Rungee v. Allied Van Lines, Inc.

• Decision Date: 24 December 1968
• Docket Number: No. 10049,10049
• Citation: 92 Idaho 718,449 P.2d 378
• Parties: John M.RUNGEE, Plaintiff-Appellant, v. ALLIED VAN LINES, INC., a licensed I C C public carrier, Defendant-Respondent.
• Court: Idaho Supreme Court

Page 378

449 P.2d 378

92 Idaho 718

John M.RUNGEE, Plaintiff-Appellant, v. ALLIED VAN LINES, INC., a licensed I C C public carrier, Defendant-Respondent.

No. 10049.

Supreme Court of Idaho.

Dec. 24, 1968.

Hawkins & McCabe and David A. Frazier, Coeur d'Alene, for plaintiff-appellant.

Miller & Knudson, Coeur d'Alene, for defendant-respondent.

McQUADE, Justice.

The evidence produced at the trial before Hon. Dar Cogswell, district judge, sitting without a jury, disclosed the following facts. John M. Rungee, appellant, is a professional engineer with the international firm of Rader and Associates, architects and engineers of Miami, Florida. This position often requires Rungee and his family to change residence. Prior to August, 1965, Rungee and his family lived in Tampa, Florida. He was then required to move to Coeur d'Alene, Idaho. On approximately August 31, 1965, Rungee contracted with respondent Allied Van Lines, Inc., a licensed I.C.C. carrier (hereafter referred to as Allied), to have his household goods shipped from Tampa to Coeur d'Alene by Allied's trucks.

Rungee was advised that the amount of protection against damage to goods (then thirty cents per pound of goods shipped) afforded by the tariffs filed by interstate carriers with the Interstate Commerce Commission was inadequate. Part of the inducement for the shipping contract therefore consisted of Allied's statements in its advertising magazine:

'Obviously, any article of exceptional value cannot be adequately covered this way. For example, if you had a precious vase worth five hundred dollars that weighed one pound, the legal coverage would be only thirty cents.

'For this reason Allied developed Comprehensive Transit Protection, which covers your valued belongings to the full extent of their declared value. * * * (Emphasis in original).

'Allied brings you this full protection at the rate of fifty cents per one hundred dollar valuation.' ¹

Rungee received a standard household goods bill of lading and freight bill upon which he declared the value of the entire shipment to be $5,000.00. Pursuant to Allied's self-insurance plan, Rungee then promised to pay to Allied a premium in an amount equal to fifty cents per one hundred dollars of the shipment's declared value.

The goods were delivered to the Rungee's new residence at Coeur d'Alene on September 20, 1965, in a damaged condition. Rungee paid the entire cost of the move by certified check before the goods were unloaded. On that same date, the driver of Allied's van and a representative of Luke's Transfer, the local agent for Allied, were informed of the damage done to the goods. The damage done was noted on the descriptive inventory forms, as is the regular practice. Allied did not dispute the fact of damage but only its amount.

During the five months from September 20, 1965, to February 17, 1966, Rungee attempted to deal with Allied in order to reach a settlement on the damage claim. Allied requested that Rungee secure estimates of the damage done. Rungee did so for about one and one-half months from sources in Coeur d'Alene, Missoula and Spokane. Rungee wrote numerous letters and made various phone calls in his efforts to estimate the damage and to settle with Allied. This was to no avail, however, because of the 'unusual delay and dilatory practices of (Allied's) claims office in Seattle.' ²

On February 18, 1966, an estimator and a claims adjuster visited the Rungee's home to determine once more the damage to the goods. The claims adjuster made a second visit on March 16, 1966. As a result of these visits, the claims adjuster indicated that he could recommend to Allied that it pay 'roughly $450' for the damage. Because the estimates acquired by the Rungees had been in the $800 to $900 range, the $450 figure suggested by the adjuster remained unacceptable to them. Therefore the Rungees brought suit against Allied in April of 1966 for actual damages, general damages, punitive damages and attorney fees. On February 2, 1967, Allied made an offer of judgment for $409.34, which was declined by the Rungees. The district court gave judgment to the Rungees for $731.33 of actual damages. The Rungees have appealed.

Although Rungee's notice of appeal stated that he appealed from the 'whole' of the judgment, no error is assigned with respect to either the amount of actual damages found below or the court's denial of punitive damages. The assignment of error relating to the denial of general damages for expenses incurred by Rungee in his efforts to settle the claim is without merit because he failed to submit any evidence on the extent of these damages. Thus, the only issue left for decision on this appeal is whether the disallowance of attorney fees was proper. Appellant argues that Allied is an 'insurer or insurance company' for purposes of I.C. § 41-1839 under which the contends attorney fees should have been awarded. Respondent Allied argues that even if it is an insurer neither the contract nor federal law provides for the assessment of attorney fees against an interstate carrier and therefore I.C. § 41-1839 cannot be applied to it by virtue of the supremacy clause of the United States Constitution.

An initial question is whether there was an insurance contract between the parties in this case. Insurance has been defined as '* * * a contract by which one party, for a consideration * * * promises to make a certain payment of money upon the destruction or injury of something in which the other party has an interest.' ³ Although Allied's literature uses the term 'protection' rather than 'insurance,' all of the basic elements of an insurance contract are present. For a premium of twenty-five dollars, Allied agreed to indemnify Rungee for loss or damage to his household goods up to their declared value of $5,000. Thus, there was an insurance contract between the parties here, with Allied the insurer and Rungee the insured. ⁴ This conclusion is supported by uncontradicted testimony in the record and is not challenged by Allied on this appeal.

The next question is what law applies to this insurance contract. The parties have assumed that I.C. § 41-1839 applies. However, I.C. § 41-1801(2) provides that Chapter 18 of Title 41 of the Idaho Insurance Code, which includes I.C. § 41-1839, 'applies as to all insurance contracts * * * other than * * * policies or contracts not issued for delivery in this state nor delivered in this state.' Since the contract for 'comprehensive protection' of Rungee's goods was in fact delivered in Florida, it would appear that Idaho law does not apply to it. However, while most of Chapter 18 of the Insurance Code deals with the formation of the terms of the contract, § 41-1839 provides the insured with a legal remedy which applies whether or not included in the contract terms. It is a general enforcement provision. For this reason we do not interpret § 41-1801(2) so as to preclude the application of § 41-1839 to certain contracts delivered outside of Idaho. The legislature could not have intended to exclude by such language the cases in which policies are delivered outside of Idaho to persons who thereafter take up residence in Idaho and subsequently find it necessary to sue their insurers in Idaho courts. This interpretation is more consistent with the general purport of Chapter 18 which is to protect Idaho residents by regulating the insurance issued in their behalf. I.C. § 41-1801 itself has an expansive scope inasmuch as it reaches all contracts negotiated, entered, and issued outside Idaho so long as they are issued for delivery or delivered in Idaho.

If I.C. § 41-1801(2) does not necessarily bar the application of § 41-1839 to certain insurance contracts delivered outside of Idaho, the question remains whether § 41-1839 is applicable. There is presented a choice between Florida law and Idaho law. In one respect, this choice presents a 'false conflict' ⁵ because the basic policies of Florida and Idaho are the same in providing that their courts may award attorney fees to an insured who finds it necessary to sue his insurer. ⁶ However, as a technical matter, it appears that if Florida law applies, then no attorney fee may be awarded because the Florida statute provides for such an award only if the insured prosecutes his claim and procures his judgment in the Florida courts. ⁷ Thus, there is a genuine conflict of laws insofar as the outcome is concerned, and it is necessary to determine whether Idaho or Florida law applies.

It has been held that the law of the forum governs this type of remedy on an insurance contract. ⁸ However, to the extent that these cases rely upon a distinction between procedure as governed by the law of the forum and substance as governed by the law of the place of contracting, we do not follow their reasoning. Courts often apply the terms 'procedural' and 'substantive' to laws as a matter of conclusory labeling without disclosing the basis for the conclusion. ⁹ Moreover, matters relating to the measure of damages are said to be substantive rather than procedural. ¹⁰ More specifically, statutes such as I.C. § 41-1839 are said to create substantive liabilities which cannot be imposed as a matter of procedure. ¹¹ To characterize these statutes as procedural would be to invite forumshopping. Therefore we view the question as one of deciding whose law, as to the particular issue involved, has the more significant relationship to the transaction and the parties. ¹²

This process has been summarized by the American Law Institute's proposed official draft of the Restatement Second of Conflict of Laws, (1968), chapter 8, Contracts:

' § 188. Law Governing in Absence of Effective Parties' Choice. (1) The rights and duties of the parties with respect to an issue in contract are determined by the local law of the State which, as to that issue, has the most significant relationship to the transaction and the parties under the principles stated in § 6....