Porter v. Farmers Ins. Co. of Idaho

• Decision Date: 15 April 1981
• Docket Number: No. 13154,13154
• Citation: 627 P.2d 311,102 Idaho 132
• Parties: George PORTER, Plaintiff-Appellant, v. FARMERS INSURANCE COMPANY OF IDAHO, an Idaho Corporation, Defendant-Respondent.
• Court: Idaho Supreme Court

Page 311

627 P.2d 311

102 Idaho 132

George PORTER, Plaintiff-Appellant, v. FARMERS INSURANCE COMPANY OF IDAHO, an Idaho Corporation, Defendant-Respondent.

No. 13154.

Supreme Court of Idaho.

April 15, 1981.

John L. King of King & Morris, Boise, for plaintiff-appellant.

William J. Russell of Elam, Burke, Evans, Boyd & Koontz, Boise, for defendant-respondent.

BAKES, Chief Justice.

On April 29, 1975, Ethel Porter was riding in a pickup owned and operated by her husband George Porter. The pickup was struck broadside on the driver's side by DeWitt Hasbrouck's vehicle while George Porter was making a left turn. Mrs. Porter was injured in the accident and brought suit against DeWitt Hasbrouck for compensation. Mr. Hasbrouck in turn brought suit against George Porter as a third party defendant, seeking contribution on the theory that he was a joint tortfeasor. The respondent herein, Farmers Insurance Co., represented George Porter at the insistence of Mr. Porter's separate counsel, and filed a general denial to the third party complaint.

A jury trial was held and the verdict was in favor of Ethel Porter and against DeWitt Hasbrouck on Mrs. Porter's claim. The jury found no negligence on the part of Mrs. Porter. As to the third party claim, the jury found that George Porter was 80% negligent, and DeWitt Hasbrouck 20%. The court entered a judgment in favor of Ethel Porter and against DeWitt Hasbrouck in the total amount of $13,828.92 which has been satisfied. The court further entered a judgment in favor of DeWitt Hasbrouck and against George Porter in the total amount of $12,281.08. Mr. Hasbrouck, through his insurance company, made demand on George Porter, who in turn made a demand on his insurance company, respondent Farmers Insurance Co., to pay the third party judgment. Farmers has refused to pay the judgment.

George Porter brought this declaratory judgment action against Farmers in an attempt to obtain payment of the judgment. At issue is the exclusionary clause in the policy of liability insurance issued by Farmers to George Porter, which states, "This policy does not apply ... to the liability of any insured for bodily injury to (a) any member of the same household of such insured except a servant, or (b) the named insured." Another provision in the policy defined the "named insured" to include the insured's spouse. The court below granted summary judgment in favor of the defendant Farmers, on the ground that liability for injuries to Mrs. Porter was excluded from coverage because she was both the insured's spouse and a member of the insured's household.

The primary contention of the appellant Porter on appeal is that the exclusionary clause cited above conflicts with both the Idaho Motor Vehicle Safety Responsibility Act (hereinafter MVSRA), and public policy, and is therefore void and of no effect. He also contends that the insurance policy is ambiguous and should therefore be construed in favor of the insured to provide coverage for liability incurred due to Mrs. Porter's injuries.

The appellant argues that I.C. § 49-1521 ¹ of the MVSRA sets mandatory minimum standards of coverage for all motor vehicle liability policies effective in Idaho. In particular, he focuses on the language which states, "Such owner's policy of liability insurance ... (s)hall insure the person named therein ... against loss from the liability imposed by law for damages arising out of the ownership, maintenance or use of such motor vehicle ...." (Emphasis added.) The appellant further buttresses his argument by stating that since the statute explicitly excludes coverage for any liability subject to workmen's compensation law, the exclusion from coverage of liability to household members or a spouse must also be specifically provided for in the statute to be valid.

In order to properly address this issue, we must examine I.C. § 49-1521 in perspective with the MVSRA as a whole. The MVSRA has been adopted by at least thirty-three states, ² and contains the following provision: "Uniformity of interpretation This act shall be so interpreted and construed as to effect its general purpose to make uniform the laws of those states which enact it." I.C. § 49-1538. The language of the MVSRA, and the majority of the cases interpreting it, clearly indicate that the act has two main divisions, often known as the "safety responsibility law," I.C. § 49-1505, -1516, and the "financial responsibility law," I.C. §§ 49-1517, -1529, respectively. See, e. g., Midsouth Insurance Co. v. Lewis, 236 F.Supp. 739, 740-41 (W.D.La.1964); Hoosier Casualty Co. of Indianapolis v. Fox, 102 F.Supp. 214, 229-30 (N.D.Iowa 1952); State Farm Mutual Automobile Ins. Co. v. Hubbard, 272 Ala. 181, 129 So.2d 669, 675 (1971); Johnson v. Universal Automobile Ins. Ass'n, 124 So.2d 580, 586 (La.App.1960); Havlick v. Bittner, 272 Wis. 71, 74 N.W.2d 798, 800 (1956).

The two divisions have very distinct purposes. The "safety responsibility law" is retrospective in operation in that it requires the furnishing of collateral or proof of insurance, after a motor vehicle accident, so that victims of that accident may be assured of compensation. In contrast, the "financial responsibility law" operates prospectively to require, under certain circumstances, evidence of ability to meet possible judgments arising from the future ownership, maintenance, or operation of motor vehicles. Hoosier Casualty Co. of Indianapolis v. Fox, supra.

I.C. § 49-1521, the provision of the MVSRA which the appellant relies upon, is a part of the "financial responsibility law," governed initially by I.C. § 49-1517, which states:

"PROOF REQUIRED UPON CERTAIN CONVICTIONS. (a) Whenever the commissioner, under any law of this state, suspends or revokes the license of any person upon receiving record of a conviction or a forfeiture of bail, the commissioner shall also suspend the registration for all motor vehicles registered in the name of such person, except that he shall not suspend such registration unless otherwise required by law, if such person has previously given or shall immediately give and thereafter maintain proof of financial responsibility with respect to all motor vehicles registered by such person." (Emphasis added.)

I.C. § 49-1518 sets forth the methods of giving proof of financial responsibility required by I.C. § 49-1517, among which is the option to furnish a certificate of insurance according to the procedure set out in I.C. § 49-1519, or § 49-1520. It is at this point that I.C. § 49-1521 becomes effective in defining the requirements of motor vehicle liability policies. That section initially provides that, "A 'motor vehicle liability policy' as said term is used in this act shall mean an owner's or an operator's policy of liability insurance, certified as provided in section 49-1519 or 49-1520 as proof of financial responsibility ...." (Emphasis added.) It thus becomes apparent that the requirements of I.C. § 49-1521 apply only to policies of insurance that are selected as the preferred method of giving proof of financial responsibility following the suspension or the revocation of a driver's license due to a conviction or forfeiture of bail, and certified pursuant to I.C. § 49-1519 or 49-1520. Such is not the case here.

Although a small minority of jurisdictions have construed the MVSRA to control the content of all motor vehicle liability policies, the great majority of jurisdictions which have decided the issue have held otherwise, following the plain language of the act itself. See Annot., 8 A.L.R.3d 388 (1966).

It should also be noted that the "motor vehicle liability policy" defined in I.C. § 49-1521, is not the same as the "automobile liability policy" which is described in I.C. § 49-1505(c), -(d), as part of the "safety responsibility law" of the MVSRA. See, e. g., Johnson v. Universal Automobile Ass'n, supra; State Farm Mutual Automobile Ins. Co. v. Hubbard, supra. I.C. § 49-1505(c), -(d), merely provides that if a policy of liability insurance meeting certain coverage limits is not in effect at the time of an accident, then the security requirement of the "safety responsibility law" comes into effect. That section in no way compels liability coverage.

Subsequent legislative action also indicates that the MVSRA was not intended by our legislature to require minimum standards of insurance coverage for persons other than those affected by the restrictions of I.C. § 49-1517. On March 30, 1976, almost a full year after the Porter-Hasbrouck accident, the legislature approved a compulsory insurance law, codified as I.C. §§ 49-232, -235. That law requires all owners of motor vehicles to continuously provide motor vehicle liability insurance in an amount not less than that required by I.C. § 49-1521. If the legislature had viewed I.C. § 49-1521 as establishing minimum standards for every insurance policy, there would have been no need in the new law to require all policies of insurance to meet the minimum liability limits contained in I.C. § 49-1521. Consequently, not only the clear language of the MVSRA, but also the apparent intent of the legislature reflected by the passage of I.C. §§ 49-232, -235, supports a finding that the insurance exclusions do not conflict with the MVSRA. Since the compulsory insurance law did not become effective until after the date of the accident in this case, its effect upon the exclusions is not at issue, and we do not express an opinion on it. I.C. § 73-101.

A few comments are in order concerning two previous opinions by this Court. In Farmers Insurance Exchange v. Wendler, 84 Idaho 114, 119-20, 368 P.2d 933, 935-36 (1962), this Court stated, "It is generally held that requirements of the safety responsibility act will be read into any policy of liability insurance issued to establish proof of financial responsibility under the act, and that the policy will be construed to provide the coverage required by the act." (Emphasis added.)...