Ransom v. Fidelity and Casualty Co. of New York

108 S.E.2d 22 (1959)

250 N.C. 60

Horace RANSOM, Administrator of the Estate of Nelson Ransom, Deceased, v. FIDELITY AND CASUALTY COMPANY OF NEW YORK.

No. 161.

Supreme Court of North Carolina.

April 8, 1959.

*23 John R. Jenkins, Jr., Aulander, for plaintiff-appellant.

James & Speight, Greensville, William C. Brewer, Jr., Janesville, for defendant-appellee.

DENNY, Justice.

The sole question for determination on this appeal is whether or not the trial court committed error in sustaining the defendant's motion for judgment as of nonsuit.

The plaintiff contends he has the right to recover from the defendant, Francis Lee's insurer, by reason of the provision in the above-numbered policy of insurance relating to temporary substitute automobile coverage, which reads in pertinent part as follows: "IV (a) * * * except where stated to the contrary, the word `automobile' means: (3) Temporary Substitute Automobileunder coverages A, B and C, an automobile not owned by the named insured while temporarily used as the substitute for the described automobile while withdrawn from normal use because of its breakdown, repair, servicing, loss, or destruction."

On the other hand, the defendant contends that under the facts in this case the insured's car had not been withdrawn from normal use "because of its breakdown, repair, servicing, loss, or destruction" at the time involved, within the meaning of the policy.

Likewise, the plaintiff contends he is entitled to recover under Section V of the policy which relates to the use of other *24 automobiles and which reads as follows: "Use of Other Automobiles. If the named insured is an individual who owns the automobile classified as `pleasure and business' or husband and wife either or both of whom own said automobile, such insurance as is afforded by this policy for bodily injury liability, for property damage liability and for medical payments with respect to said automobile applies with respect to any other automobile, subject to the following provisions: * * * (b) This insuring agreement does not apply (1) to any automobile owned by, hired as part of a frequent use of hired automobiles by, or furnished for regular use to the named insured or a member of his household other than a private chauffeur or domestic servant of the named insured or spouse."

The defendant further contends that Rupert Lee and Francis Lee belong to the same household and that the use of Rupert Lee's car by Francis Lee is expressly excluded from coverage by the above exclusion clause in the insured's policy of insurance.

No North Carolina decision has been cited or found construing either section of the policy that has been brought into question on this appeal.

In 5A Am.Jur., Automobile Insurance, section 87, page 85, it is said: "The typical `substitution' provision provides coverage while the substituted vehicle is being temporarily used, where the described automobile is withdrawn from normal use because of its breakdown, repair, servicing, loss, or destruction. The usual general rules of construction apply to such a provision, and it has been stated that the purpose of the provision is not to narrowly limit or defeat coverage, but to make the coverage reasonably definite as to the vehicles the insured intends normally to use, while at the same time permitting operations to go on should the particular vehicles named be temporarily out of commission, thus enabling the insurer to issue a policy upon a rate fair to both insured and insurer, rather than one at a prohibitive premium for blanket coverage of any and all vehicles which the insured might own or operate.

"Specifically, construing the phrase `withdrawn from normal use' as requiring the insured vehicle to be withdrawn from all normal use, it has been held that where the insured was involved in an accident while driving a borrowed automobile on an extended trip, recovery was precluded by the failure of the injured person to establish that the truck described in the policy, although in poor mechanical condition had been withdrawn from all normal use on the day of the accident. Also, the fact that a borrowed trailer was more suitable for a contemplated trip than a trailer owned by the insured and specifically covered under the policy could not be considered a `breakdown, repair, servicing, loss, or destruction,' within the meaning of a `substitution' provision." Erickson v. Genisot, 322 Mich. 303, 33 N.W.2d 803; State Farm Mut. Auto. Ins. Co. v. Bass, 192 Tenn. 558, 241 S.W.2d 568.

In the case of Iowa Mut. Ins. Co. v. Addy, 132 Colo. 202, 286 P.2d 622, 623, the reason for the substitution was strikingly similar to the case at bar. The insured owned an Oldsmobile which was covered with a policy of liability insurance issued by the defendant company and which had a substitution provision identical with the one in the case before us. The insured also had a Chevrolet automobile, the property of his employer, which he kept at his home for use in his work as an insurance adjuster. The insured and his family were preparing to attend a Thanksgiving dinner at the home of friends, when the insured discovered that his Oldsmobile automobile was "low on gasoline and had heavy snow chains on the tires." Because of this, he decided to drive the Chevroletthe company car. While enroute to their dinner appointment a collision occurred in which the plaintiff, the insured's wife, was injured. In the trial court the case was allowed to go to the jury and the plaintiff recovered, *25 on the theory that insured's automobile was "withdrawn from normal use because of * * * servicing * * *." On appeal this was reversed. The Court said: "The trial court determined that the car in which plaintiff was injured, and being used by her husband at the time of the accident was a temporary substitute vehicle within the provisions of paragraph IV of the policy. This provision of the policy makes it clear that a temporary substitute automobile is one used by the assured temporarily when the automobile which is insured under the policy is withdrawn from its customary use because of its breakdown, repair, servicing, loss or destruction. No such situation could be made to apply here, because the only reason the Oldsmobile sedan covered by the policy was not used was because it was `low on gasoline' and had heavy snow chains on the tires. This was not a breakdown, it was not destroyed, it was not being serviced at the time, neither was it being repaired, and the trial court's apparent conception of the situation, that because it was low on gasoline and had snow chains on the tires, that it fell within the servicing exception is too strained for acceptance. A reasonable and logical interpretation of the word `servicing' would seem to present a condition where the automobile covered by the policy was in some manner actually disabled."

It would seem there could be circumstances under which one might be justified in substituting another car, if the one insured was so defective mechanically that the owner was afraid to drive it on an extended trip. Allstate Insurance Co. v. Roberts, 156 Cal. App. 2d 755, 320 P.2d 90. However, all the authorities hold that it must be proven that the defective car was withdrawn from normal use at the time and during the period the substitute car was used. Pennsylvania Threshermen & Farmers' Mut. Cas. Ins. Co. v. Robertson, 4 Cir., 259 F.2d 389; State Farm Mut. Auto. Ins. Co. v. Bass, supra; Iowa Mut. Ins. Co. v. Addy, supra; Erickson v. Genisot, supra. The Buick automobile covered by the defendant's policy of insurance had not had a breakdown, was not in need of repair, nor was it being serviced at the time Francis Lee was driving the 1947 Chrysler car.

In our opinion, the provisions upon which the appellant relies did not authorize the substitution of another car in lieu of the insured car merely because the insured car was "low on gas." The servicing, in our opinion, contemplates at least some mechanical adjustment before the car can be used in normal service. Moreover, in light of the testimony of Francis Lee, it would seem that there is considerable doubt about there being a substitution of the Chrysler car owned by Rupert Lee. Francis Lee testified he was driving Rupert's car and was going with Rupert to the "setting-up." Unquestionably, we think if he had not been driving the car he would have been one of Rupert's guest passengers rather than in possession of the car as a substitute for the Buick.

On the other hand, the exclusion clause hereinabove set out has been construed many times. It has been well-nigh universally construed to exclude an automobile furnished by another member of the household, furnished for regular use, as well as any hired or leased automobile. Aler v. Travelers Indemnity Co., D.C., 92 F. Supp. 620; Rathbun v. Aetna Casualty & Surety Co., 144 Conn. 165, 128 A.2d 327; Leteff v. Maryland Casualty Co., La.App., 91 So. 2d 123; 5A Am.Jur., Automobile Insurance, section 88, page 86; Annotation: 173 A.L.R. 902, et seq.

The case of Travelers Indemnity Co. v. Pray, 6 Cir., 204 F.2d 821, construes the identical exclusion clause now before us as not excluding a car furnished by a member of the household unless it was furnished for regular use and not for occasional use. This decision was by a divided Court and has been criticized in the case of Leteff v. Maryland Casualty Co., supra.

The Leteff case gives an exhaustive review of cases in which the involved clause *26 has been construed. In that case the Court said [91 So.2d 139]: "Bearing in mind the established rules of interpretation and the reason for such exclusion clauses as shown in the cited jurisprudence, we believe that the interpretation placed upon the exclusion clause by the majority in the Pray case not only stands alone but is in error. The great weight of authority is contra."

There can be no doubt about Rupert Lee and Francis Lee being members of the same household under the definitions given by the various authorities. State Farm Mut. Auto. Ins. Co. v. James, 4 Cir., 80 F.2d 802; Farm Bureau Mut. Automobile Ins. Co. v. Violano, 2 Cir., 123 F.2d 692. For many definitions of the word "household" see 19 Words and Phrases, page 700, et seq.

In our opinion, the ruling of the trial court on the defendant's motion for judgment as of nonsuit was correct, and we so hold.

Affirmed.