Keel v. MFA Ins. Co.

• Court: Oklahoma Supreme Court
• Writing for the Court: HODGES; WILLIAMS; DAVISON
• Citation: Keel v. MFA Ins. Co., 553 P.2d 153, 1976 OK 86 (Okla. 1976)
• Decision Date: 29 June 1976
• Docket Number: No. 47211,47211
• Parties: Robert T. KEEL, Appellee, v. MFA INSURANCE COMPANY, Appellant.

Page 153

553 P.2d 153

Robert T. KEEL, Appellee, v. MFA INSURANCE COMPANY, Appellant.

No. 47211.

Supreme Court of Oklahoma.

June 29, 1976.

Robert T. Keel, Oklahoma City, pro se.

Pierce, Couch, Hendrickson, Gust & Short by Melvin F. Pierce, for appellant.

B. J. Cooper, Cooper, Stewart, Elder & Abowitz, Kenneth Webster, McKinney, Stringer & Webster, Page Dobson, Rhodes, Hieronymous, Holloway & Wilson, Rex K. Travis, Travis & Durbin, Elliott Fenton, Fenton, Fenton, Smith, Reneau & Moon, Robert S. Baker, Baker, Baker & Wilson, James D. Foliart, Foliart, Mills & Niemeyer, Jake Hunt, Hunt & Thomas, Oklahoma City, amici curiae.

HODGES, Vice Chief Justice.

This involves an appeal from a judgment of the trial court which permitted appellee to recover the proceeds of two insurance policies under the uninsured motorist endorsement for bodily injuries sustained in one accident based on a prior judgment obtained against the tort-feasor.

Robert T. Keel (Keel) was injured when the automobile he was driving was struck by a vehicle driven by an uninsured motorist. MFA insurance Company (MFA) had issued two policies to Keel which covered separate automobiles. Two separate premiums were paid. Keel sought to recover on both policies. Each policy had limits of liability of $10,000.00 for one person and $20,000.00 for two or more. MFA was furnished with a proof of loss, medical information, and a demand for settlement. The insurance company refused to discuss settlement, stating it had not completed its investigation and would not discuss settlement until that time. Three months after demand for settlement, Keel informed MFA that, since it had not made a settlement offer and apparently did not intend to, he would pursue his claim against the uninsured motorist. MFA did not respond to Keel's letter. Suit was filed against the uninsured motorist. Copies of the petition and summons were furnished MFA. It replied thirteen days later, stating that on advice of counsel a judgment obtained against the uninsured motorist without the written consent of the company would not be conclusive on the issues of liability or damages, and that written consent would not be given. In the same letter MFA again stated they were still investigating the case and asked for indulgence.

Suit was commenced on the insurance policy contracts on March 7, 1973, against MFA. MFA answered with a general denial and alleged that the action against the uninsured motorist was not prosecuted with its written consent, and that the claim exceeded the limits of its liability. At the trial Keel introduced evidence consisting of the two policies which MFA stipulated were in full force and effect; a certified copy of the judgment rendered against the uninsured motorist; and a letter from the Oklahoma Department of Public Safety stating that the uninsured motorist had not complied with the Financial Responsibility Law. MFA demurred to the evidence, which was overruled by the trial court. After MFA elected to stand on its demurrer, the trial court entered judgment in favor of Keel in the amount of $11,500.00. MFA appeals from this decision.

Two propositions are presented: (1) whether MFA may be held liable under the two policies issued to Keel; (2) is a judgment obtained against an uninsured motorist in tort without the consent of the insurer binding upon the insurer when the insured sues on the contract?

MFA contends the judgment appealed from exceeds the maximum limitation of the policy which limits uninsured motorist coverage to $10,000.00 for each person injured in an accident, and that the policies may not be stacked to permit Keel to recover the full amount which he was legally entitled to recover against the uninsured motorist.

Its argument is based on an attempt to limit recovery by language in the policies which limits liability to the highest applicable amount of benefit under any one policy. These provisions are known as 'other insurance clauses' and provide:

'Except as provided in the foregoing paragraph, if the insured has other similar insurance available to him and applicable to the accident, the damages shall be deemed not to exceed the higher of the applicable limits of liability of this insurance and such other insurance, and the Company shall not be liable for a greater proportion of any loss to which this Coverage E applied than the limits of liability hereunder bear to the sum of the applicable limits of liability of this insurance and such other insurance.'

'Other Automobile Insurance in the Company--with respect to any occurrence, accident, death, or loss to which this or any other automobile insurance policy issued to the named insured or spouse by the Company also applies, the total limit of the company's liability under all such policies shall not exceed the highest applicable limit of liability or benefit amount under any one such policy.'

We hold the above 'other insurance clauses,' as applied to facts in this case, are contrary to public policy, repugnant to our uninsured motorist statute and void for the following reasons:

(1) The uninsured motorist statute requires that each liability policy must provide uninsured motorist coverage, unless the insured rejects it in writing.

(2) The statute provides a minimum for uninsured motorist coverage, but allows the insured to purchase additional coverage if desired.

(3) The appellee has paid, and the appellant collected, separate premiums for each uninsured motorist coverage.

Title 36 O.S.1971 § 3636(A) provides that no liability policy shall be issued without uninsured motorist coverage, except Section 3636(F) gives the insured the right to reject it in writing.

Section (B) of 36 O.S.1971 § 3636 provides a minimum coverage, but allows the insured to purchase additional coverage if desired.

The literal import of the statute leaves no doubt. It directs no automobile policy shall issue in this state unless it offers coverage for payment within specified limits of what an uninsured motorist would be liable for to an insured for damages for bodily injuries. Every policy must offer the coverage, unless rejected in writing. The statute grants the victim prima facie recourse to any and all policies available, subject to the implicit condition that his claims in aggregate not exceed his damages. The legislature must have been cognizant that a person often becomes an insured, either named or otherwise included in more than one automobile liability policy. Therefore, it must have contemplated when it mandated the uninsured motorist coverage in each policy that the injured person might have recourse to more than one policy. Had that result not been intended, its negation would be expressed in the statute. Motor Club of America Insurance Co. v. Phillips, 66 N.J. 277, 330 A.2d 360, 368, 369 (1974).

The legislature could have limited protection to the minimum statutory limit had that been its intent, or could have restricted coverage to only one policy. Since it did not, there appears to be no latitude in the statute for an insurer limiting its liability through 'other insurance clauses.' Sellers v. United States Fidelity & Guaranty Co., 185 So.2d 689, 690 (Fla.App.1966).

The insured in this case has two policies for which he has paid an additional premium for uninsured motorist coverage. There is no dispute that both policies cover the insured in this accident. The pyramiding or the stacking of the policies is the only dispute. By imposition of both policies, the insured is not receiving a windfall. He has paid the insurer a premium for this protection, and is only attempting to recover the actual amount of his damages which are within the limits of both policies. On the other hand, the insurer has collected a premium for each policy. In such instance, it would be manifestly unjust to permit the insurer to avoid its statutorily imposed liability by its assertion of 'other insurance clauses' which would deny the insured from receiving that for which he has paid a premium. Safeco Ins. Co. of America v. Jones, 286 Ala, 606, 243 So.2d 736 (1971); Clayton v. Alliance Mutual Casualty Co., 213 Kan. 84, 515 P.2d 1115 (1973); Van Tassel v. Horace Mann Ins. Co., 296 Minn. 181, 207 N.W.2d 348 (1973).

We feel the most pragmatic application regarding the 'other insurance clauses' was utilized by the United States District Court in Eggleston v. Townsend, 336 F.Supp. 1212, 1218 (D.Md.1972). In this case, the court held where multiple policies in single or several companies provide sufficient coverage to fully satisfy any judgment by insured against uninsured motorist, the 'other insurance clauses' in the policies are to be given effect to determine priority of payment. The priority is first to the application of the uninsured motorist coverage available under the policy covering the vehicle involved in the accident. To the extent the judgment exceeds such coverage, resort is then to other policies issued to the insured to be applied to satisfaction of the balance on a pro rate basis up to their total coverage without regard to any 'other insurance' or excess escape clauses. The court held where the language of the 'other insurance' provisions would serve to limit or defeat full satisfaction of the insured's judgment, such clauses were repugnant to the uninsured motorist law and of no effect. A majority of other jurisdictions have reached similar results. See A. Widiss, Uninsured Motorists Coverage, 1974 Supp. § 2.60 p. 116. We, therefore, hold where an insured has been issued multiple automobile policies containing uninsured motorist coverage for which a premium has been paid, the extent of the coverage is the combined total amount of such policies. 'Other insurance clauses' are applicable to priority of payment. Actual damages of the insured are recoverable to the full amount of the combined limits of all policies.

The second question presented is whether a judgment obtained in tort against an insured...