Dufresne v. Elite Insurance Co.

• Decision Date: 26 July 1972
• Citation: 103 Cal.Rptr. 347,26 Cal.App.3d 916
• Court: California Court of Appeals Court of Appeals
• Parties: , 55 A.L.R.3d 206 Marilyn DUFRESNE, Plaintiff and Respondent, v. ELITE INSURANCE COMPANY et al., Defendants and Appellants. Civ. 11868.

Page 347

103 Cal.Rptr. 347

26 Cal.App.3d 916, 55 A.L.R.3d 206

Marilyn DUFRESNE, Plaintiff and Respondent, v. ELITE INSURANCE COMPANY et al., Defendants and Appellants.

Civ. 11868.

Court of Appeal, Fourth District, Division 2, California.

July 26, 1972.

[26 Cal.App.3d 919] Ives, Kirwan & Dibble and John Brevidoro, Los Angeles, for defendants and appellants.

Sam Collins and William M. Long, Fullerton, for plaintiff and respondent.

No appearance on behalf of defendant and respondent H. F. Bensfield Ins. Agency.

OPINION

TAMURA, Associate Justice.

Plaintiff brought the present action for declaratory relief against defendant Elite Insurance Company and H. F. Bensfield Insurance Agency (agency) ¹ seeking a declaration that the uninsured motorist provision of a motorcycle liability policy issued to plaintiff's deceased husband was in full force and effect at the time of the accident resulting in his death. Defendant denied uninsured motorist coverage alleging it had been waived by virtue of an exclusion agreement which formed a part of the application for insurance and which was purportedly signed by the insured.

The facts may be summarized as follows:

On March 2, 1970, plaintiff's husband purchased a motorcycle and called his insurance broker, Mr. Edwards, to obtain liability insurance coverage on the motorcycle before he drove it from the dealer's premises. Mr. Edwards testified in substance as follows: His agency represented a number of insurance companies including defendant Elite Insurance Company. When Mr. Dufresne telephoned, he (Edwards) quoted the premium charges for public liability and uninsured motorist coverage and 'explained to him the uninsured motorist coverage.' Mr. Dufresne stated he only wanted public liability coverage and did not want to pay the extra premium for uninsured motorist coverage. Mr. Edwards explained that a potential insurer must sign a waiver of uninsured motorist coverage whereupon Mr. Dufresne requested Mr. Edwards to sign his (Dufresne's) name to the waiver agreement. An application form was completed; someone in the agency office signed Mr. Dufresne's name to the waiver agreement which appeared at the bottom of the application; ² and the application together with a check for premium charges advanced by Mr. Edwards was forwarded to defendant. Defendant issued and sent to Mr. Edwards the insurance policy, effective as of March 2, 1970, and an endorsement waiving uninsured motorist coverage. ³

Mr. Edwards testified he mailed both documents to the Dufresnes, but plaintiff denied they ever received the endorsement. Neither plaintiff nor her husband ever received or saw a copy of the application form.

The face of the policy contained a column for premium charges for the various possible coverages. The words 'coverage waived' were typed in the column opposite coverage for 'uninsured motorists.' The following printed words appeared after the words 'Uninsured Motorists': 'Not applicable unless specific premium charge is shown on this policy.' Total premium charges of $39 were shown for bodily injury and property damage liability coverages. Part III of the policy entitled 'Protection Against Uninsured Motorists' was not deleted.

Plaintiff paid the $39 premium charge in March 1970. On April 19, 1970, Mr. Dufresne was killed when the insured motorcycle he was riding was involved in a collision with an uninsured motorist. Plaintiff presented a claim under the uninsured motorist provision of the policy and defendant denied coverage.

The trial court found that Mr. Dufresne did not 'waive' uninsured motorist coverage and decreed that the uninsured motorist provision of the policy was in full force and effect at the time of the accident.

Defendant urges: (1) The exclusion agreement executed by someone in the broker's office on behalf of the insured effectively deleted uninsured motorist coverage; (2) the insured and all persons privy to him are estopped to deny the exclusion; and (3) the deletion agreement was ratified by the insured.

I

We cannot agree with defendant's contention that the uninsured motorist coverage was effectively deleted by the agreement set out in the application form by virtue of its execution by someone in the broker's office on behalf of the insured pursuant to his oral authorization. Our reasons are twofold: (1) The oral authorization did not validly delegate to the broker the power to enter into the exclusion agreement on behalf of the deceased and (2) the purported agreement lacked the clarity and specificity required for an effective deletion of uninsured motorist coverage.

By the enactment of section 11580.2 of the Insurance Code the Legislature declared it to be the public policy of this state that every bodily injury liability policy issued or delivered in this state shall provide uninsured motorist coverage. ⁴ In furtherance of the Legislature's declared public policy it has been consistently held that the provisions of section 11580.2 of the Insurance Code are in effect 'a part of every policy of insurance to which it is applicable to the same effect as if it was written out in full in the policy itself.' (Hendricks v. Meritplan Ins. Co., 205 Cal.App.2d 133, 136, 22 Cal.Rptr. 682, 684; California Cas. Indem. Exch. v. Steven, 5 Cal.App.3d 304, 306--307, 85 Cal.Rptr. 82; Page v. Insurance Co. of North America, 256 Cal.App.2d 374, 376, 64 Cal.Rptr. 89.) The statute must be liberally construed to carry out its objective of providing financial protection for bodily injury or wrongful death caused by uninsured motorists (Katz v. American Motorist Ins. Co., 244 Cal.App.2d 886, 891, 53 Cal.Rptr. 669) and, as a corollary, 'any exception or exclusion must be strictly construed.' (Valdez v. Federal Mut. Ins. Co., 272 Cal.App.2d 223, 227, 77 Cal.Rptr. 411, 413.)

The Legislature has provided a specific method by which the otherwise mandatory uninsured motorist coverage may be excluded. Section 11580.2, subdivision (a), provides in pertinent part: 'The insurer and any named insured, prior to or subsequent to the issuance or renewal of a policy, may, by agreement in writing, delete the provision covering damage caused by an uninsured motor vehicle * * *.' By providing a specific means of deletion, the Legislature intended to limit the manner in which it may be accomplished to that specifically provided. (Hendricks v. Meritplan Ins. Co., Supra, 205 Cal.App.2d 133, 136, 22 Cal.Rptr. 682.) An insurer's attempt to exclude uninsured motorist coverage can be effected only if there has been strict compliance with the provision of the law permitting such exclusion. (Pechtel v. Universal Underwriters Ins. Co., 15 Cal.App.3d 194, 199, 93 Cal.Rptr. 53; Hendricks v. Meritplan Ins. Co., Supra, 205 Cal.App.2d 133, 139, 22 Cal.Rptr. 682.)

An agreement excluding uninsured motorist coverage 'is in the nature of an agreement to exclude from coverage something which would otherwise be included as a matter of law.' (Utah Home Fire Ins. Co. v. McCarty, 266 Cal.App.2d 892, 895, 72 Cal.Rptr. 460, 462.) 'Only an agreement in writing which amounts to an 'effective waiver' of uninsured motorist coverage by the insured will exclude it from a liability policy for which he makes application. (Utah Home Fire Ins. Co. v. McCarty (1968) 266 Cal.App.2d 892, 895, 72 Cal.Rptr. 460 (citation).)' (Bohlert v. Spartan Ins. Co., 3 Cal.App.3d 113, 118, 83 Cal.Rptr. 515, 519.)

In the present case the uncontradicted evidence reveals that the insured never in fact entered into the purported agreement to delete uninsured motorist coverage. The potential insured's oral authorization to the broker to sign his name to the insurance application and deletion agreement was not a valid delegation of authority to enter into the agreement on behalf of the insured. The statute provides that the deletion of coverage be 'by agreement in writing.' (Ins.Code, § 11580.2.) Civil Code, section 2309, commonly referred to as the equal dignities rule, provides: 'An oral authorization is sufficient for any purpose, except that an authority to enter into a contract required by law to be in writing can only be given by an instrument in writing.'

Defendant urges that the oral authorization was not violative of the equal dignities rule, citing Kadota Fig Assn. of Producers v. Case-Swayne Co., 73 Cal.App.2d 815, 167 P.2d 523, and Murphy v. Munson, 95 Cal.App.2d 306, 212 P.2d 603. Those cases are merely illustrative of an exception to the equal dignities rule where an agent is orally authorized to perform the purely mechanical function of signing the principal's name to a contract whose terms have already been agreed upon. They did not involve delegation of authority to 'enter into a contract.' (See Murphy v. Munson, Supra, 95 Cal.App.2d 306, 311, 212 P.2d 603; 1 Witkin, Summary of California Law, Contracts, § 7, p. 112.) In the present case there had been no agreement as to terms. The potential insured had never seen the purported deletion agreement nor was he otherwise apprised of its terms. In these circumstances the oral authorization to sign the insured's name could not have validly conferred on the broker the authority to Enter into the deletion agreement on behalf of the insured. (See O'Banion v. Paradiso, 61 Cal.2d 559, 563, 39 Cal.Rptr. 370, 393 P.2d 682; Angus v. London, 92 Cal.App.2d 282, 285, 206 P.2d 869.)

To hold that uninsured motorist coverage can be excluded by an oral authorization from a potential insured to an insurance agent to sign a deletion agreement on behalf of the insured would do violence to both the letter and the spirit of the statute as well as to the equal dignities rule. (See Leonard v. Gallagher, 235 Cal.App.2d 362, 371, 45 Cal.Rptr. 211.) It not only would invite abuses, but give rise to disputes and litigation concerning the existence of uninsured motorist coverage thereby defeating the manifest public policy that coverage is to be deemed to be provided in the absence of a clear and...