Morgan v. Farmers Ins. Exchange

• Citation: 511 P.2d 902,182 Colo. 201
• Decision Date: 09 July 1973
• Docket Number: No. C--342,C--342
• Parties: Elaine M. MORGAN, Petitioner, v. FARMERS INSURANCE EXCHANGE, an inter-insurance exchange, Respondent.
• Court: Supreme Court of Colorado

Page 902

511 P.2d 902

182 Colo. 201

Elaine M. MORGAN, Petitioner, v. FARMERS INSURANCE EXCHANGE, an inter-insurance exchange, Respondent.

No. C--342.

Supreme Court of Colorado, En Banc.

July 9, 1973.

Brenman, Sobol & Baum, Stephen N. Berkowitz, Denver, for petitioner.

Wolvington, Dosh, DeMoulin, Anderson & Campbell, Denver, Laird Campbell, Denver, for respondent.

Irvin M. Kent, Charles F. Brega, Kenneth N. Kripke, Denver, Colo. Trial Lawyers Association as amicus curiae.

BROVES, Justice.

We granted certiorari to review the Colorado Court of Appeals 2--1 decision in this matter reported in 31 Colo.App. 531, 506 P.2d 375 (1972). The Court of Appeals there held that insolvency of a tort-feasor's insurance carrier, occurring subsequent to the automobile accident, does not create coverage under the 'uninsured motorist' provision of the injured party's insurance policy. We reverse.

This was a declaratory judgment proceeding brought by the plaintiff Farmers Insurance Exchange.

The defendant, Mrs. Morgan, was involved in an automobile accident on March 19, 1970. She obtained a judgment against George Solario, the other party to the accident. Solario was insured by Trans Plains Casualty Company which became insolvent following the rendition of the judgment. ¹ Mrs. Morgan was insured by the plaintiff and made demand for payment under the uninsured motorist provisions of the policy issued to her.

The policy issued by plaintiff defines an uninsured motor vehicle as follows:

'Uninsured Motor Vehicle means a land motor vehicle or trailer with respect to the ownership, maintenance or use of which there is, in at least the amounts specified by the financial responsibility law of the state in which the insured automobile is principally garaged, no bodily injury liability insurance or bond applicable At the time of the accident or a land motor vehicle or trailer used without the permission of the owner thereof if there is no bodily injury liability insurance or bond applicable at the time of the accident with respect to the operator thereof, or a hit-and-run motor vehicle.' (Emphasis added.)

Some policies provide that denial of coverage by the tort-feasor's insurance company will cause the injured insured to be entitled to coverage under the uninsured motorist provision. This policy contained no such provision.

The trial court concluded that the terms of the policy were unambiguous and that since Solario's policy was in effect at the time of the accident, Mrs. Morgan was not entitled to uninsured motorist coverage under her policy. The Court of Appeals affirmed, citing Dreher v. Aetna Casualty &amp Surety Co., 83 Ill.App.2d 141, 226 N.E.2d 287 (1967), and the Annotation in 26 A.L.R.2d 883. The following is taken from that opinion:

'The statute does not require that coverage be extended, as do the statutes of some states, to cover the situations where the third party's insurance company denies coverage or, as here, becomes insolvent before the payment of the liability.'

The dissent in our Court of Appeals followed Tsapralis v. Public Employees Mutual Casualty Co., 77 Wash.2d 581, 464 P.2d 421 (1970).

The Colorado statute complels insurance companies writing motor vehicle liability policies to extend uninsured motorist coverage unless the insured shall reject such coverage. The General Assembly has made the following declaration of purpose:

'The general assembly is acutely aware of the toll in human suffering and loss of life, limb, and property caused by negligence in the operation of motor vehicles in our state. Although it recognizes that this basic problem can and is being dealt with by direct measures designed to protect our people from the ravages of irresponsible drivers, the general assembly is also very much concerned with the financial loss visited upon innocent traffic accident victims by negligent motorists who are financially irresponsible. In prescribing the sanctions and requirements of section 72--12--19 and article 7 of chapter 13, it is the policy of this state to induce and encourage all motorists to provide for their financial responsibility for the protection of others, and to assure the widespread availability to the insuring public of insurance protection against financial loss caused by negligent financially irresponsible motorists.' 1965 Perm.Supp., C.R.S.1963, 72--12-20.

In oral argument, counsel for Mrs. Morgan stated in effect that this statement of purpose is stronger in its expressed intent to protect people from uninsured drivers than any similar statement of any statute of any other state. Be that as it may, we find the statement of policy most persuasive in concluding that Mrs. Morgan is entitled to uninsured motorist protection.

The plaintiff has cited a number of cases involving similar fact situations in which it was held that the event of subsequent insolvency does not alter the fact that there was outstanding at the time of an accident insurance which precludes liability under the uninsured motorist provisions. Apotas v. Allstate Insurance Company, 246 A.2d 923 (Del.Supr.1968); Dreher v. Aetna Casualty & Surety Co., Supra; Rousso v. Michigan Educational Emp. Mutual Insurance, 6 Mich.App. 444, 149 N.W.2d 204 (1967); Topolewski v. Detroit Automobile Inter-Ins. Exchange, 6 Mich.App. 286, 148 N.W.2d 906 (1967); Baune v. Farmers Insurance Exchange, 283 Minn. 54, 166 N.W.2d 335 (1969); Swaringin v. Allstate Insurance Co., 399 S.W.2d 131 (Mo.App.1966); Hardin v. American Mutual Fire Insurance Co., 261 N.C. 67, 134 S.E.2d 142 (1964); and Stone v. Liberty Mutual Insurance Company, 55 Tenn.App. 189, 397 S.W.2d 411 (1965).

Amicus Curiae call...