Underwriters at Lloyd's, London v. United Bank Alaska

• Decision Date: 27 November 1981
• Docket Number: No. 5402,5402
• Citation: 636 P.2d 615
• Parties: UNDERWRITERS AT LLOYD'S, LONDON, Trident Insurance Company, Limited; the Phoenix Greek General Insurance Company S.A.; Sphere Insurance Company Limited; Assicurazioni General SPA; Polaris Norske SJO Insurance Company Limited; Fenton Insurance Company Limited per Marlow Underwriting Agency, Appellants, v. UNITED BANK ALASKA, an Alaskan Banking Corporation, Appellee.
• Court: Alaska Supreme Court

Page 615

636 P.2d 615

UNDERWRITERS AT LLOYD'S, LONDON, Trident Insurance Company Limited; the Phoenix Greek General Insurance Company S.A. Sphere Insurance Company Limited; Assicurazioni General SPA Polaris Norske SJO Insurance Company Limited; Fenton Insurance Company Limited per Marlow Underwriting Agency, Appellants, v. UNITED BANK ALASKA, an Alaskan Banking Corporation, Appellee.

No. 5402.

Supreme Court of Alaska.

Nov. 27, 1981.

Lloyd B. Ericsson, Robert J. Ericsson, Martin, Bischoff, Templeton, Biggs & Ericsson, Portland, Or., Rand Dawson, Anchorage, for appellants.

Kenneth R. Lamb, Kenneth R. Lamb & Associates and Walter H. Garretson, Garretson & Jarvi, Anchorage, for appellee.

Before RABINOWITZ, C. J., and CONNOR, BURKE, MATTHEWS and COMPTON, JJ.

OPINION

MATTHEWS, Justice.

On August 13, 1978, an airplane piloted by Ted Koerber and owned by Richard Burnette was totally destroyed in a crash. The aircraft had been purchased by Burnette in 1977 from Lynwood Marshall. ¹ Apparently, the aircraft was regularly kept at the same airfield where Marshall's business was located. Effective March 8, 1978, the appellant insurance companies (Underwriters) issued a policy of hull insurance under which Marshall was the named insured and under which various aircraft, several of which were not owned by Marshall, were specifically described, including that owned by Burnette. Appellee United Bank of Alaska was listed as the lienholder of Burnette's aircraft.

Just what the agreement between Burnette and Marshall was as of March 8, 1978, is not reflected by the record. However, it is clear that Burnette orally leased the plane to Marshall at some point so that Marshall could use it on a Bureau of Land Management contract which began on May 3, 1978, and terminated on August 10, 1978. Marshall stated by affidavit that on August 10, 1978, he informed Burnette that the BLM contract had been completed and that the oral lease for the aircraft was terminated. Effective that same day, Marshall deleted the aircraft from the reporting form, required by the insurance policy, on which he was to list those planes owned or leased by him. Marshall also averred that on August 10, Burnette came to his place of business with Ted Koerber and asked Marshall if Koerber had been checked out in the aircraft in question. Marshall told Burnette that Koerber had not been checked out in the aircraft and that he had no personnel available to do so at the time. Subsequently on the same day, Koerber arrived at the airport with another pilot who apparently did conduct a test flight of the aircraft with Mr. Koerber. On August 13, Koerber came to the airport alone, purchased gas from Marshall for the aircraft, and informed Marshall's employee that either he or Burnette would pay for the gas upon his return. This was the flight that terminated in the crash which gave rise to this lawsuit.

Following the crash, United Bank sued Burnette to collect on a promissory note which Burnette had signed in order to purchase the aircraft. As security for the note, United Bank had a security interest in the aircraft. United Bank also sued Underwriters for 80% of the insured value of the aircraft under the hull insurance policy between Marshall and Underwriters. United Bank moved for summary judgment against Underwriters, and the motion was granted over opposition. From the judgment which followed, Underwriters have appealed.

The relevant policy clauses are as follows:

COVERAGE A-FLIGHT, TAXIING, ON THE GROUND OR MOORED.

(Underwriters agree) ...

to pay for direct physical loss of or damage to the aircraft including disappearance if the aircraft is unreported for 60 days after the commencement of the flight....

1. AIRCRAFT COVERED

The insurance afforded under this policy shall apply to all standard licensed Fixed Wing Land aircraft owned by the Insured or operated by the Insured under a lease or other agreement at the inception date of this Policy and shall automatically apply to any additional standard licensed aircraft ... acquired by the Insured as owner, lessee or rentee during the Policy period, effective as of the time and date the Insured acquires possession of such additional aircraft.

4. REPORTS

The Insured agrees to keep accurate records pertaining to all aircraft insured under this Policy and to report monthly the following information with respect to each aircraft insured under this Policy during the preceding month: Make and type of aircraft, F.A.A. registration number, insured value as defined in paragraph 2 of this Endorsement, and the number of days the Underwriters have been at risk with respect to each such aircraft. The Underwriters shall not be liable for any claims with respect to any aircraft which has not been reported from the date the Insured acquired such aircraft as owner, lessee or rentee as provided above. The Underwriters shall be permitted to examine this Insured's records at any reasonable time during the Policy Period and any extension thereof, and within one year after its final expiration insofar as they relate to the determination of the premiums for this Policy. It is a condition of this Policy that no payment of any claim hereunder shall be made until all reports due to the date that the claim arose have been furnished the Underwriters and the premium earned as a result of such reports paid.

Attached to the policy was an endorsement entitled "Breach of Warranty Endorsement" which identified the aircraft in question as subject to the lien of the United Bank of Alaska. The endorsement provided in relevant part:

In consideration of an additional premium of $ Included

IT IS UNDERSTOOD AND AGREED THAT:

1. The insurance afforded by the Policy shall not be invalidated as...