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Action on insurance policy. Laurens Superior Court. Before Judge White.
1. (a) Where one having an automobile collision insurance policy containing a provision for automatic coverage of a newly acquired vehicle, negotiated a trade of his automobile with a dealer, delivered his car to the dealer and accepted delivery of another from the dealer, but delayed completion of the transaction and the obtaining of a certificate of title to the automobile received in exchange until the parties could arrange financing at the bank, which would not be open until the beginning of the following week and he suffered a collision loss because of an accident with the car received in exchange, of which the insurer was notified, the automobile was covered under terms of the policy as a newly acquired one.
(b) Further delay in completing the transaction until the automobile could be extensively repaired does not alter the rule.
2. Where the provisions of a new statute have not been tested and interpreted by the courts, and a reasonable basis appears for the interposition of a defense based upon what a proper interpretation of the statute should be, the defendant is not chargeable with bad faith and cannot be taxed with penalty and attorney's fees for so doing.
Ivey Woodard brought suit against Canal Insurance Company to recover for a collision loss, alleged to have been covered under a policy issued to him by the company, occurring to a 1966 Dodge automobile. He alleged that the policy had been issued to cover a 1964 Ford that he owned, but that it carried an automatic insurance clause for newly acquired automobiles and that he had traded the Ford for a Dodge August 8, 1968, and suffered the collision loss August 10, 1968.
In a deposition he testified that he went to the used car lot of Hugh Lord on August 8 and reached an agreement on a trade of the Ford for the Dodge, that the papers were drawn for closing the transaction but that it could not be closed on that day because the bank was not open, and that it had been intended that the closing take place on the following Monday, but that he had the collision loss during the interim. He further testified that because of the collision and the necessity for extensive repairs on the Dodge the closing of the trade was postponed until the repairs could be completed, and that this occurred about November 4, 1968. During that period Mr. Lord had allowed him to use the Ford which he had traded for the Dodge.
In making the investigation Canal learned that plaintiff had obtained the Ford described in his policy and had continuously used it since the time of the collision and that he contended that it continued to be covered under the policy (a fact which plaintiff agreed was true), that there had been no surrender of the title certificate on the Ford or of the tag registration certificate during that period and that the title under these documents continued in plaintiff. Likewise, there had been no title certificate on the Dodge issued to plaintiff. Mr. Lord had an insurance policy with Nationwide Insurance Company covering his inventory, and the Ford had not been added for coverage under it.
Canal Insurance Company took the position that under the requirements of the Motor Vehicle Title Act the Dodge did not qualify as a "newly acquired automobile," and for that reason was not covered under the policy which had been issued to plaintiff for coverage on the Ford.
Woodard brought suit to recover for the collision loss on the Dodge, less the $100 deductible, alleged that Canal's denial of coverage had been in bad faith and sought damages and attorney's fees. Defendant moved for summary judgment, as to the whole of plaintiff's claim, and as to the claim for damages and attorney's fees. The motion was denied, the judge certified it for review and defendant appeals.
1. Although plaintiff had not secured a title certificate for the Dodge, it would appear that as between him and the seller, Mr. Lord, he had acquired sufficient ownership of it to give him an insurable interest in it. Code Ann. 68-415a (d) provides that "Except as provided in section 68-416a and as between the parties a transfer by an owner is not effective until the provisions of this section and section 68-416a have been complied with. . ." (Emphasis supplied). The provisions referred to are those for obtaining a title certificate on the vehicle. This section recognizes that as between the parties an ownership may change hands without the necessity of transferring a title certificate by the seller and obtaining a new one in the name of the purchaser. Allen v. Holloway, 119 Ga. App. 676 (168 SE2d 196). However, as to third parties who may acquire an interest, it is essential that the title transfer be completed.
Thus, when the details of the trade had been agreed upon and delivery of the Dodge to plaintiff was made, he acquired such an interest in the vehicle to qualify it as a "newly acquired automobile" under the provisions of his policy. This was not a situation in which the dealer had simply loaned plaintiff an automobile. The evidence clearly indicates that there was a bona fide trade of the ears, the completion of which was delayed only by the circumstance of the collision and the repairs that were consequently necessary. See and compare General Fire &c. Co. v. Kuffrey, 115 Ga. App. 121 (153 SE2d 590).
While the policy requires that notice of acquisition of the vehicle be given within 30 days, it appears there was a compliance with this policy requirement in compliance with the notice of the collision loss.
Whether the Ford became a temporary substitute for the Dodge when the dealer allowed plaintiff to use it until the Dodge could be repaired is a question that is not necessary to decide here. There is no claim in connection with the Ford.
There was no error in the denial of the summary judgment as to the collision claim.
2. However, the provisions of the Motor Vehicle Title Act, as related to this situation, had not previously been interpreted by the courts and serious legal questions were raised. Mass. Benefit Life Assn. v. Robinson, 104 Ga. 256, 291 (30 SE 918, 42 LRA 261); Brown v. Seaboard Lumber &c. Co., 221 Ga. 35, 38 (142 SE2d 842). The defense was not a frivolous one. Merely because we may conclude that the defense is not well founded does not mean that bad faith is shown or make the defense of the action a frivolous one. If the defense has a reasonable basis and is not frivolously made, the good faith of the defendant is vindicated as effectively when the decision goes to the plaintiff as it does when the case is decided for the defendant. Interstate Life &c. Ins. Co. v. Williamson, 220 Ga. 323, 325 (138 SE2d 668); Gulf Life Ins. Co. v. Howard, 110 Ga. App. 76 (137 SE2d 749). The recovery of attorney's fees under Code Ann. 56-1206 is a penalty, not favored in the law, and the right thereto must clearly appear. Love v. National Liberty Ins. Co., 157 Ga. 259, 271 (121 SE 648).
Judgment affirmed as to the plaintiff's collision claim, but reversed as to his claim for penalty and attorney's fees. Jordan, P. J., and Pannell, J., concur.
Maurice Byers, for appellee.
Sharpe, Sharpe, Hartley & Newton, W. Ward Newton, for appellant.
Friday May 22 16:35 EDT

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