Protective Fire & Cas. Co. v. Woten

• Decision Date: 11 December 1970
• Docket Number: No. 37664,37664
• Citation: 186 Neb. 212,181 N.W.2d 835
• Parties: PROTECTIVE FIRE AND CASUALTY COMPANY, Appellant, v. Harold W. WOTEN and Harold E. Woten, Administrator of the Estate of Lila O. Woten, Deceased, Appellees.
• Court: Nebraska Supreme Court

Page 835

181 N.W.2d 835

186 Neb. 212

PROTECTIVE FIRE AND CASUALTY COMPANY, Appellant, v. Harold W. WOTEN and Harold E. Woten, Administrator of the Estate of Lila O. Woten, Deceased, Appellees.

No. 37664.

Supreme Court of Nebraska.

Dec. 11, 1970.

Syllabus by the Court

1. Our uninsured motorist law was enacted for the benefit of the innocent victim of the financially irresponsible motorist, and is to be liberally construed to fully accomplish that purpose.

2. Policy provisions which conflict with requirements of the uninsured motorist statute will not be effective to reduce an insured's recovery below the amount necessary to fully indemnify him for his loss within the limits of all applicable policies.

Gross, Welch, Vinardi, Kauffman, Schatz & Day, Harry L. Welch, Harold W. Kauffman, Omaha, for appellant.

Thomas J. Guilfoyle, Swenson, Guilfoyle & Pazol, Omaha, for appellees.

Heard before WHITE, C.J., and CARTER, SPENCER, BOSLAUGH, SMITH, McCOWN, and NEWTON, JJ.

SPENCER, Justice.

This is a declaratory judgment action seeking to sustain an excess-escape clause as applied to an uninsured motorist provision in a policy issued by plaintiff. The district court held the provision to be contrary to the requirements of our statute, and of no effect. We affirm.

Deceased was a guest passenger in a car owned and operated by one Turner, which was involved in a collision with a car owned by an uninsured motorist. Turner had uninsured motorist's coverage with the State Farm Mutual Automobile Insurance Company for the statutory minimum. His insurer paid defendants $10,000, the limit of the uninsured motorist coverage under the Turner policy. The Woten family car was insured by the plaintiff for the statutory minimum uninsured motorist coverage. This action seeks a declaration that the plaintiff is absolved from liability under the policy it issued to the Wotens because the defendants have received the statutory uninsured motorist coverage from the State Farm Mutual Automobile Insurance Company. Defendants' damages are in excess of $20,000, which would be the amount of coverage for both policies. Plaintiff's position is essentially that its policy assures payment up to the statutory minimum uninsured motorist coverage from some source, and payment by the State Farm Mutual Automobile Insurance Company met that obligation. Plaintiff argues this construction carries out the intent of the statute because defendants are in the same position as if the uninsured motorist had owned an insurance policy with the minimum coverage provided by the statute.

The following provisions of plaintiff's policy are pertinent to this issue: 'To pay all sums which the insured or his legal representative shall be legally entitled to recover as damages from the owner or operator of an uninsured automobile because of bodily injury, sickness or disease, including death resulting therefrom, hearinafter called 'bodily injury,' sustained by the insured, caused by accident and arising out of the ownership, maintenance or use of such uninsured automobile; * * *.

'Other Insurance: With respect to bodily injury to an insured while occupying an automobile not owned by the named insured the insurance hereunder shall apply only as excess insurance over any other similar insurance available to such occupant, and this insurance shall then apply only in the amount by which the applicable limit of liability of this Part exceeds the sum of the applicable limits of liability of all such other insurance.

'With respect to bodily injury to an insured while occupying or through being struck by an uninsured automobile, if such insured is a named insured under other similar insurance available to him, then the damages shall be deemed not to exceed the higher of the applicable limits of liability of this insurance and such other insurance, and this company shall not be liable under this Part for a greater proportion of the applicable limit of liability of this Part than such limit bears to the sum of the applicable limits of liability of this insurance and such other insurance.

'Subject to the foregoing paragraphs, if the insured has other similar insurance available to him against a loss covered by this Part, the company shall not be liable under this Part for a greater proportion of such loss than the applicable limit of liability hereunder bears to the total applicable limits of liability of all valid and collectible insurance against such loss.'

Plaintiff relies on the 'other insurance' provision set out above, involving what is commonly known as an excess-escape clause, to avoid liability. There are cases from other jurisdictions which support plaintiff's position. There are also several jurisdictions which reject that position as a violation of the intendment of the uninsured motorist law. It is not possible to reconcile the deep conflict in these cases or to distinguish them on any rational basis, although in a few of those supporting plaintiff's position there is no uninsured motorist statute requiring uninsured motorist coverage.

Some of the cases supporting the rejection of the excess-escape clause are: Bryant v. State Farm. Mut. Auto. Ins. Co., 205 Va. 897, 140 S.E.2d 817; Sellers v. United States Fidelity & Guaranty Co. (Fla.), 185 So.2d 689; Vernon v. Harleysville Mut Cas. Co., 244 S.C. 152, 135 S.E.2d 841; Travelers Indemnity Co. v. Williams, 119 Ga.App. 414, 167 S.E.2d 174; Aldcroft v. Fidelity & Cas. Co. of New York (R.I.), 259 A.2d 408; Meridian Mut. Ins. Co. v. Siddons (Ky.App.), 451 S.W.2d 831; Harleysville Mut. Cas. Co. v. Blumling, 429 Pa. 389, 241 A.2d 112.

The following extract from Sellers v. United States Fidelity & Guaranty Co., Supra, is pertinent herein: 'It appears to us that the statute expresses the statutory requirements both as to coverage to be provided by the insurer, and as to its sources of recovery of insurance protection it paid from other persons, including other insurers legally responsible for the bodily injury to insureds, to the exclusion of inconsistent language inserted in an automobile liability policy. There appears no latitude in the statute for an insurer limiting its liability through 'other insurance'; 'excess-escape' or 'pro rata' clauses, as attempted in Condition 5. If the statute is to be meaningful and controlling in respect to the nature and extent of the coverage and to the sources of recovery and subrogation of the insurer, all inconsistent clauses in the policy to the controlling statutory language such as are contained in Condition 5 must be judicially rejected.'

The following from Bryant v. State Farm Mut. Auto. Ins. Co., 205 Va. 897, 140 S.E.2d 817, is also pertinent herein: 'Section 38.1--381(b) of the Code, quoted above, commands that No policy of bodily injury liability insurance shall be issued or delivered unless it undertakes to pay the insured 'all sums' he is legally entitled to recover as damages from the owner or operator of an uninsured motor vehicle within the limits of the policy. That is plain language. It means that every such policy shall so...