Mutual of Enumclaw Ins. Co. v. Wiscomb

• Decision Date: 08 April 1982
• Docket Number: 47202-5,Nos. 47145-2,s. 47145-2
• Citation: 643 P.2d 441,97 Wn.2d 203
• Parties: MUTUAL OF ENUMCLAW INSURANCE COMPANY, a Washington corporation, Petitioner, v. Maura McGahan WISCOMB, Respondent, and Kenneth Kelso Wiscomb, Respondent. Rita MARSTEN, Respondent, v. MUTUAL OF ENUMCLAW INSURANCE COMPANY, a Washington corporation, Appellant, Charles Robert Marsten, Respondent.
• Court: Washington Supreme Court

Page 203

97 Wn.2d 203

643 P.2d 441

MUTUAL OF ENUMCLAW INSURANCE COMPANY, a Washington

corporation, Petitioner, v. Maura McGahan WISCOMB, Respondent, and Kenneth Kelso Wiscomb, Respondent.

Rita MARSTEN, Respondent, v. MUTUAL OF ENUMCLAW INSURANCE COMPANY, a Washington

corporation, Appellant,

Charles Robert Marsten, Respondent.

Nos. 47145-2, 47202-5.

Supreme Court of Washington, En Banc.

April 8, 1982.

Murray, Dunham & Waitt, Wayne Murray, Seattle, Simonarson, Visser, Johnson, Zender & Brandt, Peter J. Visser, Lynden, Stephen Larson, Seattle, for petitioner.

Faith Enyeart, Chambers & Young, Thomas J. Chambers, William Hickman, Donald S. Means, Seattle, for respondents.

WILLIAMS, Justice.

Respondent Maura McGahan Wiscomb was seriously injured in a collision between the motorcycle she was operating and an automobile driven by her husband. Petitioner Mutual of Enumclaw Insurance Company provided both liability and uninsured motorist coverage for the Wiscomb vehicles. Maura Wiscomb commenced a lawsuit against her husband alleging personal injuries as a result of his negligence. Her husband tendered the defense to petitioner, which brought a declaratory judgment action to determine the question of insurance coverage. The trial court ruled that the petitioner was relieved of its obligation under the family or household exclusion clause of the insurance policy. ¹ The Court of Appeals reversed, holding the exclusion clause to be void as against public policy. Mutual of Enumclaw Ins. Co. v. Wiscomb, 25 Wash.App. 841, 611 P.2d 1304 (1980). We affirmed the Court of Appeals on the same public policy grounds. Mutual of Enumclaw Ins. Co. v. Wiscomb, 95 Wash.2d 373, 622 P.2d 1234 (1980). Pursuant to RAP 12.4, RCW 2.04.170, and SAR 23, we granted Mutual of Enumclaw's motion for reconsideration on March 11, 1981. We now reaffirm our earlier decision, but take this opportunity to address additional issues raised by the amicus curiae brief on behalf of State Farm Mutual Automobile Insurance Company.

Respondent Rita Marsten was injured in a 1-car accident. At the time of the accident, she was a passenger in a pickup truck driven by her husband. Petitioner Mutual of Enumclaw Insurance Company provided liability coverage for the Marsten vehicle. The Marstens' insurance policy, like the Wiscombs', also contained a family or household exclusion clause. Rita Marsten brought a declaratory judgment action seeking a ruling that the exclusion clause in the insurance policy was void as against public policy. The trial court, relying on our decision in Wiscomb, granted Marsten's motion for summary judgment. Direct appeal was taken, and the case was consolidated for argument with the Wiscomb rehearing. In light of our reaffirmation of the earlier holding in Wiscomb, we affirm the trial court's ruling which granted Rita Marsten's motion for summary judgment.

In these consolidated cases, we are again called upon to determine the validity and effect of family or household exclusion clauses in automobile insurance policies. Nothing presented on rehearing, either by the parties or amicus for State Farm Mutual Automobile Insurance Company, changes our basic belief that the family or household exclusion clause violates the public policy of this state.

As we noted in our previous decision, the proper starting place for the public policy analysis is the Washington financial responsibility act, RCW 46.29. While the act does not require mandatory insurance coverage, it nevertheless conveys a strong public policy implicit in its provisions. Quite simply, the statute creates a strong public policy in favor of assuring monetary protection and compensation to those persons who suffer injuries through the negligent use of public highways by others. This public policy is clearly demonstrated by the manner in which the statute operates.

The financial responsibility act does not require an individual to prove that he is financially able to compensate those he may injure through the use of his vehicles until he is involved in an automobile accident resulting in bodily injury or death of any person or property damage of $300 or more. RCW 46.29.060. If such an accident occurs, the two-pronged approach of the financial responsibility act comes into play.

First, if the injured or damaged person(s) submits information indicating the extent of injuries or damage within 180 days of the accident, the other party must demonstrate financial responsibility to the injured or damaged person(s). RCW 46.29.070(2). Unless the individual already carries liability insurance coverage or can demonstrate financial responsibility in some other manner, see RCW 46.29.080, he must post an

amount of security ... sufficient ... to satisfy any judgment or judgments for damages resulting from such accident as may be recovered against each driver or owner.

RCW 46.29.070(1).

Second, the financial responsibility act requires the individual to demonstrate "financial responsibility for the future". This term is defined by the act as follows:

Proof of ability to respond in damages for liability, on account of accidents occurring subsequent to the effective date of said proof, arising out of the ownership, maintenance, or use of a vehicle ...

(Italics ours.) RCW 46.29.260. The individual may demonstrate financial responsibility for the future by: (1) filing a certificate of insurance; (2) posting a bond; (3) depositing securities in the amount of $60,000; or (4) providing a certificate of self-insurance. RCW 46.29.450. As a practical matter, the first method represents the only way most people can comply with the second prong of the act.

This brief review of the statutory scheme should make one thing very clear-the act will not apply until the need arises to assure an adequate pool of funds for compensation. Thus, to the greatest extent possible without requiring mandatory insurance coverage, the legislature has demonstrated its intended policy of providing adequate compensation to those injured through the negligent use of this state's highways. In LaPoint v. Richards, 66 Wash.2d 585, 403 P.2d 889 (1965), we recognized that the intended purpose of the financial responsibility act is

for the benefit of owners and drivers of motor vehicles ... and, more fundamentally, (it is) designed to give monetary protection to that ever changing and tragically large group of persons who, while lawfully using the highways themselves, suffer serious injury through the negligent use of those highways by others.

(Italics ours.) LaPoint, at 590, 403 P.2d 889. The policy of providing compensation to victims is borne out by the financial responsibility act's focus on those who have been injured by a driver in the past and those who may be injured by him in the future. In each of the two prongs of the financial responsibility act, there is a requirement that some source of funds be made available to redress the victims of automobile accidents.

This strong public policy of assuring protection to the innocent victims of automobile accidents was previously recognized by this court in Touchette v. Northwestern Mut. Ins. Co., 80 Wash.2d 327, 332, 494 P.2d 479 (1972), where in interpreting the uninsured motorist statute, we said:

(The uninsured motorist statute) is but one of many regulatory measures designed to protect the public from the ravages of the negligent and reckless driver.... The statute is both a public safety and a financial security measure. Recognizing the inevitable drain upon the public treasury through accidents caused by insolvent motor vehicle drivers who will not or cannot provide financial recompense for those whom they have negligently injured, and contemplating the correlated financial distress following in the wake of automobile accidents and the financial loss suffered personally by the people of this state, the legislature for many sound reasons and in the exercise of the police power took this action to increase and broaden generally the public's protection against automobile accidents.

(Italics ours.) This same public policy has been carried over into the new underinsured motorist statute, RCW 48.22.030, et seq., and pervades our entire scheme of insurance legislation. See generally Comment, Washington's Underinsured Motorist Statute: Balancing the Interests of Insurers and Insureds, 55 Wash.L.Rev. 819 (1980).

The family or household exclusion clause strikes at the heart of this public policy. This clause prevents a specific class of innocent victims, those persons related to and living with the negligent driver, from receiving financial protection under an insurance policy containing such a clause. In essence, this clause excludes from protection an entire class of innocent victims for no good reason.

This exclusion becomes particularly disturbing when viewed in light of the fact that this class of victims is the one most frequently exposed to the potential negligence of the named insured. Typical family relations require family members to ride together on the way to work, church, school, social functions, or family outings. Consequently, there is no practical method by which the class of persons excluded from protection by this provision may conform their activities so as to avoid exposure to the risk of riding with someone who, as to them, is uninsured.

The family or household exclusion clause is different from previous exclusions approved by our courts because it focuses not on the risk associated with who is driving the vehicle, but on which parties are injured. To illustrate, in St. Paul Fire & Marine Ins. Co. v. Circle Bar J Boys' Ranch, Inc., 1 Wash.App. 377, 461 P.2d 567 (1969), the court approved an exclusion which relieved the insurer from coverage when any automobile was driven by a person under 25 years of age. In Royse v. Boldt, 80 Wash.2d 44, 491 P.2d 644 (1971), we refused to invalidate a provision excluding coverage for any accident occurring...