LaSalle National Insurance v. Popham

188 S.E.2d 870, 125 Ga. App. 724, 1972 Ga. App. LEXIS 1456

• Court: Court of Appeals of Georgia
• Decided: March 17, 1972
• Docket: 46693
• Status: Published

Opinions

Eberhardt, Judge.

The first issue raised involves the question as to whether this was a proper case for declaratory judgment, it being contended that since the insurer was already a party to the main suits by virtue of the third-party complaint filed by the insured the issues could be adjudicated in those actions, that all rights of the insurer had accrued when the declaratory judgment action was filed, that the petition fails to disclose any uncertainty as to what action LaSalle should take, and that the judgment would be an advisory judgment only. We do not agree.

The rule as to when an insurer may properly proceed for declaratory judgment is clearly stated in Nationwide Mut. Ins. Co. v. Peek, 112 Ga. App. 260 (145 SE2d 50): "Where an insurer denies coverage under a particular policy and seeks to relieve itself of its obligation to defend a pending suit against an insured because of circumstances pleaded which cast doubt on the coverage of the policy as applied to those circumstances, there is such an immediacy of choice imposed upon it as to justify an adjudication by declaratory judgment.”

A similar holding was made in St. Paul Fire &c. Ins. Co. v. Johnson, 216 Ga. 437, 438 (117 SE2d 459), where it was pointed out that "This presents not a remote or contingent future possibility of dispute but a real and imminent threat facing the insurance company. In Maryland Casualty Co. v. Pacific Coal & Oil Co., 312 U. S. 270, 273 (61 SC 510, 85 LE 826), in determining whether there exists a controversy within the meaning of the Federal Declaratory Judgment Act, which is similar to ours, the court stated: 'Basically, the question in each case is whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment. See Aetna Life Ins. Co. v. Haworth, 300 U. S. 227, 239-242 (81 LE 617, 620-622, 57 SC 461, 108 ALR 1000).’” Accord: Mensinger v. Standard Acc. Ins. Co., 202 Ga. 258 (42 SE2d 628); Ga. Cas. &c. Co. v. Turner, 86 Ga. App. 418 (71 SE2d 773); Parks v. Jones, 88 Ga. App. 188 (76 SE2d 449); Griffin v. Hardware Mut. Ins. Co., 93 Ga. App. 801 (92 SE2d 871); Buffington v. New Hampshire Fire Ins. Co., 104 Ga. App. 139 (121 SE2d 270); Dearhart v. Reserve Ins. Co., 108 Ga. App. 347 (132 SE2d 809), reversed on other grounds in 219 Ga. 699 (135 SE2d ); Mock v. Darby, 109 Ga. App. 620 (137 SE2d 81); Ditmyer v. American Liberty Ins. Co., 117 Ga. App. 512 (160 SE2d 844); Stubbs v. State Farm Mut. &c. Ins. Co., 120 Ga. App. 750 (172 SE2d 441).

Professor Bor.chard, who drafted the Federal Declaratory Judgment Act, after which the various State Acts, including ours, is patterned, says that "cases which have attracted most attention to the declaratory judgment are those in which a casualty company institutes an action against the insured, joining or not joining the injured parties, for a declaration that the company is not under a duty to defend or to pay any eventual judgment, because the injury or death is not within the coverage of the policy or because the company has some defense which exempts it.” He asserts as some of the reasons why the action is appropriate when there is a bona fide dispute as to coverage. "By refusing to defend, the company loses all opportunity to contest the negligence of the insured or the injured person’s right to recover, and exposes itself to a charge of and penalty for breach of contract. By defending, it incurs considerable expense and may waive the claim of immunity. It is therefore of exceptional importance to both insurer and insured, if not indeed to the injured person, to know at the earliest possible moment whether the policy covers the loss or not. The liability under the policy and the liability for negligence are indeed two separate transactions.” Borchard, Declaratory Judgments (2d Ed.) pp. 646, 652.

We do not regard the cases of Rowan v. Herring, 214 Ga. 370 (105 SE2d 29), where it was held that after the testator’s death the rights of legatees and devisees had accrued under the will and thus there was no necessity for a declaration of those rights, or Pinkard v. Mendel, 216 Ga. 487 (117 SE2d 336), also seeking a declaration of rights under the will of a deceased testator, or Dunn v. Campbell, 219 Ga. 412 (134 SE2d 20), seeking a declaration of rights where in a simple statutory action an assessment made under provisions of a statute was sought to be recovered, or State Hwy. Dept. v. Ga. Southern &c. Co., 216 Ga. 547 (117 ), involving a dispute as to land titles, to be conflicting with St. Paul Fire & Marine Ins. Co. v. Johnson, 216 Ga. 437, supra, or with Nationwide Mut. Ins. Co. v. Peek, 112 Ga. App. 260, supra. The factual situations as well as the legal positions of the parties are altogether different and it is recognized that in the wills and statute cases a declaratory judgment is not needed, since it would be advisory only, while in cases like St. Paul Fire & Marine and Nationwide Mutual and many others cited, as well as the case here, a declaratory judgment is essential to the plaintiff who seeks it for determining a future course of action, i.e., whether it must afford a defense.

In the same category of the wills cases is Holcomb v. Bivens, 103 Ga. App. 86 (118 SE2d 840), where two attorneys sought a determination as to the priority of liens — which is controlled by statute. Nor do we find conflict in Gant v. State Farm Mut. Auto. Ins. Co., 109 Ga. App. 41 (134 SE2d 886), where there was a claim of no coverage because the operator of the vehicle and the injured had been fellow servants, or Travelers Indem. Co. v. Hood, 110 Ga. App. 855 (140 SE2d 68, 20 ALR3d 314) and Lumbermen’s Mut. Cas. Co. v. Moody, 116 Ga. App. 2 (156 SE2d 117), where a judgment had already been obtained against the insured in a negligence action. There may be others in which it has appeared that the rights of the parties had already accrued. We do not see any conflict between them and what we hold here, for the situations are vastly different. LaSalle must know whether it is to be held to have extended coverage under its policy under the facts and circumstances and in the light of the policy language before it can know whether it must afford a defense.

If there are cases from this court which can be construed to conflict with our present ruling, they are, to that extent, disapproved.

Was the Dodge a substitute automobile for the Ford Falcon so that it might have been covered under the LaSalle policy, or was it a substitute for the Chevrolet and thus within the coverage of the Indiana Lumberman’s policy up to the time of its cancellation?

First, let us consider the policy language. It is specifically provided that for the newly acquired car to be within the shelter of coverage it must "replace an automobile owned by [the insured or his spouse] and is covered by this policy.”

The Ford Falcon was owned by Popham and it was covered by the LaSalle policy.

It is required that the insured notify the company within 30 days after acquisition of the new car. Popham contends that he did notify LaSalle.

It is required that the newly acquired automobile "replace an owned automobile covered by this policy . . .”

Here is the crux of the matter. The Ford Falcon was not traded to City Dodge when the newly acquired car was obtained from them; the Chevrolet was traded in on the purchase of the Dodge. The Ford Falcon was returned May 4, 1968, by Popham to his half-brother, from whom he had originally obtained it. He did not have it when the Dodge was finally acquired May 6, 1968,

Neither this court nor the Supreme Court has heretofore dealt with this newly acquired vehicle provision of a liability policy in the context of these facts, but there are other jurisdictions which have done so and we here adopt the view of what appears to be the majority of the jurisdictions.

The identical policy provision was under consideration under similar facts in Dike v. American Family Mut. Ins. Co., 284 Minn. 412, 416 (170 NW2d 563), where it was held: "Construction of this provision is a matter of first impression in this state, but it has been construed in varying factual contexts in a number of other jurisdictions. With only two exceptions, every court which has considered this provision has held that it is not ambiguous and that in order to be 'newly acquired’ within its plain meaning, an automobile must have been acquired after the commencement of the policy period and must replace the automobile described in the policy. E.g., Lynam v. Employers’ Liab. Assur. Corp. (D. Del.) 218 FSupp. 383, affirmed (3 Cir.) 331 F2d 757; Commercial Standard Ins. Co. v. Central Produce Co., (M. D. Tenn.) 42 FSupp. 31 . . . Coleman v. Atlantic Nat. Ins. Co., (Fla. App.) 166 S2d 620; Country Mut. Ins. Co. v. Murray, 97 Ill. App. 2d 61 (239 NE2d 498); Howe v. Crumley, Jones & Crumley Co., 44 Ohio L. Abs. 115 (57 NE2d 415); Brown v. State Farm Mut. Auto. Ins. Co. (Ky. App.), 306 SW2d 836; Marquez v. Dairyland Mut. Ins. Co., 78 N. M. 269 (430 P2d 766); State Farm Mut. Auto. Ins. Co. v. Shaffer, 250 N. C. 45 (108 SE2d 49); Utilities Ins. Co. v. Wilson, 207 Okla. 574 (251 P2d 175). . .

"It is fundamental that ambiguous insurance policy provisions must be construed in favor of the insured. However, we cannot so construe a policy contrary to its plain, unequivocal language. We believe that plaintiff’s policy plainly requires that an automobile be acquired as a replacement for the automobile described in the policy in order for [the replacement provision] to apply . . .

"Thus, consistent with its language and purpose, it is our opinion that the 'newly acquired’ provision must be interpreted under the undisputed facts of this case, as affording coverage only to an automobile acquired as a replacement and actually substituted for the automobile described in the policy.”

A similar holding is found in Lambert v. Alabama Farm Bureau Mut. Cas. Ins. Co., 281 Ala. 196, 198 (200 S2d 656), and the court cites with approval Appleman’s Insurance Law & Practice, § 4293, where it is said that: "The coverage extends to the new acquisition when it replaces the sole automobile owned by the insured, when the insured owns a number of vehicles and all of them are insured with the company, or when several of the vehicles owned by the insured are covered by the policy and the new acquisition replaces one already covered. It does not apply to new vehicles which are in addition to those insured by the former coverages and which are not used as replacements, unless all vehicles of that insured are covered, in which event it is contemplated that a premium re-adjustment will be made.”

Appellee, Popham, contends that while the Dodge may not have technically replaced the Ford Falcon, it was his intention that it do so, pointing out that whereas he had previously kept two automobiles, after the acquisition of the Dodge he kept it alone, and that he had notified Indiana Lumberman’s Casualty to cancel the coverage which he had carried on the Chevrolet.

While there is authority to the contrary, we believe the better view is found in Auto Lease Co. v. Central Mutual Ins. Co., 7 Utah 2d 336 (325 P2d 264) where a similar contention was made. The plaintiff urged that a reasonable interpretation of the policy provision is that a newly purchased automobile is covered from the date of purchase if it is intended to replace an automobile covered by the policy. The court held (p. 339) that the language of this provision is without ambiguity and asserted: "The test to be applied is: would the meaning be plain to a person of ordinary intelligence and understanding, viewing the matter fairly and reasonably, in accordance with the usual and natural meaning of the words, and in the light of existing circumstances, including the purpose of the policy. If so, the special rule of construction is obviously unnecessary. An analysis of the language in question reveals that the meaning the plaintiff seeks to glean therefrom amounts to a distortion from the literal meaning of the present indicative of the emphasized verb: 'If it replaces an automobile’ (which usually indicates a fact accomplished), to the future tense, which literally would require the interpolation of the emphasized words, 'If it is intended to replace an automobile.’ . . . The true meaning of the clause in question is better understood if we insert the word 'actually’ before the questioned verb 'replaces.’ It would then read: 'If it [actually] replaces an automobile described in the policy.’ So read it seems clear that it means that the new car must be put in service, and take the place of one of the cars described in the policy before it becomes insured.” With this construction of the provision we agree, and conclude that under the policy terms the Dodge did not replace the Ford Falcon, but replaced the Chevrolet which was traded in for the Dodge.

Does the SR-22 filing made by LaSalle extend coverage to the Dodge?

Reliance is had upon the case of Davis v. Reserve Ins. Co., 220 Ga. 335 (138 SE2d 657), where one who had no vehicle himself, needed a driver’s license to enable him to pursue his job as a truck driver. His driver’s license had been revoked by the Department of Public Safety and, in order to get it reinstated, he procured an SR-22 filing by Reserve Insurance Company, in connection with which it issued to him a policy carrying a nonowner’s endorsement. The policy provided that it would not apply when he was operating an automobile as a livery unless the use was specifically declared in the policy, which it was not. On the policy Davis was listed as a "truck driver.” He was involved in an accident while operating a truck of his employer, and the question before the court was whether the policy exclusion applied, relieving coverage in the situation.

The Supreme Court (with two judges dissenting) reversed this court (Reserve Ins. Co. v. Davis, 109 Ga. App. 535 (136 SE2d 469) and held (p. 338): "The defendant in error has certified to the Department of Public Safety that the insured has a policy which provides him with automobile liability insurance while operating a motor vehicle and the Department of Public Safety, in reliance on this certificate, has reinstated the insured’s driver’s license. Having made it possible for the insured to return to the highways by certifying that the general public is afforded certain protection, the defendant in error is in no position to deny, at a later date, the existence of this protection and thereby thwart the purpose of the Georgia Motor Vehicle Safety Responsibility Law.”

There are substantial differences in the situation here and in Davis. In Davis the insurance company certified to the Department that it had issued to Davis a policy which covered him while operating a motor vehicle, language which appears to have been all inclusive. Here, LaSalle filed with the Department of Public Safety a certificate that it had issued to Popham an owner’s policy covering his operation of the Ford Falcon. In Davis the policy was issued with a nonowner’s endorsement, which authorized him to drive vehicles that he did not own, and which was necessary if he were to continue on his job as a truck driver for others.

It is apparent that it was on the basis of the Davis case that the trial judge directed the verdict for defendants. If the Davis case goes so far as to say that when any insurance company makes an SR-22 filing with the Department of Public Safety so that one whose driver’s license has been revoked can be reinstated it thereby assures to the Department that the insured is to be covered, no matter whose vehicle or what vehicle he may drive, then we should agree that the trial judge was correct.

But the SR-22 form is supplied by the Department of Public Safety, and it is designed to apply differently in different situations. Here the form itself provides that it is filed based upon an owner’s policy upon the particularly described vehicle — a 1962 Falcon 2 door sedan, Identification No. 2A11U166497.

On the form is a place which, if checked, would have made it based upon an operator’s policy, as was the case in Davis. In that case it is provided that it is "applicable to any non-owned vehicle.”

Obviously the situations are different, and were intended to be different when the form was devised.

We do not believe the Davis case to be applicable here. The certification to the Department is altogether different, and it should not be held that the Department or anybody else may rely upon a higher certification than was made and accepted on the Department’s form. They are based upon different premiums.

As we see it, the SR-22 filing here was limited to Mr. Popham in his operation of the Ford Falcon, or by the policy terms to a vehicle which he may have acquired to replace it.

It was error to direct a verdict for the defendants. Indeed, it would appear that the evidence demanded a contrary result.

Judgment reversed.

Jordan, P. J., Hall, P. J., Deen and Clark, JJ., and Judge H. 0. Hubert, Jr., concur. Pannell, Quillian and Evans, JJ., dissent in part. Bell, C. J., disqualified.