Grange Ins. Ass'n v. Beleke

• Court: Court of Appeals of Oregon
• Writing for the Court: BUTTLER; WARDEN; WARDEN; RICHARDSON
• Citation: 90 Or.App. 416,752 P.2d 864
• Parties: GRANGE INSURANCE ASSOCIATION, Respondent, v. Harold W. BELEKE, Sandra M. Beleke, Lesa Beleke, Larry Haynie, Defendants, Robert D. Dumas and Farmers Insurance Group, Appellants. 16-84-07998; CA A40169. Court of Appeals of Oregon, In Banc *
• Decision Date: 03 June 1988

Page 864

752 P.2d 864 90 Or.App. 416 GRANGE INSURANCE ASSOCIATION, Respondent,
v.
Harold W. BELEKE, Sandra M. Beleke, Lesa Beleke, Larry
Haynie, Defendants,
Robert D. Dumas and Farmers Insurance Group, Appellants. 16-84-07998; CA A40169.
Court of Appeals of Oregon,
In Banc ^*. Argued and Submitted May 8, 1987.
Resubmitted In Banc Feb. 3, 1988.
Decided April 13, 1988.
Reconsideration Denied June 3, 1988.

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[90 Or.App. 417] Frank E. Bocci, Eugene, argued the cause and filed the brief, for appellants.

Bruce L. Mowery, Portland, argued the cause and filed the brief, for respondent.

[90 Or.App. 418] BUTTLER, Judge.

Defendants Dumas and Farmers Insurance Group appeal from a judgment granting declaratory relief to plaintiff, Grange Insurance Association, determining that plaintiff's automobile liability insurance policy does not cover any claims by appellants arising out of an automobile accident. We affirm.

Plaintiff was the insurer of several automobiles owned and driven by defendants Harold, Sandra and Lesa Beleke. On April 26, 1982, plaintiff added to the Belekes' policy, at Sandra's request, a 1966 Ford Mustang that apparently had been owned previously by defendant Haynie. Haynie had transferred ownership of the car to the Belekes in order to reduce his insurance premiums. On October 9, 1982, Haynie was driving the Mustang when, as a result of his negligence, an accident occurred with a vehicle being driven by Dumas, who was insured under a policy issued by Farmers.

Plaintiff brought this declaratory judgment action, alleging that its policy with the Belekes did not cover Haynie's accident, because the policy was issued as a result of misrepresentations made by the policyholders regarding the ownership and use of the vehicle. An order of default was entered against the Belekes and Haynie for want of an answer, followed by a judgment that disposed only of the claims against the insureds. After a trial consisting only of arguments presented by counsel, the court entered a final judgment declaring that plaintiff is not responsible under its policy with the Belekes for Dumas' injuries incurred in the accident with Haynie.

On appeal, Dumas and Farmers contend first that the trial court erred in holding that former ORS 486.551 does not apply to plaintiff's policy. It provided:

"The liability of an insurance carrier with respect to the insurance policy required by this chapter to prove future responsibility shall become absolute whenever injury or damage covered by the vehicle liability policy occurs. The policy may not be canceled or annulled as to such liability by any agreement between the insurance carrier and the insured after the occurrence of the injury or damage. No statement made by the insured or on his behalf and in violation of the policy shall defeat or void the policy. The provisions of this [90 Or.App. 419] section are not applicable to policies of vehicle liability insurance other than those required in connection with proof of future responsibility." (Emphasis supplied.)

That statute clearly distinguishes between policies of vehicle liability insurance required in connection with proof of future responsibility and other such policies not

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required for that purpose. Former ORS 486.075 prohibited a person from driving a motor vehicle registered in this state unless the person was insured under a motor vehicle liability insurance policy or provided the division other satisfactory proof of financial responsibility. See former ORS 486.011(7).

If a driver had an automobile accident that resulted in property damage of more than $400 or injury or death to any person, former ORS 486.021 required the driver and the owner of the vehicle involved to file within 30 days "and thereafter maintain for a period of three years proof of future responsibility," unless the vehicle was insured as required by law. If a person failed to file "proof of future responsibility when such proof is required," the division was required to revoke the person's license. Former ORS 486.211. If the person complied with the requirement of proving future responsibility, the proof was returned to the person, and the requirement of the filing was waived if

"[a]t any time after three years from the date such proof was required when, during the one-year period preceding the request, the division has not received record of a conviction which would require or permit the suspension or revocation of the license or registration of the person by or for whom such proof was furnished." Former ORS 486.431(1)(d).

Accordingly, even though there existed a mandatory financial responsibility law under which all vehicles were required to carry a minimum amount of insurance, the requirement that proof of future responsibility be filed under certain circumstances was maintained, and the distinction between "future responsibility" and "financial responsibility" remained in former ORS 486.011(7), although the minimum amounts required for each were the same.

Because former ORS 486.551 and former ORS 486.021 concern the same subject and use the same language, proof of future responsibility, they should be given the same meaning. Davis v. Wasco IED, 286 Or. 261, 593 P.2d 1152 [90 Or.App. 420] (1979). It is clear that, under former ORS 486.551, the insurer's liability is absolute after injury or damage with respect to policies issued as proof of future responsibility. Rowley v. Dairyland Ins. Co., 44 Or.App. 333, 605 P.2d 1356 (1980). It is equally clear that, giving former ORS 486.551 its plain meaning, that statute does not apply to vehicle liability insurance policies other than those required as proof of future responsibility. The insurance policy in question here is not such a policy. Accordingly, we hold that plaintiff is not precluded by former ORS 486.551 from asserting that the insured made material misrepresentations in their application for insurance.

Next, appellants contend that the trial court erred in holding that their ability to recover from plaintiff depends on the ability of the Belekes and Haynie to do so. In Allegretto v. Or. Auto Ins. Co., 140 Or. 538, 13 P.2d 647 (1932), Allegretto had obtained a judgment against Harris, the insured of Oregon Auto, as a result of an accident caused by Harris' negligence. Because Harris was unable to satisfy the judgment, Allegretto brought an action against Oregon Auto, which raised as a defense that the insured had made false statements to it during the initial defense of the claim and, therefore, had breached the policy by failing to cooperate with the insurer. The court recognized that Allegretto's right to recover against Oregon Auto depended on whether Harris could recover under the policy:

"The overwhelming weight of authority establishes that the plaintiff's rights are...