A motion to dismiss for failure of the complaint to state a claim upon which relief can be granted is the equivalent of a demurrer under the old practice for failure of the complaint to state a cause of action.
Sutton v. Duke,
It is firmly established law that, in the construction of an insurance policy, nontechnical words, not defined in the policy, are to be given the same meaning they usually receive in ordinary speech, unless the context requires otherwise.
Trust Co. v. Insurance Co.,
As we said in Insurance Co. v. Insurance Co., supra:
“When an insurance company, in drafting its policy of insurance, uses a ‘slippery’ word to mark out and designate those who are insured by the policy, it is not the function of the court to sprinkle sand upon the ice by strict construction of the term. All who may, by any reasonable construction of the word, be included within the coverage afforded by the policy should be given its protection. If, in the application of this principle of construction, the limits of coverage slide across the slippery area and the company falls into a coverage somewhat more extensive than it comtemplated, the fault lies in its own selection of the words by which it chose to be bound.
“In the construction of contracts, even more than in the construction of statutes, words which are used in common, daily, nontechnical speech, should, in the absence of evidence of a contrary intent, be given the meaning which they have for laymen in such daily usage, rather than a restrictive meaning which they may have acquired in legal usage.”
*44
In the absence of a contrary provision therein, a policy of automobile insurance applies only to the vehicle specifically described therein as the insured vehicle.
Beck Motors, Inc. v. Federal Mutual Insurance Co.,
Thus, the policy provides that a “covered automobile” includes a “newly acquired” motor vehicle if “as of the date of its delivery this insurance applies to all covered automobiles.” It is, obviously, not clear whether the date of delivery, contemplated in this provision of the policy, is the date of the delivery of the newly acquired vehicle or the date of the delivery of the policy. However, this term of the policy is even more obscure in its meaning than that. It states that the “newly acquired” vehicle is covered by the policy, even though it does not replace a described covered vehicle, if “this insurance applies to all covered automobiles.” (Emphasis added.) The purpose of the company in inserting this alternative provision into the policy definition of a “covered automobile” is a baffling mystery for, obviously, the policy applies, at any given date, “to all covered automobiles.”
We observe that the language in this policy varies, in several respects, including this alternative provision, from that used in the comparable provisions in policies of other companies which have come into courts for construction in cases hereinafter cited. It would seem plausible that the company here meant to say “owned automobiles,” so as to extend the coverage to a “newly acquired automobile,” provided, at the time the policy was issued, all vehicles owned by the named insured were insured by him *45 with this company. That is a provision frequently found in other such policies, but it is not what this policy says, and we cannot rewrite the policy by construction.
Certainly, we cannot construe this exceedingly ambiguous language in favor of the company. By hypothesis, this policy applied, both on the date the policy was delivered and also on the date the International tractor was leased, to “all covered automobiles,” for a “covered automobile” is, necessarily, one to which the policy applies. Giving this provision its literal meaning, a “newly acquired” vehicle is a “covered automobile,” even though it does not replace a “described covered vehicle.”
Many of the policies involved in the cases hereinafter cited extended the coverage therein to a vehicle the “ownership” of which was “newly acquired.” This policy does not so state. We are, therefore, not required in this case to determine whether the term “ownership,” so used, would demand that the insured acquire the absolute ownership of, or the registered title to, the vehicle in order to bring it within the term “newly acquired,” as used in this policy. The term here used is “newly acquired * * * during the policy period.” The purpose of this provision is to limit the extension of the coverage to a vehicle acquired after the issuance of the policy.
Insurance Co. v. Shaffer, supra;
7 Am. Jur. 2d, Automobile Insurance, § 101 (1963); Annot.,
In the present case, if the International tractor was “acquired,” within the meaning of this policy, it was “newly acquired.” The complaint alleges that the International tractor was leased by the plaintiff from the owner thereof for a fixed period of 21 days, beginning after the issuance of the policy. By the express terms of the lease agreement, the plaintiff undertook to return this tractor to the lessor “in the same condition,” ordinary wear and tear and certain specified risks excepted. The lease agreement did not authorize either party thereto to terminate it at will. Therefore, by this agreement, the plaintiff acquired the legal, non-terminable right to use the vehicle as if he were its absolute owner for the specified period. This cir
*46
cumstance distinguishes the present case from a mere temporary, gratuitous loan of a vehicle terminable at the will of the lender, or a mere gratuitous, temporary exchange of vehicles belonging to the insured and a friend, which was the case in
Clarno v. Gamble-Robinson Co.,
Assuming, for the sake of argument, that the above mentioned, ambiguous, alternative provision in paragraph (b)(i) of the definition of “covered automobile” is not sufficient to bring this “newly acquired vehicle” within the coverage of the policy, we turn to the question of whether the International tractor is covered because it replaced the described covered vehicle. In our opinion, the allegations of the complaint, which we must presently take to be true, are sufficient to bring it within the definition of “covered automobile” contained in the policy, for the reason that it did replace the described covered vehicle.
Not infrequently, automobile insurance policies contain specific provisions with reference to the coverage of a “temporary substitute” for the described vehicle.
See, Quaderer v. Integrity Mutual Insurance Co.,
In
Continental Casualty Co. v. Employers Mutual Casualty Co.,
*47 “In the absence of evidence that the word ‘replacement’ had a meaning peculiar to the insurance field or that the parties intended any different meaning in the automobile liability policy, the usual and ordinary meaning of the term, that is, to provide a substitute or equivalent in place of a person or thing, would govern.”198 Kan. at 96 ,422 P. 2d at 562 .
The same statement appears in
Nationwide Mutual Insurance Co. v. Mast,
In an athletic contest, for example, in ordinary speech, a substitute, sent into the game, “replaces” the starting player, whether the change be intended to continue for the remainder of the contest or only for a brief period to enable the starter to rest. He is a replacement for the starter because the number of participants in the game remains the same and, while the substitute is on the field, the starter does not participate in the contest. Similarly, the International tractor replaced the Ford tractor in the plaintiff’s business for the 21 day lease period.
If the defendant insurance company had intended to limit its extension of the “covered automobile” to a permanent replacement for the described vehicle, it could easily have so provided in its policy. Not having done so, the policyholder is entitled to give the word “replaces” its common and ordinary meaning, which the complaint alleges he did.
Quite obviously, the policy provision here in question was not intended by the parties to enable the policyholder to purchase collision coverage on a designated vehicle and, without payment of a further premium, to extend that coverage to a second vehicle acquired by him as an additional vehicle and used contemporaneously with the designated vehicle. There is, however, in this respect, a clear distinction between an additional vehicle and a substitute vehicle which “replaces,” even though temporarily, the vehicle designated in the policy.
Not infrequently, policies, containing a provision extending coverage to a newly acquired vehicle which replaces the designated vehicle, provide that the insurance upon the designated vehicle terminates when it is replaced.
See, Dean v.
*48
Niagra Fire Insurance Co.,
We think that the decision of this case is controlled by the principle announced by this Court in
Insurance Co. v. Shaffer,
*49 “It is our opinion that the replacement vehicle is one the ownership of which has been acquired after the issuance of the policy and during the policy period, and it must replace the car described in the policy, which must be disposed of or be incapable of further service at the time of replacement. * * * On 11 August, 1957, date of the accident, the State Farm Ford was still owned by Shaffer and under his control, in operating condition and being driven by him and his son. It was then covered by the State Farm policy. Therefore, the 1954 Ford could not replace the State Farm Ford since Shaffer still retained the State Farm Ford in operable condition.” (Emphasis added.)250 N.C. at 52 ,108 S.E. 2d at 54 .
Our decision in the
Shaffer
case has been frequently cited, by the courts of other states, as establishing the proposition that a “newly acquired” automobile does not “replace” the vehicle designated in the policy if the designated automobile continues to be owned by the policyholder, under his control and
in operable condition. Fleming v. Nationwide Mutual Insurance Co.,
In the Beck Motors case, supra, the plaintiff insured was an automobile dealer. It was his custom to furnish, from his used car stock, a car for use of his sales manager, replacing it with another car, from time to time, as the various vehicles were sold, and, as each such successive replacement occurred, making an appropriate change in the policy of insurance as to the vehicle covered. He had a similar agreement with his accountant. An opportunity arose to sell the car being used by the accountant, so the plaintiff picked up that car and left in its place a 1967 Plymouth which the sales manager had previously been driving, thus leaving the sales manager with no car furnished by the plaintiff. Some time thereafter, the plaintiff acquired in trade a 1966 Dodge which he immediately turned over to the sales manager for the latter’s use, but there was no change in the insurance policy *50 so as to designate this as an insured car. On his way home that day, the sales manager had a wreck in the Dodge and was killed. At that time, the plaintiff owned approximately 200 to 250 automobiles, his stock in trade, but did not have a fleet insurance policy. The question was whether the Dodge so driven by the sales manager at the time of the accident replaced the Plymouth which was designated in the policy and which had been so taken from the sales manager and turned over to the accountant. Applying the rule laid down in our Shaffer decision, supra, the Court held the Dodge did not replace the Plymouth, the Plymouth being still owned by the plaintiff, still in operable condition and still actually in operation by the accountant. Furthermore, as the Missouri Court stated, the Dodge was not acquired by the plaintiff for the purpose of replacing the Plymouth but was acquired by him in his regular course of business as an automobile dealer. That decision is consistent with the one which we reach here.
In Mitcham v. Travelers Indemnity Co., supra, the car described in the policy was a Buick owned by the insured. He then purchased a Lincoln which he was driving at the time of the accident. On the same day that he acquired the Lincoln, the insured delivered his Buick automobile to a motor company to be sold for him and requested the motor company to obtain insurance on the Buick to protect it against fire and theft, which insurance was taken in another company. The Buick was not traded in upon the purchase price of the Lincoln. The insured retained title to the Buick. No purchaser for the Buick was found and no one used it prior to the death of the insured in the accident, which occurred some 12 days after the purchase of the Lincoln. The Court of Appeals for the Fourth Circuit held the Lincoln did not, in fact, replace the Buick, since the insured still retained title to the Buick and full control over it and “at any time he could have taken it from the custody of the motor company and put it into use.” Thus, at the time of the accident, the Buick, which was designated in the policy as the insured car, was still owned by the insured, was in an operable condition and was subject to his operation at will. This decision is also completely consistent with the one we here reach. In our opinion, the other cases above cited, denying coverage, are likewise consistent with our present decision.
*51
In
Merchants Mutual Casualty Co. v. Lambert,
“We think it plain that any reasonable person in the position of the defendant Lambert [the insured] would have understood from the language set forth in the statement of facts, that when he purchased another automobile to replace the 1930 Pierce-Arrow, his insurance would automatically apply to the replacing automobile ‘as of the date of its delivery to him.’ The plaintiff, if it had seen fit, might have inserted a provision that the insurance should not attach to the replacing car until the insured had parted with the ownership and possession of the replaced car, but in the absence of any such provision in the policy, these factors of the situation were properly regarded by the trial court as indecisive.”90 N.H. at 510 ,11 A. 2d at 362-363 .
In accord with the holding of the
Lambert
case,
supra,
that to “replace” a vehicle described in the policy, it is not required that the insured dispose of that vehicle if it is not operable, are the following:
Hoffman v. Illinois National Casualty Co.,
In the Hoffman case, supra, the vehicle described in the policy was a Ford tractor which was used by the plaintiff in his business of making daily trips to carry livestock to Chicago. This vehicle was involved in an accident. It was not completely wrecked, but was not thereafter used or operated by him. He filed a claim for the loss of this vehicle under his policy, but did not notify the company that he was purchasing a new vehicle. While that claim was pending, he purchased another Ford tractor and used it in his same business. One week later, the second tractor, while being so operated, was involved in the accident in question. The Court of Appeals for the Seventh Circuit said:
“[I]t is clear that when the first tractor was wrecked and the second tractor was acquired and used in its place, a reasonable person in such a situation, from the language used, would have reasonably assumed that all coverage with respect to the first tractor was terminated and that the policy, without notice, was automatically transferred as of the date of the delivery of the second tractor for a period of 30 days [the time allowed in the policy for giving notice] to the newly acquired tractor.”159 F. 2d at 566 .
In the Filaseta case, supra, the vehicle described in the policy was a 1949 Studebaker truck, used by the insured, a masonry contractor, for the purpose of hauling materials. While being so used, it broke down and had to be towed to a garage. The insured then borrowed (emphasis added) a 1953 Chevrolet truck in order to continue his business. This was used for the same purpose for which the Studebaker was used. Thereafter, the insured bought the previously borrowed Chevrolet truck and, three days later, it was involved in an accident. At the time of the second accident, the Studebaker truck was still undergoing repairs. After the completion of the repairs, the Studebaker truck was driven to a service station where it was advertised for sale and was sold some two months later. The court held the Chevrolet truck replaced the Studebaker within the meaning of the policy, saying:
“In this case there was no factual risk of the insurance company covering two trucks at the same time as the listed vehicle was inoperative, or had been placed upon a lot for *53 resale where it was not subject to the risks run by the replacement vehicle. In such cases the courts have found in favor of the insured. Most certainly, a hard and fast rule that the car must be junked or sold before the replacement clause can go into effect would work in many cases a substantial injustice.” 209 Pa. Super, at 328,228 A. 2d at 22 .
In the Brescoll case, supra, the designated automobile was a Ford. It was involved in a collision and was thereafter operable only in second and third gears but was continued in service for some months. It was then taken to a garage where repairs were undertaken in order to put it in condition for sale. The repairs were continued over a period of about one month, during which the Ford was entirely out of service. The insured, meanwhile, purchased a Lincoln with the intention of selling the Ford when the repairs were completed. When the repairs of the Ford were completed, it was delivered to the custody of the plaintiff in operable condition and was placed by the plaintiff on a car lot for sale. Efforts to sell it were not successful so the plaintiff removed it to her residence and there continued to advertise it for sale, using the Lincoln meanwhile. The Ford was used only to transport it to and from the place of repair or in demonstrations to prospective customers. The court held the Lincoln had replaced the Ford in “the ordinary meaning of the term,” that is, a substitute or equivalent, saying:
“In the instant case, the Ford car was out of service from September 18th to the time of completion of its repair in the latter part of October. After its repair, the Ford was used only for transportation incident to its sale. From the date of its purchase, the Lincoln, instead of the Ford, was regularly and continuously used by the insured. In our opinion, to all intents and purposes, the Lincoln thus replaced the Ford.”116 Ohio App. at 542 ,189 N.E. 2d at 176 .
The present case is substantially stronger for the insured than the Brescoll case, supra, for here, interpreting the complaint favorably for the plaintiff, as is proper upon the motion to dismiss, it would appear that at all times from the acquisition, by lease, of the International tractor, the Ford tractor, designated in the policy, was undergoing repairs and was not in an operable condition. Thus, we hold that, as of the time of the accident, the *54 Ford tractor had been replaced by the International tractor so that the policy covered the International tractor.
We are not required in this case to determine whether, during the period that the International tractor was so covered as a replacement vehicle, the defendant company would have been liable had the Ford tractor been struck while within the repair garage.
We think it clear that had the insured notified the company when he acquired the International tractor by lease that it was a replacement for the Ford, it would be so deemed within the meaning of this policy for that would have shown his intent so to replace the Ford. But, the policy did not require such notice until 30 days after the acquisition and the complaint clearly alleges his intent to bring the International tractor under the coverage of the policy. The provision in the policy that the “newly acquired” vehicle is a “covered vehicle,” if the named insured notifies the company within 30 days, clearly sets up a condition subsequent, not a condition precedent, to the coverage of the “newly acquired” vehicle. Obviously, the company intended to insure the “newly acquired” vehicle during the grace period allowed for the giving of the notice.
See:
Annot.,
We observe no basis for a distinction in this respect between liability insurance and collision insurance, suggested by the defendant in oral argument. It is true that the public has an interest in the maintenance of liability insurance as is evidenced by the enactment of our Financial Responsibility Law. For that reason, ambiguous provisions in liability insurance policies are construed against the insurer. However, for the reasons above set forth, ambiguous provisions in collision insurance policies are also construed against the insurer. Furthermore, we may take judicial notice of the well known fact that it is customary, though not universal, for collision coverage and liability coverage to be provided in the same insurance policy. It would be most confusing, and contrary to the probable intent of the parties, if the term “replace,” with reference to a “newly acquired” vehicle, were to be given different meanings with reference to the different coverages in the same policy, in the absence of a clear expression therein of such intent.
*55 We, therefore, conclude that it was error to allow the motion to dismiss the plaintiff’s complaint on the theory that it fails to state a cause of action. In our opinion, the plaintiff has stated a cause of action, somewhat meagerly, but sufficiently under the present concept of “notice pleading.” Whether he can, at trial, establish the facts alleged in the complaint, as elaborated by the documents thereto attached, is a matter not presently before us.
Reversed.