Hill v. Nationwide Mut. Ins. Co.

• Decision Date: 15 March 1976
• Citation: 535 S.W.2d 327
• Parties: Alan D. HILL, b/n/f Ronald G. Hill, and Ronald G. Hill, Individually, Appellants, v. NATIONWIDE MUTUAL INSURANCE COMPANY, Appellee. 535 S.W.2d 327
• Court: Tennessee Supreme Court

Page 327

535 S.W.2d 327

Alan D. HILL, b/n/f Ronald G. Hill, and Ronald G. Hill, Individually, Appellants, v. NATIONWIDE MUTUAL INSURANCE COMPANY, Appellee.

535 S.W.2d 327

Supreme Court of Tennessee.

March 15, 1976.

James A. Ridley, III, Knoxville (Kramer, Johnson, Rayson, Greenwood & McVeigh, Knoxville, of counsel), for appellants.

Jerry A. Farmer, Knoxville (Poore, Cox, Baker, McAuley, Ray & Byrne, Knoxville, of counsel), for appellee.

OPINION

HARBISON, Justice.

This case involves the validity of an exclusion in the uninsured motorist provisions of an automobile insurance policy. The trial court upheld the exclusion against a contention that it conflicts with the uninsured motorist statutes of the state.

The facts of the case are stipulated. The suit arises out of an accident which occurred on September 5, 1973, when a motorcycle driven by appellant Alan D. Hill collided with an automobile owned by Mary E. Troutt and operated by her husband, Edgar L. Troutt.

At the time of the accident Alan D. Hill was a minor, fifteen years of age. The motorcycle which he was operating was titled in the name of his older brother, Randell G. Hill. The two brothers lived in the home of their parents, Mr. and Mrs. Ronald G. Hill.

Appellants Alan D. Hill and his father sued Mr. and Mrs. Troutt and recovered a judgment against them, which is outstanding and unpaid.

Mr. and Mrs. Troutt had no liability insurance on their automobile. The appellants are claiming coverage under a liability policy issued to appellant Ronald G. Hill on his family automobiles, up to the policy limit of ten thousand dollars.

On the date of the accident, Mr. Hill held a liability insurance policy issued by appellee covering two scheduled automobiles. This policy contained uninsured motorist coverage as required by the Tennessee statutes, T.C.A. §§ 56--1148 et seq. This coverage, referred to in the policy as 'Family Protection Coverage', extends to the named insured, Mr. Hill, and, while residing in the same household, his spouse and relatives. His younger son, Alan, therefore, was within the general coverage of the family automobile policy, subject to its terms and conditions.

Under the stipulated facts, the motorcycle which Alan was operating was not listed upon or covered with liability insurance under the policy issued by appellee. It was titled in the name of Alan's older brother, but was actually scheduled upon and covered by a separate liability insurance policy, issued to Mr. Hill by another company. The stipulation shows that Mr. Hill had expressly rejected uninsured motorist insurance coverage in connection with the policy covering the motorcycle. There seems to be little question but that Alan D. Hill was covered with liability insurance while operating his brother's motorcycle, under this separate policy, but there was no uninsured motorist protection provided to anyone under that policy.

Contained in the uninsured motorist provisions of the family automobile policy are four exclusions from coverage, only one of which is pertinent here. The exclusion relied upon by appellee in the present case is as follows:

'This endorsement does not apply: . . . (b) to bodily injury to an Insured while occupying a land motor vehicle (other than an insured land motor vehicle) owned by a Named Insured or any relative resident in the same household . . ..'

It is conceded that the motorcycle being operated by Alan D. Hill was a 'land motor vehicle' within the meaning of the exclusion. It was admittedly owned by a relative residing in the same household. The exclusion, therefore, is clearly applicable, precluding coverage under the stipulated facts, if it complies with the state law.

The sole attack made upon the exclusion by appellants is that it contravenes the provisions of T.C.A. § 56--1148, and is not authorized by any other provision of state law, so that it is, in effect, illegal and contrary to the public policy of the state as contained in the uninsured motorist statutes.

At all times pertinent here, T.C.A. § 56--1148 provided that no automobile liability insurance policy should be issued in the state, covering any motor vehicle registered or principally garaged in the state, unless prescribed uninsured motorist coverage was provided therein, or unless 'any insured named in the policy shall reject the coverage . . ..' The statute prescribes minimum limits for such coverage and requires that it be provided:

'. . . subject to provisions filed with and approved by the insurance commissioner, 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 . . ..'

Alan D. Hill was a person insured under the automobile policy issued to his father. ¹ Therefore, the statute mandates that uninsured motorist coverage be extended to him also, but 'subject to provisions filed with and approved by the insurance commissioner . . ..'

It is stipulated by the parties that the policy of insurance issued by appellee to Mr. Hill 'was approved by and is on file with the Tennessee Commissioner of Insurance.' The exclusion in question, therefore, according to this stipulation, has official approval in the state.

Nevertheless, it is contended on behalf of appellants that such official approval is not determinative. It is insisted that the purported exclusion denies coverage to one who is otherwise covered, simply because he is occupying a vehicle owned by the named insured or a member of his family, but not scheduled on or covered by the underlying liability insurance policy.

Appellants insist that a person protected by the uninsured motorist endorsement is covered under most circumstances if injured by an uninsured motorist, and that the exclusion operates to produce arbitrary and illogical results. If the insured person is riding in a vehicle covered by the liability policy, and is struck by an uninsured motorist, he is usually covered; ² similarly, if he is a pedestrian on a sidewalk or street, and is struck by an uninsured motorist, he is covered. Coverage is denied, however, if he is riding in another family vehicle not carried on the family liability insurance policy. It is insisted that such a result is contrary to the legislative purpose and intention, and to the underlying public policy of providing protection against injuries by uninsured motorists.

The issue presented has been the subject of a very large number of cases in the United States, and there is a substantial split of authority among the courts with respect to the validity of an exclusion such as that involved here.

On behalf of the insurance industry, it is argued that if the exclusion is stricken, then complete unrestricted coverage is provided to all members of the insured's family, while riding in an unscheduled family vehicle, although no premium was charged for such unscheduled vehicle and the vehicle itself is not covered by the liability insurance features of the policy. This position has been accepted by a number of courts, and in a very recent case, sustaining an exclusion similar to that involved here, the Arizona Court of Appeals, referring to earlier cases from that state, said:

'We reasoned that to told otherwise would allow an insured to purchase one liability policy with uninsured motorist coverage and thereafter have such coverage extended to cover himself and occupants while driving any number of vehicles owned by him without paying any additional premium for this added coverage and risk.' Rodriquez v. Maryland Indemnity Insurance Company, 24 Ariz.App. 392, 539 P.2d 196, 198 (1975).

Authorities accepting the rationale of the case just cited point out that vehicular liability insurance is ordinarily written upon and follows particular scheduled vehicles. It is not written upon named individuals, and is not like general health or accident insurance coverage. ³ The liability policy covers a scheduled vehicle, and extends its protection, through omnibus clauses, not only to the named insured but to members of his family and other persons using the vehicle with permission, subject to prescribed conditions and exclusions.

Other authorities, holding that exclusions such as that involved in the present case are not valid, have reasoned that uninsured motorist coverage should be analogized to broad personal insurance, and that it should not be geared to or limited by coverage on particular scheduled vehicles. They emphasize that the statutes speak in terms of 'protection of persons' rather than vehicles. ⁴

Both lines of authority are supported by cogent reasons. By statute, uninsured motorist insurance coverage is appended to or made supplemental to vehicular liability insurance, so that the concepts of vehicular coverage do have relevance; on the other hand, the statutes refer to the protection of persons, not vehicles.

Faced with these somewhat mixed concepts, the courts have had to construe statutory language in an attempt to carry out legislative policy. Each case, in the last analysis, turns upon the terms and provisions of a particular state statute and its language with respect to uninsured motorist coverage.

The Tennessee statutes on uninsured motorist insurance have been the subject of a number of reported cases. In addition to the general provisions of T.C.A. § 56--1148, prescribing uninsured motorist...