State Farm Mutual Automobile Insurance v. Shaffer

108 S.E.2d 49 (1959) 250 N.C. 45

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY
v.
Will SHAFFER, Ralph Neal Shaffer, John Franklin Mullis, Joe Neeley Orr, Lois Orr Porter, Administratrix of the Estate of Ranson Wayne Porter, Deceased, and Nationwide Mutual Insurance Company.

No. 241.

Supreme Court of North Carolina.

April 8, 1959.

Clyde L. Stancil, Raleigh, Kennedy, Covington, Lobdell & Hickman, Charlotte, for defendant Nationwide Mutual Ins. Co., appellant.

Winfred R. Ervin, Charlotte, for defendants John Franklin Mullis, Joe Neeley Orr, and Lois Orr Porter, Administratrix of Estate of Ranson Wayne Porter, Deceased, appellees.

Carpenter & Webb, Charlotte, for plaintiff, appellee.

MOORE, Justice.

The question for determination here is: Was there coverage under either of the policies with respect to the accident of 11 August, 1957?

The appellant, Nationwide, requested the Judge to find in substance as follows:

That the 1954 Ford acquired 27 July, 1957, replaced the State Farm Ford, which up to the time of the replacement had been principally used by Ralph Neal Shaffer; that the 1954 Ford after its acquisition was used in the same manner and for the same purposes by Ralph Neal Shaffer as he had previously used the State Farm Ford; that the 1954 Ford did not replace the Nationwide Ford, which was principally used by Will Shaffer prior to the acquisition of the 1954 Ford; that the 1954 Ford was not used by Will Shaffer in the same manner he had used the Nationwide Ford, but that after the acquisition of the 1954 Ford the State Farm Ford was used by Will Shaffer; that Ralph Neal Shaffer was the owner of the 1954 Ford.

With respect to these matters the court found as a fact that Will Shaffer was the sole owner of the 1954 Ford and owner of all the vehicles described from time to time in the policies of State Farm and Nationwide; that after February, 1956, Will Shaffer did not own more than two automobiles at any one time; that the 1954 Ford and all the vehicles named in the policies from time to time were under the personal control of Will Shaffer as to their manner, method and time of use, and such use of said vehicles as was made by Ralph Neal Shaffer was with the permission of Will Shaffer, including the use of the 1954 Ford at the time of the accident; and that the 1954 Ford did not replace the State Farm Ford but did replace the Nationwide Ford.

The evidence was sharply conflicting and there were glaring contradictions in the pleadings, statements and testimony of Will Shaffer and Ralph Neal Shaffer. There was competent evidence to support the request of Nationwide for findings and competent evidence to support the court's findings of fact. "Where facts are found by the court, if supported by competent evidence, such findings are as conclusive as the verdict of a jury." City of Goldsboro v. Atlantic Coast Line R. Co., 246 N.C. 101, 107, 97 S.E.2d 486, 491, and cases there cited.

Notwithstanding the findings of fact, it may be conceded that Ralph Neal Shaffer as a rule used the better of the two cars owned by his father—the Nationwide car prior to the purchase of the 1954 Ford, and the 1954 Ford after its acquisition. On occasions the Shaffers used the cars interchangeably. This Court is not a fact-finding body, but the foregoing facts are assumed to be true so far as this opinion is concerned.

The policy by Nationwide provides coverage for a "newly acquired automobile." A newly acquired automobile is defined by the policy to mean "an automobile ownership of which is acquired by the named insured * * * if it replaces an automobile owned by (named insured) and covered by this policy * * *". (Emphasis and parentheses ours.)

The policy issued by State Farm provides coverage for an "automobile * * * ownership of * * * which is acquired by the named insured during the policy period, provided it replaces a described automobile * * *." (Emphasis ours.)

In this case the question of notice of replacement does not arise.

The appellant insists that the question as to which automobile, if either, was replaced by the 1954 Ford is one of fact to be gathered from the intent and acts of the insured and his son. We hold that it is a mixed question of law and fact. The trial court has found the facts and his findings are binding on this Court. Bizzell v. Bizzell, 247 N.C. 590, 101 S.E.2d 668. The interpretation of the policy provisions, in the light of the facts found, is a matter of law for the court, and in construing the contract its unambiguous terms are to be taken in their plain, ordinary and popular sense. Stanback v. Winston Mut. Life Insurance Co., 220 N.C. 494, 17 S.E.2d 666.

The exact question involved here has not previously been decided by this Court. It will be observed that both policies of insurance in this case provide that a replacement automobile must be acquired and replace an automobile owned by the insured and covered by the policy.

In a Kentucky case the insurer issued a liability policy on a Studebaker. At that time the insured owned a Ford which was not covered by the policy. The Ford had no motor in it at the time. Later the insured put a new motor in the Ford, after which time the Studebaker quit running and was never operated again. Insured then used the Ford and had an accident in which three persons were injured. He immediately notified the insurer of the accident. The Court held that there was no coverage on the Ford. While there was a question of notice of replacement involved, the Court said: "In this instance appellant's Ford car was not ``newly acquired' but was owned by him long before he took out insurance on the Studebaker. * * * (C)ertainly it was within the contemplation of the parties that the replacement must be a car the insured would acquire in the future and not one he owned at the time the policy was issued to him." Brown v. State Farm Mut. Auto. Insurance Co., Ky.1957, 306 S.W.2d 836, 837.

In Commercial Standard Insurance Co. v. Central Produce Co., D.C.M.D.Tenn. 1940, 42 F. Supp. 31, 33, insured purchased a truck and obtained liability coverage at the time of the purchase. The truck was excluded from a renewal policy because it was not in operating condition. It was placed back in service as a replacement for an insured truck withdrawn from service, and was involved in an accident in which four persons were killed and one injured. The Court held that there was no coverage. The Court said: "The Court is of the opinion that the International Tractor not being a newly acquired automobile, was not covered under the automatic clause in the policy, * * * (A)nd that by reason of the fact that the ownership of the International tractor * * * was not newly acqiured ownership, within the contemplation of the automatic clause in the policy, that clause did not operate to place said International tractor within the terms and provisions of the policy in question, and hence that clause did not apply to the International tractor."

In Utilities Insurance Co. v. Wilson, 1952, 207 Okl. 574, 251 P.2d 175, the insured obtained liability coverage on a 1947 Chevrolet truck. At that time he owned also a 1948 Chevrolet truck which was not covered. The 1948 Chevrolet truck was involved in an accident. At the time of the accident the 1947 truck was not in use. In a per curiam opinion the Court held that, since insured owned the 1948 truck at the time the policy was issued on the 1947 truck, it could not have been a newly acquired vehicle under the terms of the policy.

In substantial accord are: Howe v. Crumley, Jones & Crumley Co., Ohio App.1944, 57 N.E.2d 415; Mitcham v. Travelers Indemnity Co., 4 Cir., 1942, 127 F.2d 27; Ohio Cas. Insurance Co. v. Nelson, 1957, 49 Wash.2d 748, 306 P.2d 201; Auto. Lease Co. v. Central Mut. Insurance Co., 1958, 7 Utah 2d 336, 325 P.2d 264.

Appellant cites Merchants Mut. Casualty Co. v. Lambert, 1940, 90 N.H. 507, 11 A.2d 361, 127 A.L.R. 483. We do not agree that this case supports appellant's position. In this case the insured car was worn out, but still in the possession of the insured. He purchased another car to replace it. Here the Court held that there was a replacement. This case seems to support the decisions above cited. If not, we are not disposed to adopt it as authority in this case.

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. Merchants Mut. Casualty Co. v. Lambert, supra. We hold that the State Farm Ford could not be a replacement for the Nationwide Ford. At the beginning of the policy period of the Nationwide policy Shaffer owned both automobiles. On 11 August, 1957, date of the accident, the State Farm Ford was still owned by Shaffer and under his control, in operating condition and being driven by him and his son. It was then covered by the State Farm policy. Therefore the 1954 Ford could not replace the State Farm Ford, since Shaffer still retained the State Farm Ford in operable condition.

The 1954 Ford was a newly acquired automobile. It was purchased by Will Shaffer on 27 July, 1957. The Nationwide Ford was used as a "trade in" on the 1954 Ford, and was replaced by the 1954 Ford.

In Kaczmarck v. La Perriere, 1953, 337 Mich. 500, 60 N.W.2d 327, insured on 23 August, 1947, secured liability coverage on a Packard for one year. On 18 November, 1947, he traded the Packard for an Oldsmobile but never attempted to make the insurance cover the Oldsmobile. On 22 June, 1948, insured traded the Oldsmobile for a Pontiac and asked for transfer of coverage. The Pontiac was in an accident on 8 July, 1948. The Court held that the Pontiac replaced the Packard notwithstanding the intervening of the Oldsmobile between the two.

The obligation of Nationwide in the instant case is the same as if the 1954 Ford had been described in its policy.

The fact that the premium was paid under a 1-B rating does not affect its obligation under the policy. In Varble v. Stanley, Mo.App., 306 S.W.2d 662, 665, it was said: "If the insurer intended to exclude or limit its liability in instances of operation by a male member of the household under twenty-five years of age, it could and should have said so in plain and explicit language. And we will not adopt a construction which will imply such exclusion from language which would amount to the planting of a forfeiture in ambush." A 2-A rating does not confer upon the driver any additional right or extend the coverage of the policy in any way. Farmer v. Fidelity & Casualty Co., 4 Cir., 1957, 249 F.2d 185.

Appellant made 31 assignments of error. We have carefully examined and considered each of them. No prejudicial error has been made to appear. When parties waive a jury trial "the rules of evidence as to admission and exclusion of evidence are not so strictly enforced as in a jury trial. * * * (I)t is presumed that incompetent evidence was disregarded by the court in making up its decision." Bizzell v. Bizzell, supra [247 N.C. 590, 101 S.E.2d 678]. As we have already stated, the findings of fact by Judge Froneberger are supported by competent evidence. Proper principles of law have been applied by the Judge.

Affirmed.