Gaddy Ex Rel. Sox v. State Farm Mutual Automobile Insurance

ARNOLD, Judge. Lee B. Franklin’s insurance policy provides coverage to the “owned” automobile described in the policy, to a newly acquired “owned” automobile for the first thirty days after *716 acquiring ownership, provided that the new automobile replaces a previous “owned” vehicle, and to any “non-owned” automobiles as defined in the policy. Under North Carolina law, an automobile is not “owned” within the meaning of an automobile liability insurance policy until the transferee obtains from the transferor a properly executed certificate assigning and warranting title. G.S. 20-72 (b); Nationwide Mutual Insurance Co. v. Hayes, 276 N.C. 620, 174 S.E. 2d 511 (1970). Because Lee B. Franklin did not have the certificate of title at the time of the accident, clearly, the 1957 Chevrolet was not an “owned” automobile within the terms of the policy. The question of whether or not the State Farm policy covered Vernon Lee Franklin’s Chevrolet depends, then, on whether or not the car was a “non-owned” automobile within the meaning of the policy. The policy says in pertinent part: “The following are insureds. . . : (b) With respect to a non-owned automobile; (1) the named insured, (2) any relative, but only with respect to a private, passenger automobile or trailer, provided his actual operation or . . . use thereof is with the permission, or reasonably believed to be with the permission, of the owner and is within the scope of such permission .... “ ‘Non-owned automobile’ means an automobile or trailer not owned by or furnished for the regular use of either the named insured or any relative, other than a temporary substitute automobile.” (Emphasis added.) In other words, all cars which are not owned within the meaning of G.S. 20-72 (b) are insured “non-owned” automobiles except those which are furnished for the regular use of the insured or his relative. State Farm argues that the automobile in question was furnished by Fender, its owner, for the regular use of the Franklins. State Farm cites two North Carolina Court of Appeals cases in support of its position, Nationwide Mutual Insurance Co. v. Bullock, 21 N.C. App. 208, 203 S.E. 2d 650 (1974), and Devine v. The Aetna Casualty & Surety Co., 19 N.C. App. 198, 198 S.E. 2d 471 (1973), cert. den. 284 N.C. 253, 200 S.E. 2d 653 (1973). Bullock is distinguishable. In that case the car owner, an invalid, had an arrangement with a friend whereby *717 the friend was given custody of the car. The friend regularly used the car for her personal business as well as to carry the invalid owner. This was a permanent arrangement, so the car was unquestionably being furnished for the regular use of the driver. Therefore, when the car was involved in an accident, her insurance policy did not cover the car under its “non-owned” automobile clause. Devine v. The Aetna Casualty & Surety Co., supra, State Farm’s other cited authority, is factually indistinguishable from the case at bar. Briefly stated, that case involved a driver who purchased a car but did not obtain title and license tags. He drove the car and was involved in an accident. This Court held that the car was furnished for regular use and, therefore, not insured under the “non-owned” car clause in the driver’s policy. Lee Franklin and his son had unrestricted use and possession of the Chevrolet car from the time the sales agreement was entered until the accident. They would have retained this unrestricted use and possession until proper registration and insurance were obtained had it not been for the accident. We conclude that the car was “furnished for the regular use of” the insured and his son within the meaning of the policy. Therefore, the car was not insured under the “non-owned” clause of the insured’s policy. Where an insured driver has the unrestricted use and possession of an automobile, the certificate of title for which is retained by another, the car is “furnished for the regular use of” the insured driver, and thus not covered by the “non-owned” clause of the policy. To hold otherwise would require the insurer to assume the risk of providing coverage of a vehicle not contemplated in the contract of insurance. This result is in accord with the purpose of the “non-owned” automobile clause as stated by this Court in Devine: “The clear import of the provision excluding coverage of another’s automobile which is furnished the insured for his 'regular use’ is to provide coverage to the insured while engaged in only an infrequent or merely casual use of another’s automobile for some quickly achieved purpose but to withhold it where the insured uses the vehicle on a permanent and recurring basis.” Id. at 206. Vernon Lee Franklin’s use of the car was not casual. He had acquired a car which he meant to use on a permanent basis. *718 All the evidence indicates that the 1957 Chevrolet in question was neither an “owned” nor a “non-owned” vehicle covered by the policy. The court should have granted summary judgment to defendant, State Farm, in each action. Accordingly, summary judgment for plaintiffs is reversed. This cause is remanded with directions that summary judgment be entered for defendant. Reversed and remanded. Chief Judge Brock and Judge Parker concur.