Charest v. Union Mut. Ins. Co. of Providence

• Decision Date: 28 December 1973
• Docket Number: No. 6066,6066
• Citation: 313 A.2d 407,113 N.H. 683
• Parties: Paul J. CHAREST v. UNION MUTUAL INSURANCE COMPANY OF PROVIDENCE.
• Court: New Hampshire Supreme Court

Page 407

313 A.2d 407

113 N.H. 683

Paul J. CHAREST v. UNION MUTUAL INSURANCE COMPANY OF PROVIDENCE.

No. 6066.

Supreme Court of New Hampshire.

Dec. 28, 1973.

Sheehan, Phinney, Bass & Green, Thomas H. Richards and Lee W. Mercer, Manchester, for plaintiff.

Wiggin, Nourie, Sundeen, Pingree & Bigg and William S. Orcutt and David G. McDonough, Manchester, for defendant.

LAMPRON, Justice.

Petition for a declaratory judgment of plaintiff's right to arbitration under the uninsured motorists provisions of his family combination automobile policy issued by the defendant. Three questions of law raised by the pleadings were reserved and transferred to this court by King, J., on an agreed statement of facts.

The issue raised by the first and second questions is whether plaintiff Charest has forfeited his right to arbitration of his claim for damages under the uninsured motorists provisions of his policy because without the written consent of his insurer he made a settlement with the uninsured motorist.

On March 14, 1965, Charest was injured in an automobile accident in Nashua when his car was struck in the rear by a car operated by David Fenoff, of Massachusetts. On December 29, 1967, Charest executed a covenant not to sue and received from Fenoff's insurer $5,000, the limit of its coverage. This was less than the statutory amount of $10,000 coverage against uninsured motorists which the defendant was required to provide the plaintiff by its policy and thus under our law Fenoff was an uninsured motorist as to the difference. RSA 268:15-a (Supp.1972); see Carrignan v. Allstate Ins. Co., 108 N.H. 131, 229 A.2d 179 (1967). On March 14, 1968, Charest notified the defendant Union Mutual that he intended to submit his claim for damages to arbitration under the uninsured motorists coverage of his policy. Union Mutual advised that it owed him no obligation whatsoever because he had violated paragraph (b) of the exclusions under part IV of his policy, and also paragraph (c) of the trust agreement thereunder.

The exclusion in paragraph (b) provides in part that the uninsured motorist coverage of the policy will not apply: 'to bodily injury to an insured with respect to which such insured . . . without written consent of the company make(s) any settlement with any person or organization who may be legally liable therefor.' The trust agreement entitles the insurer to the extent of any payment made by it to receive the proceeds of any settlement or judgment which may be obtained by the insurer against the uninsured motorist. Paragraph (c) thereof provides that the insured 'shall do whatever is proper to secure and shall do nothing after loss to prejudice such rights' of the company which are held in trust by the insured. Kirouac v. Healey, 104 N.H. 157, 160, 181 A.2d 634, 636 (1962); 2 R. Long, The Law of Liability Insurance § 24.19 (1973).

RSA 268:1 VII (Supp.1972) defines the type of motor vehicle policy which will meet the financial responsibility requirements of insured motorists in this State. RSA 268:15, now RSA 268:15-a (Supp.1972) requires that such a policy provide coverage for accidents involving an uninsured motorist. The purpose of this requirement is to close a gap in the protection afforded the public under the existing Financial Responsibility Act. Maryland Cas. Co. v. Howe, 106 N.H. 422, 424, 213 A.2d 420, 421, 422 (1965). Such statutes have been liberally construed to accomplish their legislative purpose of protecting persons in automobile accidents from losses which, because of the tortfeasors' lack of liability coverage, would otherwise go uncompensated. Hein v. Nationwide Casualty Ins. Co., 106 N.H. 378, 381, 213 A.2d 197, 199 (1965); Hackman v. American Mut. Liab. Ins. Co., 110 N.H. 87, 90, 261 A.2d 433, 436 (1970). This court is not at liberty, however, to find uninsured motorist coverage when it is not demanded by the statute or to read into the statute a prohibition of an exclusion which is neither expressed nor implied. Allstate Ins. Co. v. Pesqueria, 19 Ariz.App. 528, 508 P.2d 1172, 1173 (1973); Plymouth School Dist. v. State Bd. of Educ., 112 N.H. 74, 79, 289 A.2d 73, 76 (1972); Sylvest v. Employer's Liab. Assur. Corp., 252 So.2d 693, 694 (La.App.1971).

Absent statutory provisions or public policy to the contrary, insurers have a right to limit their liability by exclusions written in terms appropriate to convey their meaning and effect to a reasonable person in the position of the insured. Merchants Mut. Ins. Co. v. Transformer Serv. Inc., 112 N.H. 360, 362, 298 A.2d 112, 114 (1972); McCaffery v. St. Paul Fire Ins. Co., 108 N.H. 373, 375, 236 A.2d 490, 492 (1967); Aetna Ins. Co. v. Pete Wilson Roofing & Heating Co., Inc., 289 Ala. 719, 272 So.2d 232 (1972). Exclusion (b) in the policy in question is unambiguous. It specifically and clearly provides that the uninsured motorist coverage will not apply if a settlement is made without the written consent of the insurer. The same is true of paragraph (c) of the trust agreement which states that the insured 'shall do nothing after loss to prejudice . . . rights' of the insurer. This agreement is similar to a subrogation clause and is designed to confer on the insurer to the extent of any payment made by it the subrogation right to all recovery from the uninsured motorist until the company has been reimbursed. Raitt v. National Grange Mut. Ins. Co., 111 N.H. 397, 400, 285 A.2d 799, 801, 802 (1971); Kirouac v. Healey, 104 N.H. 157, 162, 181 A.2d 634, 637 (1962).

Such clauses are not in violation of the provisions of RSA 268:15 or RSA 268:15-a (Supp.1972) nor do they violate RSA 268:16 (Supp.1972) which specifically excludes uninsured motorist policy provisions from its requirements. Kirouac v. Healey, 104 N.H. 157, 181 A.2d 634 (1962). No consideration of public policy has been advanced, and we know of none, which should or does preclude the parties to an insurance policy from so contracting. See Jessie v. Security Mut. Cas. Co., 488 S.W.2d 140 (Tex.Civ.App.1972); Kisling v. MFA Mut. Ins. Co., 399 S.W.2d 245 (Mo.App.1966). It is clear from the agreed statement of facts that these policy clauses were violated when the plaintiff received $5,000 from the uninsured motorist's insurer under a covenant not to sue without having obtained the written consent of his insurer. Dancy v. State Farm Mut. Auto Ins. Co., 324 F.Supp. 964 (S.D.Ala.1971); A. Widiss, A Guide to...