Huhn v. Davis ( 1969 )

J. H. Gillis, P. J.

Plaintiff was injured and his automobile was damaged when it was struck from the rear by an automobile owned by defendant Marie. Davis and operated by her nephew, Donnis Butcher. At the time of the accident, defendant Butcher’s policy of automobile insurance on his own car written by State Farm Mutual provided coverage in the event that he would operate any other motor vehicle that was not insured. The question underlying this appeal is whether or not defendant Davis’ automobile was insured by Progressive Mutual. If her automobile was insured, Progressive Mutual would be primarily liable to plaintiff. If her automobile was uninsured, then the liability provision of' defendant Butcher’s insurance covering uninsured vehicles would be effective and State Farm Mutual would be liable.

Judgment was entered against both defendants. When both defendants’ insurers denied coverage, plaintiff garnished both of them and each filed a disclosure denying liability. Plaintiff thereafter filed a motion for declaratory judgment. The trial court entered judgment, after hearing, in which it was determined that State Farm Mutual, and not Progressive Mutual, was liable to plaintiff. From that determination, State Farm Mutual has appealed.

Progressive Mutual had issued, before the date of the accident, a liability policy to Ingram Davis, husband of defendant-owner Marie Davis, insuring a 1953 Chevrolet titled in his name. The provision of that policy here in dispute provides as follows:

“Definitions. ‘Owned automobile’ means

“(c) a private passenger, farm or utility automobile ownership of any of which is acquired by the named insured during the policy period, provided,

“(1) it replaces a described automobile, or

“(2) the company insures all private passenger automobiles, farm automobiles and utility automobiles owned by the named insured on the date of such acquisition and the named insured notifies the company within 30 days following such date.”

The car which defendant Butcher was driving at the time of the accident was a 1964 Ford which Mr. Davis had purchased a few days prior to the accident, title to which he had placed in his wife’s name. At the hearing on plaintiff’s motion for declaratory judgment, Mr. Davis testified that two days after he purchased the Ford he contacted the Collins insurance agency, with whom he did business, for the purpose of obtaining insurance for the Ford. The following excerpt is taken from the transcript of the hearing:

“Q. For what purpose did you go into the agency?

“A. To transfer the insurance from the 1953 Chevrolet to the 1964 Ford.

“Q. What did you tell Mr. Collins or Mr. Mesick?

“A. I told them that I bought a new ear and had to have coverage on it, so they sold me coverage with the understanding I could take it out and drive it right then, is all they told me.

“Q. Do you know which of the two you spoke to about this?

“A. I spoke to Mr. Mesick.

“Q. What did Mr. Mesick tell you?

“A. He didn’t tell me anything. He took the deposit on the — no, he — -he told me that — that I was covered. I don’t know if I paid the money that day. I suppose I did. I don’t remember yet, but I would have the receipt for it to home; but he told me that the Ford was covered right then.

* *#«#*##*

“Q. This accident occurred, I believe, on a Saturday night, on April 11?

“A. I believe it was.

“Q. When did you report it?

“A. Monday morning.

“Q. To whom did you report this accident?

“A. Mr. Mesick and Mr. Collins, and they sent me down to Michigan Claims Service.

“Q. Did they tell you anything with regard to coverage on your vehicle?

“A. Yes, they did, in the presence of Mr. Don Butcher and Mr. — the plaintiff, Mr. Huhn. They told me that I was covered and that I should go down to Michigan Claims Service and file a claim, which I proceeded to do.”

' Subsequently, Mr. Davis was notified by Progressive Mutual that there was no coverage for the accident with the Ford. It was the position of Progressive Mutual that the Ford was not an “owned automobile” under the policy in that Mr. Davis continued to drive the Chevrolet and, therefore, the Ford was not a replacement vehicle. The company also contended that it was not bound by any representations of its agents because the furnishing by Mr. Davis of the serial number of the Ford, an alleged prerequisite to coverage, did not occur until after the accident.

The trial court resolved the matter as follows:

“Practically this self-same language (of the insurance contract) was construed in the case of State Farm Mutual Automobile Insurance Company v. Shaffer (1959), 250 NC 45 (108 SE2d 49, 54) and in which was stated:

“ ‘It is our opinion that the replacement vehicle is one the ownership of which has been acquired after the issuance of the policy and during the policy period, and it must replace the car described in the policy, which must be disposed of or be incapable of further service at the time of the replacement.’

“The 1964 Ford thus could not possibly be a replacement for the 1953 Chevrolet, and the 1964 Ford was not owned by the named insured in Progressive’s policy.

“The 1964 Ford was not covered by the Progressive policy, and liability is solely that of State Farm under its policy on Butcher, and it shall pay the same forthwith.”

Under the policy, “ ‘named insured’ means the individual named in item 1 of the declarations and also includes Ms spouse, if a resident of the same household(Emphasis supplied.) Thus, any coverage in the name of one spouse alone would also include the other.

We agree that the 1964 Ford was not, under the policy, a replacement for the 1953 Chevrolet. This fact is not, however, dispositive of the issue in this case. The record reveals that Mr. Davis informed his insurance agent that he desired the Ford to be insured. His testimony that he was given unequivocal assurances on several occasions that the Ford was, in fact, insured is unrefuted. There is no clear showing that the furnishing of the serial number was either set out by the insurance agent or understood by Mr. Davis to be a condition of coverage. It is unclear whether Mr. Davis intended to actually transfer the insurance from the Chevrolet to the Ford, thus leaving the Chevrolet uninsured, or whether he intended to obtain additional insurance to cover both cars. Notwithstanding whether or not the Ford was a replacement for the Chevrolet, Mr. Davis reasonably relied on the representations of Progressive Mutual’s agents that the Ford was insured. As stated in Holt v. Stofflet (1953), 338 Mich 115, 119:

“ ‘It is a familiar rule of law that an estoppel arises when one by his acts, representations, or admissions, or by his silence when he ought to speak out, intentionally or through culpable negligence induces another to believe certain facts to exist and such other rightfully relies and acts on such belief, so that he will be prejudiced if the former is permitted to deny the existence of such facts.’ ”

The issue of estoppel having been briefed by both parties, our determination is made pursuant to G-CR 1963, 820.1(7).

There is testimony which indicates that the insurance agent believed Mr. Davis had replaced the Chevrolet with the Ford and that the only ear to be insured with Progressive Mutual was the Ford. In holding Progressive Mutual primarily liable to plaintiff, we are holding the company to no more of a burden than its agents anticipated, namely, that the Ford, if no other car, was insured.

The order of the trial court will be vacated and an order entered consistent with this opinion.

Bronson, J., concurred.