Pearthree v. Hartford Acc. & Indem. Co.

• Decision Date: 11 July 1979
• Docket Number: No. 51203,51203
• Citation: 373 So.2d 267
• Parties: Dianne Simmons PEARTHREE, Complainant-Appellant, v. HARTFORD ACCIDENT & INDEMNITY COMPANY and United States Fidelity & Guaranty Company, Defendants-Appellees.
• Court: Mississippi Supreme Court

Page 267

373 So.2d 267

Dianne Simmons PEARTHREE, Complainant-Appellant, v. HARTFORD ACCIDENT & INDEMNITY COMPANY and United States Fidelity & Guaranty Company, Defendants-Appellees.

No. 51203.

Supreme Court of Mississippi.

July 11, 1979.

Sandusky & Bailey, Robert W. Bailey, David A. Stephenson, Meridian, for complainant-appellant.

Riddick & Carpenter, B. L. Riddick, Jackson, Joe Clay Hamilton, Meridian, for defendants-appellees.

Before PATTERSON, BROOM and BOWLING, JJ.

PATTERSON, Chief Justice, for the Court:

This appeal from the Chancery Court of Lauderdale County raises the question of whether a limitation of liability clause in an insurance contract providing uninsured motorist coverage on two automobiles permits aggregation of the coverage to determine the liability of the insurer. The controversy arose when James Fannin and Patricia Ann Shumate, insureds under policies issued by Hartford Accident & Indemnity Company (Hartford) and United States Fidelity & Guaranty Company (USF&G), died in an automobile accident caused by the negligence of Fred M. Lofton, an uninsured motorist. Following the accident, Hartford and USF&G paid a combined total of $30,000 for the benefit of certain family members, excluding Dianne Simmons Pearthree, daughter of Patricia Shumate, deceased.

Dianne Pearthree sued Hartford and USF&G. At the conclusion of the trial the chancellor cited three reasons for denying recovery under the policies issued by Hartford and USF&G: (1) she could not aggregate the uninsured motorist coverage; (2) she was not an "insured" under the policies; and (3) she was in any event estopped from bringing her action by failing timely to notify the insurers of her demands. Dianne Pearthree appealed, arguing that none of these reasons is legally sufficient to support the chancellor's decision. We reverse.

It was stipulated, as a result of the death of appellant's mother, appellees each made payments in good faith to satisfy their obligations under the uninsured motorist coverage of their respective policies. Hartford paid: (a) $9,900.00 to Eleanor M. Fannin for personal injuries sustained by her in the accident; (b) $10,000.00 to Paul Kelly Loyacono, attorney, and Eleanor Fannin, individually, and as guardian of three minor children, for the death of the named insured, James Fannin; (c) $100.00 to Paul Kelly Loyacono, attorney, and Edwin Earl Shumate, Sr., individually, and as guardian of Barbara Ellen Shumate and Edwin Earl Shumate, Jr., for a covenant not to sue as a result of the death of Patricia Simmons Shumate. USF&G paid $10,000.00 to Paul Kelly Loyacono, attorney, and Edwin Earl Shumate, Sr., individually, and as guardian of Edwin Earl Shumate, Jr., Barbara Ellen Shumate, and Darrell Veston Simmons, Jr., for the death of Patricia Simmons Shumate. Appellees paid these amounts in late 1975 or early 1976, the "settlement" represented by the payments on behalf of the minor children having been approved by the Chancery Court of Lauderdale County.

I.

The central question on appeal is whether the lower court erred in holding the limits of liability under the uninsured motorist clause of the policies issued by USF&G and Hartford each were $10,000 for any one person and $20,000 for any one accident rather than $20,000 for any one person and $40,000 for any one accident. This question encompasses appellant's first three assignments of error. In essence, it asks whether the construction of insurance contracts laid down in Hartford Accident & Indemnity Co. v. Bridges, 350 So.2d 1379 (Miss.1977), should be applied to the policies in this case to permit aggregation of the uninsured motorist coverage to determine the outer limits of the liability of the insurers.

The limits of liability provision found in the USF&G policy follows:

Limits of liability

(a) The limit of liability for Uninsured Motorist (Family Protection) Coverage stated in the declaration 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.

The limiting provision in the Hartford policy and the parallel provision in Bridges, Supra, read identically in all material respects.

In Bridges, Supra, the uninsured motorist coverage contained in one policy of insurance insured three automobiles, a separate premium being charged and paid on each automobile. This Court stated:

After carefully examining the policy in question as a whole and especially the limits of liability provision of the contract, we find ourselves in agreement with the trial judge in the holding of the Alabama Court in Jackson (Employers Liability Assurance Corp., Ltd. v. Jackson, 277 So.2d 806 (Ala.1972)) that the limits of liability clause in this policy is ambiguous and must be construed most strongly against its creator. This being true, the trial court was correct in holding that the uninsured motorist coverage provided for in this policy could be aggregated and stacked to the extent of the damage suffered by the insured. (350 So.2d at 1381-82).

We also think that charging a separate premium would not necessarily determine the propriety of aggregating, although it is an element to be considered with other aspects of the case. Presently USF&G charged separate premiums for uninsured motorist coverage on each of the two automobiles covered by its policy and thus clearly comes within the construction announced in Bridges permitting aggregation. It is not clear whether Hartford charged separate premiums for the uninsured motorist coverage it provided on two automobiles, but, as we have said, the charging of separate premiums is not decisive. We are of the opinion that a construction permitting aggregation flows from the ambiguity of the limiting clauses in the policies covering more than one automobile, not from the charging of separate premiums.

Both Hartford and USF&G argue that Bridges should not be applied "retroactively" to permit stacking. Their argument calls for a review of two earlier analogous cases in which this Court construed contracts of insurance providing uninsured motorist coverage pursuant to Mississippi Code Annotated Section 83-11-101 (1972).

In Southern Farm Bureau Casualty Insurance Co. v. Mary Roberts, Guardian of the Estate of Drexell Ray Roberts, a Minor, 323 So.2d 536 (Miss.1975), separate policies on three automobiles had been issued, each containing an uninsured motorist endorsement for which a separate premium was charged for each automobile. We stated at 323 So.2d 538: "(T)he insurer was paid a separate premium for each policy, the same as if there were three separate policies issued by three separate insurance companies." We distinguished the decision from Talbot v. State Farm Mutual Automobile Insurance Co., 291 So.2d 699 (Miss.1974), by pointing out that Talbot involved but one insurance policy with one uninsured motorist endorsement covering four automobiles. The separate policies involved provided so obvious a basis for distinguishing Talbot that there was no need in Southern Farm Bureau, supra, to look for additional demarcations.

However, there were other bases of distinguishing Talbot and we addressed one of these in Bridges by stating the limitation of liability clause in Talbot, unlike that in Bridges and this case, Unambiguously limited the insurer's uninsured motorist liability to " 'the minimum limits required by the Uninsured Motorist statute . . . .' " 350 So.2d at 1381. The variation between the limitation of liability clause in Bridges and in the present case and in Talbot renders specious appellees' argument that the stare decisis value of Talbot created some sort of "property right" that "retroactive" application of the construction employed in Bridges would impair. Assuming the construction in Bridges is proper, no "property rights" are in any way retroactively impaired, in our opinion, because ambiguous contracts are subject to judicial construction to determine the present rights and obligations of the parties to the contract. We think enforcement of a contract so construed necessarily follows; otherwise there would be little, if any, point in having the contractual rights and obligations determined. To follow the constructional approach of Bridges would serve the rationale of Bank of Philadelphia v. Posey, 130 Miss. 825, 95 So. 134 (1923), not undermine it.

Further, application of Bridges to a materially Equivalent limitation clause should not surprise any insurer. In Bridges we carried the reasoning of Southern Farm Bureau one step further by holding that payments under a single policy providing uninsured motorist coverage for more than one automobile would have the same effect as payments under several policies with respect to aggregation or stacking when the limitation clause is Not found to be unambiguous. As we have said, "(t)he courts of this State have consistently held that ambiguity and doubt in policies be resolved against the writer of the policy, the insurance company, and in favor of the insured. State Farm Mutual Automobile Insurance Co. v. Taylor, 233 So.2d 805 (Miss.1970)." 350 So.2d at 1381. In our opinion the construction employed in Bridges applies to both the Hartford and USF&G policies, inasmuch as we determine the charging of separate premiums to be without decisional significance in the face of multiple automobile coverages under ambiguous limitation clauses.

II.

The question of whether appellant is an "insured" under the Hartford and USF&G policies remains. The Hartford policy defines an...