Mutual of Enumclaw Ins. Co. v. Wiscomb

• Decision Date: 31 December 1980
• Docket Number: No. 47145-2,47145-2
• Citation: 622 P.2d 1234,95 Wn.2d 373
• Court: Washington Supreme Court
• Parties: MUTUAL OF ENUMCLAW INSURANCE COMPANY, a Washington corporation, Petitioner, v. Maura (Mary) McGahan WISCOMB and Kenneth Kelso Wiscomb, Respondents.

Page 373

95 Wn.2d 373

622 P.2d 1234

MUTUAL OF ENUMCLAW INSURANCE COMPANY, a Washington corporation, Petitioner, v. Maura (Mary) McGahan WISCOMB and Kenneth Kelso Wiscomb, Respondents.

No. 47145-2.

Supreme Court of Washington, En Banc.

Dec. 31, 1980.

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

Faith Enyeart, Seattle, for respondents.

WILLIAMS, Justice.

In this case we are asked to decide whether a "family or household exclusion clause" in an automobile liability insurance policy is void as against public policy. The Court of Appeals held that such a clause is void for that reason, and we affirm.

The facts are not in dispute. Respondent Maura McGahan Wiscomb was seriously injured in a collision between the motorcycle that she was driving and an automobile driven by her husband. Both vehicles were insured by petitioner Mutual of Enumclaw Insurance Company, which provided both liability and uninsured motorist coverage.

Maura Wiscomb commenced a lawsuit against her husband alleging that she suffered 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. Petitioner contended that it was relieved of its obligation under the family or household exclusion clause of the insurance policy, which stated:

This policy does not apply (1) to bodily injury to the insured or any member of the family of the insured residing in the same household as the insured.

Clerk's Papers 43.

The trial court ruled that the exclusionary clause relieved petitioner of any obligation to defend the action or pay damages. Petitioner appealed to the Court of Appeals, which reversed, declaring the exclusionary clause to be void as against public policy. Mutual of Enumclaw Ins. Co. v. Wiscomb, 25 Wash.App. 841, 611 P.2d 1304 (1980).

The household or family exclusion clause is almost universally found in automobile insurance policies. United Pac. Ins. Co. v. McCarthy, 15 Wash.App. 70, 546 P.2d 1226 (1976). Indeed, petitioner's counsel informed the court at oral argument that a policy without such a clause cannot be purchased in Washington at the present time. Moreover, such clauses have been sanctioned, if not expressly approved, twice in recent years by the Court of Appeals: United Pac. Ins. Co. v. McCarthy, supra, and State Farm Mut. Auto. Ins. Co. v. Phillips, 2 Wash.App. 169, 467 P.2d 189 (1970).

The general rule, which appears supported by the weight of authority, is that provisions excluding from coverage members of the insured's family or household are valid and effective to protect the insurer against claims for injuries to persons who fall within those classes. Annot., Validity, Construction, and Application of Provision of Automobile Liability Policy Excluding from Coverage Injury or Death of Member of Family or Household of Insured, 46 A.L.R.3d 1024, 1029 (1972). There are several rationales supporting this view. In Phillips, the Court of Appeals stated that the household or family exclusion clause was intended not only to protect insurers from collusion which might possibly arise in intrafamily suits, but also to protect insurers from the natural tendency of the insured to strengthen or enlarge the case against oneself when it involves members of his or her household and family. This view rested on the premise that there is a natural disposition to favor those in one's own family or household. Phillips, at 177, 467 P.2d 189. Similar reasoning is given in numerous cases from other jurisdictions. See, e. g., State Farm Mut. Auto. Ins. Co. v. Thompson, 372 F.2d 256 (9th Cir. 1967); Tomlyanovich v. Tomlyanovich, 239 Minn. 250, 58 N.W.2d 855 (1953).

The family or household exclusion clause has also been upheld because of a state policy of supporting interspousal immunity. State Farm Mut. Auto. Ins. Co. v. Leary, 168 Mont. 482, 544 P.2d 444 (1975). Conversely, where a statute provides that a liability insurance company may not exclude from its coverage liability for injuries to persons related by blood or marriage to the insured, the exclusionary provision is invalid. Haines v. Mid-Century Ins. Co., 47 Wis.2d 442, 177 N.W.2d 328 (1970); Urhammer v. Olson, 39 Wis.2d 447, 159 N.W.2d 688 (1968).

Before considering directly the question of the family exclusion clause, the Court of Appeals in the present case carefully traced the common law development of interspousal immunity and its eventual abrogation by this court in Freehe v. Freehe, 81 Wash.2d 183, 500 P.2d 771 (1972). In Freehe, where we were directly asked to abolish the doctrine of interspousal immunity, the court considered all of the historical reasons for the common law doctrine. Among the traditional supporting rationales was the desirability of discouraging collusion and fraud where one or both spouses carries liability insurance. Freehe, at 188-89, 500 P.2d 771. In dismissing this rationale, the court stated:

The courts may and should take cognizance of fraud and collusion when found to exist in a particular case. However, the fact that there may be greater opportunity for fraud or collusion in one class of cases than another does not warrant courts of law in closing the door to all cases of that class. Courts must depend upon the efficacy of the judicial processes to ferret out the meritorious from the fraudulent in particular cases.

Freehe, at 189, 500 P.2d 771, quoting Borst v. Borst, 41 Wash.2d 642, 653, 251 P.2d 149 (1952). Clearly, as the Court of Appeals concluded one spouse may sue the other for negligence after Freehe.

Two years before the Freehe decision, the Court of Appeals upheld the family exclusion clause in insurance contracts in the Phillips case, resting its decision on the fraud or collusion rationale summarized above. Since this court, in Freehe, has since decided that the fraud or collusion rationale does not support interspousal immunity, the only remaining question is whether this or any other rationale is sufficient to uphold an exclusionary clause in private insurance contracts.

We have never held as a general proposition that exclusionary clauses in liability insurance policies are void as against public policy. Indeed, the Washington courts have upheld other exclusionary clauses in insurance policies against just such a charge. In St. Paul Fire & Marine Ins. Co. v. Circle Bar J Boys' Ranch, Inc., 1 Wash.App. 377, 461 P.2d 567 (1969), for example, the court approved as valid an endorsement in a policy excluding coverage for any claim arising from accidents which occur while any automobile is being driven by any person under 25 years of age. In Royse v. Boldt, 80 Wash.2d 44, 492 P.2d 644 (1971), the policy excluded coverage for any accident occurring while the insured automobile was being operated by any driver other than the named insured, a resident of his household, or a driver specifically named in the policy. Again, we refused to declare the restriction void on public policy grounds. Finally, in Barkwill v. Englen, 57 Wash.2d 545, 358 P.2d 317 (1961), the insurance policy contained a "student and servicemen's endorsement" which provided that the insurance did not apply to the use of any automobile while being driven or operated by any person other than the named insured or a member of his family. Appellants urged the court to require that drivers be financially responsible to those they injure while operating motor vehicles, citing a rule adopted by a California court. This court replied:

It is not the function of the judiciary of this state to determine public policy as it relates to this subject. That function rests exclusively with the legislative branch of our government. Our legislature has not enacted a compulsory financial responsibility law applicable to the owners and operators of motor vehicles. Appellants' request for such legislation and the pronouncement of public policy should be addressed to the legislature.

Barkwill, at 548, 358 P.2d 317.

Thus, it can be seen that our courts have approved several kinds of exclusionary clauses in automobile liability insurance policies.

In 1963, after Barkwill, the Washington legislature enacted a financial responsibility law, RCW 46.29. Under the provisions of the statute, the driver after an injury accident must deposit security, unless he or she has an "automobile liability policy." RCW 46.29.060, .080. In addition, the driver involved in such an accident must furnish proof of financial responsibility for the future. RCW 46.29.260, .420. Such proof may be made by a showing of a motor vehicle liability policy. RCW 46.29.450, .460. If a liability policy is furnished as proof, the statute requires that the policy "(s)hall insure the person named therein and any other person, as insured, using any such vehicle or vehicles with the express or implied permission of such named insured, against loss from the liability imposed by law for damages ..." (Italics ours.) RCW 46.29.490(2)(b).

This court has explained the purpose of the financial responsibility law as follows:

The sections of our statutes involved here ... are directly intended for the benefit of owners and drivers of motor vehicles as a means of forestalling suspension of the license of the driver and of the registration of the vehicle and, more fundamentally, 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.

LaPoint v. Richards, 66 Wash.2d 585, 590, 403 P.2d 889 (1965).

If a fundamental purpose of the financial responsibility law is to give monetary protection to those people who suffer serious injury through the negligent use of highways by others, then it is difficult to see how an insured with a liability policy which...