Mountain West Farm Bureau v. Neal

• Decision Date: 12 March 1976
• Docket Number: No. 13047,13047
• Citation: 33 St.Rep. 193,169 Mont. 317,547 P.2d 79
• Parties: MOUNTAIN WEST FARM BUREAU et al., Plaintiffs and Appellants, v. Robert L. NEAL, individually and as Administrator of the Estate of Deborah Neal, Deceased and Robert C. Driggs, Defendants and Respondents.
• Court: Montana Supreme Court

Page 79

547 P.2d 79

169 Mont. 317

MOUNTAIN WEST FARM BUREAU et al., Plaintiffs and Appellants, v. Robert L. NEAL, individually and as Administrator of the Estate of Deborah Neal, Deceased and Robert C Driggs, Defendants and Respondents.

No. 13047.

Supreme Court of Montana.

Submitted Dec. 17, 1975.

Decided Feb. 9, 1976.

Rehearing Denied March 12, 1976.

Scanlon & Connors, Anaconda, Joseph C. Connors argued, Anaconda, Radonich, Brolin & Reardon, Anaconda, for respondents.

Johnson & Foster, Lewistown, Robert L. Johnson argued, Lewistown, for appellants.

HASWELL, Justice.

Plaintiff Mountain West Farm Bureau Mutual Insurance Company (Farm Bureau) brought a declaratory judgment action against defendants Neal and Driggs seeking a declaration that Farm Bureau is liable to pay no more than $10,000 to its insured, Neal, under its 'uninsured motorist' coverage. Neal counterclaimed that Farm Bureau is liable in the amount of $80,000. The district court, Lewis and Clark County, found Farm Bureau's liability to be $40,000. Farm Bureau and Neal appeal from this order.

The underlying issue is whether and under what circumstances a person carrying a single policy of automobile liability insurance, which insures two or more vehicles and includes a provision for uninsured motorist coverage, may 'stack' or 'pyramid' the uninsured motorist coverage limits. The district court held that under the insurance policy in question the uninsured motorist coverage limits may be stacked on the basis of the number of vehicles insured, but that those limits may not be stacked on both the wrongful death and survival claims. We affirm.

The facts of this case were stipulated in the district court and are undisputed here. Prior to July 4, 1971, Farm Bureau issued its policy of automobile liability insurance to Neal, the policy included a provision for uninsured motorist coverage in the amount of $10,000 for one person in any one accident. Four motor vehicles, all owned by Neal, were covered by the same policy. Neal, his wife, and his daughter Deborah were named insureds by definition under the policy, which was in full force and effect on July 4, 1971.

On July 4, 1971, Deborah Neal was riding on a motorcycle owned and operated by Robert Driggs, the other defendant herein. An accident occurred in which Deborah was injured; she died on July 10, 1971. Driggs was an uninsured motorist at the time of the accident.

Neal brought an action against Driggs and Farm Bureau in the district court of Gallatin County seeking damages from Driggs for Deborah's injury and death, and reimbursement from Farm Bureau under the uninsured motorist provisions of its policy with Neal. Thereafter, on February 6, 1974, Farm Bureau filed its complaint for declaratory judgment in Lewis and Clark County against Neal and Driggs. The Gallatin County action between Neal and Driggs is pending, Farm Bureau having been dropped as a party thereto.

Farm Bureau alleged in its complaint that it had tendered $10,000 to Neal to satisfy its obligation under the uninsured motorist provisions of its policy; that said tender had been repeatedly refused; and that Neal believed he was entitled to multiply the $10,000 limit for uninsured motorist coverage by the number of automobiles Neal had insured under the same policy. Farm Bureau prayed for a declaratory judgment to the effect that it was under no duty or obligation to pay more than $10,000 to Neal for injuries to and death of Deborah Neal under the terms of the policy.

Defendant Neal answered by admitting all of Farm Bureau's allegations save those which would limit Farm Bureau's liability to $10,000 or to $40,000. Neal counterclaimed for a declaratory judgment declaring that Farm Bureau's maximum obligation under the policy is $80,000-$40,000 for the damages to the heirs for the wrongful death of Deborah Neal, and $40,000 for the bodily injuries and personal suffering of Deborah Neal under her survival claim. Thus Neal sought to 'stack' uninsured motorist coverage limits in two ways, viz. (1) by multiplying the $10,000 limit by the number of insured vehicles (four), and (2) by multiplying the $40,000 liability resulting thereby by the number of claims prosecuted by Neal as an insured individual and representative of the heirs of Deborah Neal, and as administrator of Deborah Neal's estate, (two).

The district court of Lewis and Clark County had before it the stipulated facts and a copy of the insurance policy issued by Farm Bureau to Neal. Following hearing and submission of briefs, the court held that Farm Bureau's maximum total obligation to Neal under its policy for all injuries to and the death of Deborah Neal is the sum of $40,000. Farm Bureau appeals from that portion of the district court's order which permits stacking the $10,000 uninsured motorist coverage limit on the theory that four vehicles were insured by one policy; Neal appeals from the portion of the order which denies his attempt to stack the two claims as an insured individual and as administrator of Deborah Neal's estate.

The issues on appeal are:

(1) Do the insurance policy provisions relating to uninsured motorist coverage contain contradictions which render the policy ambiguous, thus permitting a judicial construction of the policy which allows stacking based on the number of vehicles insured?

(2) Can the insurance claimant Neal stack uninsured motorist coverage limits on the basis of his capacity to sue on two claims, i. e., as an insured individual and as administrator of Deborah Neal's estate?

In its order and opinion dated March 12, 1975, the district court disposed of the first issue in this language:

'It is the opinion of the Court that the provisions of the policy dealing with and labelled 'Limits of Liability' (pg. 32) and those provisions of paragraph '1' of the definitions section of the policy (pg. 37) are contradictory, ambiguous and beyond reconciliation and must therefore be construed in favor of the policyholder. When so construed, the effect of paragraph '1' of the definitions is to provide four separate policies of uninsured motorist insurance with maximum liability of $10,000 each for each person physically injured or killed in a particular occurrence, there having been four vehicles insured under the policy at the time of the injury. * * * ' (Emphasis supplied.)

The limits of liability provision referred to states in part:

'(a) The limit of liability, as stated in the declarations for uninsured motorist coverage, as applicable to 'each person' is the limit of the Company's liability for all damages, including damages for care or loss of services, because of bodily injury sustained by one person as the result of any one accident and, subject to the above provision respecting each person, the limit of liability stated in the declarations as applicable to 'each accident' is the total limit of the Company's liability for all damages, including damages for care or loss of services, because of bodily injury sustained by two or more persons as a result of any one accident.'

Paragraph '1' of the definitions section provides in pertinent part:

'(1) Two (2) or more automobiles-When two (2) or more automobiles are insured hereunder, the terms of Section III shall apply separately to each * * *.' This provision is referred to as the separability clause.

The rule of construction of insurance policies in Montana is stated in section 40-3725, R.C.M.1947:

'Construction of policies. Every insurance contract shall be construed according to the entirety of its terms and conditions as set forth in the policy and as amplified, extended, or modified by any rider, endorsement, or application which is a part of the policy.'

It is also the rule in Montana that where an ambiguity in an insurance policy exists after viewing it in its entirety, the terms thereof will be construed liberally in favor of the insured and strictly against the insurer. In Atcheson v. Safeco Insurance Company, 165 Mont. 239, 527 P.2d 549, 31 St.Rep. 839, 846, it is said:

'When an ambiguity arises * * * the insured is entitled to the benefit of any doubt.'

See also: Lamb v. Page, 153 Mont. 171, 455 P.2d 337; St. Paul Fire & Marine Ins. Co. v. Thompson, 150 Mont. 182, 433 P.2d 795; Johnson v. Equitable Ins. Co., 142 Mont. 128, 381 P.2d 778; Eby v. Foremost Insurance Co., 141 Mont. 62, 374 P.2d 857. Cf. Stonewall Ins. Co. v. West, 163 Mont. 12, 514 P.2d 764; Jones v. Virginia Surety Co., 145 Mont. 440, 401 P.2d 570; Section 13-720, R.C.M.1947.

Viewing the limits of liability clause and separability clause in juxtaposition and as part of the entire policy leads to the conclusion that they are 'contradictory, ambiguous and beyond reconciliation.' The separability clause is expressly made part of the uninsured motorist coverage. The limits of liability clause limits coverage for 'each person' in any one accident to $10,000. On the other hand, under the separability clause each separate automobile is governed by the limits of liability clause of the policy. Thus, under the former clause Neal would recover...