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

• Citation: 236 N.W.2d 870
• Decision Date: 17 December 1975
• Docket Number: No. 9141,9141
• Parties: Donald T. HUGHES, Plaintiff-Appellant and Cross-Appellee, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY and Maurine Hughes, Defendants-Appellees and Cross-Appellants. Civ.
• Court: United States State Supreme Court of North Dakota

Page 870

236 N.W.2d 870

Donald T. HUGHES, Plaintiff-Appellant and Cross-Appellee, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY and Maurine Hughes, Defendants-Appellees and Cross-Appellants.

Civ. No. 9141.

Supreme Court of North Dakota.

Dec. 17, 1975.

Rehearing Denied Jan. 16, 1976.

Syllabus by the Court

1. A snowmobile is a 'motor vehicle' as such term is used in Title 39, N.D.C.C.

2. A 'household, or family, exclusion clause' in a policy of motor vehicle liability insurance, if valid, operates to relieve an insurance company of liability under the terms of the policy of insurance where the named insured or any family or household member is injured in an accident caused by the negligent operation of a motor vehicle by the insured or a member of his family or household.

3. Mere changes in the arrangement of sections in the codification of statutes will not be regarded as altering the law unless the intent to do so is clear.

4. Section 39--16--05, N.D.C.C., shall not apply to a driver, if he is the owner of the motor vehicle involved in the accident and had in effect at the time of such accident an automobile liability policy with respect to the motor vehicle involved in such accident, affording substantially the same coverage as is required for proof of financial responsibility under Chapter 39--16.1, N.D.C.C.

5. In construing legislation generally, it is our duty to attempt to determine legislative intent, and when that intent is directed toward an objective not prohibited by the state or federal constitution, our construction of the legislation should be in aid of and compatible with this intent.

6. Statutes must be construed with reference to the policy intended to be accomplished, so as to effectuate the legislative purpose which prompted their enactment.

7. The Code establishes the law of this State respecting the subjects to which it relates, and its provisions and all proceedings under it are to be construed liberally, with a view to effecting its objects and to promoting justice. § 1--02--01, N.D.C.C.

8. The basic purpose for the Legislature's enactment of financial responsibility laws is to protect innocent victims of motor vehicle accidents from financial disaster.

9. The phrases 'motor vehicle liability policy', 'automobile liability insurance', and 'policy of insurance', as those phrases are used in financial responsibility laws, are deemed synonymous and mean that the provisions of Chapters 39--16 and 39--16.1, N.D.C.C., apply to all motor vehicles.

10. 'Substantially the same coverage', as that phrase is used in § 39--16--05, N.D.C.C., means that the coverage provided in a policy of 'automobile liability insurance' is the same in all important particulars as the coverage required in a 'motor vehicle liability policy', as that phrase is defined in § 39--16.1--11, N.D.C.C.

11. A 'motor vehicle liability policy' must provide coverage which insures all permissive operators against loss from liability, within certain minimum monetary limits, for damages imposed by law. Such mandatory 'Omnibus Clause' coverage is a clear legislative expression of public policy.

12. As an adhesion contract drawn by the company, the terms of a policy of insurance must be construed most strongly against the insurance company.

13. The Legislature, in §§ 39--16--05 and 39--16.1--11, N.D.C.C., has established certain minimum coverage requirements which, as clear expressions of our State's public policy, are deemed implicit in every contract of automobile or motor vehicle liability insurance issued and delivered in this State. Such policies, which are intended to comply with subsections 1 and 2 of § 39--16--05, N.D.C.C., must contain the same omnibus coverage specified in § 39--16.1--11, N.D.C.C. A 'household, or family, exclusion clause', excluding coverage for the named insured or any family or household member, is inconsistent with such omnibus coverage, and is therefore void as violative of public policy and the financial responsibility laws of this State.

14. For reasons stated in the opinion, the judgment of the district court is reversed.

Pearson & Christensen, Grand Forks, for plaintiff-appellant and cross-appellee; argued by Garry A. Pearson, Grand Forks.

Vogel, Vogel, Brantner & Kelly, Fargo, for defendants-appellees and cross-appellants; argued by Mart R. Vogel, Fargo.

PAULSON, Judge.

This is an appeal by the plaintiff, Donald T. Hughes (hereinafter Donald), and a cross-appeal by the defendant State Farm Mutual Automobile Insurance Company (hereinafter State Farm), from a judgment of the Cass County District Court declaring that State Farm was not liable under the terms of an insurance policy for liability incurred by Donald for injuries sustained by his wife, Maurine Hughes (hereinafter Maurine), in a snowmobile accident, but declaring that State Farm was liable for the sum of $10,000 for failure to provide uninsured motorist coverage as required by § 26--02--42, N.D.C.C., for such injuries.

The facts in this declaratory judgment action are not in dispute, and have been stipulated. They are, in pertinent part:

'I.

'At all times material to the resolution of this dispute, the defendant Maurine Hughes was married to the plaintiff Donald T. Hughes and was a resident in the same household as Donald T. Hughes at 215 Lincoln Drive, Grand Forks, North Dakota.

'II.

'On or about January 15, 1971, Mr. and Mrs. Hughes applied for a policy of recreational vehicle insurance with the State Farm Mutual Automobile Insurance Company for a 1971 Arctic Cat snowmobile. A copy of their application, signed by Maurine H. Hughes, is attached hereto and marked Exhibit 'A'.

'III.

'Pursuant to the application, the defendant State Farm Mutual Automobile Insurance Company issued its recreational vehicle policy effective January 15, 1971. A true and correct copy of that policy is attached hereto marked Exhibit 'B'. This policy was renewed from time to time and was in full force and effect during all of the times material to this action.

'IV.

'On January 21, 1973, at about 3:00 o'clock P.M., Donald T. Hughes was operating the snowmobile referred to and described in Exhibits 'A' and 'B' on the Red River of the North within the city limits of the City of Grand Forks, North Dakota, at a point between the Sorlie Bridge and the Point Bridge. At that time the defendant Maurine Hughes was a passenger on the snowmobile operated by her husband. A collision occurred between such snowmobile and another snowmobile owned by one Vernon C. Sanders and in that collision the defendant Maurine Hughes sustained personal injuries.

'V.

'On January 30, 1974, Maurine Hughes brought suit against Donald T. Hughes and Vernon Sanders in the District Court of Grand Forks County, North Dakota, First Judicial District. The defendant State Farm Mutual Automobile Insurance Company had actual notice of the pendency of that action but refused to defend. A true and correct copy of a letter sent by this defendant to the plaintiff concerning its refusal is hereto attached and marked Exhibit 'C'. Likewise attached hereto as Exhibit 'D' is the complaint in the action and Exhibit 'E', the findings of fact, conclusions of law, order for judgment and judgment in the case.

'VI.

'While the parties do not wish to unduly restrict themselves, the following statement of each party's position is given but intended to be merely explanatory:

'A. Plaintiff's position is:

'1. That the insurance policy between Donald T. Hughes and the defendant State Farm Mutual Automobile Insurance Company provides coverage for the injuries sustained by Maurine Hughes; that the exclusion relied upon by the defendant, State Farm Mutual Automobile Insurance Company, i.e., commonly known as the 'family exclusion clause' is void as being contrary to the statutes and public policy of the State of North Dakota.

'2. In the alternative Donald T. Hughes contends that if plaintiff is not successful under contention 1 above, that he is entitled to protection under the policy in any event as the policy fails to provide uninsured motorist coverage as required by section 26--02--42, North Dakota Century Code.

'B. The defendant State Farm Mutual Automobile Insurance Company's position is:

'1. The policy provisions found under 'Exclusions, Section I(H)' known as a family exclusion clause prohibit insurance coverage in any action or claim by Maurine Hughes since she is a named insured, is a member of the family of Donald T. Hughes and resides in the same household as Donald T. Hughes.

'2. The defendant further denies that Donald T. Hughes is entitled to protection for uninsured motorist coverage on the grounds that a snowmobile is not a motor vehicle within the meaning of the North Dakota Uninsured Motorist statute. . . .'

(The Exhibits, 'A', 'B', 'C', 'D', and 'E' referred to in the stipulation are included in the record.)

We are therefore presented with two issues on this appeal:

1. Is the so-called 'household, or family, exclusion clause' contained in the policy of liability insurance issued by State Farm valid and enforceable under the statutes and public policy of our State?

2. Must an insurance company, which issues a liability policy for a snowmobile, provide uninsured motorist coverage as part of that policy, as such coverage is defined by § 26--02--42, N.D.C.C.?

The first question which we must resolve in determining the proper disposition of the two issues is whether or not a snowmobile is, in fact, a 'motor vehicle' as that term is used in Title 39, N.D.C.C., and in 26--02--42, N.D.C.C. A 'motor vehicle' is defined in § 39--01--01(32), N.D.C.C., as:

'. . . every vehicle which is self-propelled and every vehicle which is propelled by electric power obtained from overhead trolley wires, but not operated upon rails;'

The term 'vehicle' is defined in § 39--01--01(72), N.D.C.C., as:

'. . . every device in, upon, or by which any person or property may be transported or drawn upon a...