Farmers Ins. Exchange v. Peters

• Decision Date: 10 December 1973
• Docket Number: No. 56918,No. 2,56918,2
• Citation: 502 S.W.2d 319
• Parties: FARMERS INSURANCE EXCHANGE, Respondent, v. Malcolm PETERS et al., Appellants
• Court: Missouri Supreme Court

Page 319

502 S.W.2d 319

FARMERS INSURANCE EXCHANGE, Respondent, v. Malcolm PETERS et al., Appellants.

No. 56918.

Supreme Court of Missouri, Division No. 2.

Dec. 10, 1973.

Schroff, Keeter & Glass, Robert W. Schroff, Bob J. Keeter, Springfield, for respondent.

J. W. Grossenheider, Lebanon, for appellants.

MORGAN, Judge.

Farmers Insurance Exchange, hereinafter referred to as the insurer, filed a declaratory judgment action to have resolved the extent of its obligations (coverage) with respect to one of its policies issued to one Malcolm Peters on a certain automobile, after the automobile was involved in a violent crash wherein the driver (insured's son) and a passenger were fatally injured. Named defendants included all of those persons qualified to assert a claim against the insured or insurer. The cause was tried to the court and, thereafter, 'findings of fact and conclusions of law' were entered wherein it was concluded that there was no coverage and the insurer had no exposure whatever. Judgment was entered accordingly and defendants, potential claimants, have appealed. We affirm.

We first look to the policy, and endorsements thereon, which the insurer had insued to specify the obligations assumed in consideration for the premiums received. For our present purposes, it can be said that the basic policy was that generally sold and issued to owners of automobiles. Of immediate concern is one exclusion therein which provided, to wit: 'The insurance afforded under Parts I (Liability), II (Uninsured Motorists), III (Medical), and IV (Comprehensive and Collision) does not apply under any of the coverages * * * (2) while the automobile is being operated by any person in any prearranged race or competitive speed test.' (Bracketed material and emphasis supplied.)

Attached to the policy is an endorsement entitled, in part: 'Automobile Accidental Death Indemnity . . .' It called for the payment by the insurer of $5,000 upon the death of either the insured, his wife or the son of the insured, if such death resulted directly from bodily injuries 'caused by accident.' In connection with the death benefit endorsement, we dispose of one preliminary problem. The insurer submits that this additional coverage was also excluded by the 'prearranged race' exclusion, and relies on that portion of the endorsement which provided: 'The company agrees with the named insured . . . (to pay the death benefit) . . . subject to the . . . exclusions . . . of this endorsement and of the policy.' However, we look further to other terms of the endorsement covering the death benefit, admittedly somewhat gratuitously, and find the following: 'Policy Provisions. None of the . . . exclusions . . . of the policy shall apply to the insurance afforded by this endorsement except (thereafter are listed certain exclusions and conditions not relevant in this case).' The ambiguity is obvious; but, in view of the final disposition we must make of any possible claim under the endorsement, it is sufficient to say that 'if the contract is reasonably susceptible of two or more interpretations that one which will sustain the insured's claim must be adopted, since the language used in the policy is that of the insurer.' Reese v. Preferred Risk Mutual Insurance Company, 457 S.W.2d 205, 207(1--3) (Mo.App.1970). Therefore, we rule that the 'death benefit' called for by the enforsement was not affected by the 'prearranged race' exclusion of the policy--thus leaving the question as to whether or not the factual situation presented falls within the coverage provided by the endorsement.

Factually, it appears that the son of the insured was driving the family automobile on the evening of February 1, 1970, in Lebanon. That he and the passenger, as well as others, met shortly before midnight and agreed to engage in automobile races. The evidence indicates the passenger had done some mechanical work on the automobile. They left Lebanon on State Highway No. 32, and when about five miles into the country held one race. A decision was made that the road conditions there were not proper for racing; and the participants, including spectators, continued on about twenty miles from Lebanon where they reached the site of the ill-fated race. Pictures of the area were in evidence, and it seems agreed that the race was to cover a flat strip of highway across the bottom and end at the bridge crossing the Gasconade River; and, such exhibits also show that immediately after crossing the bridge the highway makes a sharp turn to the left. The son lined up the insured's automobile with that of another--pointing to-ward the bridge--and a spectator started the race by a hand signal. The son pulled ahead, at speeds estimated at 80 to 100 miles per hour, and crossed the bridge. Shortly thereafter the spectators saw a 'sort of red explosion.' They rushed to the scene and found that both the driver and passenger had been thrown from the automobile, which was in flames in the ditch on the outside of the curve.

First, in connection with the death of the passenger, we consider whether or not the insurer has any contractual obligation to defend against any claim brought under the 'liability' provisions of the policy. Claimants thereunder admit 'that a prearranged speed race was held' and rely solely on the argument that the incident occurred after the race was over, and thus, that the race exclusion was not operative at the moment of the passenger's death. There is no dispute but that the automobiles involved had crossed the agreed finish line prior to the catastrophe.

Was the automobile engaged in a race at the time of the casualty? This court has not considered the question, and the few cases dealing with somewhat similar exclusions have such differing factual situations 'that no general rule of law can be formulated respecting their construction.' 23 A.L.R.3rd 1444. Claimants submit that the excluded coverage applied solely 'while' the race was on, and that when the participants crossed the finish line a winner had been determined and no longer was there a race. Although not cited by claimants, support for their position may be found in American Standard Insurance Co. of Wis. v. Tournor, 186 Neb. 585, 185 S.W.2d 267 (1971) wherein a similarly worded exclusion was considered. In a four to three opinion, the majority said: 'The word 'while' connotes a specific segment of time. The word 'in' can mean 'in the course of' or 'during.' Either construction terminates the exclusion at the identical time the excluded event terminates. Such a construction is particularly indicated when a non-commercial race is held on a public highway, where policy coverage is specific and intended both before and after the occurrence of the excluded race.' Those judges dissenting said, in part: 'In a drag race, the engagement in the race may involve more than occurs over the designated course. If two cars are to approach the starting line at a designated speed, the approach is also part of the race. In view of the fact that in a race the participants cannot stop immediately at the finish line, it seems that the slowing down and stopping is also essentiallly a part of the race although this occurs beyond the finish line. The cars are still being used in a race or speed contest although the winner had been determined.' Claimants also cite two cases decided in Alabama, to wit: Alabama Farm Bureau Mutual Cas. Ins. Co. v. Cofield, 274 Ala. 299, 148 So.2d 226 (1962) and Alabama Farm Bureau Mut. Cas. Ins. Co. v. Goodman, 279 Ala. 538, 188 So.2d 268 (Ala.1966). Neither case considered the answer to the precise question herein posed although similar exclusionary clauses were involved. In Cofield coverage was found because the races had been terminated sometime before, and in Goodman the exclusion was found applicable because the casualty occurred while the race was still being contested. In connection with the latter case, we note that the insurer adopts language therein to stress the meaning and intent of the exclusionary...