicles.

Charles Popham had been the owner of a 1963 Ford Falcon, insured under a liability policy issued by LaSalle National Insurance Company effective April 27, 1968, to April 27, 1969. He also owned a 1962 Chevrolet Impala, insured under a liability policy issued by Indiana Lumberman's Mutual Insurance Company, effective January 20, 1968, to January 20, 1969.

He had been involved with a DUI charge against him, and under the Financial Responsibility Law obtained an SR-22 filing by LaSalle National with the Department of Public Safety, effective April 26, 1968 to April 26, 1969, declaring that it had issued to Popham an owner's policy applicable to the 1963 Ford Falcon.

The Ford Falcon had previously been owned by Popham's half-brother, John Pilgrim, and on May 4, 1968 he returned it to Pilgrim. On the same date he tentatively traded the 1962 Chevrolet Impala to City Dodge for a 1966 Dodge, but did not close the trade by delivering the Chevrolet or by taking delivery of the Dodge until May 6, 1968. The conditional sale contract, however, was signed May 4, 1968 with a notation thereon 'Pending' til Monday.'

The Chevrolet had been financed by Avco Finance Company, and the balance of the indebtedness owing on it was paid off by City Dodge May 6, 1968. A warranty on the Dodge was issued and delivered to Popham by City Dodge May 6, 1968.

The liability policy on the Chevrolet was canceled by Indiana Lumberman's Mutual May 15, 1968, ostensibly for nonpayment of premium. Popham asserts that he had notified the company to cancel the policy shortly after he traded for the Dodge.

Relative to coverage each of the policies carried the following provision: '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 is covered by this policy, or the company insured 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 30 days following such delivery date; but such notice is not required under coverages A, B and Division One of Coverage C if the newly acquired automobile replaces an owned automobile covered by this policy . . .'

Coverage A provides for payment of such amounts, within policy limits, as the insured may become legally liable to pay for personal injury or for the death of another in the operation of the insured vehicle; Coverage A provides for payment of property damage, and Division 1 of Coverage C provides for the payment of certain medical expenses.

Popham contends that he intended that the Dodge replace the Ford Falcon and that he so notified LaSalle.

On May 17, 1968 Popham was driving the Dodge when it collided with a vehicle operated by Mrs. Ruby A. Mitchell, and she received fatal injuries.

On April 30, 1969, James H. Mitchell, Jr., as executor of the estate of Mrs. Ruby A. Mitchell, filed suit in DeKalb Superior Court against Popham, claiming damages for loss of the automobile, funeral and burial expenses. On the same date Mrs. Mitchell's children, James H. Mitchell, Jr., Cornelia Grace Hicks and Catherine Collings, filed suit in DeKalb Superior Court against Popham claiming damages for the loss of their mother's life.

Popham answered the two suits, and on April 30, 1969 filed a third party complaint against LaSalle National, alleging that it had issued a policy of liability insurance covering the occurrence in which Mrs. Mitchell lost her life, and that it had failed and refused to defend the action, although obligated by the terms of the policy to do so.

LaSalle National filed a suit for declaratory judgment in DeKalb Superior Court June 6, 1969, seeking to have the issue of coverage vel non resolved, and thus the issue of whether it must afford defenses in the pending actions, making the executor, Mrs. Mitchell's children and Popham parties defendant.

All parties defendant answered the suit for declaratory judgment, urging that because of the pendency of the third party complaint the suit for declaratory judgment could not be maintained, and asking that the suit be dismissed. A demand for jury trial was included.

Requests for admission were filed, and there was a trial of the declaratory judgment action in DeKalb Superior Court, at the conclusion of which the judge directed a verdict for the defendants therein. Judgment was entered on the verdict and from it the plaintiff, LaSalle National, appeals.

Errors enumerated are: (1) that the court erred in refusing to direct a verdict in favor of the plaintiff, and (2) that the court erred in directing a verdict for the defendants.

Swift, Currie, McGhee & Hiers, W. Wray Eckl, Hunter S. Allen, Jr., Atlanta, for appellant.

Jones, Bird & Howell, Arthur Howell, III, Peyton S. Hawes, Jr., Henning, Chambers & Mabry, Ward D. Hull, Atlanta, for appellees.

EBERHARDT, Judge.

1. The first issue raised involves the question as to whether this was a proper case for declaratory judgment, it being contended that since the insurer was already a party to the main suits by virtue of the third party complaint filed by the insured the issues could be adjudicated in those actions, that all rights of the insurer had accrued when the declaratory judgment action was filed, that the petition fails to disclose any undertainty as to what action LaSalle should take, and that the judgment would be an advisory judgment only. We do not agree.

The rule as to when an insurer may properly proceed for declaratory judgment is clearly stated in Nationwide Mut. Ins. Co. v. Peek, 112 Ga.App. 260, 145 S.E.2d 50: 'Where an insurer denies coverage under a particular policy and seeks to relieve itself of its obligation to defend a pending suit against an insured because of circumstances pleaded which cast doubt on the coverage of the policy as applied to those circumstances, there is such an immediacy of choice imposed upon it as to justify an adjudication by declaratory judgment.'

A similar holding was made in St. Paul Fire & Marine Ins. Co. v. Johnson, 216 Ga. 437, 117 S.E.2d 459, where it was pointed out that 'This presents not a remote or contingent future possibility of dispute but a real and imminent threat facing the insurance Company. In Maryland Casualty Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273, 61 S.Ct. 510, 512, 85 L.Ed. 826, in determining whether there exists a controversy within the meaning of the Federal Declaratory Judgment Act, which is similar to ours, the court stated: 'Basically, the question in each case is whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment. See Aetna Life Ins. Co. (of Hartford, Conn.) v. Haworth, 300 U.S. 227, 239-242, 57 S.Ct. 461, 463, 464, 81 L.Ed. 617, 620-622, 108 A.L.R. 1000. " Accord: Mensinger v. Standard Acc. Ins. Co., 202 Ga. 258, 42 S.E.2d 628; Georgia Cas. etc., Co. v. Turner, 86 Ga.App. 418, 71 S.E.2d 773; Parks v. Jones, 88 Ga.App. 188, 76 S.E.2d 449; Griffin v. Hardware Mut. Ins. Co., 93 Ga.App. 801, 92 S.E.2d 871; Buffington v. New Hampshire Fire Ins. Co., 104 Ga.App. 139, 121 S.E.2d 270; Dearhart v. Reserve Ins. Co., 108 Ga.App. 347, 132 S.E.2d 809, reversed on other grounds in 219 Ga. 699, 135 S.E.2d 378; Mock v. Darby, 109 Ga.App. 620, 137 S.E.2d 81; Ditmyer v. American Liberty Ins. Co., 117 Ga.App. 512, 160 S.E.2d 844; Stubbs v. State Farm Mut., etc., Ins. Co., 120 Ga.App. 750, 172 S.E.2d 441.

Professor Borchard, who drafted the Federal Declaratory Judgment Act, after which the various State Acts, including ours, is patterned, says that 'cases which have attracted most attention to the declaratory judgment are those in which a casualty company institutes an action against the insured, joining or not joining the injured parties, for a declaration that the company is not under a duty to defend or to pay any eventual judgment, because the injury or death is not within the coverage of the policy or because the company has some defense which exempts it.' He asserts as some of the reasons why the action is appropriate when there is a bona fide dispute as to coverage. 'By refusing to defend, the company loses all opportunity to contest the negligence of the insured or the injured person's right to recover, and exposes itself to a charge of and penalty for breach of contract. By defending, it incurs considerable expense and may waive the claim of immunity. It is therefore of exceptional importance to both insurer and insured, if not indeed to the injured person, to know at the earliest possible moment whether the policy covers the loss or not. The liability under the policy and the liability for negligence are indeed two separate transactions.' Borchard, Declaratory Judgments (2d Ed) pp. 646, 652.

We do not regard the cases of Rowan v. Herring, 214 Ga. 370, 105 S.E.2d 29,...