Holcomb v. Farmers Ins. Exchange, 73--20

• Decision Date: 21 May 1973
• Docket Number: No. 73--20,73--20
• Parties: James HOLCOMB and Leona Holcomb, Appellants, v. FARMERS INSURANCE EXCHANGE, Appellee.
• Court: Arkansas Supreme Court

Page 155

495 S.W.2d 155

254 Ark. 514

James HOLCOMB and Leona Holcomb, Appellants, v. FARMERS INSURANCE EXCHANGE, Appellee.

No. 73--20.

Supreme Court of Arkansas.

May 21, 1973.

Rehearing Denied June 25, 1973.

Bon McCourtney & Associates, by Troy L. Henry, Jonesboro, for appellants.

Cockrill, Laster, McGehee, Sharp & Boswell, Little Rock, for appellee.

JONES, Justice.

James Holcomb owned a 1971 Ford Maverick and his wife, Leona Holcomb, owned a 1965 Plymouth. They both had separate liability insurance policies issued by Farmers Insurance Exchange on their respective automobiles. Mr. Holcomb had uninsured motorist coverage on his Ford but Mrs. Holcomb had rejected uninsured motorist coverage on her Plymouth. Mr. Holcomb was driving his wife's Plymouth when it was damaged and he and Mrs. Holcomb were injured in a collision caused by the negligence of an uninsured motorist. Mr. and Mrs. Holcomb filed suit against Farmers and against the uninsured motorist, Sammy Walker, for the sum of $25,000. The trial court granted Farmers' motion for a summary judgment.

On appeal to this court the Holcombs contend that the exclusion in the insurance policy relied on by Farmers is void and against public policy under the uninsured motorist statute; that there are material issues of fact in dispute and the trial court erred in granting Farmers' motion for summary judgment.

The statute in question, Ark.Stat.Ann. § 66--4003 (Repl.1966) reads 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 with respect to any motor vehicle registered or principally garaged in this State unless coverage is provided therein or supplemental thereto, in not less than limits described in section 27 of Act 347 of 1953 (§ 75--1427), as amended, under 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; provided, however, that the coverage required under this section shall not be applicable where any insured named in the policy shall reject the coverage.'

Under the policy involved in this case James Holcomb is the named insured under Item I and the vehicle described is a 1971 Maverick. The policy is divided into Part I, covering liability, and Part II, pertaining to the benefits for bodily injury caused by uninsured motorists. Certain exclusions are set out under each part but under Part I the company agrees:

'To pay all damages the insured becomes legally obligated to pay because of:

(A) bodily injury to any person, and/or

(B) damage to property arising out of the ownership, maintenance or use, including loading or unloading, of the described automobile or a non-owned automobile.'

In Part I under 'Definition of Named Insured' the policy provides:

'If the insured named in Item 1 of the Declarations is an individual, the term 'named insured' includes his spouse if a resident of the same household.'

And in Part I under 'Definition of Insured' the policy provides:

'The unqualified word 'insured' includes

(a) with respect to the described automobile,

(1) the named insured, and

(2) any other person while using such automobile and any other person or organization legally responsible for its use, provided the actual use of such automobile is by the named insured or with his permission; and

(b) with respect to a non-owned automobile,

(1) the named insured or a relative, and

(2) any other person or organization not owning or hiring such automobile if legally responsible for its use by the named insured or a relative, but only in the event such named insured or relative is legally liable for the occurrence; provided the actual use of the non-owned automobile by the persons in (1) and (2) above is with the permission of the owner.'

Under Part I 'Non-Owned Automobile' is defined as:

'(A)n automobile not owned by or regularly or frequently used by the named insured or any resident of the same household, other than a substitute automobile.'

Substitute automobile is defined as:

'(A)n automobile not owned by the named insured or any resident of the same household, while temporarily used with the permission of the owner, as a substitute for the described automobile when withdrawn from normal use because of its breakdown, repair, servicing, loss or destruction.'

Under Part II, coverage (C) of the policy, the company agrees:

'To pay all sums which the owner or operator of an uninsured motor vehicle would be legally responsible to pay as damages to the insured because of bodily injury sustained by the insured, caused by accident, and arising out of the ownership, maintenance or use of such uninsured motor vehicle; provided that, (1) insurance under Coverage A of this policy must be in effect at the time of such accident.'

Under 'Definitions' in Part II the policy provides:

'The following definitions in Part I apply to Part II: 'Bodily injury', 'Damages', 'Newly Acquired Automobile', 'Non-Owned Automobile', 'Relative', 'Substitute Automobile', 'Named Insured' . . .

Described Automobile means the automobile described in the policy Declarations for which Uninsured Motorists insurance is indicated as covered, including a newly acquired automobile or a substitute automobile.

Insured means (1) the named insured or a relative, (2) any other person while occupying an insured motor vehicle, and (3) any person, with respect to damages he is entitled to recover because of bodily injury to which Part II applies sustained by an insured under (1) or (2) above.'

Under 'Exclusions' in Part II the policy provides:

'This policy does not apply under Part II: * * * (3) to bodily injury to an insured while occupying an automobile or 2 wheel motor vehicle (other than an insured motor vehicle) owned by a named insured or any relative resident in the same household, or through being struck by such vehicle.'

It was Farmers' contention that Mrs. Holcomb was an insured as the spouse of Mr. Holcomb and a resident of the same household, and therefore, that both were occupying a motor vehicle (other than an insured motor vehicle) owned by a named insured, within the exclusionary clause of the policy. The trial court agreed with Farmers so the question presented on this appeal is whether the policy exclusion is void or contrary to the public policy under § 66--4003, supra. More specifically the question is whether Mr. and Mrs. Holcomb's protection against uninsured motorist provided under the policy on Mr. Holcomb's automobile followed and protected them while riding in another automobile owned by them and on which the uninsured motorist protection or coverage had been rejected. The precise question presented here has not been before this court previously but the courts of other states have reached different results under facts and policy provisions similar to the case at bar and statutory provisions similar to our own. In the 1971 Arizona case of Owens v. Allied Mut. Ins. Co., 15 Ariz.App. 181, 487 P.2d 402, the plaintiff insured appealed from a summary judgment in favor of his insurance company. The plaintiff owned a Chevrolet on which he had uninsured motorist coverage but was driving his uninsured 1962 Studebaker when he was injured in a collision with an uninsured motorist. The plaintiff contended that his protection against uninsured motorist under the policy on the Chevrolet extended to cover him while driving the uninsured Studebaker. The insurance policy contained an identical provision as does the policy in the case at bar, to the effect that the protection afforded did not apply 'to bodily injury to an insured while occupying an automobile (other than the insured automobile) owned by the insured.' The plaintiff's sole contention in that case, as is the appellants' contention in the case at bar, was that the exclusion was not valid because the statute mandated uninsured motorist coverage for the named insured even though he might be driving an uninsured self-owned automobile. The Arizona uninsured motorist statute was practically identical with ours in its wording and was identical with ours in meaning. In Owens the court said:

'We can see nothing in the statute which requires an insurer to extend uninsured motorist protection under one policy to a policyholder who has elected not to insure another vehicle owned by him, so as to give coverage at such times as he might be driving that uninsured vehicle. Any other interpretation would allow an insured to purchase one liability policy on one owned vehicle and claim uninsured motorist coverage thereunder for himself and others while driving any number of other uninsured automobiles also owned by him.'

In a footnote to Owens the court quoted from a previous Arizona case in which it was said:

"In light of that stated purpose, the question is whether or not the statute is intended to restrict the privilege of an individual to contract with his insurance carrier to exclude his own personal recovery under the policy terms in the event of his own injury. We read nothing in the statute which states such a restriction nor do we find ourselves compelled by public policy to so construe this statute."

In the 1970 Illinois case of McElyea v. Safeway Ins. Co., 131 Ill.App. 452, 266 N.E.2d 146, the plaintiff insured owned a Chevrolet one-half ton truck on which Safeway had issued a policy with 'Family Protection Coverage' with an uninsured motorist provision similar to the one in the case at bar, and with an exclusionary clause providing that the endorsement did not apply 'to bodily injury to an insured while occupying an automobile (other than an insured automobile) owned by a named insured or any relative resident in the same household. . . .' The...