Members Ins. Co. v. Felts

• Citation: 117 Cal.Rptr. 54,42 Cal.App.3d 617
• Court: California Court of Appeals Court of Appeals
• Decision Date: 23 October 1974
• Parties: MEMBERS INSURANCE COMPANY, Plaintiff and Respondent, v. Eleanor W. FELTS and Clay H. Felts, Defendants and Appellants. Eleanor W. FELTS and Clay H. Felts, Plaintiffs and Appellants, v. MEMBERS INSURANCE COMPANY, Defendant and Respondent. Civ. 31714, 31715.

Page 54

117 Cal.Rptr. 54

42 Cal.App.3d 617

MEMBERS INSURANCE COMPANY, Plaintiff and Respondent, v. Eleanor W. FELTS and Clay H. Felts, Defendants and Appellants.

Eleanor W. FELTS and Clay H. Felts, Plaintiffs and Appellants, v. MEMBERS INSURANCE COMPANY, Defendant and Respondent.

Civ. 31714, 31715.

Court of Appeal, First District, Division 2, California.

Oct. 23, 1974.

[42 Cal.App.3d 619] Walter H. Medak, Walnut Creek, for appellants.

Paul H. Coffee, Wines, Coffee & Robinson, Inc., San Jose, for respondent.

BRAY, ^* Associate Justice.

Consolidated appeals by defendants Eleanor W. Felts and Clay H. Felts from judgment of the Alameda County Superior Court in favor of respondent Members Insurance Company and from order of said court denying petition for order of arbitration.

QUESTION PRESENTED

The questions of whether Travis Felts had an insurable interest in the policy and whether there was an effective waiver of uninsured motorist coverage were issues to be determined by arbitration.

RECORD

Respondent Members Insurance Company filed complaint against the above-named appellants for declaratory relief seeking a declaration that no agreement to arbitrate existed between Travis Felts, deceased, or appellants as his heirs, and respondent. Appellants demurred. Thereafter Eleanor W. Felts and Clay H. Felts filed a petition to appoint neutral arbitrator to arbitrate certain matters between them and Members Insurance Company. In the declaratory relief action, the court granted the insurance company's motion for summary judgment and denied the petition for appointment of arbitrator.

FACTS

These proceedings arise out of the death of Travis Felts who was killed while riding the motorcycle hereinafter mentioned, in a collision with an automobile being driven by an uninsured owner. The pertinent facts appear in declarations presented to the court on the hearing of the motion for summary judgment and the petition for appointment of arbitrator.

Richard Rabinowitz was purchasing from Powell Motors a Honda motorcycle on the installment plan requiring payments of $50.12 per month to Central Valley National Bank, which became the legal owner of the motorcycle, and Rabinowitz became the registered owner. Thereafter, he entered into an oral agreement with Travis Felts by which the latter agreed to purchase the machine and take over the payments to the bank. Desiring liability insurance coverage, the two men contacted Hans Hoehne, agent of respondent Members Insurance Company. Travis Felts had been informed by a mutual friend that he could purchase a policy for approximately $200. Rabinowitz claimed in his declaration that Hoehne wrote up an application for a policy of insurance in which Rabinowitz was stated as the registered owner of the motorcycle and Travis Felts as the principal driver and Rabinowitz as secondary driver. Hoehne, in making out the application, consulted with a Mr. Wolff, who was also an agent of respondent. Hoehne was informed that the machine would be kept at the address where both Rabinowitz and Felts lived. Hoehne was informed of the purchase arrangements between the two men, the application was signed by Rabinowitz, and then ensued a conversation between the three men as to whether the policy should include uninsured motorist coverage. Rabinowitz stated that Hoehne said 'inasmuch as I was not to be the principal driver, it was not necessary to carry uninsured motorist coverage.' Rabinowitz said that he had such coverage on another motorcycle, 'and there was considerable discussion pro and con, and Mr. Hoehne stated that it would involve additional premium and he did not feel that it was necessary. He finally convinced us that we did not need it, whereupon Mr. Hoehne had me sign a waiver, excluding uninsured motorist coverage. He did not ask Mr. Felts to sign such a waiver. . . .' Felts paid Hoehne the insurance premium, a total cost of $200.

Hoehne's declaration was not as detailed as that of Rabinowitz. Hoehne said he took the application for liability insurance which was attached to his declaration, and that subsequently, the policy in question was issued by Members Insurance Company, listing Rabinowitz as the named insured, that in making application for the policy, Rabinowitz executed a waiver of the uninsured motorist coverage under said policy, which waiver was attacked to his declaration. Due to this waiver, the policy as issued provided no uninsured motorist coverage and no premium was charged for such coverage.

It will be noted that while Rabinowitz and Hoehne agree that Rabinowitz signed the waiver of uninsured motorist coverage, Hoehne, in his declaration, does not deny that he wrote up the application for insurance, answer or comment upon Rabinowitz' declaration that Hoehne stated that as Rabinowitz was not the principal driver, it was not necessary to pay the additional premium for such coverage.

Felts made monthly payments to the bank until his death.

THE ISSUES RAISED SHOULD BE DETERMINED BY ARBITRATION

Respondent takes the position that as Travis Felts was named in application for insurance and in the insurance policy only as principal driver, the insurance contract is and can be only between the insurance company and Rabinowitz and as Rabinowitz signed the waiver the insurance company cannot be liable for uninsured motorist coverage.

Appellants contend that Travis Felts had an insurable interest in the motorcycle described in the policy and was covered by it, and that the waiver of the uninsured motorist coverage was not effective as it was obtained by the insurance company's agents through improper advice.

As will hereinafter appear, these were issues which because of the arbitration agreement should have been submitted to arbitration.

In the instant case the declarations of the parties show that there are issues of fact to be decided. First, did the two agents of respondent, knowing that Felts was buying Rabinowitz' interest in the motorcycle, fail to cover Felts as an insured; and second, in obtaining the waiver of the uninsured motorist coverage did they improperly advise either or both to waive the uninsured motorist coverage? As the agents were representing respondent, it would be charged with the responsibility for...