Jacobson v. Implement Dealers Mut. Ins. Co.

• Decision Date: 17 February 1982
• Docket Number: No. 81-226,81-226
• Citation: 640 P.2d 908,39 St.Rep. 325,196 Mont. 542
• Parties: , 30 A.L.R.4th 165 Helen JACOBSON and Elva J. Dike, Personal Representatives of the Estate of Sammy D. Harlan, Plaintiff and Respondent, v. IMPLEMENT DEALERS MUTUAL INSURANCE CO. and Kenneth Heimer, Defendant and Appellant.
• Court: Montana Supreme Court

Page 908

640 P.2d 908

196 Mont. 542, 30 A.L.R.4th 165

Helen JACOBSON and Elva J. Dike, Personal Representatives of the Estate of Sammy D. Harlan, Plaintiff and Respondent, v. IMPLEMENT DEALERS MUTUAL INSURANCE CO. and Kenneth Heimer Defendant and Appellant.

No. 81-226.

Supreme Court of Montana.

Submitted Dec. 1, 1981.

Decided Feb. 17, 1982.

Worden, Thane & Haines, Robert J. Phillips, Missoula, for defendant and appellant.

Garlington, Lohn & Robinson, Paul C. Meismer, argued, Missoula, for plaintiff and respondent.

DALY, Justice.

This is an appeal from the District Court of the Fourth Judicial District of the State of Montana, in and for the County of Missoula, the Honorable James B. Wheelis presiding. Plaintiffs are the personal representatives of the estate of Sammy D. Harlan, deceased. They commenced this action in District Court to enforce the uninsured motorist coverage of an insurance policy issued by defendant and appellant, Implement Dealers Mutual Insurance Company (hereinafter IDM), to the plaintiffs' decedent (Harlan). Both parties moved for a summary judgment on the issue of the availability of uninsured motorist coverage. The District Court granted summary judgment in favor of the plaintiffs. IDM appeals from the summary judgment and requests that this Court reverse the District Court and grant judgment in its favor on the basis that there is no coverage available in this case.

Sammy D. Harlan died as a result of a motor vehicle accident two and one-half miles east of Big Timber, Montana, on June 20, 1978, when the 1974 Peterbilt tractor-trailer unit which he owned and was driving was involved in a collision with a motor vehicle driven by Kenneth Heimer. By stipulation of counsel, Heimer is deemed to be at fault in Sammy D. Harlan's death. Heimer had no liability insurance coverage at the time of the accident.

Harlan had purchased a policy of automobile liability insurance from IDM on a 1971 Ford pickup truck which he owned. This policy provided for uninsured motorist coverage in the amount of $25,000. The policy of insurance issued by IDM on the Ford pickup truck contained an exclusion which read:

"This policy does not apply under Part IV:

"(a) to bodily injury to an insured while occupying an automobile (other than an insured automobile) owned by the named insured or a relative, or through being struck by such an automobile ..."

Montana's mandatory uninsured motorist coverage statute, section 33-23-201, MCA, requires all motor vehicle liability insurance policies issued in this state to include uninsured motorist coverage unless the named insured rejects such coverage.

The statute in question, section 33-23-201, MCA, provides:

"Motor vehicle liability policies to include uninsured motorist coverage-rejection by insured. (1) No automobile liability or motor vehicle liability policy insuring against loss resulting from liability imposed by law for bodily injury or death suffered by any person arising out of the ownership, maintenance, or use of a 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 limits for bodily injury or death set forth in 61-6-103, under provisions filed with and approved by the 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.

"(2) The named insured shall have the right to reject such coverage. Unless the named insured requests such coverage in writing, such coverage need not be provided in or supplemental to a renewal policy where the named insured had rejected the coverage in connection with the policy previously issued to him by the same insurer."

One issue is presented to this Court on appeal: Did the District Court err in holding that the insurance policy's exclusion (a) was not a permissible limitation under Montana insurance law?

Appellant contends exclusion (a) is not invalidated by section 33-23-201, MCA. More specifically, appellant argues that because there is no express provision in the statute which prohibits this type of exclusion, it is thereby valid. Further, it is argued that if the legislature wished to proscribe this type of exclusion, it would have done so. Finally, appellant contends that in the interest of public policy, the exclusion should be held to be valid.

While it is true that courts in several states have upheld the validity of exclusion clauses similar to exclusion (a), the majority of courts have held similar exclusion clauses are in conflict with the uninsured motorist statutes. See, State Farm Automobile Insurance Co. v. Reaves (1974), 292 Ala. 218, 292 So.2d 95; Mullis v. State Farm Mutual Automobile Ins. Co. (Fla.1971), 252 So.2d 229; Bass v. State Farm Mut. Auto. Ins. Co. (1973), 128 Ga.App. 285, 196 S.E.2d 485, modified, 231 Ga. 269, 201 S.E.2d 444; Doxtater v. State Farm Mutual Automobile Insurance Co. (1972), 8 Ill.App.3d 547, 290 N.E.2d 284; State Farm Mutual Automobile Ins. Co. v. Robertson (1973), 156 Ind.App. 149, 295 N.E.2d 626; Cannon v. American Underwriters, Inc. (1971), 150 Ind.App. 21, 275 N.E.2d 567; Elledge v. Warren (La.App.1972), 263 So.2d 912; Nygaard v. State Farm Mutual Automobile Ins. Co. (1974), 301 Minn. 10, 221 N.W.2d 151; State Farm Mutual Automobile Ins. Co. v. Hinkel (1971), 87 Nev. 478, 488 P.2d 1151; Bell v. State Farm Mut. Auto. Ins. Co. (1974), 157 W.Va. 623, 207 S.E.2d 147; Widiss, A Guide To Uninsured Motorist Coverage, § 2.9 at 31 (1981).

The discussions upholding the validity of exclusion clauses do so on the grounds that if a statute is silent there is no reason to prevent the withholding of coverage by the insurer. Widiss, supra, at 30; see also, Rodriquez v. Maryland Indemnity Insurance Co. (1975), 24 Ariz.App. 392, 539 P.2d 196; Barton v. American Family Mutual Insurance Co. (Mo.App.1972), 485 S.W.2d 628. Regardless of this rationale, this Court elects to follow the majority position.

There are two equally sound positions adopted by the majority of courts holding this type of exclusion clause to be invalid. First, the exclusionary clause is ineffective because it reduces the scope of coverage required by the statutory mandate. Mullis v. State Farm Mutual Automobile Insurance Co. (Fla.1971), 252 So.2d 229; Allstate Insurance Company v. Meeks (1967), 207 Va. 897, 153 S.E.2d 222; Federated American Ins. Co. v. Raynes (1977), 88 Wash.2d 439, 563 P.2d 815. In Mullis, the court stated:

"The public policy of the uninsured motorist statute (Section 627.0851) is to provide uniform and specific insurance benefits to members of the public to cover damages for bodily injury caused by the negligence of insolvent or uninsured motorists and such statutorily fixed and prescribed protection is not reducible by insurers' policy exclusions and exceptions any more than are the benefits provided for persons protected by automobile liability insurance secured in compliance with the Financial Responsibility Law.

"Insurers or carriers writing automobile liability insurance and reciprocal uninsured motorist insurance are not permitted by law to insert provisions in the policies they issue that exclude or reduce the liability coverage prescribed by law for the class of persons insured thereunder who are legally entitled to recover damages from owners or operators of motor vehicles because of bodily injury." 252 So.2d at 233-234.

The second, and equally sound, rationale is that the clause is contrary to the public policy embodied in the statute. Phillips v. Midwest Mutual Insurance Company (1971), 329 F.Supp. 853. The policy behind the statute is to protect the policyholders from uninsured motorists in all instances.

In this case, when exclusion (a) is analyzed under either or both of the above rationales, it is clear that the exclusion is a violation of public policy and Montana insurance law, and that it tries to limit the scope of coverage mandated by section 32-23-201, MCA.

Appellant alleges that there is a connection between the automobile which is insured and the uninsured...