Lick v. Dairyland Ins. Co., 47260

• Decision Date: 30 September 1977
• Docket Number: No. 47260,47260
• Citation: 258 N.W.2d 791
• Parties: Everett LICK, Trustee of the Estates of Vera Edeburn and Her Son, Bruce H. Edeburn, Deceased, Appellant, v. DAIRYLAND INSURANCE COMPANY, Respondent.
• Court: Minnesota Supreme Court

Page 791

258 N.W.2d 791

Everett LICK, Trustee of the Estates of Vera Edeburn and Her Son, Bruce H. Edeburn, Deceased, Appellant, v. DAIRYLAND INSURANCE COMPANY, Respondent.

No. 47260.

Supreme Court of Minnesota.

Sept. 30, 1977.

Syllabus by the Court

Where decedents were killed in an automobile accident caused by the negligence of an individual who carried, and paid to decedents' survivors, liability insurance in an amount equal to the underinsured motorist coverage carried by decedents, the tortfeasor was not "underinsured" within the meaning of Minn.St.1971, § 65B.26(d), and decedents' underinsured motorist coverage was not applicable toward the unsatisfied judgment recovered by decedents' survivors.

Abrams & Spector, Richard B. Abrams and Mitchell R. Spector, Minneapolis, for appellant.

Allen G. Christoffersen, St. Paul, for respondent.

Heard before PETERSON, KELLY and PLUNKETT, JJ., and considered and decided by the court en banc.

PETERSON, Justice.

Plaintiff appeals from summary judgment in favor of defendant, Dairyland Insurance Company, arguing that the insurance policy issued by defendant to plaintiff's decedents failed to satisfy the statutory mandate of Minn.St.1971, §§ 65B.25 and 65B.26(d), that insurers make available "underinsured motorist coverage" in every policy of automobile liability insurance. We affirm.

On July 2, 1974, Bruce H. Edeburn was killed in an automobile accident caused by the negligence of Elroy Hatten. On July 13, 1974, his mother, Vera Edeburn, died as a result of the injuries she sustained in the same accident. Vera Edeburn's two surviving children obtained judgment by stipulation against Hatten for $275,000. Hatten carried the minimum amount of liability insurance permitted by Minn.St.1971, § 170.25, subd. 3, the Safety Responsibility Act, and Hatten's insurer paid to plaintiff Everett Lick, trustee of the estates of Vera and Bruce Edeburn, the $20,000 policy limit.

The Edeburn vehicle was likewise insured under a policy providing the minimum liability coverage required by law: $10,000 for any one injury and $20,000 for any one accident. This policy, issued by defendant, also provided "underinsured motorist insurance" in the same amounts. The coverage was to be applicable in the event of injury caused by an "underinsured highway vehicle" defined by the policy to mean:

" * * * (A) highway vehicle with respect to the ownership, maintenance or use of which the sum of the limits of liability under all bodily injury liability bonds and insurance policies applicable at the time of the accident is less than the applicable limits of liability under this insurance."

Defendant made available underinsured motorist insurance in order to comply with Minn.St.1971, § 65B.25, which provided that no motor vehicle liability insurance policy should issue in this state unless it made available certain supplementary coverage defined by Minn.St.1971, § 65B.26. ¹ Minn.St.1971, § 65B.26(d), required:

"Beginning January 1, 1972, underinsured motorist coverage, whereby subject to the terms and conditions of such coverage the insurance company agrees to pay its own insured for such uncompensated damages as he may recover on account of an automobile accident because the judgment recovered against the owner of the other vehicle exceeds the policy limits thereon, to the extent of the policy limits on the vehicle of the party recovering or such smaller limits as he may select less the amount paid by the liability insurer of the party recovered against. His insurance company shall be subrogated to any amounts it so pays, and upon payment shall have an assignment of the judgment against the other party to the extent of the money it pays." ²

After recovering the $20,000 maximum payable under Hatten's policy, plaintiff demanded payment of $20,000 in underinsured motorist benefits from defendant. Defendant refused to pay, contending that the statute and the policy authorize it to offset against the underinsured motorist limits the amount paid by the liability insurer; in this case, the underinsured motorist coverage does not exceed the amount recovered against the insured tortfeasor, and thus no underinsured motorist coverage is available.

Plaintiff interprets Minn.St.1971, § 65B.26(d), to provide that when the policyholder obtains judgment against another party in excess of the latter's insurance coverage, the policyholder can obtain payment on the unsatisfied judgment to the extent of his own underinsured motorist coverage. Contrary to plaintiff's argument, the statute does not provide that a motorist is "underinsured" relative only to the judgment recovered against him. Rather, a motorist is underinsured relative to the limits of underinsured coverage for which the recovering party has contracted. Minn.St.1971, § 65B.26(d), required an insurer to make available to supplementary underinsured motorist coverage in an amount equal to the liability coverage under the policy, or in such smaller amount as the party may select. The statute explicitly and unambiguously provided that that amount, "less the amount paid by the liability insurer of the party recovered against," shall be paid by the insurer toward an unsatisfied judgment of its insured. (Italics supplied.)

The effect of this supplemental coverage is to enable an individual to ensure that should he be injured by one who carries liability insurance in an amount less than the minimum required by the Safety Responsibility Act, he will nonetheless have available to him that full minimum amount. ³

One consequence of the separate statutory provision for underinsured motorist coverage is that Minnesota avoids the problem, faced by...