Norman Paul Harvey, Philadelphia, for appellant.
Abram P. Piwosky, Philadelphia, for appellee.
Before Rhodes, P. J., and Hirt, Reno, Dithrich, Ross and Gunther, JJ.
[ 172 Pa. Super. Page 533]
This action of assumpsit was brought by Olive J. Fink, administratrix of the estate of Sheridan Vaughn
[ 172 Pa. Super. Page 534]
Fink, against Lumbermens Mutual Casualty Company on a policy of automobile insurance issued by the defendant to plaintiff's decedent. At the trial, after some of the plaintiff's testimony had been heard, counsel agreed that a verdict be directed for the plaintiff. Defendant's subsequent motion for judgment n.o.v. was refused and this appeal followed.
The facts of the case are not in dispute. The policy in suit was issued to plaintiff's decedent on June 27, 1950 and was stated to be effective to June 27, 1951. There was no encumbrance against decedent's automobile when the policy was issued, but on September 12, 1950 decedent caused an encumbrance in favor of his mother, Mrs. Mertie Fink, to be noted on his title certificate as security for a loan. On November 21, 1950, Sheridan Fink lost his life as the result of an automobile accident, and the insured automobile which he was driving at the time was almost completely demolished. This action followed defendant's refusal to pay for the damages to the insured automobile.
Under the heading 'Exclusions' the policy contained the following: 'This policy does not apply * * * (h) under coverages C, E, F, G, H and I, (1) while the automobile is subject to any bailment lease, conditional sale, mortgage or other encumbrance not specifically declared and described in this policy; * * *.' It is defendant's contention that it is not required to indemnify the insured if damage occurs to the insured automobile while there exists an encumbrance against it, irrespective of whether the encumbrance existed at the time the policy was issued or came into existence later. Consequently, the only question involved in the case is whether the exclusion provision of the policy applies to encumbrances existing at the time the policy was issued or includes encumbrances subsequently placed on the insured vehicle.
[ 172 Pa. Super. Page 535]
The question has not before been passed upon by an appellate court of this Commonwealth but the defendant, in support of its contention, has cited to us a number of cases from other jurisdictions. We have carefully examined these cases and agree with the learned court below that they are 'not persuasive in either reasoning or conclusion'.
However, we do believe that the rationale of the Oregon Supreme Court in Medford v. Pacific Nat. F. Ins. Co., 189 Or. 617, 219 P.2d 142, 222 P.2d 407, 16 A.L.R.2d 1181, is sound. In that case the defendant on May 26, 1946, issued a policy of insurance to plaintiff insuring his automobile against loss resulting from collision. On November 8, 1946, the automobile was totally wrecked. The policy provided that it did not apply under coverages for damage by collision 'while the automobile is subject to any * * * mortgage * * * not specifically declared and described in this policy'. There was an encumbrance on the car when the policy was issued and this encumbrance was described in the policy. On September 9, 1946, plaintiff paid off this encumbrance but a few days later borrowed money from a third party and this loan was secured by a chattel mortgage on the insured automobile. The Court stated, 219 P.2d at page 154: 'In view of the phraseology of the policy we hold that there was no warranty or agreement against encumbrances created after the execution of the policy. Such encumbrances obviously could not be described in 'this policy'. The words used are open to such construction, and applying the authorities earlier quoted, we hold that the policy ...