Clayton v. Alliance Mut. Cas. Co., 46902

• Decision Date: 14 July 1973
• Docket Number: No. 46902,46902
• Citation: 212 Kan. 640,512 P.2d 507
• Parties: Sanders B. CLAYTON, Appellee, v. ALLIANCE MUTUAL CASUALTY COMPANY, Appellant, and Darrell D. Bedore. Rubye CLAYTON, Appellee, v. ALLIANCE MUTUAL CASUALTY COMPANY, Appellant, and Darrell D. Bedore. Max A. CLAYTON, Appellee, v. ALLIANCE MUTUAL CASUALTY COMPANY, Appellant, and Darrell D. Bedore.
• Court: Kansas Supreme Court

Page 507

512 P.2d 507

212 Kan. 640

Sanders B. CLAYTON, Appellee, v. ALLIANCE MUTUAL CASUALTY COMPANY, Appellant, and Darrell D.

Bedore. Rubye CLAYTON, Appellee, v. ALLIANCE MUTUAL CASUALTY COMPANY, Appellant, and Darrell D.

Bedore. Max A. CLAYTON, Appellee, v. ALLIANCE MUTUAL CASUALTY COMPANY, Appellant, and Darrell D. Bedore.

No. 46902.

Supreme Court of Kansas.

July 14, 1973.

Syllabus by the Court

1. The provisions of K.S.A.1972 Supp. 40-284 are construed and applied, and it is held, that insurance policy provisions which purport to condition, limit, or dilute the unqualified uninsured motorist coverage mandated by the statute, are void and of no effect.

2. Where more than one insurance policy containing uninsured motorist coverage exists with respect to an injury, an insurer's liability may not be limited by policy provisions to the amount of recovery under one policy; each insurance policy carries its own liability for which a premium was paid as consideration, and the insured may 'stack' coverage up to the full amount of damages sustained.

3. Insurance policy clauses referred to in the opinion as the 'arbitration' clause, the 'consent to sue' clause, the 'other insurance' clause, the 'proof of loss' clause, the 'medical authorization' clause, and the 'furnishing of medical reports' clause, are examined, and as more fully set forth in the opinion, it is held: All such clauses purporting to place requirements on the insured which constitute a condition precedent to the commencement of an action to recover damages under an uninsured motorist endorsement, are void and of no effect as an attempt to condition, limit, or dilute the statutory mandate of uninsured motorist coverage. (K.S.A.1972 Supp. 40-284.)

4. The record in an action involving liability under uninsured motorist endorsements is examined, and, under the facts and circumstances as more fully set forth in the opinion, it is held: The district court erred in concluding the insurer was collaterally estopped from challenging the default judgment as to damages rendered against the uninsured tort feasor, and further, in light of the insurer's positive demand for a jury trial as to damages, and the district court's expressed stipulation the default judgment was limited to the uninsured tort feasor, it was error to deny the insurer a jury trial as to damages sustained by the plaintiffs.

James P. Mize, Salina, argued the cause, and C. L. Clark, Aubrey G. Linville and C. Douglas Miller, Salina, were with him on the brief for appellant.

Raymond L. Dahlberg, Great Bend, argued the cause, and H. Lee Turner and Thomas C. Kelley, Great Bend, and D. A. Hindman, Stanley Krysl and Wayne McCaslin, guardian ad litem, of Stockton, were with him on the brief for appellees.

FATZER, Chief Justice:

At issue is the construction and application of the uninsured motorist provision of automobile unsurance policies issued by the appellant, Alliance Mutual Casualty Company (Alliance) to Sanders B. Clayton (Sanders) and Max A. Clayton (Max), two of the appellees herein.

The facts are not in dispute. On October 15, 1968, while riding in an automobile owned and operated by Floyd D. Fix (Fix), the appellees, Sanders, Max, Joy Clayton and Rubye Clayton, were injured when the Fix automobile was struck by an automobile operated by Darrell D. Bedore (Bedore). Subsequently, it was discovered that Bedore did not carry liability insurance. However, Fix, Sanders, and Max held automobile liability insurance policies issued by Alliance which included uninsured motorist endorsements. The policy issued to Sanders covered two automobiles owned by him and the policy issued to Max covered a vehicle owned by him. The Claytons were of the same household, Sanders and Rubye being husband and wife; Max, their adult son, and Joy, their minor daughter.

Fix held a policy on his Buick automobile involved in the accident, which afforded uninsured motorist protection in limits of $10,000 and $20,000, and was the primary insurance on the accident. The entire $20,000 aggregate limit of the Fix policy was made available by Alliance after the accident, and the total amount was paid by Alliance to all of the persons occupying the Buick, including the appellees Sanders, Rubye, Max and Joy, receiving $1,300; $1,300; $2,000 and $500 respectively. In addition, Alliance paid the medical expenses of each of the appellees.

Subsequent to the receipt of payment under the Fix policy, the Claytons made demands upon Alliance for payment pursuant to the uninsured motorist endorsements on the policies held by Sanders and Max. Both policies held by the Claytons had aggregate limits of $20,000 per accident and contained identical provisions.

Alliance refused to make payment, asserting first that the Claytons had failed to make proof of claim and had not consented to submit medical authorizations and medical reports necessary for it to ascertain the character and degree of their injuries sustained in the accident. Proof of loss and medical authorizations were required pursuant to paragraph 9 of the CONDITIONS section of the policies.

Likewise, Alliance requested the Claytons arbitrate their claims under the policies pursuant to PART IV-PROTECTION AGAINST UNINSURED MOTORISTS which was a condition to payment under the uninsured motorist endorsement if either party elected not to agree upon a settlement of the claim. The Claytons refused to consent to arbitration and reasserted their claim against Alliance.

Thereafter, and on October 30, 1969, Sanders, Ruybe, and Max each filed separate actions against Bedore and Alliance for damages resulting from the automobile accident. Alliance filed a motion to consolidate the actions which was sustained by the district court. Bedore wholly defaulted, and the Claytons filed a motion for default judgment against him with notice to Alliance.

On January 12, 1970, the appellees' motion for default came on for hearing. Bedore was not present, nor was he represented by counsel. Alliance was represented by counsel, and objected to any evidence in support of the Claytons' motion against Bedore for default as it would relate to Alliance. The district court granted Alliance seven days to answer the appellees' petitions and set up its defenses, and thereafter the following discussion was had:

'THE COURT: . . . I will hear testimony as to how much the judgment should be at this time.

'The Court is ruling that this is limited to Bedore only.

'MR. TURNER: Yes, Your Honor. I will call Reverend Clayton.

'MR. MIZE: Your Honor, may I be excused?

'THE COURT: Yes, sir.

'THE COURT: The record at this time shows that Mr. Mize is leaving. He has every right to stay, but he may also leave. He is not required to stay.' (Emphasis supplied.)

Upon hearing evidence relating to the injuries sustained by Sanders, Rubye, and Max, the district court entered default judgment against Bedore and assessed damages to the appellees at $65,000, $30,000, and $15,000 respectively. The judgments for damages were in addition to the amounts allowed for medical expenses and court costs.

Thereafter and three days later on January 15, 1970, Alliance filed its answer alleging policy defenses that the appellees had failed to do certain acts which were a condition precedent to the commencement of an action by the insured against the company. In particular, the answer asserted the Claytons had refused to make proof of claim, to sign medical authorizations, to permit inspection of medical reports and records relating to the injuries sustained and to arbitrate their claims. Further, Alliance contended the Claytons had not secured its written consent to be sued under the policy, and that the judgment against Bedore was not conclusive either as to liability or to damages because of the absence of consent to be sued. In addition, Alliance's answer contained a request for a jury trial on the issue of loss sustained by each of the plaintiffs.

On September 25, 1971, Alliance filed a motion requesting that Joy Clayton be joined as a plaintiff. The motion was sustained, and a guardian ad litem was appointed to represent her.

On January 7, 1971, Joy replied to Alliance's answer, and counterclaimed against it in the amount of $10,000, costs, and attorney's fees. On January 11, 1971, Alliance answered the counterclaim, and reasserted its demand for a jury trial on the issue of loss sustained to each of the appellees.

On February 1, 1971, a pertrial conference was held and the parties agreed that the interpretation of the provisions of the policies relied upon by Alliance and the enforcement of those provisions, being questions of law, would be tried by the district court. In addition, the issue of attorney's fees would be determined by the court. Alliance filed a motion to sever and try the issue of the appellees' damages to a jury. The motion by Alliance to sever and try the issues relating to Joy's injuries was sustained, and the motion to sever and try the issue of damages to Sanders, Rubye, and Max was taken under advisement. Subsequently, Joy's claim for damages was tried to a jury, and it returned a verdict in the sum of $2,500 upon which judgment was rendered.

On April 16, 1971, the district court, having taken under advisement the questions of law, entered the following judgments relating to the construction and application of the insurance policies. First, it held that Alliance was collaterally estopped by the judgment entered against Bedore, not only as to liability, but also as to damages. Second, it held that the policies were to be 'stacked' in that the liability of Alliance would be $60,000. Third, that the appellees were not entitled to attorney's fees. Thereafter, on November 22, 1971, the district court issued its memorandum opinion setting forth the findings of fact and conclusions of law upon which Alliance has now appealed. The significant portions are quoted:

'The Court is now ruling on the matters...