Greene v. Great Am. Ins. Co.

• Citation: 516 S.W.2d 739
• Decision Date: 27 November 1974
• Docket Number: No. 7643,7643
• Parties: Oran C. GREENE, Appellant, v. GREAT AMERICAN INSURANCE COMPANY, Appellee.
• Court: Court of Appeals of Texas. Court of Civil Appeals of Texas

Page 739

516 S.W.2d 739

Oran C. GREENE, Appellant, v. GREAT AMERICAN INSURANCE COMPANY, Appellee.

No. 7643.

Court of Civil Appeals of Texas,

Beaumont.

Nov. 27, 1974.

Kidd & Doggett, Austin, for appellant.

House, Mercer, House, Brock & Wilson, Austin, for appellee.

STEPHENSON, Justice.

This is an appeal from an order of the trial court granting defendant's (Great American Insurance Company) motion for summary judgment. The parties will be referred to here as they were in the trial court.

Plaintiff (Oran C. Greene) brought this suit for damages under the uninsured motorist provision of an automobile insurance policy issued by defendant to his mother, Letitia Greene. He was injured in a collision while driving his mother's automobile, when it was in collision with another automobile driven by an uninsured motorist. The affidavit attached to the motion showed that Form 119 was attached to the policy in question, reading as follows:

'It is agreed that the insurance afforded by this policy shall not apply with respect to any claim arising from accidents which occur while any automobile is being operated by Oran Castine Greene.

'Acknowledged by: Letitia Smith Greene

(Signature of Named Insured)'

The policy in question, dated December 15, 1971, was issued in renewal of a one year policy containing the same coverage which was as follows: Minimum limits of bodily injury liability, property damage liability, comprehensive coverage, collision, and uninsured motorist.

Plaintiff's primary complaint here is that an attempt to exclude him from uninsured motorist coverage by the use of Form 119 is void as contrary to public policy. We disagree. It is argued that such public policy is embodied in Tex.Ins.Code Ann. art. 5.06--1, V.A.T.S., (Supp. 1974--1975) which reads in part as follows:

'No automobile liability insurance . . . covering liability arising out of the ownership, maintenance, or use of any motor vehicle shall be delivered or issued for delivery in this state unless coverage is provided therein or supplemental thereto, in the limits described in the Texas Motor Vehicle Safety-Responsibility Act, under provisions prescribed by the Board, for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles because of bodily injury, sickness or disease, including death, resulting therefrom. The coverage required under this Article shall not be applicable where any insured named in the policy shall reject the coverage . . .'

The above quoted section of the Insurance Code shows that uninsured motorist coverage is not mandatory in this state. Such coverage is required unless the insured rejects the coverage, and the Board and cases hold that such rejection must be in writing. This court has come to the conclusion that the policy here sued on is not ambiguous, and that Form 119, signed by plaintiff and attached to the policy, effectively rejects such coverage unless partial rejection is contrary to public policy.

The plaintiff in this case was offered, and accepted, a contract furnishing her uninsured motorist coverage except when her son was driving the automobile. Why should that be contrary to public policy? If plaintiff's contention is allowed to become the law in Texas, insured motorist with sons or daughters with bad driving records will be unable to secure uninsured motorist coverage in any form except from the assigned pool at a much greater cost. Public policy dictates the allowance of partial rejection of such coverage in order to allow insureds in that situation to secure insurance they can afford, just as they presently can when liability coverage is in question.

Western Alliance Insurance Company v. Albarez, 380 S.W.2d 710 (Tex . Civ.App.--Austin 1964, writ ref'd n.r.e.) is persuasive in the case before us. In this case, Form 119 was attached to the policy excluding insured's brother in the exact form in our case. Suit was filed when the insurance company declined to defend a liability claim arising out of collision which occurred while insured's brother was driving. The trial court held, inter alia, that the exclusion by Form 119 violated the public policy of Texas. The Court of Civil Appeals held specifically that the exclusionary endorsement was not invalid as contrary to public policy. The only difference in the Albarez case and the one before us is that the claim in Albarez was under the liability coverage, and the claim in our case under the uninsured motorist coverage. Our case not being one involving the Motor Vehicle Safety Responsibility Act, we see no valid reason why public policy would allow partial exclusion under liability coverage but not under the uninsured motorist coverage. See also, Travelers Indemnity Co. v. Columbus State Bank, 442 S.W.2d 479 (Tex.Civ.App.--Houston (1st Dist.) 1969, no writ).

Plaintiff's argument that public policy in Texas should not allow partial rejection of uninsured motorist coverage is based upon the erroneous deduction that the law of American Liberty Insurance Company v. Ranzau, 481 S.W.2d 793 (Tex.1972), compels that result. This Court makes no attempt to overrule Ranzau, as that case has no application to the factual situation before us. In our discussion of that case, we point out at the outset, there is no mention of Public policy in Ranzau.

In Ranzau the question arose as to whether an 'other insurance' caluse in a policy could reduce the amount of uninsured motorist coverage to less than $10,000. The Supreme Court of Texas said, 'No .' Not because of Form 119 excluded some person from coverage, but because 'other insurance' contravened the statutory requirement in art. 5.06--1, Tex.Rev.Civ.Stat.Ann., that uninsured motorist coverage should be in the amount of $10,000, and the Board could not approve a form which would serve to reduce that amount of coverage. In Ranzau, an attempt was made in the policy of insurance to violate the statutory requirement as to the amount of coverage. There is no statutory provision stating a policy of insurance with uninsured motorist coverage must insure everyone.

Plaintiff's second and final argument to support its contention that partial rejection of uninsured motorist coverage should be contrary to public policy in Texas is that the courts in the state of California have made a similar holding. Inasmuch as we have no case in Texas passing directly in point, we proceed to examine the California rule in great detail.

One of the most thorough discussions of the public policy of California is to be found in Abbott v. Interinsurance Exchange of Auto. Club. of So. Calif., 260 Cal.App.2d 528, 67 Cal.Rptr. 220 (1968). There the Court of Appeals reiterated California's position that it is primarily concerned with the innocent third party: 'The public policy protecting unknown innocent persons, who may be insured by a car driven by a permittee of the insured, is fundamentally based upon the principle presently set forth in section 16451 of the Vehicle Code.' The Court upheld the trial court's interpretation that § 16451 . . .:

'(California) still requires insurance policies issued in this state to apply to injuries suffered by third parties at the hands of negligent permittee drivers of the insured's car and that while section 11580.1, subdivision (e) of the Insurance Code allows insurers and the insured by contract to restrict coverage As between themselves, such permission does not change the law as established by Vehicle Code section 16451 with respect to innocent third parties . . .' (at 221) (emphasis supplied).

In Abbott the appellant was attempting to validate a policy restriction which excluded coverage of the policy when the assured's car was driven by their son, much like Form 119 in our case. The California Court held such a restriction as void, saying:

"The purpose of Vehicle Code section 16451 is to broaden insurance coverage and to protect those injured by the negligence of drivers operating automobiles with the owners' consent. . . . There are no exceptions in the statute to the omnibus coverage thus required. Since the provisions of section 16451 are made a part of every policy of insurance issued by an insurer . . . it must follow that any provision which would exclude such coverage . . . being contrary to the provisions of the statute, and against public policy, must be held invalid and void." (cases cited) (at 223)

The forerunner of § 16451 of the Vehicle Code was § 415, and from a discussion of the California cases cited herein, it appears that there was very little, if any, change in the wording of the two sections. In interpreting the meaning of § 415, the California Supreme Court has stated in numerous opinions that that state's public policy prevents a restriction or whittling away of the uninsured motorists coverage. In Wildman v. Government Employees' Insurance Co., 48 Cal.2d 31, 307 P.2d 359 (1957), the Court said:

'It appears that section 415 must be made a part of every policy of insurance issued by an insurer since the public policy of this state is to make owners of motor vehicles financially responsible to those injured by them in the operation of their vehicles. . . . We are of the opinion that for an insurer to issue a policy of insurance which does not cover an accident which occurs when a person, other than the insured, is driving with the permission and consent of the insured is a violation of the public policy of this state as set forth in sections 402 and 415 of the Vehicle Code.' (at 364)

Section 415 of the Vehicle Code provided in part:

'(a) . . . A 'motor vehicle liability policy,' as used in this code means a policy of liability insurance . . . which policy Shall meet the following requirements:

'(1) * * *

'(2) 'Such policy shall insured the person named therein And any other person using or responsible for the use of said motor vehicle or motor vehicles with the express or implied...