Pattani v. Keystone Ins. Co.

• Decision Date: 29 June 1967
• Citation: 426 Pa. 332,231 A.2d 402
• Parties: Bruce PATTANI, Appellant, v. KEYSTONE INSURANCE COMPANY.
• Court: Pennsylvania Supreme Court

Page 402

231 A.2d 402

426 Pa. 332

Bruce PATTANI, Appellant, v. KEYSTONE INSURANCE COMPANY.

Supreme Court of Pennsylvania.

June 29, 1967.

Rehearing Denied Aug. 14, 1967.

Stephen M. Feldman, Philadelphia, Joseph G. Feldman, Feldman & Feldman, Philadelphia, for appellant.

John S. Kokonos, Philadelphia, for appellee.

Before MUSMANNO, COHEN, EAGEN, O'BRIEN and ROBERTS, JJ.

Mr. Justice ROBERTS files a concurring opinion in which Mr. Justice MUSMANNO and Mr. Justice EAGEN join.

Mr. Justice JONES files a dissenting Opinion in which Mr. Chief Justice BELL joins.

OPINION OF THE COURT

O'BRIEN, Justice.

Bruce Pattani, appellant, was injured in a collision, which occurred on January 3, 1965, between an automobile driven by him and one driven by Reversa Taylor. The Taylor automobile, at the time of the accident, was insured by Wissahickon Mutual Casualty Company, and appellant was insured by appellee, Keystone Insurance Company. Appellant's policy, written by appellee, contained uninsured motorist coverage, as required by the Act of August 14, 1963, P.L. 909, § 1, 40 P.S. § 2000.

The statute provides that all automobile liability insurance policies issued within the Commonwealth are required to provide, unless the coverage is expressly rejected in writing, coverage for damages caused by uninsured owners and operators of motor vehicles. The statute does not define uninsured motorists. The policy provision involved does, however, define an uninsured automobile as: 'an automobile as to which there is * * * no * * * insurance policy applicable at the time of the accident * * * or with respect to which there is a policy applicable at the time of the accident but the company writing the same denies coverage thereunder.'

Appellant filed a suit in trespass against Reversa Taylor, to recover damages for personal injuries sustained in the collision. Wissahickon Mutual entered into a defense on behalf of Miss Taylor, and represented her up to and during a compulsory arbitration hearing, held on February 21, 1966, in the County Court of Philadelphia County. That arbitration hearing resulted in a finding for appellant in the amount of $719. On March 18, 1966, Wissahickon Mutual, being insolvent, went into receivership. Thereupon, appellant made a demand upon appellee that the matter be submitted to arbitration in accordance with the provisions of his uninsured motorist coverage contained in his policy written by appellee. Appellee refused arbitration, and appellant commenced an action in the Court of Common Pleas of Philadelphia County to compel arbitration. The petition was denied, and appellant appealed to the Superior Court, which affirmed the judgment of the Court of Common Pleas, with one Judge dissenting. On appellant's petition, we granted allocatur. ¹

The issue before this court was well stated in the majority opinion of the Superior Court as 'whether the uninsured motorist provision of (this) automobile (policy) extend to those covered under the policy when at the time of the accident the person causing the accident was covered by liability insurance which subsequently lapsed because of the insolvency of the carrier.' The Superior Court majority concluded that the insolvency of the carrier subsequent to the accident did not make the uninsured motorist provision of the policy applicable; we reach an opposite conclusion. We agree with the statement of the dissenting opinion in the Superior Court that: 'When an insurer fails to defend a claim or to satisfy a judgment against its insured, whether voluntarily or involuntarily, it 'denies coverage' to him in the only meaningful sense of that term.'

The majority of the Superior Court concluded that inasmuch as the Taylor automobile was covered by insurance at the time of the accident, and there had been no express denial of that insurance coverage, the Taylor automobile was not an uninsured vehicle within the meaning of the policy provision. This case, while novel in the Appellate Courts of Pennsylvania, has been considered and decided in other jurisdictions. The Supreme Court of Appeals of Virginia, interpreting a statute of that State in State Farm Mutual Automobile Insurance Co. v. Brower, 204 Va. 887, 134 S.E.2d 277 (1964), reached a conclusion opposite to that reached by the Superior Court. The Virginia statute in question required uninsured motorist coverage in all automobile liability policies issued in the State of Virginia, and further contained a provision defining uninsured vehicles. That definition included as uninsured vehicles those where there was insurance but the insurance company writing it denied coverage thereunder. The court held that the refusal of the insurance carrier, which had become insolvent subsequent to the accident, to pay the judgment which its insured had become obligated to pay, constituted a denial of coverage, thereby invoking the uninsured motorist coverage of the other driver's insurance policy. The Court said: 'State Farm argues that neither National nor any of its receivers 'have made an express denial of coverage' to Mazza and hence that Mazza's automobile was not an uninsured vehicle. But (the Virginia statute) does not say that the denial must be express. It says only that the automobile is an uninsured vehicle if the insurance company 'denies coverage.' There is nothing in the letter of the statute nor, as we believe, in the spirit and purpose of the statute, that requires the denial to be expressed. Denial of coverage clearly may be as effectively made by the conduct of the insurer as by its spoken or written word.'

The Supreme Court of South Carolina followed Brower when faced with a similar situation in North River Ins. Co. v. Gibson, 244 S.C. 393, 137 S.E.2d 264 (1964). In that case, again, an insurance carrier became insolvent subsequent to the accident which precipitated the litigation. Under the South Carolina statute, requiring uninsured motorist coverage, an uninsured vehicle was defined as one, inter alia, on which liability insurance was carried but as to which the insurer denies coverage. The court held that the right of the insured to recover on his uninsured motorist coverage is not necessarily determinable as of the date of the collision. The South Carolina Supreme Court adopted the language of Brower that: 'An insurer denies coverage to its insured when it fails or refuses to accord him the protection it contracted to give.'

Appellee, in the instant case, contends that the South Carolina decision in Gibson is dependent upon a 1963 amendment to the South Carolina statute, which amendment specifically defined an uninsured vehicle as one on which there was insurance but the insurance carrier who wrote it was subsequently declared insolvent. Such, however, is not the rationale of the South Carolina decision. It held specifically that the purpose and effect of the amendment was to clarify, rather than to broaden, the coverage afforded by the statute as it existed prior to the amendment and at the time of the accident which gave rise to the case. In that connection, it should be added that the decision in Federal Ins. Co. v. Speight, 220 F.Supp. 90 E.D.S.C. (1963), wherein the Federal...