489 F.2d 1393
CANAL INSURANCE COMPANY, Plaintiff-Appellant,
James C. BALDREE, Defendant-Appellee.
No. 73-3017 Summary Calendar.*
*Rule 18, 5 Cir.; see Isbell Enterprises, Inc.
Citizens Casualty Company of New York et al., 5 Cir., 1970,
431 F.2d 409, Part I.
United States Court of Appeals, Fifth Circuit.
Feb. 20, 1974.
Converse Bright, Valdosta, Ga., for Plaintiff-appellant.
Robert B. Williamson, Sol Altman, Thomas J. Loftiss, II, Thomasville, Ga., for defendant-appellee.
Before BROWN, Chief Judge, and DYER and SIMPSON, Circuit Judges.
JOHN R. BROWN, Chief Judge:
This appeal raises the sole question whether the trial court erred in not ruling as a matter of law that the geographical limitation of use endorsement in an Insurer's automobile policy excluded coverage for the occurrence in question. The trial court, declining counter motions for summary judgment because of a supposed ambiguity conflict, submitted the issue of coverage to a jury for a factual determination which impliedly held coverage existed. Whatever doubts we might have-- and they are considerable-- that this was a case for jury assessment, especially on a record that contained not a single stitch of evidence on the asserted underlying construction or the intention of the parties-- we conclude that judge, jury, or a little bit of both got to the right decision and we therefore affirm.
Insurer issued its policy to Assured (James C. Baldree) which concededly was in full force and effect on June 18, 1972, the date of the accident in question. The policy contained a geographical limitation endorsement which specified the radius for each vehicle.
It is undisputed that had the same policy been issued without these geographic limitations a higher premium would have been payable.
The underlying accident occurred during the last leg of a 2,000 mile trip which Assured had taken from the principal garage site in Boston, Georgia to Huntspoint, New York and back to Boston via Washington, D.C. Assured was only ten to fifteen miles from Boston, Georgia when he collided with a truck. Thus the trip itself took the vehicle well outside the restrictive 400 mile radius but the actual collision occurred within the radius.
The Insurer insists that as a matter of Georgia law the terms of the policy were so clear that the trial judge should have entered summary judgment for it initially and in any event directed a verdict for it at trial. To this end Insurer presses Wallace v. Virginia Surety Co., Inc., 1949, 80 Ga.App. 50, 55 S.E.2d 259, as controlling. And well it might since it has a beguiling similarity which would, if indistinguishable, be the Erie floodlight from the latest, highest writing court, Ford Motor Co. v. Mathis, 5 Cir., 1963, 322 F.2d 267, 269, and compel a reversal, a result we would reject if left to our own juridical devices on contract interpretation.
In Wallace the geographic restriction contained two elements the second of which is comparable to part (ii) of Insured's clause (note 2, supra). But the first was quite different since it constituted a promissory warranty against the operation of the vehicle beyond the radius area.
This is not just an effort on our part to find a distinction. The Georgia Court in positive terms emphasized the operational-use aspect, so much so that it characterized the agreement as a promissory warranty.
Unlike a covenant in terms of operation use of the vehicle as in Wallace, the restriction here speaks only in terms of insurance coverage. The Assured makes no agreement not to use the vehicle beyond the radius. All he agrees to is that the 'insurance applies only while' the vehicle is operated 'within the radius.' (See part (i), note 2, supra).
Since there is no warranty as to operational use of the vehicle but only a dual provision ((i) and (ii), note 2, supra) excluding coverage, interpretation and application of this geographical restriction to terminate coverage once the perimeter was breached would produce absurd results. The mileage which could be run on any given trip, during any particular time could be virtually unlimited provided only that the radius was not exceeded. And in the course of such journeys practically every kind of driving condition could be encountered, high speed Interstate, through ways, metropolitan city traffic, hilly or flat, town or country roads.
Freed from any specific Erie ruling we think the proper principle to apply is that of suspension of coverage. Under that doctrine, in the absence of terms which would compel it, the policy does not come to an end. Rather coverage is suspended during the continuation of the violation of policy terms. Coverage under the policy terms is therefore not destroyed but suspended as long as the specific policy violations are occurring. The insurance during this time of suspension is as if no insurance policy had been in force. Travelers Protective Association v. Prinsen, 1934, 291 U.S. 576, 582, 54 S.Ct. 502, 504, 78 L.Ed. 999, 1003.
On the uncontradicted, stipulated facts the insured vehicle was on the occurrence being operated within the specified radius. Coverage was, of course, suspended during the time the vehicle traveled outside the perimeter. Once the vehicle came back within the magic circle under circumstances which do not even remotely raise a question of extraterritorial tant, cf. Henjes, note 12, supra, the insurance reattached to cover an incident occurring within the policy's geographical area. The policy was an annual one calling for an annual premium and giving annual protection. The reduced premium was accorded because during the annual period coverage might be unavailable if the vehicle went beyond the perimeter. But while in the perimeter the protection charged and paid was fully effective without taint or contamination from the vehicle's having transgressed the boundary.