St. Paul Mercury Ins. Co. v. Andrews

• Decision Date: 01 July 1982
• Docket Number: No. 10151,10151
• Parties: ST. PAUL MERCURY INSURANCE COMPANY, a foreign insurance company, Plaintiff and Appellant, v. Conrad W. ANDREWS, Jr., and Eileen Andrews, Defendants and Appellees. Civ.
• Court: North Dakota Supreme Court

Page 483

321 N.W.2d 483

29 A.L.R.4th 1

ST. PAUL MERCURY INSURANCE COMPANY, a foreign insurance company, Plaintiff and Appellant, v. Conrad W. ANDREWS, Jr., and Eileen Andrews, Defendants and Appellees.

Civ. No. 10151.

Supreme Court of North Dakota.

July 1, 1982.

Zuger & Bucklin, Bismarck, for plaintiff and appellant; argued by Thomas O. Smith, Bismarck.

Dosland, Dosland & Nordhougen, Moorhead, Minn., for defendants and appellees; argued by Duane A. Lillehaug, Moorhead, Minn.

PEDERSON, Justice.

Is "stacking" prohibited under the mandatory uninsured motorist statute in North Dakota? The trial court said it is not and we agree.

Is "stacking" of basic no-fault benefits prohibited under the North Dakota Auto Accident Reparations Act? The trial court said it is not. We do not agree.

Are provisions in an insurance policy which clearly prohibit "stacking" of uninsured motorist coverage enforceable in this state? We conclude that even though insurance policies are contracts of adhesion and the benefit of all doubts is given to the insured, the policy here leaves no doubt.

The judgment is reversed.

In 1971 the Legislature adopted "Mandatory Uninsured Motorist Coverage" (Ch. 279, S.L.1971--see Sec. 26-02-42, NDCC). This statutory provision prohibited the issuance of any motor vehicle liability insurance policy unless it provided the insured with at least $10,000 personal injury coverage for injuries caused by an uninsured motorist. (The amount of coverage which is governed by Sec. 39-16.1-11, NDCC, has subsequently been raised to $25,000.) Although Sec. 26-02-42, NDCC, required that no liability policy could be issued without uninsured motorist coverage, there was, at that time, no mandatory requirement for liability insurance. This changed in 1975, however, when the Legislature made it compulsory that liability coverage be in effect before any vehicle be driven in this state (Ch. 340, S.L.1975--see Sec. 39-08-20, NDCC).

Also, in 1975 (Ch. 265, S.L.1975--see Ch. 26-41, NDCC), the Legislature enacted the North Dakota version of mandatory no-fault insurance. One of its provisions (Sec. 26-41-07, NDCC) made "basic no-fault benefits" payable to the owner of the motor vehicle or to any relative residing in the same household (Sec. 26-41-03(14), NDCC).

In 1976, St. Paul issued an insurance policy to Conrad Andrews covering his 1976 Honda Hatchback. Andrews paid a premium of $1.00 for uninsured motorist coverage and $26.00 for basic no-fault benefits. In June 1979, St. Paul amended the policy to cover a 1970 Chevrolet Camaro. For this vehicle, Andrews paid a premium of $.90 for uninsured motorist coverage and $24.00 for basic no-fault benefits. His premium for basic no-fault benefits was reduced by $14.00 for the Honda Hatchback. In July 1979 St. Paul again amended the policy to cover a 1979 Honda station wagon. For this vehicle, Andrews paid a premium of $.80 for uninsured motorist coverage and $9.00 for basic no-fault benefits. Because Andrews' daughter, Eileen, was identified as an occasional operator of the 1976 Honda Hatchback, the premium for basic no-fault benefits for that car was increased by $10.00.

The policy, in plain words, limited St. Paul's liability under the uninsured motorist coverage "regardless of the number of covered persons, claims made, vehicles or premiums ... [up to $25,000]" and, under the basic no-fault coverage "regardless of the number of persons insured, policies ..., claims made or insured motor vehicles to which this coverage applies ... [up to $15,000]."

On July 15, 1979, Eileen was injured in a one-car accident. She was a passenger in a car owned by Randy Johnson and driven by Dale A. Anderson. The car involved in the accident was an uninsured motor vehicle. There was also no insurance applicable to Randy Johnson nor to Dale E. Anderson. Eileen's injuries far exceed the total of the benefits payable, even if coverage is "stacked." The facts in this case are undisputed.

Following the accident, Andrews submitted a claim to St. Paul seeking compensation for her injuries. St. Paul contended that "stacking" was not permitted in North Dakota, and subsequently paid Andrews $15,000 in basic no-fault benefits and $25,000 in uninsured motorist benefits. It is conceded that the benefits in these amounts would have been payable if only one of the Andrews' vehicles had been covered and only one premium paid.

This suit was then commenced by St. Paul, seeking a declaratory judgment to determine the extent of its liability. St. Paul argued that it had complied with the statutory provisions in North Dakota, as well as the terms and conditions of the policy, when it made payments of $25,000 of uninsured motorist benefits and $15,000 of basic no-fault benefits. Andrews argues that Eileen should be compensated also under the remaining two coverages. Andrews contends that Eileen should be able to "stack" the additional two coverages up to the extent of her injuries.

The district court agreed with Andrews and ordered St. Paul to pay an additional $30,000 of basic no-fault benefits and an additional $50,000 of uninsured motorist benefits. St. Paul appealed from the judgment and we reverse.

The question of whether or not "stacking" is prohibited under any North Dakota law is one of first impression in this court, albeit we did indicate approval of "stacking" in an obiter statement in St. Alexius Hospital v. Eckert, 284 N.W.2d 441 (N.D.1979). The subject was also peripherally raised but not analyzed by the federal court in Hughes v. State Farm Mut. Auto. Ins. Co., 604 F.2d 573, 580 (8th Cir. 1979).

"When the wording of a statute is clear and free of all ambiguity, the letter of it is not to be disregarded under the pretext of pursuing its spirit." Section 1-02-05, NDCC. If the statute is ambiguous, we are authorized to consider all pertinent, extrinsic evidence of legislative intent. See Morton County v. Henke, 308 N.W.2d 372 (N.D.1981). Pertinent matters to be considered include:

"1. The object sought to be attained.

"2. The circumstances under which the statute was enacted.

"3. The legislative history.

"4. The common law or former statutory provisions, including laws upon the same or similar subjects.

"5. The consequences of a particular construction.

"6. The administrative construction of the statute.

"7. The preamble." See Sec. 1-02-39, NDCC.

We will first examine the 1971 statute requiring that every motor vehicle liability policy include uninsured motorist coverage. It is clearly stated therein that no policy shall be delivered or issued for delivery in this state "unless coverage is provided therein or supplemental thereto in amounts not less than that set forth in section 39-16.1-11 ...." Section 26-02-42, NDCC. That language is not patently ambiguous and no extrinsic evidence should be necessary to lead to the conclusion that "stacking" is not prohibited thereby.

Assuming, however, that insurance industry custom, other insurance law, or attending circumstances disclose a latent ambiguity, we examine the statute in the light of the canons set forth in Sec. 1-02-39.

Neither the stated purpose nor the legislative history are revealing. The circumstances under which the statute was enacted were not described for us. We know that this is not common law nor a uniform state law; however, we are told that nearly all of the states had enacted similar statutes prior to 1971. There is a presumption that when we adopt a statute from another jurisdiction, we adopt the contemporaneous construction of its provisions by the courts of that jurisdiction. See Federal Land Bank of St. Paul v. State, 274 N.W.2d 580, 582 (N.D.1979).

The courts of a number of the states that had enacted mandatory uninsured motorist laws, in words remarkably similar, had, prior to 1971, construed the statute to either permit or prohibit "stacking." A few examples will illustrate the necessity to abolish the presumption referred to in Federal Land Bank of St. Paul v. State, supra, insofar as this case is concerned.

In a case sometimes described as the first to consider "stacking" of uninsured motorist coverage, the Supreme Court of Iowa in effect prohibited "stacking." Burcham v. Farmers Insurance Exchange, 255 Iowa 69, 121 N.W.2d 500 (1963). Our research leaves it unclear whether the Iowa court was interpreting the statute alone or a "positive policy limitation." There is uncertainty, also, whether or not the "stacking" prohibited was "double recovery," as distinguished from the claim of Eileen Andrews.

Similar results were reached by the Court of Appeals of California in Allstate Insurance Company v. Schmitka, 12 Cal.App.3d 59, 90 Cal.Rptr. 399 (1970), in construing the statute, case law, and the policy terms. Likewise, the Court of Appeals of Louisiana barred "stacking" in its interpretation of the statute and interpretations by administrators. LeBlanc v. Allstate Insurance Company, 194 So.2d 791 (La.App.1967).

On the other hand, opposite conclusions had been reached, also prior to 1971, by the courts of other states, e.g., Safeco Insurance Co. of America v. Jones, 286 Ala. 606, 243 So.2d 736 (1970). An inconclusive but interesting analysis of the various rulings was published in 1969--Al Widiss, "A Guide To Uninsured Motorist Coverage", The W. H. Anderson Company, Cincinnati.

We noted in State v. Wells, 276 N.W.2d 679, 691 (N.D.1979), cert. denied, 442 U.S. 932, 99 S.Ct. 2865, 61 L.Ed.2d 300, that we also look to subsequent interpretations of the courts of other jurisdictions that have similar laws, not that they are controlling but, perhaps, persuasive. The most obvious result of our research of post-1971 decisions is--the "bright line" has not appeared--the reasoning is as confusing as ever. A contributing factor, of course, is the addition of the companion question of "stacking" of basic no-fault benefits under statutes with significantly different language. Until we dispose of "stacking" under our...