West American Ins. Co. v. State Farm Mut. Auto. Ins. Co., 329--I

• Decision Date: 08 February 1971
• Docket Number: No. 329--I,329--I
• Citation: 4 Wn.App. 221,480 P.2d 537
• Parties: WEST AMERICAN INSURANCE COMPANY, a California corporation, Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, an Illinois corporation, Respondent.
• Court: Washington Court of Appeals

Page 221

4 Wn.App. 221

480 P.2d 537

WEST AMERICAN INSURANCE COMPANY, a California corporation, Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, an Illinois

corporation, Respondent.

No. 329--I.

Court of Appeals of Washington, Division 1, Panel One.

Feb. 8, 1971.

Rehearing Denied March 25, 1971.

Review Granted May 26, 1971.

Horswill, Keller, Rorhback, Waldo & Moren, Harold Fardal, Seattle, for appellant.

Skeel, McKelvy, Henke, Evenson & Betts, R. L. Gemson, Seattle, for respondent.

WILLIAMS, Judge.

This is an action between insurance companies over which one should pay a casualty loss arising from an automobile-pedestrian accident. At the conclusion of plaintiff West American Insurance Company's case, the court sustained a challenge to the sufficiency of the evidence and entered judgment of dismissal. This appeal followed.

Respondent, State Farm Mutual Automobile Insurance Company, issued its policy of automobile liability insurance to Jennie Perry, covering the vehicle she then owned. At a later date she purchased another automobile which she loaned to Thomas J. Avants, who was in the automobile body shop business. He directed an employee to use this vehicle to take the current receipts of the business to the bank for deposit. While returning from this errand, the employee struck a pedestrian in a crosswalk.

The pedestrian sued Avants, whose liability insurance carrier, appellant West American Insurance Company, accepted responsibility as to him, but tendered the defense of the action to respondent on the theory that it had the primary coverage. Respondent declined the tender, appellant settled the claim at a total reasonable cost of $9,529.80, and then brought this action to recover that amount from respondent.

The trial court dismissed the complaint because of the operation of two clauses in Jennie Perry's contract of insurance. The first clause provided coverage for a newly acquired automobile if 'the named insured notifies the company within 30 days following such delivery date.' The accident occurred within a week of the delivery date, but several months went by before Jennie Perry notified respondent, and then only to advise of the accident. Later, she signed a statement that she never did intend to have the new vehicle covered by the policy. Appellant contends the clause provides 'automatic insurance' for the 30-day period, irrespective of whether notice was given or not.

It appears from the contract of insurance that the policy afforded protection for the newly acquired vehicle for the first 30 days following its acquisition. During these 30 days, the insured had the opportunity of arranging for permanent coverage by respondent, placing her insurance elsewhere, or deciding not to insure the vehicle at all. Respondent's position, however, is that the coverage was canceled retroactively at the end of the 30-day period because no notice was given. Washington cases which consider this type of clause concern accidents which occurred after the 30-day period and so are not in point. Cf. Clow v. National Indemnity Co., 54 Wash.2d 198, 339 P.2d 82 (1959); Summerwell v. Farmers Ins. Exchange, 50 Wash.2d 636, 313 P.2d 1112 (1957).

Hall v. State Farm Mutual Automobile Ins. Co., 268 F.Supp. 995 (D.S.C.1966), aff'd per curiam, 378 F.2d 371 (4th Cir. 1967), is in point and decided that a similar clause provided automatic insurance for 30 days, which coverage was not forfeited by subsequent failure to give notice. This is the majority, and we think the best, view. See Construction and application of automatic insurance clause or substitution provision of automobile liability or indemnity policy, Annot., 34 A.L.R.2d 936 (1954).

But respondent calls attention to the written statement which Jennie Perry gave 7 months after the accident in which she said that when she acquired the new vehicle she did not intend that it be covered by her policy of insurance. It does not appear that this intent was expressed to, or accepted by, respondent as the other contracting party prior to the time the cause of action, if any, arose under the terms of the insurance policy. An intent of one party to a contract not communicated to the other party will not serve to modify that contract. 17 G. Couch, Insurance § 65.5 (2d ed. R. Anderson 1967). See also RCW 48.18.190 which requires that a modification of an insurance contract must be in writing and made a part of the policy.

The second contested...