Kaysen v. Federal Ins. Co., No. 47048

• Decision Date: 30 June 1978
• Docket Number: No. 47048,47598 and 47621.
• Citation: 268 NW 2d 920
• Parties: Donald KAYSEN, Administrator of the Estates of David Distel and Patricia Distel, Appellant, v. FEDERAL INSURANCE COMPANY, a Division of Chubb/Pacific Indemnity Group, Respondent, and Douglas DISTEL, et al., by Donald Kaysen, their guardian, Respondents, v. MUTUAL SERVICE CASUALTY INSURANCE COMPANY, defendant and third party plaintiff, Appellant, v. FEDERAL INSURANCE COMPANY, a division of Chubb/Pacific Indemnity Group, third party defendant, Respondent.
• Court: Minnesota Supreme Court

268 N.W.2d 920 (1978)

Donald KAYSEN, Administrator of the Estates of David Distel and Patricia Distel, Appellant, v. FEDERAL INSURANCE COMPANY, a Division of Chubb/Pacific Indemnity Group, Respondent, and Douglas DISTEL, et al., by Donald Kaysen, their guardian, Respondents, v. MUTUAL SERVICE CASUALTY INSURANCE COMPANY, defendant and third party plaintiff, Appellant, v. FEDERAL INSURANCE COMPANY, a division of Chubb/Pacific Indemnity Group, third party defendant, Respondent.

Nos. 47048, 47598 and 47621.

Supreme Court of Minnesota.

June 30, 1978.

Wiese & Cox and Paul G. Neimann, Minneapolis, for Donald Kaysen.

Schiefelbein & Greenberg, Minneapolis, for Mut. Service Cas. Ins. Co.

Richards, Montgomery, Cobb & Bassford and Greer E. Lockhart and Robert M. Rosenberg, Minneapolis, for Federal Ins. Co.

Wiese & Cox and Paul G. Neimann, Minneapolis, for Donald Kaysen as respondent.

Considered and decided by the court en banc.

SCOTT, Justice.

These two related appeals have been consolidated for decision. The first arises out of a declaratory judgment action brought by the administrator of the estate of Mr. and Mrs. David Distel to establish a contractual claim to uninsured motorist coverage under a general liability automobile insurance policy issued by Federal Insurance Company (Federal) to Mr. Distel's employer, Mars Industries, Inc. The Hennepin County District Court denied the administrator's motion for summary judgment and granted Federal's motion for summary judgment. The trial court found that the policy did not provide uninsured motorist coverage for Mr. and Mrs. Distel, who died after being struck while pedestrians by an uninsured motorist, upon the ground that they were not insureds within the meaning of that term under the uninsured motorist coverage. The administrator appeals from the order denying his motion for summary judgment and granting Federal's motion for summary judgment. The district court certified the question as important and doubtful. We reverse.

A second action was brought by the guardian of Douglas, age 9, Brian, age 8, and Lezlie Distel, age 4, children of the decedents, to recover survivor basic economic loss benefits from Mutual Service Casualty Insurance Company (Mutual) under the assigned claims plan provisions of the Minnesota No-Fault Automobile Insurance Act, Minn.St. 65B.41 to 65B.71. Mutual then brought a third-party action against Federal and alleged that Federal should be adjudged the primary insurer. The Hennepin County District Court granted summary judgment in favor of plaintiff-guardian and judgment on the pleadings in favor of Federal. Mutual appeals from the district court orders and judgments entered pursuant thereto. We affirm.

Mr. and Mrs. Distel were struck and killed by a hit-and-run vehicle while walking along Zane Avenue North in Brooklyn Park, Minnesota, at 1:30 a. m. on July 27, 1975. For some unexplained reason, the Distels apparently abandoned a Mazda automobile in which they had been traveling shortly before the accident. The hit-and-run driver, whose identity was later discovered, did not carry insurance on his vehicle as required by the Minnesota No-Fault Automobile Insurance Act, Minn.St. 65B.48, subd. 1. Although the Distels personally owned an automobile they failed to maintain uninsured motorist coverage, which is required by Minn.St. 65B.49, subd. 4(2), on the vehicle at the time of the accident.

The Mazda automobile used by the Distels immediately prior to their deaths was owned by Mars Industries, Inc. Mr. Distel, as the corporation's vice president of sales and a member of its board of directors, was regularly assigned this company vehicle. The corporation maintained a general liability-automobile insurance policy on its vehicles with Federal. As a corporate officer, Mr. Distel was expressly insured for certain purposes under the comprehensive liability portion of the policy, but was not expressly insured under the uninsured motorist portion.

The first two issues to be considered in resolution of these matters are:

(1) Were the decedents "insureds" within the meaning of that term contained in the uninsured motorist portion of the policy of insurance owned by Mars Industries, Inc.?

(2) Was the policy of insurance sold to Mars Industries in compliance with Minn.St. 65B.49, subd. 4, which requires all policies of automobile insurance to include uninsured motorist coverage for the "protection of persons insured thereunder"?

1. The two parts of the policy of insurance relevant to this initial discussion are the comprehensive liability insurance coverage and the mandatory uninsured motorist coverage required by § 65B.49, subd. 4(2). The comprehensive automobile liability insurance part defines an "insured" as follows:

"Each of the following is an insured under this insurance to the extent set forth below:

"(a) the named insured;

"(b) any partner or executive officer thereof, but with respect to a non-owned automobile only while such automobile is being used in the business of the named insured;

"(c) any other person while using an owned automobile or a hired automobile with the permission of the named insured, provided his actual operation or (if he is not operating) his other actual use thereof is within the scope of such permission * * *." (Italics supplied.)

It is readily apparent that this definition protects executive officers such as Mr. Distel in certain instances.

In contrast, the coverage and class of persons protected under the uninsured motorist portion are as follows:

"The company will pay all sums which the insured or his legal representative shall be legally entitled to recover as damages from the owner or operator of an uninsured highway vehicle because of bodily injury sustained by the insured, caused by accident and arising out of the ownership, maintenance or use of such uninsured highway vehicle * * *.

* * * * * *

"Each of the following is an insured under this insurance to the extent set forth below:

"(a) the named insured and any designated insured and, while residents of the same household, the spouse and relatives of either;

"(b) any other person while occupying an insured highway vehicle; and

"(c) any person with respect to damages he is entitled to recover because of bodily injury to which this insurance applies sustained by an insured under (a) or (b) above." (Italics supplied.)

Unlike the definition of "insured" found in the comprehensive liability part of the policy, executive officers are not expressly included in the definition of "insured" for the purpose of uninsured motorist coverage.

It is undisputed on this appeal that the decedents were not designated insureds under the uninsured motorist coverage because the space for indicating designated insureds was left blank on the policy and Mars Industries never paid any additional premiums for this coverage. Similarly, the Distels were not occupying an insured vehicle at the time of the accident. See, Ostendorf v. Arrow Insurance Co., 288 Minn. 491, 182 N.W.2d 190 (1970). Therefore, the only way that the administrator could conceivably hope to prevail is to establish that the Distels were named insureds, notwithstanding the fact that the named insured clearly indicated on the face of the policy is Mars Industries, Inc., and not its corporate officers.

The administrator's argument is based on the fact that the uninsured motorist provision is a standard one for a general policy of family automobile insurance which uses such words as "bodily injury," "spouse," "relative," and "household." The administrator argues that the class of persons protected as "named insureds" must be broader than simply the corporate entity, Mars Industries, for quite obviously a corporation cannot suffer bodily injury, or have a "spouse," "relative," or "household." Carrying this argument one step further, he alleges that if coverage with respect to the named insured is limited to the corporate entity, then this portion of the uninsured motorist coverage is a nullity because the corporation cannot sustain bodily injury.

Much the same argument was made by the claimant in Polzin v. Phoenix of Hartford Ins. Companies, 5 Ill.App.3d 84, 283 N.E.2d 324 (1972). Polzin was the chief executive officer and principal shareholder of a corporation which carried a policy of insurance to cover two automobiles owned by the company. Included within this policy was a "Family Protection Coverage" endorsement for uninsured motorist protection which was virtually identical to the coverage presently under consideration. When Polzin was injured as a pedestrian by an uninsured motorist, he brought suit against the insurer claiming that he was covered under the company policy. After recovery had been denied by the trial court, Polzin appealed to the Appellate Court of Illinois which upheld the denial of his claim on the ground that he had failed to prove that he was within the class of persons protected by the uninsured motorist endorsement. Specifically, the court held, without explanation, that the policy terms were unambiguous, and that the uninsured motorist coverage contemplated by the endorsement extended only to the corporate entity, as the named insured, and to any other person occupying the company-owned automobiles. Pedestrians, on the other hand, were not covered, even though they might be corporate officers.

The Polzin case does little to clear up the ambiguity caused when a corporation is listed as the named insured in an uninsured motorist provision designed to protect family members from bodily injury. Of course the corporation cannot sustain bodily injury, but this does not make the entire provision a complete nullity because in both Polzin and the present case the uninsured motorist coverage protects "any other person while occupying an insured highway vehicle."

Although the policy is admittedly confusing with respect to the coverage afforded the corporation as a named insured under the...