Shoffner v. State Farm Mut. Auto. Ins. Co.

• Decision Date: 07 May 1972
• Citation: 494 S.W.2d 756
• Parties: Nila E. SHOFFNER and P. V. Shoffner v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY.
• Court: Tennessee Supreme Court

Page 756

494 S.W.2d 756

Nila E. SHOFFNER and P. V. Shoffner v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY.

Supreme Court of Tennessee.

May 7, 1972.

Joe Guess, Knoxville, for plaintiffs-appellees.

Paul E. Dunn, Ray Lee Jenkins, Knoxville, for defendant-appellant.

OPINION

McCANLESS, Justice.

The plaintiffs instituted suit in the Circuit Court of Knox County for a breach of an insurance contract. From an adverse decision in the trial court, the defendant, State Farm Mutual Automobile Insurance Company, appeals to this Court directly since all facts were stipulated below.

On February 26, 1969, the plaintiff, Nila E. Shoffner, was riding as a guest passenger in an automobile owned and operated by Marie Ousley, which was involved in a three vehicle accident in Union County, Tennessee. The accident involved the Ousley vehicle; a vehicle owned and operated by James Samuel Lewis, an uninsured motorist; and a vehicle owned and operated by Gulf Oil Corporation.

On the date of the accident, the Ousley vehicle was insured by a policy with Southern Fire and Casualty Company providing Uninsured Motorists coverage with limits of $10,000/$20,000. The plaintiff, Nila E. Shoffner, had a policy of insurance with the defendant which provided Uninsured Motorists coverage with like limits.

The plaintiff filed suit in the United States District Court against James Samuel Lewis, and by amendment, the Gulf Oil Corporation. The District Court dismissed the action as to the Gulf Oil Corporation, but awarded a judgment against Lewis in the amount of $18,700.00: $6,700.00 to P. V. Shoffner for medical expenses and loss of services and consortium; and $12,000.00 to Nila E. Shoffner for pain and suffering.

Southern Fire and Casualty Company subsequently paid its full limits of $20,000.00 to Mrs. Ousley and her passengers; Mrs. Shoffner's share being $5,137.00. State Farm paid $4,819.64 to the Shoffners under the medical payments portion of their policy, but recovered this entire amount, less attorney fees, from the $5,137.00 settlement as subrogation. The Shoffners brought the present action against State Farm When it refused to pay anything under the Uninsured Motorists provision of its policy. The trial court entered judgment for the plaintiffs in the amount of $4,863.00, being the difference between $10,000.00 and the settlement of $5,137.00.

The defendant assigns as error that the trial judge erred in failing to give full validity to the defendant's 'other insurance clause', which provides:

'Other Insurance. With respect to bodily injury to an insured while occupying an automobile not owned by a named insured under this coverage, 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 coverage exceeds the sum of the applicable limits of liability of all such other insurance.'

Defendant averred that the above clause was validated by T.C.A. § 56--1152, which provides:

' § 56--1152. Minimum policy limits not increased. Nothing contained in §§ 56--1148--56--1153 shall be construed as requiring the forms of coverage provided pursuant to §§ 56--1148--56--1153, whether alone or in combination with similar overage afforded under other automobile liability policies, to afford limits in excess of those that would be afforded had the insured thereunder been involved in an accident with a motorist who was insured under a policy of liability insurance with the minimum limits described in § 59--1206. Such forms of coverage may include such terms, exclusions, limitations, conditions, and offsets, which are designed to avoid duplication of insurance and other benefits.'

Tennessee Code Annotated § 56--1148, Automobile Liability Insurance--Uninsured Motorist, provides:

'No automobile liability insurance, covering liability arising out of the ownership, maintenance, or use of any motor vehicle, shall be delivered or issued for delivery in this state with respect to any motor vehicle registered or principally garaged in this state unless coverage is provided therein or supplemental thereto, in not less than limits for bodily injury or death described in Sec. 59--1206, subject to provisions filed with and approved by the insurance commissioner, for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles because of bodily injury, sickness or disease, including death, resulting therefrom; provided, however, that the coverage required under this section shall not be applicable where any insured named in the policy shall reject the coverage; provided further that, unless the named insured requests such coverage in writing, the coverage need not be provided in or supplemental to, a renewal policy where the named insured had rejected the coverage in connection with a policy previously issued to him by the same insurer.'

Out uninsured motorists statute was enacted in response to the growing public concern over the increasing problem arising from property and personal injury damage inflicted by uninsured and financially irresponsible motorists. Its purpose is to provide, within fixed limits, some recompense to innocent persons who receive bodily injury or property damage through the conduct of an uninsured motorist who cannot respond in damages.

Litigation in other jurisdictions has resulted in divergent trends. Some courts have stated that the design and purpose of uninsured motorists statutes are to provide protection only up to the minimum statutory limits for bodily injuries, and not to provide the insured with greater insurance protection than would have been available had he been injured by an insured motorist. Such reasoning has led to the result that 'other insurance' and similar provisions are held to be valid where they do not reduce coverage below the statutory minimum. Miller v. Allstate Ins. Co., 66 Wash.2d 871, 405 P.2d 712 (1965); Russell v. Paulson, 18 Utah 2d 157, 417 P.2d 658 (1966); LeBlanc v. Allstate Ins. Co. (La.App.1966) 194 So.2d 791; Globe Indemnity Co. v. Baker's Estate, 22 A.D.2d 658, 253 N.Y.S.2d 170 (1964). Other courts hold that 'other insurance' provisions, whether in the form of 'pro-rata', 'excess insurance', 'excess-escape', or other similar clauses are invalid when contained in uninsured motorist policies on the ground that this type of provision is contrary to the policy behind such compulsory statutes. Sellers v. United States Fidelity and Guaranty Co., 185 So.2d 689 (Fla.1966); State Farm Mutual Auto. Ins. Co. v. Barnard, 115 Ga.App. 857, 156 S.E.2d 148 (1967); Moore v. Hartford Fire Ins. Co. Group, 270 N.C. 532, 155 S.E.2d 178 (1967); Bryant v. State Farm Mutual Auto. Ins. Co., 205 Va. 897, 140 S.E.2d 817 (1965).

The theory on which the latter group of decisions appears to be based is that the courts will not permit an insurer to avoid its statutorily imposed liability by its insertion into the policy of a limitation clause which restricts the insured from coverage for which he had paid the premiums. Safeco Ins. Co. of America v. Jones, 286 Ala. 606, 243 So.2d 736 (1970). These courts insist that a compulsory motor vehicle insurance act is remedial in nature and should be liberally construed to effect the beneficial purpose intended by its enactment. Moore v. Hartford Fire Ins. Co. Group, supra. Further, in the cases cited above, great emphasis is placed upon the fact that their statutes in no way limit the amount of recovery.

In Geyer v. Reserve Insurance Company, 8 Ariz.App. 464, 447 P.2d 556, Sellers was followed and later, in Transportation Insurance Company v. Wade, 11 Ariz.App. 14, 461 P.2d 190 (1970), the court said:

'The Transportation Insurance...