Woods v. Nationwide Mut. Ins. Co., 67

CourtUnited States State Supreme Court of North Carolina
Citation246 S.E.2d 773,295 N.C. 500
Decision Date29 August 1978
Docket NumberNo. 67,67
PartiesRebecca Sumner WOODS, Executrix of the Estate of John C. Woods, Deceased v. NATIONWIDE MUTUAL INSURANCE COMPANY.

Bencini, Wyatt, Early & Harris by William E. Wheeler, High Point, for plaintiff-appellant.

Young, Moore, Henderson & Alvis by B. T. Henderson, II, and Joseph C. Moore, III, Robert R. Gardner, Raleigh, of counsel, for defendants-appellees.

SHARP, Chief Justice.

Condition 4 of both the Spencer and Woods policies provides that the medical provisions of Part III "apply separately" to each automobile insured therein. Relying upon this provision plaintiff contends that as to each policy she is entitled to treat the applicable limit on medical payments liability as applying to each car for which separate premiums had been paid, and to compute the amount recoverable by multiplying the respective liability limitation by the number of "owned automobiles." Thus, she argues, she is entitled to payments of $1,000 for each of the three cars covered by the Spencer policy and $500 for each of the two cars named in the Woods policy, a total of $4,000. Conceding its liability for $1,000 and for $500 under the respective policies, defendant has paid plaintiff $1,500. She now seeks to recover the $2,500 she contends is still owing.

The general principles of construction employed to divine the meaning of an insurance contract are well summarized in Wachovia Bank & Trust Company v. Westchester Fire Insurance Company, 276 N.C. 348, 354-55, 172 S.E.2d 518, 522-23 (1970), a case in which the parties argued contentions very similar to those of the parties in this case. As with all contracts, the goal of construction is to arrive at the intent of the parties when the policy was issued. Where a policy defines a term, that definition is to be used. If no definition is given, nontechnical words are to be given their meaning in ordinary speech, unless the context clearly indicates another meaning was intended. The various terms of the policy are to be harmoniously construed, and if possible, every word and every provision is to be given effect. If, however, the meaning of words or the effect of provisions is uncertain or capable of several reasonable interpretations, the doubts will be resolved against the insurance company and in favor of the policyholder. Whereas, if the meaning of the policy is clear and only one reasonable interpretation exists, the courts must enforce the contract as written; they may not, under the guise of construing an ambiguous term, rewrite the contract or impose liabilities on the parties not bargained for and found therein. Plaintiff's appeal must be considered with these principles of construction in mind.

In its unpublished decision the Court of Appeals accepted the defendant's contention that this case is controlled by Wachovia Bank & Trust Company v. Westchester Fire Insurance Company, supra (hereinafter cited as Wachovia v. Insurance Co.) and concluded that "the judgment appealed from is consistent with the holding . . . in that case. . . ." Accordingly, it affirmed the trial court. Plaintiff apparently concedes the application of Wachovia v. Insurance Co. to the interpretation of the Spencer policy, but urges this Court to reconsider that opinion. She also contends that the policy provision construed in Wachovia v. Insurance Co. is entirely different from the one in the Woods policy under which she claims. We will consider each of these arguments in turn.

Although the Spencer policy is practically identical with the one construed by this Court in Wachovia v. Insurance Co., a brief review of that case will demonstrate that it need not be reconsidered to resolve plaintiff's claim under the Spencer policy. In Wachovia v. Insurance Co. the plaintiff was the administrator of the estate of Herbert Barnes, the named insured to whom defendant Westchester Fire Insurance Company had issued a comprehensive automobile policy covering two vehicles, a Pontiac automobile and a Ford pickup truck. Separate premiums were paid for the coverage on each vehicle and both qualified as "owned automobiles" within the meaning of the policy. A provision of that policy purported to limit medical payments liability to $5,000, but it also included an "apply separately" clause (Condition 4 in that policy too).

Barnes died from injuries received in a head-on collision with another vehicle while he was driving the "named" Pontiac. In a suit on the medical payment provisions of the police the plaintiff, Barnes' executor, argued that the "apply separately" language could reasonably be construed as creating two independent, identical contracts for each vehicle for which separate premiums had been paid, and that the limitation provision applied separately to claims under each of these contracts. Had Barnes had two separate policies identical to the one issued by that defendant he would have qualified under Division 1 of each of those contracts for medical payments coverage, thus the plaintiff there sought to aggregate, or "stack," the limitation provisions so as to render the defendant liable for the sum of the medical payments protection provided by each hypothetical policy. This Court rejected the independent contract construction on the facts of that case.

The faulty reasoning underlying plaintiff's claim under the Spencer policy can best be demonstrated by assuming, Arguendo, that in Wachovia v. Insurance Co. this Court had adopted the construction of the "apply separately" clause put forward by the plaintiff in that case, that is, that the "apply separately" provision created independent identical contracts for each car for which separate premiums had been paid. On the facts in this case Cynthia Woods was neither the "named insured" nor his relative. She was, however, operating the Volkswagen with the permission of the "named insured." Further, the Volkswagen, by virtue of the separate premiums paid, was an "owned automobile" within the meaning of the Spencer policy.

Under Division 2, subsection (a) of this contract, defendant agreed to extend medical payments coverage to nonrelatives of the "named insured" for bodily injury "caused by accident, While occupying the owned automobile " with the permission of the "named insured." (Emphasis added.) Thus, the coverage extended by this provision is explicitly limited to that purchased for the "owned automobile" Occupied at the time of collision. One cannot construe this language to mean that nonrelatives receive protection by virtue of the premiums paid for the other vehicles mentioned in the policy which were not occupied by the injured party. There is nothing ambiguous about this language; it ties coverage to specific vehicles. Plaintiff, therefore, is not entitled to collect additional payments under the...

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