Boughton v. Farmers Ins. Exchange

• Decision Date: 28 June 1960
• Docket Number: No. 38579,38579
• Parties: , 1960 OK 159 Helen R. BOUGHTON, Plaintiff in Error, v. FARMERS INSURANCE EXCHANGE, Defendant in Error.
• Court: Oklahoma Supreme Court

Page 1085

354 P.2d 1085

79 A.L.R.2d 1245, 1960 OK 159

Helen R. BOUGHTON, Plaintiff in Error, v. FARMERS INSURANCE EXCHANGE, Defendant in Error.

No. 38579.

Supreme Court of Oklahoma.

June 28, 1960.

Rehearing Denied Aug. 9, 1960.

Application for Leave to File Second Petition for Rehearing

Denied Sept. 13, 1960.

Syllabus by the Court.

1. Stipulations to arbitrate all questions as to future controversies are not enforceable for the reason that such stipulations deprive the courts of jurisdiction and are contrary to public policy.

2. Every stipulation or condition in a contract by which any party thereto is restricted from enforcing his rights under the contract, by the usual legal proceedings in the ordinary bribunals, is void.

3. Where an automobile insurance policy provides that insurer shall pay insured all sums insured shall be legally entitled to recover as damages from an uninsured motorist and insured suffers damages as a result of a collision with an uninsured motorist, institutes an action after notice to the insurer and obtains a judgment against the uninsured motorist; a petition alleging, inter alia, the judgment against the uninsured motorist, states a cause of action against the insurer and a trial court order sustaining a demurrer to such petition is error.

4. When a petition states a cause of action in favor of plaintiff and against the defendant, it is error for the trial court to sustain defendant's demurrer to the petition.

Appeal from the District Court of Oklahoma County; William L. Fogg, Judge.

Plaintiff's action was for judgment on an automobile insurance policy. From order of the trial court sustaining a demurrer to the petition and dismissing the action, the plaintiff has appealed. Reversed and remanded with directions.

Cheek, Cheek & Cheek, Oklahoma City, for plaintiff in error.

Foliart, Hunt & Shepherd, Oklahoma City, for defendant in error.

IRWIN, Justice.

Farmers Insurance Exchange, defendant in error, issued to Helen R. Boughton, plaintiff in error, an insurance policy insuring her for liabilities arising out of the use of an automobile. Attached to the policy and made a part thereof by endorsement was a form designated as 'Family Protection Against Uninsured Motorists', which inter alia, provided:

'Insuring Agreement. To pay all sums which the insured shall be legally entitled to recover as damages from the owner or operator of an uninsured automobile because of bodily injury sustained by the insured caused by accident while this endorsement is in effect and arising out of the ownership, maintenance or use of such automobile; provided that for the purpose of this endorsement determination as to whether the insured shall be legally entitled to recover such damages and if so entitled the amount thereof shall be made by agreement between the insured and the Exchange or, in the event of disagreement by arbitration.'

It further provides under Conditions:

4. 'Action against the Exchange: No action shall lie against the Exchange unless, as a condition precedent thereto, there shall have been full compliance with all terms of this endorsement.'

5. 'Arbitration: In the event the insured and the Exchange do not agree that the insured in entitled to recover damages from the owner or operator of an uninsured automobile under this endorsement or do not agree as to the amount of payment which may be owing under this endorsement, then upon written demand of either, the matter or matters upon which the insured and the Exchange do not agree shall be settled by arbitration in accordance with the rules of the American Arbitration Association and judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. The insured and the Exchange each agree to consider itself bound and to be bound by any award made by the arbitrator pursuant to this endorsement.'

Under Exclusions the policy provides:

'This insurance does not apply

'2. To bodily injury of an insured with respect to which such insured or his representative shall, without the written consent of the Exchange, make any settlement with or prosecute to judgment any action against any person or organization who may be legally liable therefor.'

While the above described policy and endorsement were in force and effect, Helen R. Boughton, insured, was involved in an accident with an uninsured motorist, resulting in personal injuries and damages. She instituted an action and obtained a judgment against the uninsured motorist and demand was made upon Farmers Insurance Exchange to pay her according to the provisions of the policy. Exchange denied liability and refused to pay anything.

Helen R. Boughton commenced this action against Farmers Insurance Exchange for damages sustained by her as a result of the accident with the uninsured motorist.

Plaintiff alleged the provisions of the policy, the accident with, the action and the judgment against the uninsured motorist; that the uninsured motorist is insolvent; that she notified Farmers Insurance Exchange of the accident and of the injuries she sustained and attached to the letter of notification a copy of the petition and summons which were to be filed in the action against the uninsured motorist; that Exchange was afforded an opportunity to participate in the prosecution or defense or trial of said action, which it wholly failed and refused to do.

Attached to and made a part of the petition were the insurance policy and endorsement, the pleadings and judgment in the action against the uninsured motorist and the correspondence between the plaintiff and Exchange. The exhibits disclose that several attempts to reach an agreement and negotiate a settlement under the terms of the policy were made and Exchange requested that the matter be submitted to arbitration which was rejected by the insured; that plaintiff did submit herself for an examination by a doctor selected by Exchange; that Exchange was advised by plaintiff that the action against the uninsured motorist had been instituted for determination of the legal liability and the amount of damages and that it would be liable under the policy to pay such damages; that Exchange refused to participate in that action; the action against the uninsured motorist was commenced and reduced to judgment without the approval or consent of Exchange; that plaintiff was advised by Exchange if she settled or reduced to judgment her action pending against the uninsured motorist, that she would be violating the terms of the policy and would not be entitled to any sum of money under the provisions of the policy; that Exchange also advised her that it would refuse to pay any money, either by settlement or arbitration, if she settled or reduced to judgment her lawsuit against the uninsured motorist.

The trial court sustained defendant's (Exchange) demurrer to the petition of plaintiff, finding that the arbitration agreement was void and unenforceable; that the judgment obtained by her against the uninsured motorist was not binding upon Exchange for the reason it was not a party to that action; that Exchange is not estopped to retry or relitigate the question of liability of the uninsured motorist or the amount of damages suffered by plaintiff.

The plaintiff refused to further plead and the trial court dismissed the action and plaintiff perfected this appeal.

Contentions

Helen R. Boughton, plaintiff in error, contends the trial court erred in sustaining the demurrer to the petition; that Farmers Insurance Exchange is liable under the policy 'to pay all sums which the insured shall be legally entitled to recover as damages from the owner or operator of an uninsured automobile;' that the judgment rendered against the uninsured motorist determined she is legally entitled to recover damages and the amount thereof; that the arbitration...