Summary
finding that an expansive reading of those insured under the policy is detrimental to the policy holder by resulting in an increase in their premiums
Summary of this case from PITSENBARGER v. FOOSOpinion
No. 38502
Decided June 10, 1964.
Insurance — Automobile indemnity — Construction of standard garage liability policy — Dealer's coverage of permissive user — Until delivery made to purchaser.
Under a standard garage liability policy of insurance, issued to an automobile dealer who is the named insured, which policy contains an endorsement that reads "it is agreed that coverage under this policy is extended to include vehicles until delivery is made to either the original purchaser or person so designated by the insured as the one for whom delivery was intended," coverage of a permissive user of a car owned by the automobile dealer is extended until such time as delivery of the car is made by the automobile dealer to the purchaser, and then such coverage ceases.
CERTIFIED by the Court of Appeals for Cuyahoga County.
Robert Cook was the owner-operator of a tractor-trailer unit which was damaged as a result of a collision with an automobile driven by defendant Kozell.
The Fireman's Fund Insurance Company had issued a $500 deductible policy of collision insurance on Cook's vehicle and under the terms of this policy made payment to Cook.
Cook instituted an action for damages for property loss, loss of income and other expenses in the Cleveland Municipal Court against Kozell, joining Fireman's as a defendant. Upon trial, Cook was awarded a judgment of $3,900, and Fireman's recovered a judgment of $486.94.
The judgments against Kozell were not paid.
This cause of action arose when Cook and Fireman's filed a supplemental petition in the Cleveland Municipal Court against the Continental Casualty Company, a new party defendant. Continental had issued a garage liability policy of insurance, naming the Euclid Ford Company as the insured.
Kozell had purchased the car which he was driving at the time of the accident from the Euclid Ford Company, and the title to this vehicle was in the process of being transferred to his name.
Continental filed an answer to the supplemental petition, denying that Kozell was a named insured in any policy of insurance written by the company; and that Kozell had complied with any of the terms, provisions and conditions of such policy of insurance issued by Continental. Continental alleges that Kozell had purchased and operated the automobile prior to the time of the accident; that Kozell did not report the accident and did not forward any suit papers or advise the company that he had been sued; that Kozell had made no request upon the company to defend the lawsuit brought against him by Cook; that Kozell retained his own counsel to defend the lawsuit and conducted the trial of the case without notice to Continental; and that Kozell acted contrary to the interests of Continental and, therefore, voided and terminated such policy of insurance so far as the interests of Kozell, Cook and Fireman's were concerned.
Continental denies that it was liable for the judgment obtained against Kozell and denies all the other allegations set forth in the supplemental petition.
Cook and Fireman's filed replies to the answer of Continental, denying the affirmative allegations made in the answer filed by Continental. The replies do not deny that the automobile had been purchased and driven by Kozell prior to the accident.
Cook and Fireman's moved for summary judgment against Continental.
The accident occurred on January 31, 1961.
A photostatic copy of a certificate of title, dated February 2, 1961, and indicating that Kozell took title to the automobile involved on that date, was filed. Copies of letters allegedly exchanged between Continental and counsel representing Cook were also filed in support of the motion for summary judgment.
The motion for summary judgment was granted.
On appeal, the Court of Appeals reversed the judgment of the trial court and remanded the cause to the Cleveland Municipal Court for trial upon the supplemental petition and the answer of Continental.
The Court of Appeals certified the record to this court on the ground of a conflict with a judgment rendered upon the same question by the Court of Appeals for Lucas County in the case of Ohio Farmers Ins. Co. v. Hoosier Casualty Co., 117 Ohio App. 507.
Messrs. Woodle Wachtel, Mr. George R. Hewes and Messrs. Hollingsworth Hollingsworth, for appellants.
Messrs. McNeal Schick, for appellee.
The two important questions to be determined are: (1) Was Kozell an insured of Continental at the time of the accident? (2) Was the 1955 Dodge automobile, which he had purchased from the owner, the Euclid Ford Company, and which had been delivered to him at the time of purchase, covered at the time of the accident by the garage liability insurance policy issued by Continental to the Euclid Ford Company?
These questions are raised by the supplemental petition, wherein it is alleged "that Andrew J. Kozell and said 1955 Dodge automobile were then and there insured by the new party defendant, Continental Casualty Company, against liability on account of any suit or judgment for property damage, loss of use and other expenses occasioned while Andrew J. Kozell was operating said 1955 Dodge automobile," and by the answer of Continental that "* * * said new party defendant herein denies prior to, and at the time referred to in the supplemental petition of the plaintiff herein said Andrew J. Kozell was a named insured in any policy of insurance written by said new party defendant; * * * defendant herein denies each and every other allegation and averment made and contained in the supplemental petition * * *."
Plaintiff is not a named insured in the policy referred to in the supplemental petition.
Plaintiff relies upon the language in a policy of insurance, No. AGL3711240, issued by Continental to the Euclid Ford Company, effective October 1, 1960. The portion relied upon is: "III. Definition of Insured * * * (2) any person while using an automobile covered by this policy, and any person or organization legally responsible for the use thereof, provided the actual use of the automobile is by the named insured or with his permission."
Plaintiff's position is that Kozell purchased the car involved in the accident from the Euclid Ford Company and took possession and delivery, but that a certificate of title had not yet been issued to him at the time of the accident, and the owner of the car, at the time of the accident, was the Euclid Ford Company; that Kozell was a user with permission of the owner, the Euclid Ford Company; and that, therefore, Kozell was an insured and the car was insured under Continental's policy according to the law as pronounced by this court in the case of Brewer v. DeCant, 167 Ohio St. 411, the third paragraph of the syllabus of which reads as follows:
"Where a purchaser contracts to buy an automobile and takes possession thereof from an automobile dealer [covered by a standard garage liability insurance policy containing the above-quoted provision] and uses the automobile, such use is a use with the permission of the dealer until such time as a certificate of title thereto is issued to the purchaser."
Continental's position is that the endorsement in its policy, reading that "it is agreed that coverage under this policy is extended to include vehicles until delivery is made to either the original purchaser or person so designated by the insured as the one for whom delivery was intended," extends the coverage until such time as delivery of a car is made by the automobile dealer to the purchaser, and then such coverage ceases.
No such endorsement was a part of the policy in either Brewer v. DeCant, supra, or Ohio Farmers Ins. Co. v. Hoosier Casualty Co., supra.
It seems clear that the language of the endorsement extends coverage of an automobile owned by a dealer and covered by a garage liability policy to a person driving it with permission of the dealer-owner to the time when such automobile has been purchased and has been delivered to the purchaser. Paragraphs two and three of the syllabus of Brewer v. DeCant, supra, and paragraphs one and two of the syllabus of Ohio Farmers Ins. Co. v. Hoosier Casualty Co., supra, recognize the distinctions among an owner, a purchaser and a user of an automobile.
Plaintiff argues that this endorsement is a limitation upon the liability of the insurance company, and that in any dispute between the parties to an insurance contract concerning the construction of the language of the contract, such language must be construed against the insurer, i.e., the party drafting the language.
There are two weaknesses in this argument. First, the plaintiff is not a party to this contract of insurance and, therefore, is not in a position to urge, as one of the parties, that the contract be construed strictly against the other party. Second, the construction urged by the plaintiff would be a disadvantage to both parties to the contract. It would make Continental liable for damages for which its named insured is not liable and for a hazard not covered by the policy, and the Euclid Ford Company has no interest in covering the purchaser of an automobile for liability for property damage which such purchaser causes through his negligent operation of the automobile after the company has delivered it to him. This could only result in higher insurance premiums for the Euclid Ford Company. An insured gets the coverage he pays for, and, if the coverage is to be increased beyond that which he needs or for which the policy provides, the premiums will necessarily be increased. Therefore, the plaintiff who is not a party to the contract is not in a position to urge a construction of the contract which would be detrimental to both parties to the contract.
This case is not in conflict with the case of Ohio Farmers Ins. Co. v. Hoosier Casualty Co., supra, and is distinguishable from it and Brewer v. DeCant, supra, on the ground that the policy in each of those cases did not contain the endorsement which is a part of the policy in this case. This endorsement provides, in effect, that, when a permissive user of an automobile owned by an automobile dealer, named insured under a garage liability policy, becomes the purchaser of such automobile and accepts delivery from the insured dealer-owner, the coverage on the automobile for property damage caused by the negligence of the purchaser while driving such automobile ceases at the time of the acceptance of delivery by the purchaser.
Therefore, the judgment of the Court of Appeals is affirmed.
Judgment affirmed.
TAFT, C.J., ZIMMERMAN, MATTHIAS, GRIFFITH, HERBERT and GIBSON, JJ., concur.