Finney v. Farmers Ins. Co.

Decision Date17 October 1978
Docket NumberNo. 2422-III,2422-III
Citation586 P.2d 519,21 Wn.App. 601
CourtWashington Court of Appeals
PartiesRalph C. FINNEY and Charlene Finney, husband and wife, Individually, and Ralph C. Finney, personal representative of the Estate of Robin Colleen Finney, Respondents, v. FARMERS INSURANCE CO. of Washington, a corporation, and Mid-Century Insurance Company, a corporation, Appellants, v. AETNA CASUALTY & SURETY CO., Respondent.

Halverson, Applegate & McDonald, Walter G. Meyer, Jr., Yakima, for appellants.

Fortier & Baker, G. Wm. Baker, Gavin, Robinson, Kendrick, Redman & Mays, William H. Mays, Yakima, for respondents.

GREEN, Judge.

Defendant, Mid-Century Insurance Co., a member of Farmers Insurance Group (herein called "Farmers"), issued separate policies of insurance covering two automobiles owned by plaintiffs Finney. Both policies contained uninsured motorist coverage of $15,000 for each injury and $30,000 for each accident. After plaintiffs' daughter, Robin, was killed in an automobile collision, the plaintiffs, individually, and Mr. Finney as representative of Robin's estate, brought this action to recover under the uninsured motorist provisions of these policies and sought additional damages for Farmers' alleged bad faith in failing to negotiate or settle their claim. Farmers denied liability and filed a third-party complaint joining Aetna Casualty & Surety Co. who allegedly insured the automobile in which Robin was a passenger. All parties moved for summary judgment.

The trial court (1) dismissed the third-party complaint against Aetna Casualty & Surety; (2) entered judgment for plaintiffs against Farmers in the amount of $30,837.95 plus interest; and (3) dismissed plaintiffs' claim for additional damages based upon the alleged bad faith of Farmers. Farmers and plaintiffs appeal.

Numerous issues are presented and in general concern (1) the existence of timely notice, (2) the existence of an uninsured motorist, (3) the effect on Farmers' liability of Finney's settlement with and covenant not to sue one of the tort-feasors, (4) the effect of clauses relating to "other insurance", subrogation, and offset on the amount of Farmers' liability for uninsured motorist coverage, (5) the binding effect on the instant litigation of findings, conclusions and judgment entered in favor of plaintiffs against the allegedly uninsured motorist, (6) Farmers' liability for funeral expenses in addition to its uninsured motorist coverage, (7) the validity of the trial court's award of prejudgment interest, and (8) Farmers' liability for attorney's fees. We affirm.

On August 11, 1973, Robin Finney, age 16, was a passenger in a 1963 Chevrolet Nova driven by Norman Cornelius Jr., which had been purchased by Randall Wood, age 17, who was also a passenger. This vehicle crossed the center line of a highway and collided head-on with another car resulting in the instantaneous death of Cornelius, Wood and Finney, together with fatal injuries to two persons and serious injuries to five others in the other car. After the insurance carrier for Cornelius and Wood denied the existence of coverage for the collision, plaintiffs, in August 1974, presented a claim to Farmers, their insurance carrier, for the maximum ($30,000) uninsured motorist coverage under their two policies. On August 8, Farmers rejected this claim in writing, while indicating it would investigate the accident under a reservation of rights. At the same time, it wrote plaintiffs' counsel a letter stating that Cornelius' carrier, State Farm Insurance, was not denying coverage, only liability. This letter then stated:

It is my position that since State Farm is not denying coverage, their policy is primary. It is my understanding that State Farm has coverage for bodily injury, uninsured motorist and medical payments. Any claim that you may have must be made to State Farm.

If you should bring suit against State Farm, you will not be prejudiced in the future if it should develop that there is no insurance coverage available to your client. I make this statement in the event you find it adviseable (Sic ) to make an uninsured motorist claim along with a medical payments claim. The point is that the question of the primary coverage of State Farm must be resolved before Mr. Finney's policy becomes available.

Thereafter, on August 29, 1974, plaintiffs filed a wrongful death action against the estates of Norman Cornelius and Randall Wood, the driver and alleged owner, respectively, of the vehicle in which Robin was a passenger. In their complaint, they contended that the collision resulted from the negligence and intoxication of Cornelius and that Wood was legally responsible for the negligence of Cornelius. On February 26, 1975, plaintiffs compromised their action against the Cornelius estate for $15,000 and executed a covenant not to sue "reserving the right to further prosecute this action against the defendants Wood . . . and . . . others." The remainder of the action went to trial and resulted in a judgment in favor of Robin's estate against the Wood estate in the amount of $45,837.95. Aetna Casualty & Surety Co., which insured Wood's parents, denied coverage. As a result, the Finneys were unable to collect the judgment.

In July 1975, plaintiffs brought this action against Farmers to recover damages for $30,000 under the uninsured motorist provisions of the two policies, plus interest, damages of $837.95 for funeral expenses, attorney's fees, and punitive damages for failure to negotiate or settle the claim. Farmers unsuccessfully raised numerous defenses to the action in the trial court and now urges those defenses upon this court on appeal.

First, Farmers contends plaintiffs did not give notice "as soon as practicable" 1 of their uninsured motorist claim. For that reason alone, Farmers argues there is no uninsured motorist coverage available to plaintiffs and the complaint should have been dismissed. We find no error. Plaintiffs' affidavits reflect that Howard Lewis, a Farmers Insurance Group agent, telephoned Mrs. Finney within a week after the collision to express his regrets over Robin's death. Insurance was discussed and with regard to the claims he said, in effect, "not to worry you have one year before you need to do anything." The plaintiffs later contacted an attorney, and about August 1974, nearly a year after the accident, their attorney informed them that probably neither the operator of the vehicle nor the owner, Randall Wood, had insurance. At that time, plaintiffs presented their claim to Farmers for uninsured motorist coverage. These facts are not controverted.

The notice requirements for uninsured motorist coverage do not become operative until an insured reasonably believes he has an uninsured motorist claim. Thomas v. Grange Ins. Ass'n, 5 Wash.App. 820, 490 P.2d 1316 (1971); See Signal Ins. Co. v. Walden, 10 Wash.App. 350, 517 P.2d 611 (1973), Rev. den., 83 Wash.2d 1013 (1974). At that point, notice should be given. Here, Mr. Lewis, Farmers' agent, knew of the collision and death just after it happened, and, as soon as plaintiffs learned that in all probability neither the operator of the vehicle nor its owner was covered by insurance, they presented their claim for uninsured motorist benefits to Farmers. Ironically, as plaintiffs' brief points out, Farmers is asserting, even now, that the owner and the vehicle are covered by insurance, and therefore, there is no uninsured motorist coverage under plaintiffs' policy. Yet it simultaneously contends that the plaintiffs should have recognized earlier than they did that they had an uninsured motorist claim. We agree with the trial court that in these circumstances plaintiffs' actions constituted reasonable notice.

Second, Farmers argues that Wood is not an uninsured motorist, and therefore, no recovery is allowed under its policies. In support of this argument, Farmers makes three contentions: (1) Randall Wood was insured under his father's policy with Aetna Casualty & Surety Co., and the third-party complaint against Aetna should not have been dismissed; or, alternatively, (2) Wood was insured under the policy carried by Cornelius with State Farm Insurance Co.; or (3) since Cornelius, the driver of the vehicle in which Wood was riding was insured, the vehicle was not uninsured within the meaning of the policy. We disagree with these contentions.

The record shows that on August 6, 1973, Wood, age 17, without the consent or knowledge of his father, paid one Monty Bak $450 to purchase the car. Mr. Bak thereupon signed the certificate of title and delivered it to Wood along with possession of the car. However, Wood had not registered the transfer of title before the accident occurred on August 11. RCW 46.12.250 makes it "unlawful for any person under the age of 18 to be the registered or legal owner of any motor vehicle" if that person is not emancipated or on duty with the Armed Forces. Farmers applies this statute to the facts and asserts that Wood was not the owner of the Nova at the time of the collision, the true owner being Monty Bak. Consequently, Farmers contends the Nova was a "non-owned" vehicle within the terms of Aetna's policy which defines a "non-owned automobile" as an

automobile or trailer not owned or furnished for the regular use of either the named insured or any relative . . .

We disagree. The contracts of a minor are not void, but voidable, and unless disaffirmed within a reasonable time after attaining majority, are valid. RCW 26.28.030. Here, the purchase had not been disaffirmed. On the precise facts involved in this case, the California Court of Appeals held the minor to be the equitable owner of the car he purchased and thus an owner within the meaning of an insurance policy. Allstate Ins. Co. v. Chinn, 271 Cal.App.2d 274, 76 Cal.Rptr. 264, 266 (1969); Accord, St. Paul Fire & Marine Ins. Co. v. Muniz, 19 Ariz.App. 5, ...

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