Moon v. Guarantee Ins. Co.

• Decision Date: 12 July 1988
• Docket Number: No. 66107,66107
• Citation: Moon v. Guarantee Ins. Co., 764 P.2d 1331, 1988 OK 85 (Okla. 1988)
• Parties: Emmett L. MOON, Plaintiff, v. GUARANTEE INSURANCE COMPANY, Defendant.
• Court: Oklahoma Supreme Court

Page 1331

764 P.2d 1331

1988 OK 85

Emmett L. MOON, Plaintiff, v. GUARANTEE INSURANCE COMPANY, Defendant.

No. 66107.

Supreme Court of Oklahoma.

July 12, 1988.

As Amended on Rehearing Oct. 11 1988.

Certified Questions of Law from the United States District Court for the Northern District of Oklahoma.

Insured lessee of rental vehicle brought action seeking uninsured motorist coverage under contract providing liability insurance to Insured. We answer the certified questions of law to this Court by the United States District Court for the Northern District of Oklahoma as follows:

1) Does 36 O.S. 1981 § 3636 mandate that an insurance company which insures a fleet of rental vehicles provide lessee an opportunity to purchase or reject uninsured motorist coverage? Yes.

2) Is a car rental agency and its employees "insurance agents" within the meaning of 36 O.S. 1981 § 1422(3) and 1423(A) when in the normal course of each car rental transaction they sell automobile insurance under a pre-arranged plan with the insurance company to their lessee-customers and solicit premiums from the lessee-customers? Yes.

3) If so, is the insurance company estopped to deny that car rental agency employees act as its agents? Yes.

4) If a car rental proprietor rejects uninsured motorist coverage pursuant to 36 O.S. 1981 § 3636(F) on a fleet of cars that he owns for the purpose of renting the vehicles to the general public, is that rejection binding upon his customers who ultimately operate the vehicle? No.

5) Is an insurance carrier estopped from asserting a written rejection of uninsured motorist coverage which is signed only by the rental agency proprietor as a bar to a claim for uninsured motorist coverage benefits by the ultimate insured? Yes.

CERTIFIED QUESTIONS ANSWERED.

Layon & Cronin, Tulsa by Thomas A. Layon, James R. Hicks, for plaintiff.

Williams, Clark, Baker & Earl, P.A., Tulsa by Roger R. Williams, Joseph F. Clark, Jr., for defendant.

ALMA WILSON, Justice:

The lessee of a rental vehicle brought an action in the United States District Court for the Northern District of Oklahoma seeking uninsured motorist coverage pursuant to a contract issued in the course of the vehicle rental transaction. We answer the certified questions of law to this Court by the United States District Court for the Northern District of Oklahoma as follows:

1) Does 36 O.S. 1981 § 3636 mandate that an insurance company which insures a fleet of rental vehicles provide lessee an opportunity to purchase or reject uninsured motorist coverage? Yes.

2) Are car rental agency and its employees "insurance agents" within the meaning of 36 O.S. 1981 §§ 1422(3) and 1423(A) when in the normal course of each car rental transaction they sell automobile insurance under a pre-arranged plan with the insurance company to their lessee-customers and solicit premiums from the lessee-customers? Yes.

3) If so, is the insurance company estopped to deny that car rental agency employees act as its agents? Yes.

4) If a car rental proprietor rejects uninsured motorist coverage pursuant to 36 O.S. 1981 § 3636(F) on a fleet of cars that he owns for the purpose of renting the vehicles to the general public, is that rejection binding upon his customers who ultimately operate the vehicle? No.

5) Is an insurance carrier estopped from asserting a written rejection of uninsured motorist coverage which is signed only by the rental agency proprietor as a bar to a claim for uninsured motorist coverage benefits by the ultimate insured? Yes.

The facts giving rise to the federal court's certification of questions of law to this court are as follows. Guarantee Insurance Company entered into a "Business Auto Policy" insurance contract with Neal Wilderon Rental & Leasing d/b/a Thrifty Rent-A-Car of Bartlesville, Oklahoma. The effective dates of this contract of insurance covered the period from July 1, 1981, to July 1, 1982.

The schedule of coverages affirmatively included only:

1) Liability Insurance, defined by the policy as sums the insured must pay as damages because of bodily injury or property damage to which this insurance applies, caused by an accident and resulting from the ownership, maintenance or use of a covered auto.

2) Theft of a Covered Auto.

The schedule of coverages included by operation of law:

3) Uninsured Motorist Coverage for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles and hit-and-run motor vehicles because of bodily injury, sickness or disease, including death resulting therefrom. 36 O.S. 1981 § 3636.

We note that although the policy did not affirmatively provide any coverage in the event of physical personal injury to the driver of a covered auto, (whether by way of the negligence of another or because of an uninsured motorist), that the contract by statutory operation of law did provide uninsured motorist coverage. However, on August 10, 1981, Guarantee Insurance Company issued "General Change Endorsement E-110b", wherein Neil Wilderon executed a "Notice of Rejection of Uninsured Motorist Coverage". This unilateral rejection by endorsement purports to change the original coverage to preclusively bind all yet-to-be-known insureds from coverage under the policy's statutorily mandated provision for personal injury protection against uninsured motorists.

During the effective period of the subject policy, on August 29, 1981, Emmett L. Moon went to the office of Neil Wilderon d/b/a Thrifty Rent-A-Car in the City of Bartlesville, Oklahoma, for the purpose of renting a motor vehicle. An employee of that car rental business placed three X's on a preprinted rental form and instructed Mr. Moon to initial two of them and sign his full name in the third place. Mr. Moon did as instructed, was given the keys and took possession of the vehicle. Upon inquiry, Mr. Moon was advised that he was "fully insured". In pertinent part, the small-print rental form included the following insurance contract:

(23) PERSONAL ACCIDENT    BENEFICIARY (IF NONE STATED, PAY ESTATE)
                INSURANCE (PAI) BY
                INITIALS RENTER ACCEPTS
                OR DECLINES
                ACCIDENT INSURANCE AS     ____________________  DECLINES____________
                DESCRIBED IN COPY OF          RELATIONSHIP
                PROVISIONS OF POLICY
                AVAILABLE FOR INSPECTION
                AT THE RENTAL OFFICE.                           ACCEPTS X ELM
                

Emmett L. Moon placed his handwritten initials beside the "X" denotingacceptance of "Personal Accident Insurance." Pursuant to the contract, Moon was charged a fee in consideration of his acceptance of the Personal Accident Insurance; and he did not reject any form of insurance coverage made available to him. Subsequently, however, Moon was denied any recovery under the policy for severe multiple traumatic injuries sustained by reason of the negligence of an uninsured motorist. While operating the subject rental vehicle, Moon was struck head-on by an uninsured motorist who was travelling on the wrong side of the highway. The uninsured motorist has eluded authorities and private investigators since he left the scene of the accident on foot and disappeared into the surrounding Osage countryside.

I

TITLE 36 O.S. 1981 § 3636 MANDATES THAT INSURANCE COMPANIES

ISSUING, DELIVERING, RENEWING, OR EXTENDING POLICIES INSURING

AGAINST LOSS RESULTING FROM LIABILITY IMPOSED BY LAW ARE

LEGALLY BOUND TO PROVIDE UNINSURED MOTORIST COVERAGE WITHIN

SUCH POLICIES OR SUPPLEMENTAL THERETO.

The legislative mandate of 36 O.S. 1981 § 3636(A) and (B) is expressly stated in this way:

(A) No 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 issued, delivered, renewed, or extended in this state with respect to a motor vehicle registered or principally garaged in this state unless the policy includes the coverage described in subsection (B) of this section.

[Emphasis added.]

The mandatory coverage as described in subsection (B) of 36 O.S. 1981 § 3636 is as follows:

(B) The policy referred to in subsection (A) of this section shall provide coverage therein or supplemental thereto for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles and hit-and-run motor vehicles because of bodily injury, sickness or disease, including death resulting therefrom....

[Emphasis added.]

This Court in Keel v. MFA Insurance Company, 553 P.2d 153 (Okla.1976), at p. 155, unequivocally stated that,

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

* * *

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. [Emphasis added.]

The Keel rationale, above, dictates that the only way a "policy" may be said to "offer" uninsured motorist coverage is by the terms of such language as appears within the written provisions of the policy. This conclusion is consistent with the legislative intent favoring inclusion of uninsured motorist coverage, as acknowledged by this Court in Chambers v. Walker, 653 P.2d 931, 935 (Okla.1982); and it is further consistent as the legal corollary or mirror image of the subsequent statutory directive for written rejection, as set forth in Subsection (F) of 36 O.S. 1981 § 3636:

(F) The named insured shall have the right to reject such uninsured motorist coverage in writing, and except that unless the named insured requests such coverage in writing, such coverage need not be provided in or supplemental to a renewal policy...