State Farm Mut. Auto. Ins. Co. v. Western Cas. & Sur. Co.

Decision Date13 March 1972
Docket NumberNo. 56815,56815
Citation477 S.W.2d 421
PartiesSTATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Plaintiff-Appellant, v. WESTERN CASUALTY AND SURETY COMPANY and Richard Sphar, Defendants-Respondents, Ira Sphar et al., Defendants.
CourtMissouri Supreme Court

Miller, Fairman, Sanford, Carr & Lowther, Irven L. Friedhoff, Springfield, for plaintiff-appellant.

Keith V. Williams, Springfield, for defendant-respondent Western Casualty & Surety Co.

Haseltine & Springer, Gregory K. Johnson, Kerry L. Montgomery, Springfield, for defendant-respondent Richard Sphar.

William H. Sanders, amicus curiae, David C. Trowbridge, James S. Helms, John A. Magers, Kansas City, for amicus curiae; Blackwell, Sanders, Matheny, Weary & Lombardi, Kansas City, of counsel.

FINCH, Chief Justice.

This is an appeal from a judgment declaring that a policy of State Farm Mutual Automobile Insurance Company, issued on a 1964 station wagon owned by Ira Sphra, provided coverage under its 'nonowned automobile' clause on a 1967 Chevrolet driven by Ira's son Richard and that no coverage was provided for defendant Sphar under the garage policy issued by Western Casualty and Surety Company to Ray Chevrolet Company, the owner of the 1967 Chevrolet. 1

The judgment of the Circuit Court was affirmed on appeal by the Springfield Court of Appeals (now Missouri Court of Appeals, Springfield District). Thereafter, the case was ordered transferred to this Court pursuant to Art. V, § 10 of the Constitution of Missouri, 1945, V.A.M.S., and is now decided by us the same as if it came on direct appeal. We affirm.

Sometime in June or July, 1967 (the parties did not more specifically fix the date), Ira and Richard Sphar drove from their home in Springfield to Licking, Missouri, in a 1964 station wagon designated as the 'owned' automobile in State Farm's policy. It was taken to Ray Chevrolet to be checked because the transmission was 'acting up,' and also possibly to explore trading for a new automobile. Alva Ray, the President of Ray Chevrolet Company, was a brother-in-law of Ira Sphar and Sphar had purchased cars there on previous occasions.

The station wagon was left at Ray Chevrolet and the Sphars returned home in a demonstrator automobile. Shortly thereafter, Ira Sphar decided to trade his station wagon and Richard Sphar talked on the telephone to Mr. Ray's son at Licking and ordered a new car. Subsequently, Ira Sphar returned to Licking, where he endorsed the title to the station wagon and also signed a blank chattel mortgage which he left with Mr. Ray. It was agreed that Mr. Ray would sell the station wagon for the best price obtainable. The demonstrator was returned by Sphar at that time and in lieu thereof he took possession of a 1967 Chevrolet belonging to Ray Chevrolet Company.

The station wagon was sold by Ray Chevrolet on July 24, 1967, but Sphar did not immediately purchase a new automobile. The evidence is not very clear as to just what car Sphar was going to buy, and it is uncertain whether he ever contemplated buying the 1967 Chevrolet which he was driving. It was not the car which Richard had ordered from Mr. Ray's son, and there was some testimony that Mr. Ray had determined that he was going to put Sphar in a 1968 rather than a 1967 model car. In any event, the 1967 Chevrolet was never transferred to Sphar. However, he and his family continued to use it as a family car until Richard had the collision on August 31, 1967. Richard drove it to school and testified he put several thousand miles on it.

Three persons brought suit for damages because of claimed negligence on the part of Richard in the August 31, 1967, collision. Thereafter, State Farm brought this action against the Sphars, Western, Ray Chevrolet, and the three accident claimants seeking a declaration of the rights and liabilities of the parties in relation to the State Farm and Western insurance policies.

The trial court decided that coverage of the 1967 Chevrolet was provided under the 'non-owned automobile' clause of the State Farm policy, and the first question we must decide is the propriety of that conclusion.

The pertinent portion of the policy referring to coverage on 'non-owned' automobiles provided in part as follows: 'If the named insured * * * during the policy period * * * owns an automobile covered by this policy * * * such insurance as is afforded by this policy with respect to the owned automobile * * * applies to the use of a non-owned automobile * * *. Non-Owned Automobile--means an automobile * * * not (i) owned by, (ii) registered in the name of, or (iii) furnished or available for the frequent or regular use of the named insured, * * * other than a temporary substitute automobile.' Clearly, the 1967 Chevrolet was not owned by Ira Sphar, nor was it registered in his name. The only real question is whether it was 'furnished or available for the frequent or regular use' of the Sphars so as to exclude coverage under (iii) of the above provision.

State Farm's policy was intended basically to provide coverage on one designated vehicle (the 1964 station wagon) in return for the payment of a premium based on single car coverage. However, the policy does contain clauses which provide limited additional coverage for that single premium. One such instance is in the case of a 'temporary substitute automobile' which is defined in the policy as follows: 'Temporary Substitute Automobile--means an automobile not owned by the named insured or his spouse while temporarily used as a substitute for the described automobile when withdrawn from normal use because of its breakdown, repair, servicing, loss or destruction.' This provision is consistent with the basic idea of insuring one automobile for one premium because the car designated in the policy is out of service temporarily and in lieu thereof the company agreed to provide coverage on the temporary substitute. When a vehicle qualifies under the above provision, it becomes an 'owned' automobile for insurance purposes under the terms of the policy.

Although the trial court did not rely on this substitute automobile provision, the Sphars claim that it is applicable to Richard's accident. We disagree because the occasion for use of the 1967 Chevrolet did not arise out of the 'breakdown, repair, servicing, loss or destruction' of the station wagon. Instead, it resulted from the sale of the station wagon and the delay by Sphar in deciding the question of what new car to buy. For this reason, the 'temporary substitute automobile' clause as it is now written is not applicable.

Another instance of additional coverage is provided by the policy provision with respect to operation of 'non-owned' automobiles. This is the clause on which both the trial court and the Court of Appeals relied in holding the State Farm policy applicable. The effect and purpose of such a clause is well stated in a statement with reference to 'drive other cars' provisions in an Annotation in 86 A.L.R.2d 937, 940, as follows: 'The purpose of the 'drive other cars' provision in an automobile liability policy is to cover occasional or incidental use of other cards without the payment of an additional premium, but to exclude the habitual use of other cars, which would increase the risk on the insurance company without a corresponding increase in the premium.' In order to thus limit this additional coverage in State Farm's policy it provided that this additional coverage would not be applicable to a non-owned automobile 'furnished or available for the frequent or regular use of the named insured * * * other than a temporary substitute automobile.'

In deciding whether a non-owned automobile has been furnished or available for frequent or regular use, some courts have held that such question is to be determined solely or at least primarily upon the basis of the purpose for which the non-owned automobile was furnished, rather than on the quantum of its use. Cotton States Mutual Ins. Co. v. Falls, 114 Ga.App. 812, 152 S.E.2d 811. This was the basic theory upon which this case was affirmed by the Springfield Court of Appeals. Other courts have decided the question of applicability of the exclusion on the basis of length or type of use rather than purpose for which the car was furnished. Hartford Accident & Indemnity Co. v. Hiland, 7 Cir., 349 F.2d 376. We have considered these and all the other cases cited in the various briefs which have been filed. Without detailing and discussing all of them, we conclude that we should not limit ourselves either to a test of merely determining motive or purpose or one of simply measuring length and extent of availability of use. Rather, each case should be decided on its own facts, and the court should take into consideration the type and length of use, the purpose for which the non-owned automobile was furnished, and any other pertinent facts, including a determination of whether the use and purpose was in harmony with or violative of the objective of the 'non-owned automobile' clause.

Ira Sphar and his family had possession of the 1967 Chevrolet at least during the period between July 24, 1967, when the station wagon was sold, and August 31, 1967, when the collision occurred. It appears likely that the use of the car was for some additional period because the evidence indicates that the demonstrator was returned and the 1967 Chevrolet picked up prior to the date when the station wagon was sold. If, during this period of six weeks or so, Ira Sphar had retained possession of his station wagon and had used it regularly, and if, during that same period, Sphar and his family had had possession and use of the 1967 Chevrolet on a daily and regular basis similar to the use which they made of the car in this case, it may be that the State Farm policy would not have provided coverage for the accident involving the 1967 Chevrolet which occurred on August 31, 1967. In that event, Sphar and his family would have been...

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