Nationwide Mutual Insurance Company v. Akers

• Decision Date: 04 January 1965
• Docket Number: No. 9536.,9536.
• Citation: 340 F.2d 150
• Parties: NATIONWIDE MUTUAL INSURANCE COMPANY, a corporation, Appellee, v. Philip AKERS, an infant under the age of twenty-one years, Dorothy Akers, Charlotte Smith, Johnny Akers, Jonathon Akers, an infant under the age of twenty-one years, Charlotte Y. Smith, Administratrix of the Estate of Willie Mae Akers, Deceased, and Edward Henry Smith, Appellants.
• Court: U.S. Court of Appeals — Fourth Circuit

340 F.2d 150 (1965)

NATIONWIDE MUTUAL INSURANCE COMPANY, a corporation, Appellee, v. Philip AKERS, an infant under the age of twenty-one years, Dorothy Akers, Charlotte Smith, Johnny Akers, Jonathon Akers, an infant under the age of twenty-one years, Charlotte Y. Smith, Administratrix of the Estate of Willie Mae Akers, Deceased, and Edward Henry Smith, Appellants.

No. 9536.

United States Court of Appeals Fourth Circuit.

Argued September 30, 1964.

Decided January 4, 1965.

H. Lee Kanter, Norfolk, Va. (Kanter, Kanter & Sachs, Norfolk, Va., on brief), for appellants.

E. Pryor Wormington, Norfolk, Va. (Rixey & Rixey, Norfolk, Va., on brief), for appellee.

Before SOBELOFF, Chief Judge, and HAYNSWORTH and BOREMAN, Circuit Judges.

BOREMAN, Circuit Judge.

The Uninsured Motorist Law of Virginia requires that all automobile liability insurance policies issued in the State shall contain an endorsement indemnifying the insured for injury caused by an uninsured motor vehicle. Code of Va., sec. 38.1-381(b) (Michie 1953 as amended). In the present controversy Nationwide Mutual Insurance Company (hereinafter Nationwide) brought an action for declaratory judgment to determine the coverage of an uninsured motorist endorsement contained in a family automobile policy issued to George O. or Daisy Kessler.

The pertinent facts are these. The original policy of insurance was issued by Nationwide to the Kesslers on February 4, 1961, to expire on April 30, 1961. The policy contained the usual liability provisions covering personal injury and property damages and included an uninsured motorist endorsement. Two automobiles owned by Kessler, a 1960 Ford Galaxie and a 1958 Ford Fairlane 500, were listed on the declaration sheet which was part of the policy.

On February 11, 1961, Kessler traded the 1958 Ford to Edward Henry Smith, a defendant, for a 1959 Mercury and $250 in cash which Smith was unable to pay at the time. Smith and Kessler both knew that their signatures assigning the certificates of title for the two cars had to be acknowledged under Virginia law. With this in mind they visited a notary public on the day of the trade. Smith signed the certificate of title to the 1959 Mercury, acknowledged his signature before the notary and gave the title to Kessler. At the same time Kessler signed the certificate of title to the 1958 Ford, reserving a lien thereon for the $250, and the acknowledgment of his signature was duly notarized but whether or not Kessler gave the certificate of title to Smith was disputed. Kessler testified that he gave Smith the title at that time but Smith denied that he ever received it. As this was the only question of fact to be decided, the lower court submitted it to the jury by a special interrogatory. The jury found that Kessler had not delivered the title to Smith. However, the evidence does show that Smith took possession of the 1958 Ford on the day of the trade and used the car as his own until it was involved in a wreck on April 8, 1961.

Sometime between February 11 and March 17, 1961, Kessler purchased a 1957 Ford Fairlane for on March 17 Kessler telephoned the Nationwide agent requesting him to delete the 1958 Ford from his insurance policy and to substitute the 1957 model. As was customary when one automobile was to be substituted for another, the agent issued a replacement policy and canceled the original. The replacement policy, issued on March 17, listed on the declaration sheet the 1960 Ford Galaxie and the 1957 Ford Fairlane and contained the same liability provisions, the same uninsured motorist endorsement and the same expiration date, April 30, 1961, as the original policy. The replacement policy is the one involved here as it was in effect on April 8, 1961.

While driving the 1958 Ford on April 8, Smith was involved in an accident in which one of his passengers was killed and Smith, his wife and all other passengers were injured. To recover for their injuries and the wrongful death, Smith and the others instituted several actions in the District Court at Norfolk, Virginia, against Jerry Arlen Estep, the driver of the other car. Pursuant to the Virginia Uninsured Motorist Law, Code of Va., sec. 38.1-381(e) (Michie 1950 as amended), copies of the complaints were served on Nationwide. The complaints alleged, inter alia, that the 1958 Ford was an "insured automobile" within the meaning of the uninsured motorist endorsement in the replacement policy issued to Kessler and the car driven by Estep was an "uninsured automobile" under Virginia law. Nationwide denied liability and procured a stay of the proceedings in those actions until it could prosecute to a conclusion this declaratory judgment action.

Nationwide concedes that Estep was driving an "uninsured automobile" within the terms of the Virginia statute and that Estep's negligence was the cause of the accident, but asserts that it was not liable to the deceased passenger or any of the injured parties because Kessler did not own the 1958 Ford at the date of the accident as required by the policy, Smith was not a permissive user of the 1958 Ford as required by the policy, and the policy issued to Kessler on March 17 did not cover the 1958 Ford as it was not listed on the declaration sheet. Defendants contend that under the Virginia law Kessler was still the legal owner of the 1958 Ford as he had not delivered the certificate of title to Smith as the law required, that Smith was using the car with Kessler's permission, and that the uninsured motorist endorsement contained in the policy covered any automobile owned by Kessler and registered in Virginia.

The District Court determined that. Kessler was the legal owner of the 1958 Ford as title had not been delivered to Smith and that Smith was a permissive user within the meaning of the policy, but held that Nationwide was not liable because the policy in its entirety provided coverage only to the automobiles described in the declarations. This appeal followed.

For the purposes of this decision and in view of our ultimate conclusions with reference to limited policy coverage, we shall assume the correctness of the District Court's determination that, at the time of the accident, Kessler was the owner of the 1958 Ford and Smith was using it with Kessler's permission. We turn our attention to the remaining question — Was the 1958 Ford an "insured automobile" within the terms of the uninsured motorist endorsement which is a part of the policy issued to Kessler by Nationwide? We conclude, as did the District Court, that the question must be answered in the negative.

COVERAGE OF UNINSURED MOTORIST ENDORSEMENT

Defendants contend that the 1958 Ford was an "insured automobile" by the language of the insuring agreements in the uninsured motorist endorsement. The language on which they rely is found in the following policy provisions:

"II. DEFINITIONS

"(a) Insured. The unqualified word `Insured\' means:

"(1) the Named Insured and, while residents of the same household, his spouse and the relatives of either;

"(2) any other person while occupying an insured automobile;

* * * * *

"(b) Insured Automobile. The term `insured automobile\' means:

"(1) an automobile which is registered in Virginia and which is owned by the Named Insured or by his spouse if a resident of the same household;

"(2) an automobile while temporarily used as a substitute for an insured automobile as described in subparagraph (1) above, when withdrawn from normal use because of its breakdown, repair, servicing, loss or destruction; or

"(3) any other automobile while being operated by the Named Insured, or by his spouse if a resident of the same household;

but the term `insured automobile\' shall not include:

"(i) under subparagraphs (1) and

(2) above, an automobile unless being used by or with the permission of the Named Insured or his spouse if a resident of the same household; or

`(ii) under subparagraphs (2) and (3) above, an automobile owned by the Named Insured or by any resident of the same household."

Neither party questions the fact that the defendants are insured under the "omnibus clause" in paragraph (a) (2) above provided they were occupying an "insured automobile."¹

It is the defendants' position that under paragraph (b) (1) any automobile then owned by Kessler and registered in Virginia was an "insured automobile," and as Kessler was the legal owner of the 1958 Ford at the time of the accident Smith was an insured driver. Nationwide on the other hand contends that the insuring agreement above must be construed with other provisions of the policy in which the uninsured motorist endorsement is incorporated and, when read and considered together, coverage is restricted to those automobiles described in the declarations. We think Nationwide is right.

The endorsement along with other applicable clauses and provisions constituted the contract of insurance between Nationwide and Kessler. To construe each clause or endorsement in isolation and without reference to the other policy provisions would do violence to basic contract law for insurance contracts, like other contracts, must be read and construed as a whole and not piecemeal. State Farm Mut. Auto. Ins. Co. v. Justis, 168 Va. 158, 190 S.E. 163 (1937); 29 Am.Jur., Insurance, sec. 250 (1960). Moreover, the endorsement is not a complete contract in itself as the defendants seem to contend. Nowhere does it show the parties to the agreement, the subject matter of the contract to which protection is extended, the period of time covered by the policy, or the amount of consideration to be paid for the protection provided. See 29 Am. Jur., Insurance, sec. 192 (1960). Only the declaration sheet of the policy reveals this information, yet the defendants argue that the declaration sheet and other provisions of the policy do not apply to the uninsured motorist endorsement.

It is apparent from the endorsement that the parties intended other provisions in the policy to...