Nationwide Mut. Ins. Co. v. Douglas

• Decision Date: 05 June 1979
• Docket Number: No. 20974,20974
• Citation: 255 S.E.2d 828,273 S.C. 243
• Court: South Carolina Supreme Court
• Parties: NATIONWIDE MUTUAL INSURANCE COMPANY, Appellant, v. Sally Shaw DOUGLAS, John W. Howard, III, as Administrator of the Estate of Janet C. Edmonds, deceased, Wilma Harkins Smith, Gordon M. Powell, James Mullinax d/b/a Greenwood Upholstery, Kevin C. Edmonds, Walter G. Gutman, Aetna Life & Casualty Insurance Co., Respondents.

Page 828

255 S.E.2d 828

273 S.C. 243

NATIONWIDE MUTUAL INSURANCE COMPANY, Appellant, v. Sally Shaw DOUGLAS, John W. Howard, III, as Administrator of the Estate of Janet C. Edmonds, deceased, Wilma Harkins Smith, Gordon M. Powell, James Mullinax d/b/a Greenwood Upholstery, Kevin C. Edmonds, Walter G. Gutman, Aetna Life &amp Casualty Insurance Co., Respondents.

No. 20974.

Supreme Court of South Carolina.

June 5, 1979.

F. Dean Rainey, Jr., of Rainey, McKay, Britton, Gibbes & Clarkson, Greenville, for appellant.

Cary C. Doyle, of Doyle & Cofield, Anderson, for respondent Aetna Life & Casualty Insurance Company.

NESS, Justice:

This declaratory judgment action was commenced by Nationwide Mutual Insurance Company to determine whether a policy extended coverage to an insured while operating a stolen vehicle. The trial judge sitting without a jury, concluded the insured was afforded coverage under the terms of her policy. We disagree and reverse.

Appellant Nationwide issued a policy to Janet Edmonds on her 1965 Oldsmobile. On March 31, 1976, Ms. Edmonds received a 1969 Pontiac as a gift from her husband. Although her husband purchased the car with knowledge it was "hot," there is no evidence that Janet Edmonds knew the vehicle was stolen.

Ms. Edmonds was killed in a head-on collision on April 5, 1976, while driving the Pontiac. The principle respondent in this suit is Aetna Life and Casualty which provided uninsured motorist coverage on the Chevrolet which collided with the Pontiac.

As the insured was not operating the automobile described in her policy, any coverage to be extended must be derived from Article VI of the Nationwide policy entitled "Use of Other Land Vehicles." The trial court concluded the insured was covered under any one of four separate categories in Article VI.

Initially, the trial court held coverage was afforded under paragraph (1)(a) of Article VI which extends coverage to the policyholder while operating "a land motor vehicle not owned or not stolen by the Policyholder, while temporarily being used as a substitute for the described automobile when withdrawn from normal use because of breakdown, repair, servicing, loss or destruction . . ." This was error.

There is no evidence that Ms. Edmonds was using the Pontiac as a temporary replacement for her Oldsmobile while the latter was withdrawn from normal use due to breakdown, repair, etc. While there was evidence that the Oldsmobile was not in optimum condition, it was operable at all times. The insured's husband testified he drove the car from Laurens to Columbia and used it for approximately six months following the wife's death. (Tr. p. 29).

Generally, under a temporary substitute automobile clause, a vehicle cannot qualify as a temporary substitute unless the automobile described in the policy is withdrawn from normal use on the date of the accident. Pennsylvania T. & F. Mutual Casualty Ins. Co. v. Robertson, 259 F.2d 389 (4th Cir. 1958); 7 Am.Jur.2d Automobile Insurance, § 103; 34 A.L.R.2d 936, 947-951; Erickson v. Genisot et al., 322 Mich. 303, 33 N.W.2d 803 (1948). However, it is not necessary that the "owned" car be completely disabled or actually under repair. Allstate Ins. Co. v. Aetna Casualty & Surety Co., 326 F.2d 871 (2d Cir. 1964); Midcontinent Casualty Co. v. West, 351 P.2d 398 (Okl.1959).

We do not believe the testimony that the insured's Oldsmobile had some mechanical problems was sufficient to establish it was withdrawn from normal use. Moreover, in order for coverage to be extended under a substitution provision, the use of the alleged substitute automobile must be Temporary. Central National Ins. Co. of Omaha v. Sisneros, 173 F.Supp. 757 (D.N.M.1959); 7 Am.Jur.2d, Automobile Insurance, § 104. Ms. Edmonds' husband testified that he gave the car to her and intended her to have title and ownership of it. (Tr. p. 35). The record is barren of any evidence that she was using the Pontiac temporarily. Accordingly, the Pontiac was not a temporary replacement vehicle and the trial court erred in holding that coverage was extended under this provision.

The trial court concluded that coverage was also provided under paragraph (1) (b) of Article VI of the Nationwide policy. Pursuant to that provision, coverage is extended when the policyholder is operating a motor vehicle, the "ownership of which is acquired by the Policyholder . . . which has not, except as a replacement, been the subject of such ownership for more than 30 days next preceding the occurrence." The intent of this automatic insurance clause is to provide temporary liability coverage for a newly acquired vehicle for up to 30 days after acquisition of ownership. See 7 Am.Jur.2d, Automobile Insurance, § 100. The trial court reasoned that since Janet Edmonds acquired ownership of the Pontiac less than 30 days prior to the accident, she was covered under paragraph (1)(b) of Article VI. We disagree.

Although Ms. Edmonds was in possession of the stolen Pontiac, she was not its "Owner " under the definition contained in the Motor Vehicle Financial Responsibility Act. Code § 56-9-20(11) (1976) defines an "owner" as "A person who holds the legal title of a motor vehicle . . ." Moreover, two prior decisions of this Court construing automatic insurance clauses appear to require actual ownership rather than an insurable interest. In Bankers Ins. Co. of Pennsylvania v. Griffin, 244 S.C. 552, 558, 137 S.E.2d 785 (1964), the Court stated:

"In the case of Robinson v. Georgia Casualty & Surety Co., 235 S.C. 178, 110 S.E.2d 255, it was said in regard to a similar clause providing for automatic coverage on a newly acquired automobile that such clause 'specifically, and in explicit language, requires that to be covered as a newly acquired automobile the automobile must be one acquired by the named insured. In other words to be covered as a newly acquired automobile, the vehicle must be one in which the named insured not only has an insurable interest he Must own the automobile.' " (Emphasis supplied).

In view of our conclusion that Janet Edmonds could not have acquired ownership of the stolen Pontiac, the trial court erred in holding that coverage was extended under this provision.

Next, the trial court construed the phrase "except as a replacement" in Article VI(1)(b) to eliminate not only the 30 day limitation on coverage but also the requirement that ownership be acquired. This construction was erroneous.

There is no apparent reason to require ownership in the case of an additional vehicle and dispense with it when a replacement vehicle is involved. In any event, it was error to characterize the Pontiac as a Replacement vehicle since the insured's Oldsmobile was still in her possession and operable.

Finally, the trial court held coverage was provided to the insured under paragraph (3) of Article VI which extends coverage to the policyholder while operating "any other land motor vehicle except a temporary substitute land motor vehicle while used by the Policyholder . . ." provided it is "(ii) not furnished for regular use to such Policyholder . . ." or "(iv) is not stolen."

The trial court concluded the language of (iv) was ambiguous because in two other paragraphs of Article VI, the exclusion applies to vehicles "stolen by the policyholder." It is not necessary for us to determine whether an ambiguity was created by paragraph (3)(iv) because we conclude coverage was excluded by paragraph (3)(ii) since the Pontiac was Furnished for the insured's regular use. As stated earlier, all the evidence indicates the stolen vehicle was a gift from the insured's husband; there is no indication that Ms. Edmonds' use of the Pontiac was temporary in nature.

We conclude the trial court erred in finding that coverage extended to Janet Edmonds under the terms of her Nationwide policy.

REVERSED.

LITTLEJOHN and RHODES, JJ., concur.

LEWIS, C. J., and GREGORY, J., dissent.

LEWIS, Chief Justice (dissenting):

I would affirm the order of the lower court upon the ground that the ownership requirements of the policy of insurance in question were met under the facts of this case and, therefore, dissent. While the lower court based its order on several grounds, the following from the order under appeal correctly sets forth the pertinent facts and legal conclusions which, in my opinion, require affirmance:

"This action was brought by the plaintiff (hereinafter referred to as 'Nationwide') pursuant to the provisions of Section 15-53-10, et seq. of the Code of Laws of South Carolina, 1976, seeking a Declaratory Judgment to the effect that its automobile liability insurance policy did not provide liability insurance coverage to its named insured, Janet Edmonds, with regard to an automobile accident occurring on April 5, 1976.

"The accident occurred on Highway 221 near Laurens, South Carolina, when a 1969 Pontiac automobile being driven by Janet Edmonds collided with a 1968 Chevrolet automobile owned by Gorden M. Powell and/or James Mullinax, d/b/a Greenwood Upholstery Co., and which was being operated by Wilma Harkins Smith. As a result of the collision, Wilma Harkins Smith and a passenger in her vehicle, Sally Shaw Douglas, received personal injuries and Janet Edmonds sustained personal injuries which resulted in her death. The defendant, Sally Shaw Douglas, has already instituted suit against the Estate of Janet Edmonds for personal injuries and that action is now pending in the Court of Common Pleas for Greenville County. Wilma Harkins Smith has also notified Nationwide of her claim for damages arising out of the automobile collision.

"In the present action, John W. Howard, III, as Administrator of the Estate of Janet Edmonds, has filed his Answer generally denying the allegations of the complaint and asserting that Nationwide's policy provided liability coverage. Wilma Harkins Smith has also filed her Answer denying the material allegations of the present action by Nationwide....