Southern Guaranty Ins. Co. v. Wales

• Decision Date: 06 February 1969
• Docket Number: 8 Div. 315
• Parties: SOUTHERN GUARANTY INSURANCE COMPANY v. Ruby B. WALES et al.
• Court: Alabama Supreme Court

Page 822

218 So.2d 822

283 Ala. 493

SOUTHERN GUARANTY INSURANCE COMPANY v. Ruby B. WALES et al.

8 Div. 315.

Supreme Court of Alabama.

Feb. 6, 1969.

Camp, Page, Williams, Utsey & Spurrier, Huntsville, for appellant.

Lusk & Lusk, Guntersville, for appellees Wales.

Clark E. Johnson, Jr., Albertville, for appellee Glassco.

BLOODWORTH, Justice.

This is an appeal from a decree of the circuit court of Marshall County, in equity, which found that complainant, Southern Guaranty Insurance Company, is obligated by the terms of its policy issued to respondents, Ruby Wales and James Wales, to defend them in two damage suits filed against them by respondent, Lolas Glassco, and to pay all damages recovered by her, within the policy limits.

On June 6, 1963 complainant issued its 'Family Combination Automobile Policy' to James Wales for the period from June 6, 1963 to June 6, 1964. The policy was renewed on June 6, 1964, to expire June 6, 1965. Nonpayment of premium resulted in the policy lapsing on June 6, 1965. However, it was reinstated effective July 1, 1965 for a twelve month period.

By the terms of the policy James and Ruby Wales are both insureds, and a 1963 Valiant automobile is listed therein under 'Item 4. Description of owned automobile or trailer.' In March, 1964, James Wales purchased a 1960 Ford pick-up truck.

On December 17, 1965, while driving the truck, Ruby Wales was involved in an accident with respondent Lolas Glassco. At the time of the accident James Wales was using the 1963 Valiant automobile, described in the policy. The insurer was not notified of the acquisition of the truck until after the accident.

Lolas Glassco filed suits against James Wales and Ruby Wales, seeking damages for bodily injury and damages to her property. Demand was made on complainant that it defend the Wales, and that complainant acknowledge it would be responsible for any judgments rendered against them within the policy limits.

The insurance company refused both requests and then instituted the instant suit for a declaratory judgment.

There are five assignments of error in the record. However, complainant's brief primarily directs our attention to the fifth assignment. Consequently, we limit our consideration to that particular assignment.

Complainant (Southern Guaranty) contends that the trial court erred in ruling that the truck owned by respondent, James Wales, which was involved in the accident while being driven by Ruby Wales, was an 'owned automobile' within the meaning of the policy issued by complainant to respondents Wales, and was therefore covered by that policy.

The coverage provisions applicable to this case read as follows:

'To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of:

A. bodily injury, sickness or disease, * * * hereinafter called 'bodily injury,' sustained by any person;

B. injury to or destruction of property, including loss of use thereof, hereinafter called 'property damage';

arising out of the ownership, maintenance or use of the owned automobile, * * *.'

Definitions, under Part I, states:

"named insured' means the individual named in Item 1 of the declarations and also includes his spouse, if a resident of the same household;

"owned automobile' means a private passenger, farm or utility automobile or trailer owned by the named insured * * *.'

Item 2 of the declarations provides:

'Unless otherwise stated herein, 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 the number of such automobiles described in Item 4.'

(The only automobile described in Item 4 was the 1963 Valiant.)

Condition 2 of the policy provides:

'PREMIUM: 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.' (Emphasis supplied) Condition 17 of the policy provides:

'17. Declarations: By acceptance of this policy, the insured named in Item 1 of the declarations agrees that the statements in the declarations are his agreements and representations, that this policy is issued in reliance upon the truth of such representations and that this policy embodies all agreements existing between himself and the company or any of its agents relating to this insurance.'

It is complainant's position that the acquisition of ownership of the 1960 Ford truck was not reported to the company during the policy period of its acquisition. Consequently, since there was no notice and no premium was collected, the truck is not entitled to coverage under the policy which complainant issued to respondent covering the 1963 Valiant.

Respondents contend that the 'owned automobile' clause does not limit coverage merely to the automobile described in the declarations of the policy, but that the language of that clause extends coverage to any automobile owned by the insured regardless of whether the insurance company was notified of the acquisition of that automobile. They also contend that none of the exclusions contained in the policy specifically exclude coverage of an automobile which is not described therein, and therefore respondent's truck is covered coming with the provisions of the 'owned automobile' clause.

A contract of insurance like all other contracts must be construed so as to give effect to the intent of the parties to the contract. This court and courts throughout the country are clear to the effect that where there is no ambiguity in the policy it must be enforced as written. Colonial Life & Accident Insurance Co. v. Collins, 280 Ala. 373, 194 So.2d 532.

In construing a policy we must avoid taking a single provision or sentence and attaching to it greater significance than is intended by the whole terms of the policy. North River Insurance Company v. Jackson, 278 Ala. 604, 179 So.2d 731. And, of course, any ambiguities contained in an insurance policy are to be resolved in favor of the insured. North River Insurance Company v. Jackson, supra.

The contract of insurance we are here concerned with is known as 'The Family Automobile Policy.' As pointed out in Mattox v. Pennsylvania Threshermen & Farmers' Mut. Cas. Ins. Co., 276 Ala. 172, 160 So.2d 458, it first began to appear in the automobile insurance field in 1956. The policy in this case seems to be couched in essentially the same language as the original policies which have been in use since 1956. (See, the historical discussion in Mattox, supra.)

Several cases have been cited to us from other jurisdictions which we believe are dispositive of the issue in the instant case.

In Pennsylvania Threshermen & Farmers' Mut. Cas. Ins. Co. v. Traister (Fla.App., 1965), 173 So.2d 153, plaintiff purchased automobile insurance from the defendant covering a six month period which September 8, 1961. During that time plaintiff owned a Buick automobile which was listed on the policy. On April 14, 1961 plaintiff purchased a truck, but did not notify the insurer. When the policy expired September 8, 1961 plaintiff renewed coverage on the Buick for a six month period terminating March 8, 1962. On February 12, 1962 plaintiff was involved in an accident while driving the truck. The insurer denied coverage on the truck.

Confronted with these facts, the Florida District Court of Appeals reversed the lower court decision which found that plaintiff was covered by the policy. The language of the policy in that case appears to be identical to the one before this court. Under the heading 'Conditions' it provided:

'If the named insured disposes of, acquires ownership of or replaces a private passenger, farm or utility automobile * * * 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.' (Emphasis supplied.)

The Florida court held that this language was not ambiguous and gave effect to its plain and obvious meaning. It held Notice must be given to the company during the policy period in which the additional vehicle is acquired in order to insure the additional vehicle.

We are convinced that the decision reached in Pennsylvania Threshermen & Farmers' Mut. Cas. Ins. Co. v. Traister, supra, is sound authority to follow in the instant case.

We also agree with the decision of the 8th United States Circuit Court of Appeals in Imperial Casualty & Indemnity Co. v. Relder, 308 F.2d 761 (8 Cir., 1962), in which that court held that no ambiguity exists in a clause precisely like that quoted above...