Rowley v. Dairyland Ins. Co., Inc.

• Citation: 44 Or.App. 333,605 P.2d 1356
• Decision Date: 05 February 1980
• Docket Number: No. 102767,102767
• Parties: Kyleen ROWLEY, Respondent, v. DAIRYLAND INSURANCE COMPANY, INC., a corporation, Appellant. ; CA 14290.
• Court: Court of Appeals of Oregon

Page 1356

605 P.2d 1356

44 Or.App. 333

Kyleen ROWLEY, Respondent, v. DAIRYLAND INSURANCE COMPANY, INC., a corporation, Appellant.

No. 102767; CA 14290.

Court of Appeals of Oregon.

Argued and Submitted Nov. 16, 1979.

Decided Feb. 5, 1980.

Ralph C. Spooner, Salem, argued the cause for appellant. With him on the briefs were Bruce W. Williams and Williams, Spooner & Graves, P. C., Salem.

Tim Armbruster, Newport, argued the cause for respondent. With him on the brief were William A. Barton and Barton & Armbruster, P. C., Newport.

Before BUTTLER, P. J., and GILLETTE and ROBERTS, JJ.

GILLETTE, Judge.

This proceeding involves an automobile accident between plaintiff and defendant's insured, Lillian Hurst. Plaintiff brought an action against Hurst alleging negligence in the operation of her car. A default judgment for $25,000 was entered by the Jackson County Circuit Court in the plaintiff's favor. The judgment remained unsatisfied 30 days after it was rendered and, after transferring it to Marion County Circuit Court, plaintiff brought this action against defendant as the insurer. ¹ Plaintiff moved for summary judgment. Both sides submitted affidavits. After a hearing on the motion, the trial court granted summary judgment in favor of plaintiff. Defendant appeals from that order. We affirm.

On appeal, defendant contends that there are unresolved factual issues which make the granting of summary judgment inappropriate. Defendant argues that an issue exists as to the insured's non-cooperation in the defense of this matter and that a question remains concerning a purported release agreed to by plaintiff and defendant. Also assigned as error is the award of attorney fees to plaintiff.

Summary judgment is appropriate where there is no genuine issue as to any material fact and, based on these facts, the moving party is entitled to judgment as a matter of law. Former ORS 18.105(3). ² Seeborg v. General Motors Corporation, 284 Or. 695, 699, 588 P.2d 1100 (1978).

The policy issued to Hurst by the defendant was issued under Oregon's Financial Responsibility Law. That law provides, in part, that:

"The liability of an insurance carrier with respect to the insurance policy required by this chapter to prove future responsibility shall become absolute whenever injury or damage covered by the vehicle liability policy occurs." ORS 486.551.

In State Farm Ins. v. Farmers Insurance Exchange, 238 Or. 285, 292, 387 P.2d 825, 828, 393 P.2d 768 (1964), the Oregon Supreme Court stated that:

"The Oregon legislature by the Financial Responsibility Act, ORS ch. 486, largely abolished any insurance policy defenses, including the defense of noncooperation, when an action is brought by an injured party against an insurer."

Although that statement is only dictum in that case, we believe it represents the correct view and should be followed. The court was giving recognition to the express "governmental policy in favor of protecting the innocent victims of vehicular accidents * * * ." Id., supra, at 293, 387 P.2d at 828, See also Rhone v. Louis, 282 Or. 693, 697, 580 P.2d 549 (1978). The wording of the statute is clear. The liability of the insurance carrier is absolute with respect to policies issued as proof of financial responsibility. The policy in question here was such a policy. We hold that, as a matter of law, the defendant was not entitled to raise the defense of non-cooperation because the policy in question was issued as proof of future financial responsibility.

The second issue presents a more difficult problem. The defendant in this case raised the affirmative defense of settlement and submitted affidavits in support of its claim. On appeal, defendant claims that the question of whether or not the release agreed to by plaintiff and defendant should be given effect has not been resolved. In response, Plaintiff argues that the proper forum for defendant to raise the settlement issue was in its motion to set aside the original default judgment against its insured, Hurst, in Jackson County.

Defendant moved in Hurst's name, to set aside the default judgment entered against her in Jackson County. The basis of the action was ORS 18.160. ³ The defendant alleged, in supporting affidavits, that it failed to receive notice of service upon Hurst and unsuccessfully tried to locate her. It alleged prejudice in view of the allegedly disproportionate amount of the award and further alleged that " * * * there may be additional facts within the knowledge of defendant, Lillian Hurst, which could affect the outcome of this case if it is tried." A general denial was tendered as an answer. No mention was made of the existence of the settlement agreement obtained from plaintiff. Plaintiff filed a counteraffidavit contending that the defendant received adequate notice. The court denied the motion.

The question before us now is whether defendant should have brought the existence of the settlement to the attention of the Jackson County court.

The rule is that

" * * * a default decree will be set aside only if the moving party establishes that the decree was entered against him through mistake, inadvertence, surprise or excusable neglect; that he acted with reasonable diligence after knowledge of the default decree; And that he has a meritorious defense to the suit * * * " Lowe v. Institutional Investors Trust, 270 Or. 814, 817, 529 P.2d 920, 922 (1974). (Emphasis added.)

In this case, the defendant's application to the trial court did not establish that it had a meritorious defense. Notifying the trial court of the existence of the alleged release which defendant already had in its possession would have supplied that element.

Defendant argues that, even if it should have shown the availability of the defense of release in its motion on behalf of Hurst for relief from default in Jackson County, such fact does not establish that the defendant in this case the insurance company, not Hurst is foreclosed from defending the suit against It by offering evidence of the settlement.

We di...