Hamilton v. Travelers Indem. Co.

• Decision Date: 15 October 1985
• Docket Number: No. 8529SC149,8529SC149
• Citation: 77 N.C.App. 318,335 S.E.2d 228
• Court: North Carolina Court of Appeals
• Parties: James Kirby HAMILTON, Executor of the Estate of Darren Keith Hamilton, Deceased v. The TRAVELERS INDEMNITY COMPANY, a Stock Insurance Company.

Page 228

335 S.E.2d 228

77 N.C.App. 318

James Kirby HAMILTON, Executor of the Estate of Darren Keith Hamilton, Deceased v.The TRAVELERS INDEMNITY COMPANY, a Stock Insurance Company.

No. 8529SC149.

Court of Appeals of North Carolina.

Oct. 15, 1985.

Toms & Bazzle by James H. Toms and Ervin W. Bazzle, Hendersonville, for plaintiff-appellant.

Roberts, Cogburn, McClure & Williams by Isaac N. Northup, Jr., Asheville, for defendant-appellee.

EAGLES, Judge.

Plaintiff claims only under the UM coverage; no other liability is asserted under the policy.The parties do not dispute the facts, only the interpretation of the policy and applicable statutory language.Since the case presents only questions of law, summary judgment was appropriate.Kessing v. National Mortgage Corp., 278 N.C. 523, 180 S.E.2d 823(1971).The decision of the trial court is fully reviewable here.North Carolina Reins. Facility v. North Carolina Ins. Guaranty Ass'n., 67 N.C.App. 359, 313 S.E.2d 253(1984).

Under the terms of its UM coverage, defendant obligated itself to do the following:

To pay all sums which the insured or his legal representative shall be legally entitled to recover as damages from the owner or operator of an uninsured automobile because of:

(a) bodily injury, sickness or disease, including death resulting therefrom, hereinafter called "bodily injury," sustained by the insured;

* * *

* * *

"[U]ninsured automobile" means:

(a) with respect to damages for bodily injury and property damage an automobile or other vehicle with respect to the ownership, maintenance or use of which there is, in at least the amounts specified in Subsection (c) of Section 20-279.5 of the North Carolina Motor Vehicle Safety and Financial Responsibility Act, neither (1) cash or securities on file with the North Carolina Commissioner of Motor Vehicles nor (2) a bodily injury and property damage liability bond or insurance policy, applicable to the accident with respect to any person or organization legally responsible for the use of such automobile or vehicle....

The key language here is "in at least the amounts specified in Subsection (c) of Section 20-279.5 of the North Carolina Motor Vehicle Safety and Financial Responsibility Act."We note that this language parallels the statutory definition of "uninsured motor vehicle."G.S. 20-279.21(b)(3).As used here, however, it is part of a contract of insurance.Insurance contracts are construed like other contracts, but in case of ambiguity we construe them against the insurer and in favor of finding coverage.SeeWachovia Bank & Trust Co. v. Westchester Fire Ins. Co., 276 N.C. 348, 172 S.E.2d 518(1970)(reviewing rules of construction).

One of the settled tenets of contract construction is that the law in effect at the time of the execution of the contract becomes part of the contract.Pike v. Wachovia Bank & Trust Co., 274 N.C. 1, 161 S.E.2d 453(1968).The contract here was executed after 1 January 1980, at which time the mandatory minimum UM coverage was $25,000 per victim.The amending act which raised the minimum to $25,000 per victim provided that it would not affect policies then in effect.1979 N.C.Sess.Laws c. 832, s. 12.However, plaintiff's policy was not "in effect" at the time of the amendment, but only became effective when executed in early 1980.At the time the contract was entered into, the language "in at least the amounts specified in [G.S. 20-279.5(c) ]" meant in at least the statutory amounts as they then existed.The policy's coverage letters tend to indicate to the insured that this was in fact the case: they provide $25,000/$50,000 coverage for "each person" and "each accident" respectively and premiums are charged accordingly.In the policy language no exceptions for vehicles with lower coverages appear.The contract language "in at least the amounts specified in [G.S. 20-279.5(c) ]" allows the construction that plaintiff had contracted for the full $25,000 UM coverage for any covered injury to insured.This is the policy language, not statutory language, and we therefore adopt that construction of the contract.Roberts' automobile was an "uninsured automobile" as defined under the policy issued by Travelers.

Had defendant wished to define its UM liability limits in terms that would have allowed it to limit its liability to the lesser amount called for in Roberts' policy, it could have done so.Defendant's policy could have provided expressly that compliance with the Act was the key to determining whether a tortfeasor was an uninsured motorist and whether the policy's UM coverage was invoked.It did not do so, but elected to frame its policy in terms of the "amounts specified in"G.S. 20-279.5(c).

We believe that our decision is consistent with the legislative intent and policy underlying compulsory UM coverage.UM coverage was designed by the legislature to provide certain minimum financial protection to persons injured by financially irresponsible motorists.Moore v. Hartford Fire Ins. Co., 270 N.C. 532, 155 S.E.2d 128(1967).The legislature decided, as a policy matter, that a certain level of UM coverage was proper, and subsequently reconsidered and increased that minimum level.In increasing the minimum, the legislature did not expressly create any exceptions or exemptions, other than that motorists' existing policies would not be affected.We doubt that the legislature could have modified existing liability contracts.U.S. Const. Art. I, Section 10 cl. 1;Hood v. Richardson Realty, Inc., 211 N.C. 582, 191 S.E. 410(1937).The only exception to this legislative policy, as we construe it, would be that motorists with existing policies including UM coverage at the pre-amendment level could not claim up to the new limits if they were struck by an uninsured motorist.If those insureds, before their routinely scheduled policy renewal, desired more UM coverage at the higher, post-amendment level, they could renew their policies early.In the interim, they would not be in violation of the Financial Responsibility Act because they retained their existing, lower-limit policies nor would their insurers be forced to assume additional, uncontracted for liability.SeeOksa v. American Employers Ins. Co., 128 F.Supp. 681(N.D.N.Y.1954)(insurer has no duty to conform existing policy to new statutory minimums), aff'd, 218 F.2d 585(2d Cir.1955)(per curiam).

On the other hand, motorists like plaintiff, who contracted and paid premiums for UM coverage after the effective date of the new limits, should receive coverage up to those higher limits.The legislative policy behind UM insurance laws is not to divide liability among insurers or limit insurers' liability, but to protect the motorist to the extent the statute requires protection against a specific class of tortfeasors.SeePickering v. American Employers Ins. Co., 109 R.I. 143, 282 A.2d 584(1971).There is nothing in the legislative scheme suggesting that insured persons should have to concern themselves with the liability insurance limits of tortfeasors; in fact, the very purpose of UM coverage is to ameliorate that concern.

We are aware of authority that a tortfeasor is not an "uninsured motorist" even though, because of payments to other plaintiffs, the amount available from which to pay plaintiff's damages is less than the statutory minimum, and even though the result ironically means that the underprotected plaintiff would have been better off if injured by a totally uninsured motorist and permitted to proceed under his own UM coverage.SeeTucker v. Peerless Ins. Co., Inc., 41 N.C.App. 302, 254 S.E.2d 656(1979);Rogers v. Tennessee Farmers Mut. Ins. Co., 620 S.W.2d 476, 24 A.L.R. 4th 1(Tenn.1981); Annot. 24 A.L.R. 4th 13, Section 8(1983).However, these cases, including Tucker, involved a tortfeasor fully insured to the required statutory coverage limit per accident then in effect.Those cases concern the legislatively mandated UM upper limit per accident, not UM coverage per victim as here.Where tortfeasors have...