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Sturgeon v. Automobile Club Inter-ins. Exch.





APPEAL from the Circuit Court of St. Clair County; the Hon. RICHARD P. GOLDENHERSH, Judge, presiding.


Plaintiffs herein are father and son who brought suit to compel defendant to pay $5,000 pursuant to the medical expenses provision of an automobile insurance policy. After plaintiffs and defendant each moved for summary judgment, the trial court rendered judgment in favor of plaintiffs and later denied defendant's motion to reconsider. On appeal defendant raises the single issue of whether the vehicle driven by the son at the time of the automobile accident leading to this lawsuit was covered by the insurance policy under which plaintiffs seek to compel payment.

On September 14, 1976, Clifford and Katharyn Sturgeon, husband and wife, applied to Automobile Club Inter-Insurance Exchange for automobile insurance. In the application they listed themselves and their 26-year-old daughter who resided with them as operators. Two automobiles, a 1969 Chevrolet and a 1975 Oldsmobile, were declared in this application for coverage. Defendant issued a policy of insurance pursuant to the application. Later, for an additional premium of $75, the policy was amended, effective November 15, 1976, to add as an operator the Sturgeons' unmarried son, David, age 19 at the time.

Sometime in or around March of 1977, while the policy was in effect, David Sturgeon took title to a 1958 Chevrolet automobile, purchasing it with $100 of his own funds. The policy was never amended to include coverage of the 1958 Chevrolet nor was application for such amendment ever made or any premium ever paid regarding that automobile. About two months later on May 8, 1977, while David Sturgeon was driving the 1958 Chevrolet home following a night of camping, it went off the highway and overturned, injuring him as well as some of the four passengers in the car at the time of the accident. David Sturgeon's ensuing medical expenses exceeded the policy limit of $5,000.

While the policy was in effect and at the time of the accident David Sturgeon resided with his parents. He used the 1958 Chevrolet regularly to go to work and for pleasure, apparently sharing the use of it with his girlfriend but keeping it in a garage at his residence. His father had no legal interest in the automobile and never used it. The record is silent as to any interest in or use of the vehicle by his mother. We assume there was none.

Construing the policy the trial court found David Sturgeon to be an "assured" and the 1958 Chevrolet to be an "owned" automobile within the terms of the policy, necessitating defendant's payment of the amount of the policy limit for David Sturgeon's medical expenses. Defendant concedes the first part of the finding but objects to the second.

The pertinent provisions of the policy's definition of "owned automobile" are these:

"(a) a private passenger * * * automobile owned by the assured described in this policy for which a specific premium charge indicates that coverage is afforded.

(c) a private passenger * * * automobile ownership of which is acquired by the named assured during the policy period provided,

(1) it replaces an owned automobile as defined in (a) above, or

(2) the exchange insures all private passenger * * * automobiles owned by the named assured on the date of such acquisition and the named assured notifies the exchange during the policy period or within 30 days after the date of such acquisition of his election to make this and no other policy issued by the exchange applicable to such automobile, or

(d) a temporary substitute automobile."

Upon application of the facts outlined above it may be seen that the 1958 Chevrolet does not qualify as an "owned automobile" under paragraph (a) because, although it is owned by an assured, David Sturgeon, it is not described in the policy and no premium was ever paid for its coverage.

• 1 Plaintiffs insist that the phrase, "described in this policy" and that which follows modifies "assured" and consequently refers to David Sturgeon. We disagree. It is to be noticed that after the addition of David Sturgeon as an occasional driver of the 1969 Chevrolet, though not the 1975 Oldsmobile, the premium charge for "Excess Medical Payments," for example, on that automobile was increased from $6 to $13, while the premium charge for that kind of coverage on the other automobile remained the same. Because premiums are assessed and paid in terms of a given automobile in any policy, the provision "for which a specific premium charge indicates that coverage is afforded" would have no meaning at all if it were applied, as plaintiffs urge it should be, to a person, that is, to "assured," rather than to "automobile." If the policy provision in question referred to "assured," as plaintiffs argue, it would read "for whom a premium has been paid." We think the reference of the phrase is plain and that it is to the "automobile * * * described in this policy for which a premium has been paid." Furthermore, plaintiffs' proposed construction is inconsistent with the manner of determining premium amounts, ...

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