Charles v. Stout

[CONTRACT LAW]

In Charles v. Stout,[1] the supreme court held that a passenger is not an intended third party beneficiary of an insurance policy provided by a lender to protect the property that secures their loan.[2] Charles was injured in a car accident where he was the passenger in Stout’s car.[3] In addition to suing Stout, Charles also sued Credit Union 1, the lender and lienholder for the vehicle.[4] The loan agreement between Credit Union 1 and Stout provided that Stout would maintain liability insurance but Credit Union 1 would have the right to obtain insurance if Stout failed to do so.[5] The agreement further stated that any insurance procured by Credit Union 1 would be primarily to protect Credit Union 1 rather than Stout.[6] On appeal, Stout argued that he was an intended third party beneficiary of the insurance policy that Credit Union 1 contracted to provide and he is therefore entitled to recover under that policy.[7] The supreme court affirmed the lower court’s decision, reasoning that there was no written agreement compelling Credit Union 1 to provide liability coverage for the benefit of Stout.[8] The court further reasoned that there was no evidence Charles was an intended third party beneficiary of the aforementioned coverage.[9] Affirming the lower court’s decision, the supreme court held that a passenger is not an intended third party beneficiary of an insurance policy provided by a lender to protect the property that secures their loan.[10]

 



[1] 308 P.3d 1138 (Alaska 2013).

[2] Id.

[3] Id. at 1139.

[4] Id.

[5] Id. at 1141.

[6] Id.

[7] Id. at 1141.

[8] Id.

[9] Id. at 1142.

[10] Id.

Charles v. Stout

[CONTRACT LAW]

In Charles v. Stout,[1] the supreme court held that a passenger is not an intended third party beneficiary of an insurance policy provided by a lender to protect the property that secures their loan.[2] Charles was injured in a car accident where he was the passenger in Stout’s car.[3] In addition to suing Stout, Charles also sued Credit Union 1, the lender and lienholder for the vehicle.[4] The loan agreement between Credit Union 1 and Stout provided that Stout would maintain liability insurance but Credit Union 1 would have the right to obtain insurance if Stout failed to do so.[5] The agreement further stated that any insurance procured by Credit Union 1 would be primarily to protect Credit Union 1 rather than Stout.[6] On appeal, Stout argued that he was an intended third party beneficiary of the insurance policy that Credit Union 1 contracted to provide and he is therefore entitled to recover under that policy.[7] The supreme court affirmed the lower court’s decision, reasoning that there was no written agreement compelling Credit Union 1 to provide liability coverage for the benefit of Stout.[8] The court further reasoned that there was no evidence Charles was an intended third party beneficiary of the aforementioned coverage.[9] Affirming the lower court’s decision, the supreme court held that a passenger is not an intended third party beneficiary of an insurance policy provided by a lender to protect the property that secures their loan.[10]

 



[1] 308 P.3d 1138 (Alaska 2013).

[2] Id.

[3] Id. at 1139.

[4] Id.

[5] Id. at 1141.

[6] Id.

[7] Id. at 1141.

[8] Id.

[9] Id. at 1142.

[10] Id.