Automobile Club Inter-Ins. Exchange v. Diebold

• Decision Date: 11 June 1974
• Docket Number: INTER-INSURANCE,No. 35579,35579
• Citation: 511 S.W.2d 135
• Parties: AUTOMOBILE CLUBEXCHANGE, Plaintiff-Appellant, v. Larry M. DIEBOLD, Defendant-Respondent. . Louis District, Division Two
• Court: Missouri Court of Appeals

Page 135

511 S.W.2d 135

AUTOMOBILE CLUB INTER-INSURANCE EXCHANGE, Plaintiff-Appellant, v. Larry M. DIEBOLD, Defendant-Respondent.

No. 35579.

Missouri Court of Appeals, St. Louis District, Division Two.

June 11, 1974.

Moser, Marsalek, Carpenter, Cleary, Jaeckel, Keaney & Brown, F. Douglas O'Leary, St. Louis, Jackson, Thomasson, Dickerson & Gilbert, Paul V. Gilbert, Cape Girardeau, for plaintiff-appellant.

Limbaugh, Limbaugh & Russell, Richard D. Kinder, Joseph J. Russell, Cape Girardeau, for defendant-respondent.

McMILLIAN, Judge.

Plaintiff, Automobile Club Inter-Insurance Exchange, sought a declaratory judgment in the Circuit Court of Cape Girardeau to ascertain, under Missouri law, the extent of its liability under a policy of insurance issued by plaintiff to defendant Diebold. In his responsive pleading, defendant Diebold asked the court to award him judgment for the amounts due under the policy. The trial court entered judgment against plaintiff in the amount of $17,000.00 and plaintiff appeals. We reverse and remand.

The parties have stipulated the basic facts. On March 3, 1970, plaintiff insurance company issued a family automobile insurance policy to defendant Larry M. Diebold. This policy contained uninsured motorist insurance as required in § 379.203, RSMo 1969, V.A.M.S., (later amended by RSMo Supp.1971; Laws 1972, S.B.No.458, § 1). The policy also provided separate medical payments coverage. The policy insured two automobiles which were separately listed and a separate premium was charged for each coverage on each insured automobile. The declaration sheet shows that a lower overall premium was charged for the second automobile. The premium charged for uninsured motorist coverage was $3.00 for each car; and $6.00 on each car for medical payment coverage. The total amount shown as charged for the first car was $115.00 and for the second car was $73.00.

The uninsured motorist limit for one automobile for injury to one person was $10,000.00. The medical payment limit for one automobile was $1,000.00.

The policy contains the following provision under the 'Conditions' section:

'4. Two or More Automobiles--Parts I, II, III and IV. When two or more automobiles are insured hereunder, the terms of this policy shall apply separately to each . . .

'Regardless of the number of automobiles insured under this policy or other policies issued to the named assured or spouse by the exchange, if the automobile involved in an event making coverage applicable is one described in the declarations the limit for each and every coverage afforded shall be that stated in the declarations for such automobile and the limits for other automobiles described in the declarations shall not be applicable. If the automobile involved in such event is not one described in thedeclarations, then the total limit of the exchange's liability shall not exceed the highest applicable limit of liability or benefit for any one automobile described in this or such other policy.' (Emphasis added.)

This policy was in effect on April 8, 1970, when defendant Diebold was involved in an accident while operating an automobile not owned by him. Consequently, the accident occurred in an automobile 'not . . . described in the declarations' as stated in the above-mentioned clause. It was stipulated that the accident was caused by the negligence of a driver operating 'an uninsured automobile' as that term is used in the uninsured motorist section of the policy.

The issue here turns on the validity of the above 'separability' clause of the policy which states essentially that if the automobile involved in the accident is nonowned, then the total limit of the plaintiff's liability shall not exceed the highest applicable limit of liability or benefit for any one automobile described in the particular policy. The parties have stipulated that if plaintiff is liable to defendant Diebold for uninsured motorist coverage to the extent of benefits applicable to only one of the insured cars, plaintiff's liability is $9,500.00. The trial court held that plaintiff is liable to defendant for uninsured motorist coverage for each of the two cars, totalling $17,000.00. The effect of this holding is to nullify the separability clause set forth above.

We are not here concerned with construing the meaning of the separability clause. An insurance contract couched in plain and unambiguous language must be given its plain meaning; it is only when the contract is ambiguous that a court may be called upon to construe it, and it is only at that time that a construction favorable to the insured must be adopted. Central Surety & Ins. Corp. v. New Amsterdam Cas. Co., 359 Mo. 430, 222 S.W.2d 76, 78 (1949); Steinhaeufel v. Reliance Ins. Companies, 495 S.W.2d 463, 466 (Mo.App.1973). We find the separability clause to be unambiguous and therefore are not bound to construe the clause in favor of the insured.

Rather, defendant asks that we address the validity of the separability clause in light of our uninsured motorist statute requiring a minimum amount of coverage on each policy of automobile liability insurance issued in this state. ¹ The parties to an insurance contract are free to place limitations and restrictions on the insurer's liability as the contracting parties may be willing to agree unless prohibited by statute or public policy. Webb v. State Farm Mut. Auto Ins. Co., 479 S.W.2d 148, 150 (Mo.App.1972); Steinhaeufel v. Reliance Ins. Companies, supra, 495 S.W.2d at 466. A contract of insurance is a voluntary contract and as long as the terms and conditions are not unreasonable or in violation of legal rules and requirements, the parties may incorporate such provisions and conditions as they see fit to adopt. State Farm Mutual Auto. Ins. Co. v. Ward, 340 S.W.2d 635, 640 (Mo.1960). Consequently, unless the separability clause which limits plaintiff's liability on uninsured motorist coverage of the statutory minimum of $10,000 per injury is unreasonable or violates public policy, the clause is valid. Our uninsured motorist statute is a legislative mandate requiring that no automobile liability insurance be delivered or issued in this state unless uninsured motorist coverage is provided for not less than the limits set forth in the motor vehicle responsibility law, which in this case is $10,000.00. This coverage was 'designed to close the gap in the protection afforded the public under existing financial responsibility laws, and within fixed limits, to provide recompense to innocent persons injured by motorists who lack financial responsibility.' (Emphasis ours.) Steinhaeufel v. Reliance Ins. Companies, supra, 495 S.W.2d at 466. There is no doubt that the policy which plaintiff issued to defendant provided the minimum statutory coverage. This court has held that where such...