Court Opinion

ID: 8877761
Source: CourtListenerOpinion
Date Created: 2022-11-26 19:36:49.828206+00
Date Added: 2024-06-11T17:06:27.684515
License: Public Domain

CRAVEN, Circuit Judge
(dissenting):
The court’s decision seems to me an unjustifiably narrow interpretation of the replacement clause in an automobile liability insurance policy. To be sure, ordinarily the change of possession and ownership of the “old” for the “new” car occurs at or about the time of delivery of the new automobile. One is substituted for the other. When the usual occurs, there is no problem and ordinarily no litigation. Preoccupied with the usual fact situation, the court reads the policy provision as if it contained words specifying the time when replacement must occur. It does not.1 One need only look at the language of the policy (words chosen presumably by the insurer and not the assured) to clearly perceive that “replacement,” within the meaning of the policy, may occur in at least these two fact situations :
(a) Simultaneous, or virtually simultaneous, exchange of one vehicle for another ;
(b) Purchase of a “new” vehicle and subsequent abandonment or sale of the “old” vehicle.
In the latter situation there arises, of course, during the interim, the problem of protecting the insurance company against *151the risk of double coverage, i. e., the risk that the owner may take the position that whichever vehicle is in collision bears the insurance. That there may be a problem does not justify the court’s rewriting the insurance policy in order to avoid it. And here there is no such problem for the simple reason that the collision did not occur until long after the “old” vehicle had been sold to a new owner. This is not in dispute: it is agreed that the new purchaser of the “old” vehicle had even taken out liability insurance with another company.
Thus, the court is not faced with the necessity of guarding, as it should, an insurance company from double risk for a single premium. There was no double risk, or to be more precise, the risk of double coverage ended when the “old” vehicle was sold — long before the collision. At the time of the collision, the assured owned one and only one vehicle. That it was a Pontiac passenger vehicle instead of a business type Ford van would seem to have diminished rather than increased the risk. The premium had been accepted. Statutory notice (Form 402) had been sent by the Highway Department to the insurer advising that the assured claimed coverage on the “new” vehicle.
The court’s perplexing decision cannot be explained on the ground that, inequitable or not, it is compelled by state court decisions. The only South Carolina case cited by the majority does not require, if indeed it even supports, such a result. In Miller v. Stuyvesant Ins. Co., 242 S.C. 322, 130 S.E.2d 913 (1963), upon purchase of the alleged replacement car by the named insured, title to the original car was transferred into the assured’s wife’s name. The policy defined an insured as “named insured and his spouse if a resident of the same household.” Replacement vehicle was defined to be “an automobile, ownership of which is acquired by the named insured or his spouse if a resident of the same household if * * * it replaces an automobile owned by either and covered by this policy.” In view of these policy terms, the South Carolina Supreme Court quite understandably held that there was no replacement because the original car remained in the possession and ownership of “the named insured or his spouse, who was a resident of the same household.” A decision that there was no replacement is scarcely authority for rewriting the policy to specify when replacement must occur.
In Mitcham v. Travelers Indem. Co., 127 F.2d 27 (4th Cir. 1942), on which the court also relies, the accident occurred before the original vehicle was sold. Unlike Miller and Mitcham, the insured in the instant case did not have ownership or possession of the replaced vehicle at the time of the collision.
Where there is no danger of an insurance company being saddled with double coverage, I think it unjust to permit it to escape single coverage. The innocent collision victims are third party beneficiaries of automobile liability insurance and are entitled to protection where (a) the premium has been paid, (b) the risk is not increased, and (c) the insurance company is not subjected to the danger of double coverage. The universal rule, frequently confirmed by the South Carolina Supreme Court, that terms of an insurance contract should be construed most liberally in favor of the insured should be invoked in the instant case to afford the assured coverage. See, e. g., Glisson v. State Farm Mut. Auto. Ins. Co., 246 S.C. 76, 142 S.E.2d 447, 449 (1965). At the very least, the policy ought not be amended by the court to insert words of limitation that are simply not there.
I dissent.

. See opinion of the court, supra, p. 147, quoting the section of the policy being construed.