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Economy Fire & Casualty Co. v. Pearce

OPINION FILED DECEMBER 4, 1979.

ECONOMY FIRE & CASUALTY COMPANY, PLAINTIFF-APPELLEE,

v.

TREVOR PEARCE ET AL., DEFENDANTS. — (LARRY L. SCHNAUTZ, DEFENDANT-APPELLANT.)



APPEAL from the Circuit Court of Richland County; the Hon. ROBERT W. WHITMER, Judge, presiding.

MR. PRESIDING JUSTICE JONES DELIVERED THE OPINION OF THE COURT:

Rehearing denied January 14, 1980.

This appeal involves an action for declaratory judgment brought in the circuit court of Richland County by Economy Fire and Casualty Company (Economy) against Trevor Pearce, Debra Pearce (now Parish), Roger Parish and Larry Schnautz. Defendant Schnautz appeals from a judgment declaring that by reason of a "youthful driver endorsement" attached to an automobile insurance policy issued by Economy to Trevor Pearce, Economy had no obligation to defend Debra Pearce or Roger Parish in an action brought against them by Larry Schnautz for damages arising out of an automobile accident involving Trevor Pearce's automobile, or to pay any sums which they might become legally obligated to pay as a result of such action. Schnautz also appeals a simultaneous order denying his motions for leave to amend his answer and to conduct additional discovery.

The issues on appeal are: (1) whether the youthful-driver endorsement was in effect at the time of the accident; (2) whether the endorsement precludes coverage of the claims against Debra Pearce; (3) whether the endorsement is void as against public policy; and (4) whether the court abused its discretion in denying Schnautz's motions for leave to amend his answer and to conduct additional discovery.

On January 10, 1976, Trevor Pearce was the named insured on an automobile policy issued by Economy which covered a certain 1974 Chevrolet Nova automobile. On that date, this automobile was involved in a head on collision with a pickup truck driven by Larry Schnautz. At the time of the accident the Pearce automobile was being driven by 20-year-old Roger Parish with the permission of Pearce's daughter, Debra, who was a passenger in the automobile. As a result of the accident, Schnautz sustained severe and permanent bodily injuries. He subsequently sued both Parish and Debra Pearce to recover damages for these injuries. Economy then commenced the present declaratory judgment action which resulted in the entry of a judgment that Economy had no obligation under the policy to afford any coverages in favor of Debra Pearce or Roger Parish with respect to Schnautz's lawsuit because the insured automobile was being operated by Parish in violation of the policy's "youthful driver" endorsement at the time of the accident.

The original policy period of the policy upon which the Pearce automobile was listed as an owned automobile extended from April 19, 1974, to April 19, 1975. Condition 1 of the policy provided that the policy could be continued in force for successive policy periods by payment of the required continuation premium to Economy on or before the effective date of each successive period. The instant policy was continued in force for the successive period of April 19, 1975, to April 19, 1976, by Trevor Pearce's payment of the continuation premium by check dated April 15, 1975. The policy obligated Economy to pay on behalf of an insured all sums which he became legally obligated to pay because of bodily injury or property damage "arising out of the ownership, maintenance or use of the owned automobile" and to defend any suit alleging such bodily injury or property damage and seeking damages which were payable under the terms of the policy. Under the policy, persons insured with respect to the owned automobile included the named insured, Trevor Pearce, any resident of the same household and "any other person using such automobile with the permission of the named insured * * *."

Condition 14 of the policy, entitled "Changes," provided in part that "the terms of this policy [shall not] be waived or changed, except by endorsement issued to form a part of the policy, signed by a duly authorized representative of the company."

Several printed endorsements were attached to the policy issued to Pearce in 1974 pursuant to condition 14. Their presence was indicated in item 7 of the declarations sheet of the policy in the following manner:

"Form designations of printed endorsements attached to policy are: CE-139, CE-182, CE-90, CE-5."

The endorsement which is relevant to this appeal is the youthful-driver endorsement, form CE-90. It appeared as follows:

"YOUTHFUL DRIVER ENDORSEMENT

It is a part of the consideration of this policy that the coverages afforded herein are not in force when or if an automobile covered by this policy is being driven by any person under 25 years of age, other than the named insured and/or a member of his immediate family.

I (we) assent to the conditions of this endorsement and the terms stated herein.

X TREVOR L. PEARCE Signature of Named Insured

All other conditions, stipulations, representations and limitations stated in the policy not in conflict herein remain the same. Effective Date. Unless an effective date is entered below, the endorsement shall be effective as of the beginning of the policy period stated in (1) the declaration of ...


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