Holt v. State Farm Mut. Auto. Ins. Co.

• Decision Date: 06 November 1972
• Citation: 486 S.W.2d 734
• Court: Tennessee Supreme Court
• Parties: Jimmy Ray HOLT, Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellee.

Page 734

486 S.W.2d 734

Jimmy Ray HOLT, Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellee.

Supreme Court of Tennessee.

Nov. 6, 1972.

Dennis L. Tomlin, Nashville, for appellant.

W. P. Ortale, Nashville, for appellee.

OPINION

CHATTIN, Justice.

State Farm filed this suit pursuant to our declaratory judgment statute seeking a determination of its liability to a claim of Holt filed against the insureds, if any, under two of its policies. State Farm sought a declaration that it was not liable to Holt nor obligated to defendant the claim against the insureds under the terms of either policy.

The Chancellor heard the matter on the bill, answer and a stipulation of facts and found the coverages of the two policies did not extend to or for the benefit of Holt.

Holt has perfected an appeal to this Court and has assigned errors.

The facts are: Bonita Lovell is the natural mother and guardian of Richard L. and Jimmy R. Holt. She and Jimmy resided in the same house. Richard resided separate and apart from them.

On November 8, 1969, a Triumph automobile driven by Richard collided with a taxicab. Jimmy was one of the four passengers in the car and received certain personal injuries.

The liability insurance policy covering the Triumph named as the first insured Bonita Lovell and as a second insured Richard L. Holt. Bonita owned another automobile. This car was covered by an automobile liability policy issued by State Farm which named her as the insured.

State Farm paid all claims resulting from the accident except the claim of Jimmy.

Thereafter, State Farm filed the proper papers with the Financial Responsibility Department of the State confirming the liability coverage on the Triumph car. No statement was made that exclusions of the policies applied to Jimmy R. Holt. State Farm knew all the above facts when it filed the papers confirming the liability coverage.

It was agreed Jimmy incurred personal damage in the amount of $3,885.00; and that he would be entitled to that amount if he were adjudged to be entitled to recover under the liability or uninsured motorist coverage of either of the policies.

It is first insisted the Chancellor erred in holding the relative resident exclusion clause of both policies applied to Jimmy.

Specifically, it is insisted on behalf of Jimmy the exclusion clause does not apply to him because he was not a resident of the same household with his brother, Richard.

Both policies provide, in part:

'To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of (A) bodily injury sustained by other persons . . .. Exclusions--Section 1.

This insurance does not apply under: . . . (H) coverage A to bodily injury to any insured or any member of the family of an insured residing in the same househoud as the insured; . . .. Definitions--Section 1--Insured.

The unqualified word 'insured' includes . . . (3) if residents of same household, the relatives of the first person named in the declarations, or of his spouse, . . ..'

It is clear the exclusion clauses of both policies expressly exclude Jimmy under the facts. Jimmy resided with his mother. Richard resided apart from them. Mrs. Lovell was the first named insured in the policy covering the Triumph car. She was the lone insured in the other policy.

'Clauses in insurance contracts excluding from coverage members of the insured's family or household are valid and binding.' Dressler v. State Farm Mutual Automobile Ins. Co., 52 Tenn.App. 514, 376 S.W.2d 700 (1963).

It is next insisted the exclusion clauses of the policies violate the Financial Responsibility Act and specifically T.C.A. Section 59--1223, wherein it is stated:

'(b) Owners policy. Such owner's policy of liability insurance; * * * (2) shall insure the person named herein and any other person, as insured, using any such vehicle or vehicles with the express or implied permission of such named insured, against loss from the liability imposed by law for damages. * * *'

The fallacy in this contention is the Financial Responsibility Act does not apply under the facts of this case.

The parties stipulated the policies were in full force and effect at the time of the accident; and that following the accident State Farm filed the proper papers with the Financial Responsibility Department of the State attesting to the fact the Triumph car was covered by a liability insurance policy at the time of the accident.

T.C.A. Section 59--1205 provides, in part:

'The requirements of this chapter in regard to the requirement of security and revocation shall not apply: (a) To the operator or owner if the owner had in effect at the...