Nelson v. St. Paul Mercury Insurance Company

HANSON, Judge.

Plaintiff, Douglas E. Nelson, was involved in an automobile accident on August 31, 1964 causing injuries and damages to Jo Anne and Shirley G. Clark, Jr. Personal injury actions commenced by the Clarks resulted in judgment against plaintiff and his employer, Floyd E. Carlon. This action for a declaratory judgment followed by plaintiff Nelson to determine rights and obligations under two automobile insurance policies issued by the defendant, St. Paul Mercury Insurance Company. Plaintiff Nelson appeals and defendants Clark cross-appeal from a judgment entered in favor of the insurer.

The facts are not essentially disputed. On the date of the accident Nelson was engaged in servicing vending machines for Floyd E. Carlon. He owned a 1953 Chevrolet and his wife owned a 1958 Oldsmobile. Both vehicles were insured under separate liability insurance policies issued by the St. Paul Mercury Insurance Company.

On or about May 2, 1964 the Chevrolet was extensively damaged by a hit and run driver. With reference to its subsequent use and condition plaintiff testified:

"Q On August 31, 1964, were you driving the Chevrolet? A No.
''0 Did you drive it on occasions? A Yes I did.
"Q What type of an occasion would you use it? A When I just had to use it.
"Q Did you do any repair work to it after the vehicle was damaged by hit and run? A Nothing other than to pull the metal away from the wheel.
*36"Q Were you holding off doing any repair work? A I didn't feel the car was worth it.
"Q As you testified previously your car wasn't worth repairing, is that right? A Right.
"Q And you didn't repair it? A No.
"Q Has it been junked? A I understand that it has now.
"Q When was it junked? A I don't know.
"Q What did you do with it after the accident? A I sold it to a couple of buddies of mine.
"Q When? A In September or October, I believe. I'm not for sure.
"Q Up to that time it had just been parked, is that correct? A Most of the time, yes.''

On the morning of the accident plaintiff drove the Oldsmobile to work. At noon his wife took him to work and kept the car for her own use. That afternoon plaintiff answered a service call using a 1951 Chevrolet panel truck which was parked at the vending company and owned by Harold Carlon. He had only used the truck twice before for this purpose as he ordinarily furnished his own transportation. On returning to the shop the accident occurred in which the Clarks were injured. According to plaintiff's testimony he would have been driving his 1953 Chevrolet at the time of the accident if it had not been previously damaged and disabled. He had renewed the policy of insurance on the Chevrolet on June 3, 1964. The policy declarations indicated the car would be used in going to work.

Plaintiff contends he was afforded insurance protection and coverage while driving the panel truck at the time of the accident in which the Clarks were injured under:

*371. The "temporary substitute automobile" clause of the insurance policy on his 1953 Chevrolet; or
2. The "non-owned automobile" clause in either the insurance policy on his 1953 Chevrolet or the policy on the 1958 Oldsmobile; or
3. The provisions of the Financial Responsibility Laws of South Dakota.

Only the first contention requires discussion. In this regard the insurance policy on the 1953 Chevrolet contained the following insuring provision whereby the insurer agreed:

"To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of:
A. bodily injury, sickness or disease, including death resulting therefrom, hereinafter called 'bodily injury', sustained by any person;
B. injury to or destruction of property, including loss of use thereof, hereinafter called 'property damages'; arising out of the ownership, maintenance or use of the owned automobile * *

The policy further contained the following definitions:

" 'owned automobile' means the described private passenger, farm or utility automobile or trailer owned by the named insured, and includes a temporary substitute automobile * * *
" 'temporary substitute automobile' means any automobile or trailer, not owned by the named insured, while temporarily used as a substitute for the owned automobile or trailer when withdrawn from normal use because of its breakdown, repair, servicing, loss or destruction;”

*38A substitute automobile provision extends coverage to an insured who is temporarily using a vehicle not owned by him as a substitute for the insured automobile which has been withdrawn from normal use because of breakdown, repair, servicing, loss or destruction. This common clause is primarily designed for the benefit of the insured. Its purpose is not to defeat liability but to reasonably define coverage by limiting the insurer's risk to one operating vehicle at a time for a single premium. 12 Couch on Insurance 2nd Ed. § 45:219, p. 261. It should be so construed. To qualify for coverage an insured:

(1) Must be temporarily using a substitute vehicle;
(2) The substitute vehicle must be owned by someone other than the named insured; and
(3) The insured automobile must have been withdrawn from normal use because of its breakdown, repair, servicing, loss or destruction.

The word "temporarily" relates to and is a restriction on the use of the substitute vehicle. The policy does not similarly require that the insured vehicle be "temporarily" withdrawn from normal use. This phase of the insurance contract is without time limit. Harte v. Peerless Insurance Company, 123 Vt. 120, 183 A.2d 223. Furthermore, the policy does not require the replacement, or an intention to replace, the insured vehicle in use after being withdrawn from normal use. A breakdown, repair, loss or destruction might be permanent in nature. Obviously, there would never be an intention to replace in use an automobile damaged beyond repair, as in the present case, or one that has been lost or destroyed. Nevertheless, the substitute automobile clause is clearly designed to extend coverage to an insured in those cases during the remainder of the policy period. The insured is thereby afforded protection paid for and the insurer's risk is confined to one operating vehicle at a time.

This conclusion is not in accord with the view expressed by this court in Munson v. Speck, 76 S.D. 599, 83 N.W.2d 479, *39which case is relied upon by the defendant insurer and apparently followed by the trial court in denying coverage to plaintiff. In the Munson case the insured had abandoned a financed used automobile because he couldn't pay for it. Coverage was denied because the insured automobile had not been withdrawn from normal use because of breakdown, repair or servicing. This was decisive. However, the court went on to say "The word 'temporarily' read in connection with the whole of the policy provision indicates that it is intended the described car is to again be placed in use by the insured". This adds a requirement not found in the insuring agreement and relates the word "temporarily" to the insured vehicle rather than to the use of the substitute automobile. In refusing to follow this aspect of Munson v. Speck the Vermont court in Harte v. Peerless Insurance Company, 123 Vt. 120, 183 A.2d 223, observed that "The insurance contract itself fixes no limit in time during which the temporary extended coverage is to be effective ¥ ¥ * we cannot say that the substitute protection provided in the insurance contract should be forfeited as a matter of law solely on the strength of the fact that the repairs to the insured vehicle had not been accomplished in the three-month interval that elapsed after it had been withdrawn from normal use." See also Continental Cas. Co. v. Ocean Accident & Guar. Corp., Del., 209 A.2d 743 and McKee v. Exchange Insurance Association, 270 Ala. 518, 120 So.2d 690, in which the Munson case is factually distinguished and not followed. To avoid any possible conflict and future misunderstanding as to the meaning of this portion of Munson v. Speck the same is expressly overruled.

The fact plaintiff drove the Chevrolet on occasion after it was damaged does not defeat coverage. He used the car in its damaged and unrepairable condition only when he "just had to". The policy does not require the insured vehicle to be withdrawn from "all" use. It merely requires withdrawal from "normal" use. All-state Ins. Co. v. Roberts, 156 Cal.App.2d 755, 320 P.2d 90; Canal Insurance Company v. Paul, Tenn.App., 369 S.W.2d 393. This means a withdrawal from ordinary, customary or usual use. Mid-Continent Casualty Company v. West, Okl., 351 P.2d 398.

*40 The undisputed facts show plaintiff's Chevrolet was covered by a policy of liability insurance issued by the defendant insurer. The car had been damaged beyond repair by a hit and run driver, was rarely used thereafter and was eventually sold for junk. It could not be used in the usual or customary manner because it had been withdrawn from normal use by reason of its need for repair, breakdown, loss or destruction. Furthermore, it was not in use at the time of the accident. "An overt act of withdrawal by the insured is not necessary — that is, to withdraw the insured automobile from normal use it is not necessary that it be in a garage or a service station." 7 Am.Jur.2d, Automobile Insurance, § 104, p. 413. The extensive and unrepairable damages resulting from the hit and run accident automatically withdrew the insured Chevrolet from normal use. Therefore, at the time of the accident with the Clarks we conclude the panel truck was being used by plaintiff as a temporary substitute automobile under and in accordance with the terms of the substitute automobile provision of his policy on the Chevrolet.

Reversed.

HOMEYER, P. J„ BIEGELMEIER, J„ and BANDY, Circuit Judge, concur. ROBERTS, J., dissents. BANDY, Circuit Judge, sitting for RENTTO, J„ not participating.