Simpson v. State Farm Mutual Automobile Insurance Co.

• Decision Date: 02 September 1970
• Docket Number: No. NA 69-C-34.,NA 69-C-34.
• Citation: 318 F. Supp. 1152
• Parties: Elizabeth SIMPSON, Pamela Simpson, Plaintiffs, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Southern District of Indiana

318 F. Supp. 1152

Elizabeth SIMPSON, Pamela Simpson, Plaintiffs, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant.

No. NA 69-C-34.

United States District Court, S. D. Indiana, New Albany Division.

September 2, 1970.

Schnatter & Gabhart, Jeffersonville, Ind., for plaintiffs.

Orbison, Rudy & O'Connor, New Albany, Ind., for defendant.

MEMORANDUM OF DECISION

DILLIN, District Judge.

This action has been submitted to the Court for findings and judgment upon the pleadings, admissions and stipulations of the parties. The Court, having considered the same, together with the briefs of the parties, now makes its findings of fact and conclusions of law in the form of this memorandum.

The case presents an important question relating to the construction of policies of automobile liability insurance as presently written in Indiana, as to which there is no Indiana authority. This Court is therefore required to attempt to predict the construction which the courts of Indiana would probably make if confronted with the same set of facts. Each side has filed vigorous briefs, supported by respectable authority, as is possible because there is a substantial split in the authorities with respect to the question involved.

That question is as follows: In light of the Indiana statute requiring each policy of automobile liability insurance to include a policy provision for the protection of persons insured thereunder who are legally entitled to recover damages for personal injuries from owners or operators of uninsured motor vehicles,¹ is it permissible for an insurance carrier to limit such clause in its policy so as to reduce or eliminate its liability if other similar insurance is available to such insured, or payments made pursuant to other coverage of the policy? This Court believes that the Indiana courts would hold the correct answer to be "No."

The facts of the case are that the plaintiff Pamela Simpson is a minor, residing in the home of her mother, Elizabeth Simpson, both citizens of Indiana. On or about December 30, 1967, Elizabeth Simpson was the owner of two automobiles and carried separate policies of automobile liability insurance as to each of them with the defendant State Farm Mutual Automobile Insurance Company (hereinafter "State Farm"), a corporation organized and having its principal place of business in the State of Illinois. The policies were each issued in Indiana. On such date Pamela Simpson was a passenger in an automobile other than the two owned by her mother, which automobile collided with one driven by one Malcolm W. Robertson, an allegedly uninsured motorist, as a result of which Pamela received personal injuries stipulated to be in excess of $30,000. Defendant has paid $6,000 for Pamela under the medical coverage provisions of her mother's policies.

Another insurance company, which afforded uninsured motorist coverage with respect to passengers in the vehicle in which Pamela was riding, has heretofore paid to her its full policy limit of $10,000 under such policy provision. The uninsured motorist coverage in each of State Farm's policies issued to Elizabeth Simpson is likewise $10,000, and Pamela, as an admitted insured under each of said policies, seeks a declaratory judgment to the effect that she is entitled to collect such sums from the defendant upon proof that the alleged negligence of Robertson was the proximate cause of her injuries. This Court has jurisdiction of the action. 28 U.S.C. §§ 1332(a), 1391(a), (c), 2201.

State Farm asserts the policy defense that, considering the other insurance available and paid to Pamela Simpson, it has no duty to pay her anything because of the language contained in the first grammatical paragraph of numbered paragraph 14 of Insuring Agreement III, which reads as follows:

"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."

It is true, as defendant contends, that said clause would constitute a complete defense to the action if valid, as the insured Pamela Simpson was injured while occupying an automobile not owned by the named insured, her mother, other insurance was available and paid to her, and all policies involved, including the other insurance, contained identical limits of $10,000 as to any one person. The clause is not ambiguous. Therefore, the principal question is as to whether paragraph 14 is valid in light of the statute.

State Farm asserts that the majority view favors its position that the clause is valid. However, neither analysis nor count of the decided cases supports this view.

Defendant states in its original brief that the leading case on the proposition appears to be Burcham v. Farmers Insurance Exchange, 1963, 255 Iowa 69, 121 N.W.2d 500. It is true that this is perhaps the earliest case holding that the "other insurance" clause should be effectuated as written, and has been cited as authority in other cases upon which defendant relies, such as Maryland Casualty Company v. Howe, 1965, 106 N.H. 422, 213 A.2d 420; Globe Indemnity Company v. Baker's Estate, 1964, 22 A.D.2d 658, 253 N.Y.S.2d 170, and others.

This Court does not disagree with the result reached in Burcham, as it agrees with the general proposition expressed therein that when policy provisions are clear, the contract entered into between the parties should be given effect as written. However, the case is completely lacking in authority in situations where, as in the case before this Court, a state statute is involved, for the reason that the Iowa uninsured motorist statute was not enacted by the legislature of that State until the year 1967, some four years after Burcham was decided. See Iowa Acts 1967, Chapter 374.

The one other case cited in Globe Indemnity Company v. Baker's Estate, supra, is Travelers Indemnity Co. of Hartford, Conn. v. Wells, 4 Cir., 1963, 316 F. 2d 770, which gave effect to an "other insurance" clause in a case of first impression purporting to apply the law of Virginia. Virginia, at the time, had a statute similar to the Indiana statute in question. This case lost all of its vitality when the Supreme Court of Virginia specifically disapproved it in Bryant v. State Farm Mutual Automobile Ins. Co., 1965, 205 Va. 897, 140 S.E.2d 817. The holding in Bryant, requiring payment in full on two separate policies of insurance containing an uninsured motorist clause, was that the "other insurance" clause, in undertaking to limit and qualify the statute conflicted with the plain terms of the statute and was therefore illegal and of no effect.

The underpinning of Maryland Casualty Company v. Howe, supra, has likewise been totally undermined. In addition to citing the Burcham case, which was not in point, it also cited Travelers Indemnity Co. of Hartford, Conn. v. Wells, supra, repudiated as just pointed out. Finally, it cited Chandler v. Government Employees Ins. Co., 5 Cir., 1965, 342 F.2d 420, which held the "excess insurance" clause to be enforceable under the law of Florida. This decision was likewise repudiated by the appropriate state court in Sellers v. United States Fidelity & Guaranty Company, Fla., 1966, 185 So.2d 689. Here again, the court held that there was no latitude in the statute for an insurer to limit its liability through such clause, and that the clause must be judicially rejected as in conflict with the statute.

Another case cited by the defendant is M. F. A. Mutual Ins. Co. v. Wallace, 1968, 245 Ark. 230, 431 S.W.2d 742, which cites as its authority Maryland Casualty Company v. Howe, supra, the weakness of which as precedent has just been demonstrated. Still another case relied upon by the defendant, that of Martin v. Christensen, 1969, 22 Utah 2d 415, 454 P.2d 294, cites as its sole authority the M.F.A. case.

The actual weight of authority favors the plaintiffs' position that an insured in a state having an uninsured motorist statute similar to the Indiana statute is entitled to payment in full, up to the policy limit, with respect to each policy under which coverage is afforded, and that "other insurance" clauses and similar clauses which purport to limit liability, such as clauses providing for a deduction as to amounts paid under medical payments provisions of the policy, are void as being in conflict with the statute. Meridian Mutual Insurance Company v. Siddons, Ky., 1970, 451 S. W.2d 831; Harleysville Mutual Casualty Company v. Blumling, 1968, 429 Pa. 389, 241 A.2d 112; Stephens v. Allied Mutual Insurance Company, 1968, 182 Neb. 562, 156 N.W.2d 133; Sparling v. Allstate Insurance Company, 1968, 249 Or. 471, 439 P.2d 616; Geyer v. Reserve Insurance Company, 1968, 8 Ariz.App. 464, 447 P.2d 556; State Farm Mutual Automobile Insurance Company v. Barnard, 1967, 115 Ga.App. 857, 156 S.E.2d 148; Moore v. Hartford Fire Ins. Company Group, 1967, 270 N.C. 532, 155 S.E.2d 128; Vernon v. Harleysville Mutual Casualty Company, 1964, 244 S.C. 152, 135 S.E.2d 841; Sellers v. United States Fidelity & Guaranty Company, supra; Bryant v. State Farm Mutual Automobile Ins. Co., supra.

The minority view is represented by M. F. A. Mutual Ins. Co. v. Wallace, supra; Martin v. Christensen, supra; Horr v. Detroit Auto. Inter-Insurance Exchange, 1967, 379 Mich. 562, 153 N. W.2d 655; LeBlanc v. Allstate Insurance Company, La.App., 1967, 194 So.2d 791; and Tindall v. Farmers Auto. Management Corp., 1967, 83 Ill.App.2d 165, 226 N.E.2d 397. Other cases cited by defendant are from jurisdictions lacking the all important statute. The...