Hawaiian Ins. & Guar. Co. v. Mead

• Decision Date: 30 July 1975
• Docket Number: No. 1110--III,1110--III
• Citation: 14 Wn.App. 43,538 P.2d 865
• Court: Washington Court of Appeals
• Parties: HAWAIIAN INSURANCE & GUARANTY CO., Appellant, v. Robert L. MEAD and Jane Doe Mead, his wife, Respondents.

Page 43

14 Wn.App. 43

538 P.2d 865

HAWAIIAN INSURANCE & GUARANTY CO., Appellant, v. Robert L. MEAD and Jane Doe Mead, his wife, Respondents.

No. 1110--III.

Court of Appeals of Washington, Division 3.

July 30, 1975.

Rehearing Denied Sept. 22, 1975.

Edwin J. Snook, of Lycette, Diamond & Sylvester, Seattle, for appellant.

Douglas D. Peters, of Felthous, Peters, Schmalz & Leadon, Inc., P.S., Selah, for respondents.

WILLIS, ^* Judge.

On January 13, 1970, the defendant Robert L. Mead (referred to herein as though he were the sole defendant) was driving his automobile in a southerly direction on Highway 12 near Toppenish, Washington. He was being followed by a panel truck belonging to Bilyeu's Meats, Inc. (hereafter Bilyeu). Approaching from the opposite direction was an automobile operated by one David Hunter, an uninsured motorist. The Hunter vehicle crossed the center line into the lane occupied by the Mead and Bilyeu vehicles and collided with the Mead car. In rapid succession, the Bilyeu truck struck the rear of the Mead car. The defendant Mead sustained personal injuries in those collisions.

On March 17, 1970, the defendant, for an expressed consideration of $2,075.83, executed a document denominated a 'release of all claims' which stated that he

does hereby . . . release, acquit and forever discharge . . . Bilyeu Meats, Inc. . . . or its agents . . . and all other persons, firms, corporations, associations or partnerships of and from any and all claims, actions, causes of action, demands, rights, damages, costs, loss of service, expenses and compensation whatsoever, which the undersigned now has or which may hereafter accrue on account of or in any way growing out of any and all known and unknown, foreseen and unforeseen bodily and personal injuries and property damage and the consequences thereof resulting or to result from the accident, casualty or event which occurred on or about the 13th day of January, 1970, at or near Toppenish, Washington.

This release was negotiated by a representative of the insurance company that carried the liability insurance on the Bilyeu vehicle.

At the time of the accident the defendant was insured by the plaintiff, Hawaiian Insurance & Guaranty Company (hereafter Hawaiian), by virtue of an automobile liability policy which contained a provision granting uninsured motorists protection or coverage to the insured and which provided for the settlement by arbitration of any dispute as to such coverage or the amount of any recovery thereunder.

Sometime after the execution of the release to Bilyeu, the defendant filed a petition seeking arbitration under the uninsured motorist provision of his policy with the plaintiff. Plaintiff then filed the present action seeking an order declaring that the defendant was not entitled to arbitrate this matter due to his willful breach of the insurance contract. The alleged breach relied on by the plaintiff was the defendant's failure to obtain the written consent of the plaintiff to the settlement he made with Bilyeu, which it contends was in violation of that portion of his policy relating to uninsured motorists coverage. ¹

In 1967, the Washington State Legislature enacted, as a part of our insurance code, certain statutes which require all automobile liability policies to contain uninsured motorist protection and which define certain rights thereunder belonging to the insurer. ²

The case came on for trial before court and jury. The defendant testified that he did not receive a written consent from the plaintiff to sign the release which he gave to Bilyeu. At the end of all the evidence, the court granted the defendant's motion for dismissal, and in so doing, ruled: (1) that the release given by the defendant to Bilyeu was not ambiguous and was intended to relate only to the Bilyeu-Mead collision, to release only Bilyeu and his agents, and not to release the uninsured driver in the other vehicle; (2) that the signing of the release without the written consent of the plaintiff was not a breach of the insurance contract; (3) that the giving of the release to Bilyeu did not release the uninsured motorist; and (4) that the policy provision requiring the written consent of the insurer to the release of any person legally liable for bodily injury to the insured is against the public policy of this state and is therefore unenforceable.

Issue No. 1: Did the policy provision requiring the insured to obtain the written consent of the company before making a settlement with any person legally liable for bodily injury to the insured violate the public policy inherent in the statute requiring uninsured motorist coverage in every automobile liability policy?

The trial court ruled that the policy provision was in violation of the public policy of the state. We agree.

Our courts have held that attempts by an insurer to restrict the uninsured motorists' protection required by the statute are invalid. Thus, in Signal Insurance Co. v. Walden, 10 Wash.App. 350, 517 P.2d 611 (1973), the uninsured motorists' provision in the policy contained a one-year limitation. In holding that such provision was invalid, the court quoted as follows, at page 353, 517 P.2d at page 613:

Any limiting language in an insurance contract which has the effect of providing less protection than that made obligatory by the above statute would be contrary to the public policy as expressed, and of no force and effect. ³

The Walden court also stated at 353--54, 517 P.2d at 613:

The one-year limitation in the uninsured motorist section of the policy inhibits the fulfillment of the public policy that a claimant shall have the same rights in an uninsured motorist situation as he would have against a responsible third party.

In Hartford Accident & Indemnity Co. v. Novak, 83 Wash.2d 576, 520 P.2d 1368 (1974), the court held that a provision in the uninsured motorists section of a liability policy which made coverage conditional upon physical contact between a hit-and-run vehicle and the vehicle of the insured was restrictive of the coverage mandated by the statute, and was therefore invalid as being contrary to public policy.

In Touchette v. Northwestern Mutual Ins. Co., 80 Wash.2d 327, 494 P.2d 479 (1972), the son of the insured, while riding in his own automobile (not the insured vehicle) was injured when he collided with an uninsured vehicle. The policy covered the plaintiff as 'a relative of the named Insured who is a resident of the same household.' The defendant sought to avoid liability under the uninsured motorists section of the policy by relying on an exclusion that stated that such coverage did not apply to bodily injury to an insured while occupying a vehicle other than the insured automobile. The court held that the exclusionary provision was void, saying at page 335, 494 P.2d at page 484:

The legislative purpose . . . is not to be eroded or, as the cases say, whittled away by a myriad of legal niceties arising from exclusionary clauses.

The plaintiff urges that the provision requiring its consent before the insured can settle with any person liable for his bodily injury is not just another exclusion constituting a 'legal nicety,' noticed by the court in Touchette, but is actually a valid provision protective of the statutorily recognized subrogation rights of the insurer.

A similar contention was made, and rejected, under very similar circumstances, in Harthcock v. State Farm Mutual Auto. Ins. Co., 248 So.2d 456 (Miss.1971). Mississippi statute § 8285--51 provides that no automobile liability policy shall be issued unless it contains

. . . an endorsement or provisions undertaking to pay the insured all sums which he shall be legally entitled to recover as damages for bodily injury or death from the owner or operator of an uninsured motor vehicle,

A further statute, § 8285--54 provides:

An insurer paying a claim under the endorsement or provisions required by Section 1 (§ 8285--51) shall be subrogated to the rights of the insured to whom such claim was paid against the person causing such injury, death or damage, to the extent that payment was made.

The court said, at page 459:

The 'person causing such injury' within the meaning of this section is the uninsured motorist. The statute is not concerned with other joint tort-feasors. The protection afforded by the uninsured motorists coverage is not liability insurance. It affords no protection to the uninsured motorist. Its sole utility is to provide the injured party a means of collecting damages for his injuries; and rather than indemnifying the uninsured motorist, as does conventional liability insurance, it provides that the insurer paying the injured party is subrogated to the injured party's rights against the uninsured motorist to the extent that payment is made. State Farm and Universal are not entitled to be subrogated to plaintiff's claim against Roark (insured driver involved in collision with uninsured vehicle, in which plaintiff was a passenger), and the settlement of that claim did not diminish the uninsured motorists coverage.

In Harthcock, each of the two policies contained a clause which purported to exclude coverage under the uninsured motorists provision for

. . . bodily injury to an insured with respect to which such insured . . . shall, without written consent of the company, make any settlement with any person or organization who may be legally liable therefor.

The court said, at page 459:

Insofar as this exclusion applies to a tort-feasor other than the uninsured motorist, this provision is invalid. The insurer may not cut down on the coverage the statute requires. The statute intends to provide a source for the collection by the insured of all sums which he shall be legally entitled to recover as damages against the owner or operator of an uninsured motorist vehicle. The coverage afforded by these policies is mandatory under the statute and may not be cut down by a policy exclusion....