Thompson v. State Auto. Mut. Ins. Co.

• Citation: 122 W.Va. 551
• Decision Date: 22 October 1940
• Docket Number: No. 9057,9057
• Parties: Ralph Thompson v. State Automobile Mutual Insurance Company
• Court: Supreme Court of West Virginia

122 W.Va. 551

Ralph Thompson

v.State Automobile Mutual Insurance Company

No. 9057

Supreme Court of Appeals of West Virginia.

Submitted September 24, 1940.

Decided October 22, 1940.

Insurance

Though a provision in a policy of public liability and property damage insurance for automatic insurance for newly acquired automobiles is for the insured's benefit, nevertheless, such provision, together with all the other policy provisions, should be construed liberally in insured's favor.

Error to Circuit Court, Kanawha County.

Action by Ralph Thompson against the State Automobile Mutual Insurance Company, to recover on an automobile policy issued to Harmon A. Smith against whom plaintiff recovered a judgment for injuries. To review a judgment for the plaintiff, the defendant brings error.

Affirmed.

Rummel, Blagg & Stone, for plaintiff in error.

B. J. Pettigrew and A. P. Hudson, for defendant in error.

Riley, President:

State Automobile Mutual Insurance Company prosecutes error to a judgment of $10,000.00 in favor of Ralph Thompson, rendered by the Circuit Court of Kanawha County, under a suggestion based upon a $14,000.00 judgment of that court in a case in which Thompson was plaintiff and Harmon A. Smith was defendant.

The judgment against Smith is based upon personal injuries claimed to have been received by plaintiff when struck by a truck owned by the former. Execution was issued on this judgment, and plaintiff suggested the insurance company as being indebted to the insured, Smith, under a certain policy of public liability and property damage insurance issued to the latter on December 2, 1937. This policy, as originally issued, in an endorsement designated "FLEET SCHEDULE", lists the six automobiles covered, and describes each as having a tank body and classifies the use of each as "commercial"; and, by another endorsement, provides that the insurance afforded thereby shall cover the legal liability of Harmon Smith, United Fuel Gas Company and Mullins Gas Company, in the use, ownership, maintenance, or operation of the automobiles covered. An endorsement to the policy, dated March 9, 1938, effective at 12:01 a. m. standard time March 9, 1938, substitutes a truck described as:

Motor % Serial # Uses Indemnity Prem. #3-Intern'l. Tank 1600 Gal. 1936 21421 2903 Comm'l. 10-20-5 $82.65

for one of the originally insured trucks. (The truck so substituted is the one which struck and injured the plaintiff herein.)

The policy contains, among others, the following provision, the construction of which is in issue:

"2. AUTOMATIC INSURANCE FOR NEWLY ACQUIRED AUTOMOBILES. If the named Insured who is the owner of the automobile acquires ownership of another automobile, such insurance as is afforded by this policy applies also to such other automobile as of the date of its de- livery to him, subject to the following additional conditions: * * * (2) if the company does not insure all automobiles owned by the named Insured at the date of such delivery, insurance applies to such other automobile, if it replaces an automobile described in this policy and may be classified for the purpose of use stated in this policy, but only to the extent applicable to the replaced automobile; (3) the insurance afforded by this policy automatically terminates upon the replaced automobile at the date of such delivery; and (4) this agreement does not apply * * * (b) unless the named Insured notifies the company within ten days following the date of delivery of such other automobile * * *, nor (d) unless the named Insured pays any additional premium required because of the application of this insurance to such other automobiles. * * *."

At the time of taking out the insurance, Smith had nine trucks, three without and six with tanks. The latter group, covered by the policy, were at the time used in hauling drip gasoline from gas wells of the United Fuel Gas Company and Mullins Gas Company in Poca District, Kanawha County, to the refinery. The truck involved in the instant case was purchased on December 30, 1937. When purchased, it was not equipped with a tank. A license therefor was obtained on January 7, 1938, and thereafter it was used to a limited extent in general hauling. About March 5, 1938, one of the fleet of six trucks was so badly damaged that its chassis was cut up and sold for junk, and the tank therefrom installed on the truck which Smith had purchased in December. The latter truck was thereupon put in service, with the remaining five tank trucks, hauling drip gasoline. On March 8, 1938, while in such service, the last-mentioned truck struck the plaintiff. On the day following, the insurer, upon request of insured, executed the endorsement, heretofore referred to, making the substitution in the policy.

The insurance company takes the position that the substituted truck was not covered by the policy at the time of the accident. Both it and the plaintiff assert that the issue of coverage is dependent upon a proper interpretation of the automatic provision, heretofore set out in haec verba. Before giving further attention to this provision, it is well to consider some rules of construction.

In numerous cases, this Court has adopted and maintained as a cardinal rule of construction that clauses in insurance contracts should be construed liberally to the insured. Kanawha Investment Co. v. Hartford Steam Boiler Inspection, etc., Co., 107 W. Va. 555, 557, 149 S. E. 605; Hamlet v. American Fire Ins. Co., 107 W. Va. 687, 690, 150 S. E. 7; Cook v. Citizens Ins. Co. of Missouri, 105 W. Va. 375, 376, 143 S. E. 113, 61 A. L. R. 657; Shinn v. West Virginia Ins. Co., 104 W. Va. 353, 359, 140 S. E. 61; Booher v. Farmers' Mutual Fire Assn. of W. Va., 91 W. Va. 468, 113 S. E. 754; Bowling, Rec'r. v. The Continental Ins. Co., 86 W. Va. 164, 103 S. E. 285, 17 A. L. R. 376; Bond v. National Fire Ins. Co., 77 W. Va. 736, 88 S. E. 389; Downey, Rec'r. v. The National Fire Ins. Co., id. 386, 87 S. E. 487. This rule of construction, cardinal as it is, should not be applied to contravene the intention of the parties. In all events, "policies of insurance, like other contracts, must receive a reasonable interpretation consonant with the apparent object and plain intent of the parties." Pt. 3, Syl., Kanawha Investment Co. v. Hartford Steam Boiler Inspection, etc., Co., supra. However, once the intention is clearly ascertained, the policy is to be liberally construed in order to carry out that intention. 29 Am. Jur. 173, and cases cited in Note 1. In ascertaining the intention of the parties to an insurance contract, the test is what a reasonable person in insured's position would have understood the words of the policy to mean. Pt. 3, Syl., Merchants Mutual Casualty Co. v. Lambert, 90 N. H. 507, 11 Atl. (2d) 361, 127 A. L. R. 483; Watson v. Firemen's Ins. Co., 83 N. H. 200, 202, 140 Atl. 169.

Defendant's counsel rely upon the part of the automatic provision of the policy to the effect that, subject to certain named conditions, if the insured acquires another automobile, "such insurance as is afforded, by this policy applies also to such other automobile as of the date of its delivery to him * * *." (Italics supplied)....