Stockberger v. Meridian Mut. Ins. Co.

Decision Date25 October 1979
Docket NumberNo. 3-278A46,3-278A46
Citation395 N.E.2d 1272,182 Ind.App. 566
PartiesDelbert J. STOCKBERGER, Appellant-Plaintiff, v. MERIDIAN MUTUAL INSURANCE COMPANY, Harvey Clarey (Sic ), Appellees-Defendants.
CourtIndiana Appellate Court

Jeffry G. Price, Peru, for appellant-plaintiff.

R. Kent Rowe, Paul M. Oleniczak, South Bend, for Meridian Mut. Ins. Co.

William J. Reinke, James E. McMahon, Thornburg, McGill, Deahl, Harman, Carey & Murray, South Bend, for Harvey Clary.

STATON, Judge.

Delbert J. Stockberger owned a 1960 pickup truck which was involved in an accident on August 22, 1974. When Meridian Mutual Insurance Company received Stockberger's accident claim, it denied insurance coverage on the truck. Stockberger filed a complaint on contract seeking damages against Meridian and Harvey Clary, d/b/a Rouch Agency. Additionally, Stockberger alleged that Clary was negligent. At the close of Stockberger's presentation of evidence, the trial court granted motions tendered by Meridian and Clary for judgment on the evidence, pursuant to Ind. Rules of Procedure, Trial Rule 50(A). The court found, as a matter of law, that Stockberger was not entitled to coverage and that Clary was not negligent.

Stockberger appeals. We affirm.

Stockberger's action against Meridian and Clary developed from the following factual situation. In October, 1973, Stockberger purchased a 1960 one-ton pickup truck and a 1952 pickup truck, both not operable and not licensed. Neither vehicle was insured. On February 11, 1974, Clary issued Stockberger a policy with Meridian to renew coverage on a 1963 1/2-ton pickup truck, effective from April 3, 1974 to October 10, 1974.

Stockberger, Clary, and other gentlemen in the community would often drink their morning coffee together at a coffee shop in Rochester. While they were having their morning coffee one day in May, 1974, Stockberger told Clary that the 1960 pickup was being repaired and would probably be ready for use in 2 weeks. Stockberger and Clary both testified that the conversation occurred, but their recollections of the discussion vary.

Stockberger insisted that he requested Clary to transfer coverage from the 1963 truck to the 1960 truck. He testified that Clary requested the serial numbers from the truck. Stockberger recalled checking for the numbers and was sure that he provided them to Clary at a later date. Clary's version of the conversation was that he advised Stockberger that the truck should be insured but nothing further was discussed about insurance coverage.

While the truck was being driven by Stockberger's wife, it was involved in a collision with another motor vehicle on August 22, 1974. Stockberger notified Clary of the accident, but Clary could not find any cards indicating coverage on the 1960 truck. Clary did refer the matter to Meridian. Meridian wrote Stockberger a letter on September 6, 1974 which denied coverage of the 1960 truck and stated that Meridian would not provide a defense for Stockberger in any legal actions arising from the collision.

The 1963 truck was in good condition and had been used as a second vehicle. When the 1960 truck was put into operation, the 1963 truck was parked in Stockberger's barn lot. Stockberger was not anxious to sell the 1963 truck at that time, but did sell it in April, 1976. After the accident with the 1960 truck, the 1963 truck was used.

At the time of the accident Stockberger had four vehicles insured through Clary, including the 1963 truck, but not all of the policies on these vehicles were with Meridian. Clary would procure insurance for his customers with any of several companies, depending upon the type of coverage desired. For example, Clary was not aware that Stockberger owned the 1952 truck until after the accident with the 1960 truck occurred.

The relevant provisions of the policy on the 1963 truck are set forth as follows:




"To pay for the Insured all sums which the Insured shall be legally obligated to pay as damages because of:

"A. bodily injury sustained by any person, and

"B. property damage,

"arising out of the ownership, maintenance or use of the described automobile or a non-owned automobile, and to defend any suit against the Insured for such damages, even if groundless, false or fraudulent; but the Company may make such investigation and settlement of any claim or suit as it deems expedient.


"1. To pay for direct and accidental loss of or damage to the described automobile or a non-owned automobile except by collision. For the purpose of this coverage, breakage of glass and loss caused by missiles, falling objects, fire, theft or larceny, explosion, earthquake, windstorm, hail, water, flood, malicious mischief or vandalism, riot or civil commotion, or colliding with a bird or animal, shall not be deemed to be loss caused by collision.


"2. To pay for damage by collision to the described automobile when such automobile is legally parked except at an automobile business, is not occupied by any person and is in the custody of the named Insured.


'Automobile' means a land motor vehicle, trailer or semitrailer, and includes its equipment and other equipment permanently attached thereto.

'Described automobile' means the private passenger or utility automobile described in the declarations, and also includes:

"2. a newly acquired automobile;

" 'Utility automobile' means an automobile with a load capacity of fifteen hundred pounds or less of the pickup body, sedan delivery or panel truck type.

" 'Newly acquired automobile' means a private passenger or utility automobile, ownership of which is acquired by the named Insured:

"1. during the policy period, or

during the last 30 days of the previous policy period and notice of the acquisition has been given to the Company within 30 days after its acquisition; if either it replaces an automobile described in the declarations of this policy or the Company insures all automobiles owned by the named Insured on the delivery date of the newly acquired automobile; provided, the named Insured shall pay any additional premium required because of the application of the insurance to such newly acquired automobile."

On appeal, the central issue Stockberger raises against Meridian is: was the policy ambiguous as to the qualifications of a replacement vehicle? He contends that the 1960 truck could not qualify as a replacement vehicle until the time that it was rendered operable for use on the highways. Therefore, he provided timely notice of acquisition to Clary during the conversation in May, 1974.

Meridian maintains that for purposes of the policy provisions the vehicle was acquired in October, 1973. Thus, the requisite 30-day notice of acquisition was not timely.

I. Automatic Coverage

An automatic insurance clause in standard automobile liability policies is for the insured's benefit, and

"is intended to meet the necessity for maintaining coverage in the situation arising from the recognized custom among insured owners of acquiring other cars by replacement and new purchases during the life of their policies, and to provide coverage for the newly acquired car at the earliest time the insured needs protection." (Footnotes omitted.).

12 G. Couch, Cyclopedia of Insurance Law § 45:184 (2d ed. 1964). If the policy requires that notice be given to the insurer within a specified time in order to continue coverage, it is mandatory. 7 Blashfield, Automobile Law and Practice § 316.6 (3rd ed. 1966).

This Court has not previously construed an automatic insurance clause for automobiles. However, courts in other jurisdictions have interpreted this type of provision. Two disparate lines of cases have developed.

The prevailing line of cases hold that the test of when an automobile is "newly acquired" for purposes of giving the requisite notice of acquisition is not when the vehicle is rendered operable but instead when it was acquired. Reciprocal Exchange v. Noland (8th Cir. 1976), 542 F.2d 462; Allstate Insurance Company v. Stevens (9th Cir. 1971), 445 F.2d 845; Williams v. Standard Accident Insurance Company (1958), 158 Cal.App.2d 506, 322 P.2d 1026; Illinois National Insurance Co. v. Trainer et al. (1971), 1 Ill.App.3d 34, 272 N.E.2d 58; Brown v. State Farm Mutual Automobile Insurance Co. (Ky.App.1957), 306 S.W.2d 836; Mahaffey v. State Farm Mutual Automobile Insurance Company (La.App.1965), 175 So.2d 905; Collard v. Globe Indemnity Co. (La.App.1951), 50 So.2d 838; Providence Washington Insurance Company v. Hawkins (Tex.Civ.App.1960), 340 S.W.2d 874.

The rationale behind these cases is that an automobile is an automobile, as the term is ordinarily understood. The fact that the automobile is not used on the highways while it is being repaired does not change its status as an automobile under the terms of the policy. Williams v. Standard Accident Insurance Company, supra. Interpreting the insurance policy as a whole, the Williams court found that the coverage was not limited to liability arising out of use and maintenance on the highway, but included an automobile being repaired and maintained while inoperable. Other terms of the policy, such as coverage resulting from fire or theft, have been held to indicate that the policy was intended for other than just highway use. Wisbey v. Nationwide Mutual Insurance Co. (1973), 264 Or. 600, 507 P.2d 17.

The court in Mahaffey v. State Farm Mutual Automobile Insurance Company, supra, found this construction to be consistent with the intent of the parties:

"(T)his provision was not intended to cover another automobile owned by the insured at the time the policy issued and used to replace the described vehicle. To hold otherwise, in a situation like the present (new motor put in an old automobile), would...

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