Peterson v. State Farm Mut. Auto. Ins. Co.
| Decision Date | 24 June 1964 |
| Citation | 393 P.2d 651,238 Or. 106 |
| Parties | Laurence A. PETERSON, Respondent, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, a corporation, Appellant. |
| Court | Oregon Supreme Court |
Alfred T. McGill, Portland, argued the cause for appellant. On the brief were McGill & Clarke, Portland.
Herbert B. Galton, Portland, argued the cause for respondent. On the brief were Goldstein, Galton, Galton & Popick, Portland.
Before McALLISTER, C. J., and ROSSMAN, PERRY, SLOAN, O'CONNELL, GOODWIN and DENECKE, JJ.
This is an action against an insurer to recover $5,000 under the provisions of the uninsured motorist clause of plaintiff's automobile liability insurance policy. The trial court rendered judgment for the plaintiff for the full amount.
The undisputed facts are that plaintiff was injured when he was struck by an automobile driven by an uninsured motorist. The plaintiff was legally entitled to recover damages against the motorist. At the time of the accident plaintiff was performing his duties as a street cleaner for the city of Portland; he was, therefore, entitled to workmen's compensation, which he has received in an amount exceeding the $5,000 policy limits of his uninsured motorist insurance.
The uninsured motorist clause involved here was issued under the compulsory provisions of the Oregon Uninsured Motorist Statute, ORS 736.317:
'(1) No policy insuring against loss resulting from liability imposed by law for bodily injury * * * shall be issued or delivered in this state with respect to a motor vehicle * * * unless the policy includes the coverage described in subsection (2) of this section.
'(3) Subsection (1) of this section does not apply to any policy covering motor trucks as defined in ORS 481.035 where the insured has employes who operate the motor trucks and such employes are covered by workmen's compensation.'
The uninsured motorist clause in plaintiff's policy contains a limitation on liability providing:
* * *
* * *
'(c) Any loss payable under the terms of this endorsement to or for any person shall be reduced by the amount paid and the present value of all amounts payable to him under any workmen's compensation law, exclusive of non-occupational disability benefits.'
The sole question is whether this limitation on the defendant's liability is valid and enforceable. Plaintiff contends it is not valid because it diminishes the protection that the statute requires the insurer to provide.
State Farm contends that the limitation of liability is not in derogation of the statutory requirements because the statute provides that the insurance 'shall provide coverage * * * under provisions approved by the State Insurance Commissioner, * * *.' ORS 736.317(2). It is agreed that the provision involved was approved by the Insurance Commissioner. Therefore, if the Commissioner had the statutory authority to approve such a provision, the provision would be a valid and enforceable part of the present insurance contract. Initially, this is a question of the authority granted by the legislature to the Insurance Commissioner.
A study of the general insurance law granting the Commissioner his authority and setting forth his duties shows that he is not equipped or expected to pass upon the wisdom of various provisions of the insurance contract. For example, ORS 736.090 requires every insurer, except marine insurers, to file its policy forms with the Commissioner. However, the Commissioner is not granted any authority to approve or disapprove such policy forms. His power is expressly defined by statute:
In the case of life insurance policies and health and accident policies, the legislature has specified numerous provisions that are either required or prohibited in the policies. ORS 739.315-320; ORS 741.120-140. The Commissioner's duty is to examine the policy forms filed and to determine whether the forms contain all the provisions required by law and none of those prohibited by law. The Commissioner has no statutory authority to include or exclude any other provisions of the policies, not required or prohibited by the statutes.
A hearing by the Commissioner to determine the advisability of approving or disapproving a proposed policy provision is not provided for in either the general insurance law or in the uninsured motorist act. The Administrative Procedures Act does not require a hearing because the approval or disapproval of a proposed policy provision is not a 'contested case' within the meaning of the Act. ORS 183.310(2).
The Commissioner is authorized by statute to issue rulings to enforce the insurance law, and he made an official ruling in this case. Insurance Department Ruling No. 39 states that in order to comply with the uninsured motorist law the coverage must be at least as broad as that contained in the endorsement filed by the National Bureau of Casualty Underwriters. The general authority of the Commissioner to make rulings to enforce the insurance laws does not indicate any intent of the legislature to grant the Commissioner the power to determine whether or not an insurer's liability should be reduced by the amount of compensation benefits received by the insured.
We must look, then, to the uninsured motorist act itself to discover the purpose of the law and thus to determine the limits of the Commissioner's authority in this particular case.
Frequently the legislature requires that persons carry a specific type of insurance, requires that insurance covering certain risks shall contain certain provisions, or prohibits the inclusion of certain provisions in certain kinds of insurance; life and health and accident insurance are examples of the latter two classes of legislative action. Insurance policy provisions imposing a lesser obligation on the insurer than that required by statute are unenforceable. For example, see ORS 741.140, 744.130, 747.190. In Merchants Mutual Casualty Company v. Egan, 91 N.H. 368, 20 A.2d 480, 135 A.L.R. 745 (1941), the court considered the New Hampshire legislation which sets forth certain provisions that are required to be in automobile liability insurance policies. The legislation also provides that the Insurance Commissioner shall approve the form of the policy. The Insurance Commissioner approved a policy provision that if the named insured shall die or become bankrupt the policy is canceled unless the insurer be given written notice of the change within 10 days after the death or bankruptcy. The court held this provision invalid because it reduced the extent or duration of the insuring obligation which the statute specifically imposed.
In this case the insurance is required by statute. The statute requires the insurer to assume the obligation to provide coverage for an insured who is legally entitled to recover damages from an uninsured motorist because of injuries or death. The statute requires that the extent of this protection, i. e., limits, be not less than in policies listed as proof of financial responsibility. The Financial Responsibility Act requires limits of $5,000 for injury or death to one person, and $10,000 for injury or death to two or more persons. ORS ch. 486. The legislature did not further describe the coverage of the statute. However, we note that the Financial Responsibility Act, referred to specifically in the uninsured motorist provision, contains no provision regarding the effect of the receipt of workmen's compensation benefits by the injured party.
The basic purpose of the uninsured motorist provision seems clear. It provides protection for the automobile insurance policyholder against the risk of inadequate compensation for injuries or death caused by the negligence of financially irresponsible motorists. See Note, 2 Will.L.J. 56, 61 (1962); Commissioners of the State Insurance Fund v. Miller, 4 A.D.2d 481, 166 N.Y.S.2d 777, 779 (1st Dept.1957). In other words, the legislative purpose in creating...
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