First-Citizens Bank & Trust Co. v. Universal Underwriters Insurance

EAGLES, Judge.

Plaintiff brings forward one assignment of error. After a careful consideration of the briefs and record, we reverse and remand.

Plaintiff argues that the trial court erred by granting summary judgment for defendant. We agree.

Under the section entitled “Unicover Coverage Part 300 Auto Inventory Physical Damage” of the policy issued by defendant to Sigmon Chevrolet, the following terms appeared:

“AUTO” means any type of land motor vehicle, (whether crated or not), trailer or semi-trailer, farm tractor or implement, each including its equipment and other equipment permanently attached to it. AUTO does not include hovercraft.

“COVERED Auto” means an auto (1) owned by or acquired by YOU or (2) not owned by You but in YOUR care, custody, or control.

In a request for admissions, defendant admitted “that as of the time of delivery and acceptance of the subject motor vehicle to Don Sigmon by First Citizens, it adhered to the definition of a covered auto.” In another request for admissions, defendant answered as follows:

No. 12 Interrogatory: Does the Unicover Coverage Part 300 Auto Inventory Physical Damage apply to and cover theft of the subject motor vehicle from the premises of Sigmon Chevrolet as the same is a “Covered Auto” “not owned by [Sigmon Chevrolet] but in [Sigmon Chevrolet’s] care, custody or control”?

Answer: Without admitting that defendant has any obligation to pay hereunder, it is admitted the subject motor vehicle does come under the definition of a covered automobile, as defined in Unicover Coverage Part 300.

(Alterations in original.)

Defendant argues that the 15 April 1992 “attempted assignment is invalid under the terms of the policy and plaintiff is only entitled to recovery from their contractual partner.” We disagree. The provision regarding assignment of the insurance policy read as follows: “ASSIGNMENT — No assignment of interest will affect this policy unless WE [defendant] change the policy.” The following provision also appears in the policy:

Changes —The only way this policy can be changed is OUR issuing an endorsement(s) or substituting the declarations. They must be signed by one of OUR representatives when required by law. Nothing else will change this policy, waive any of its terms, or stop US from asserting any of OUR rights, not even notice to or knowledge learned by one of OUR representatives.

If We change any of the terms of this policy, which broadens or extends the coverage, this policy will automatically be broadened or extended as if it were actually endorsed, if the change

(a) was approved by YOUR state insurance regulatory authority, during the policy period or 45 days before the policy became effective; and

(b) is available to You without additional premiums.

Given defendant’s admissions, supra, we conclude that the assignment of the mere right to payment after loss in no way broadened the scope of the coverage of insurable risks provided by defendant’s policy. We particularly note that this policy did not expressly prohibit assignments: rather, our disposition here turns on the express words chosen by the defendant-insurer in this policy. See Burk v. Prudential Ins. Co., 7 N.C. App. 209, 172 S.E.2d 67 (1970); White v. Mote, 270 N.C. 544, 155 S.E.2d 75 (1967). We note further that most of the cases from other jurisdictions regard such express prohibitions as generally ineffective when applied to assignments which occur after the loss has been incurred:

[T]he great weight of authority supports the rule that general stipulations in policies prohibiting assignments thereof except with the consent of the insurer apply to assignments before loss only, and do not prevent an assignment after loss, for the obvious reason that the clause by its own terms ordinarily prohibits merely the assignment of the policy, as distinguished from a claim arising thereunder, and the assignment before loss involves a transfer of a contractual relationship while the assignment after loss is the transfer of a right to a money claim.

16 George J. Couch et al., Couch on Insurance 2d, § 63.40, at 763-65 (Rev. ed. 1983) (footnotes omitted). See also 5A John A. Appleman and Jean Appleman, Insurance Law and Practice, § 3458, at 408-09 (1970).

For the reasons stated, the trial court’s 14 December 1992 order is reversed and the cause is remanded for entry of an order granting partial summary judgment for plaintiff on the issue of liability. Accordingly, the cause is remanded for further proceedings, including a determination of the amount of damages, not inconsistent with this opinion.

Reversed and remanded.

Chief Judge ARNOLD and Judge WELLS concur.