Cotton States Mut. Ins. Co. v. Neese

Decision Date30 April 1985
Docket NumberNo. 41876,41876
Citation254 Ga. 335,329 S.E.2d 136
Parties, 49 A.L.R.4th 311 COTTON STATES MUTUAL INSURANCE COMPANY v. NEESE et al.
CourtGeorgia Supreme Court

E. Wycliffe Orr, Gainesville, for Cotton States Mut. Ins. co.

C. Michael Roach, Canton, Nicholas E. Bakatsas, Janes D. Hogan, Jr., Marietta, for Christopher Leon Neese et al.

HILL, Chief Justice.

We granted certiorari to decide whether an exclusion in a policy of automobile insurance, excluding liability coverage while an insured is "attempting to avoid apprehension or arrest," is unenforceable as a matter of public policy in view of Georgia's compulsory insurance law. The Court of Appeals held that the exclusion is unenforceable. Cotton States Mutual Ins. Co. v. Neese, 173 Ga.App. 62, 325 S.E.2d 431 (1984).

Danny Blalack was killed at about 10:45 a.m. on March 27, 1981, when the car he was driving was struck by a Plymouth Barracuda driven by Christopher Neese. Neese, who was skipping school without permission, and two high school companions riding with him were injured. At the time of the collision, Neese was driving at an excessive speed, attempting to outrun a state patrol car which was pursuing him. The state patrolman had observed the Barracuda traveling above 75 m.p.h. and passing other vehicles in a no passing zone. A high speed chase ensued around sharp curves at speeds reaching approximately 100 m.p.h., terminating in the head-on collision with Blalack's vehicle.

The deceased, Blalack, had no automobile insurance. The Barracuda was insured by Cotton States Mutual Ins. Co. under a policy issued to Neese's father, with bodily injury liability limits of $100,000 per person and $300,000 per occurrence. One of the exclusions to liability coverage is "to any automobile while used by any insured ... while attempting to avoid apprehension or arrest." 1

Relying on this exclusion, Cotton States denied coverage and brought suit for declaratory judgment, naming as defendants its insureds, the insured's passengers and their parents, and the widow and estate of the deceased driver of the other vehicle. After a jury verdict finding that Neese was "attempting to avoid apprehension or arrest" at the time of the collision, the trial court found the exclusion to be unenforceable as a matter of public policy, and entered judgment against the insurance company. On appeal, the Court of Appeals affirmed, Cotton States Mutual Ins. Co. v. Neese, supra.

We granted certiorari to decide the question stated, and because the insurer urged that the Court of Appeals' opinion could be read broadly to declare all exclusions from liability to be unenforceable. We deal only with the exclusion in issue in this case, but because of the scarcity of cases our analysis contains examples of other exclusions and possible exclusions. 2

1. Prior to 1963, liability insurance was purchased in Georgia for the benefit and protection of the insured and his or her assets. Because of the large number of motorists whose assets were limited and who did not have liability insurance, in 1963 the General Assembly adopted an uninsured motorist act which requires that any insurance company issuing or delivering motor vehicle liability policies in this state provide protection to its insureds when injured by the negligence of an uninsured motorist; i.e., the insurance company is required to pay its insured sums which the insured is legally entitled to recover as damages from the owner or operator of an uninsured motor vehicle. A motor vehicle is uninsured if there is no liability insurance on it, or if the insurer of such vehicle legally denies coverage. The law allows the insured to reject uninsured motorist coverage in writing. Ga.L.1963, p. 588; now OCGA § 33-7-11. As with liability insurance, uninsured motorist protection was for the benefit of the insured, not the driver of a vehicle struck by the insured.

In 1974, the General Assembly enacted the Motor Vehicle Accident Reparations ("no-fault") Act. Ga.L.1974, p. 113; now OCGA § 33-34-1 et seq. It provides that no insurer shall issue a policy in this state, and no owner of a motor vehicle required to be registered in this state shall operate or authorize another to operate such vehicle, unless, among other things, the policy provides and the owner has bodily injury liability insurance in at least the amount of $10,000 per person in any one accident and $20,000 for two or more persons in any one accident (in 1981, the year in issue here). OCGA §§ 33-34-3, 33-34-4, 40-9-37(a); Pearce v. Southern Guaranty Ins. Co., 246 Ga. 33, 36-37, 268 S.E.2d 623 (1980). 3 Thus, when adopting our "no-fault" act in 1974, the General Assembly enacted a compulsory liability insurance law. Pearce, supra, 246 Ga. at 36, 268 S.E.2d 623. At this point, liability insurance was required by law not only for the benefit of the insured but to ensure compensation for innocent victims of negligent motorists.

We turn now to the public policy aspects of this case. 4 The insurance policy here in issue does not exclude liability coverage when the insured vehicle is exceeding the speed limit, and such an exclusion would appear to be unenforceable as a matter of public policy. 5 The policy here does exclude coverage while the insured is using an automobile in a prearranged or organized drag racing or speed contest, and such an exclusion does not appear to be void as a matter of public policy, at least under normal organized racing conditions. Hence, we can assume for purposes of this case that there could be some exclusions which would be against public policy, and that other exclusions would not be against public policy. The question is: Is the exclusion in issue here unenforceable as a matter of public policy? 6

No case involving the validity of this particular exclusion from liability has been cited by the parties and we have found none. 7 In Anderson v. Southeastern Fidelity Ins. Co., 251 Ga. 556, 307 S.E.2d 499 (1983), we construed the exclusion as to "any racing event, speed contest or exhibition" not to exclude an impromptu "drag race." Anderson involved the interpretation of the insurance contract, not the underlying validity of the exclusion itself. However, in construing the contract, we noted two aids to construction: (1) An insurance contract is to be construed against the insurer which drafted it, and (2) the advent of compulsory motor vehicle liability insurance in this state established the public policy that "innocent persons who are injured should have an adequate recourse for the recovery of their damages." 251 Ga. at 557, 307 S.E.2d 499.

In Young v. Allstate Insurance Co., 248 Ga. 350, 282 S.E.2d 115 (1981), this court held that a provision in an insurance policy, requiring that notice of a lawsuit against the insured be given the insurer, created no defense for the insurer which was not notified of the suit, in light of Georgia's compulsory automobile insurance law (that is to say, the insurance policy requirement of notice was unenforceable as a matter of public policy). In doing so, the court noted (at p. 350, 282 S.E.2d 115): "... [F]inancial responsibility laws are enacted for the benefit of the public rather than for the benefit of the insured. Therefore, the failure of the insured to comply with the policy provisions should not defeat the rights of those for whose benefit the law requiring the policy was enacted."

Courts in other jurisdictions considering their compulsory insurance laws have declared policy coverage to be too narrow and exclusions to be unenforceable. In Nationwide Mutual Ins. Co. v. Roberts, 261 N.C. 285, 134 S.E.2d 654 (1964), the court considered whether a person, injured when the insured driver deliberately drove across a sidewalk and crushed him against a stone wall, was injured "by accident" so as to be protected by the driver's insurance. The court found in favor of the injured party, saying (134 S.E.2d at 659): "The primary purpose of compulsory motor vehicle liability insurance is to compensate innocent victims who have been injured by the negligence of financially irresponsible motorists. Its purpose is not, like that of ordinary insurance, to save harmless the tortfeasor himself.... In order to accomplish the objective of the law, the perspective here must be that of the victim and not that of the aggressor...." 8 See also Jenkins v. Mayflower Ins. Exchange, 93 Ariz. 287, 380 P.2d 145 (1963), where the court invalidated a restrictive endorsement which precluded recovery when the car was being driven by a member of the armed forces other than the named insured.

In Pennsylvania Nat. Mut. Cas. Ins. v. Parker, 320 S.E.2d 458 (S.C.App.1984), the court held the "used for business or commercial purposes" exclusion in a policy on a pickup truck loaned by the owner to his son, and being used in the son's roofing business when the accident occurred, was void on grounds of public policy. See also Universal Underwriters Ins. Co. v. American Motorists Ins. Co., 541 F.Supp.2d 755 (N.D.Miss.1982), where the court, construing Mississippi law, held the "automobile business" exclusion to be invalid.

In Mutual of Enumclaw Ins. Co. v. Wiscomb, 97 Wash.2d 203, 643 P.2d 441 (1982), the court held a liability insurance policy provision excluding protection of members of the insured's family residing in the same household to be void as against public policy. (The Washington court had previously abrogated intrafamily tort immunity.)

In Weekes v. Atlantic Natl. Ins. Co., 370 F.2d 264, 272 (9th Cir.1966), the court, construing Arizona law, invalidated a rent-a-car liability insurance provision excluding coverage while the vehicle was being operated by a person under the influence of intoxicants.

Against this growing body of law, the insurer cites Harbin v. Sams, 171 Ga.App. 263, 319 S.E.2d 99 (1984) (family exclusion clause); Patterson v. Commercial Union Ins. Co., 151 Ga.App. 86, 258 S.E.2d...

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