State Farm Fire & Cas. Co. v. Rossini

Decision Date11 November 1971
Docket NumberNo. 10494--PR,10494--PR
Citation490 P.2d 567,107 Ariz. 561
PartiesSTATE FARM FIRE AND CASUALTY COMPANY, Appellant and Cross-Appellee, v. Frank G. ROSSINI and Bertha Rossini, husband and wife, Appellees and Cross-Appellants.
CourtArizona Supreme Court

Chandler, Tullar, Udall & Richmond, by D. B. Udall, Tucson, for appellant and cross-appellee.

Somers & Arnold, by Jack T. Arnold, Tucson, for appellee and cross-appellant.

HAYS, Vice Chief Justice.

This cause is before us on a petition for review of a decision of the Court of Appeals, Division Two, which modified and affirmed a judgment entered by the Superior Court of Pima County. State Farm Fire and Casualty Company v. Frank G. Rossini and Bertha Rossini, his wife, 14 Ariz.App. 235, 482 P.2d 484 (1971). The opinion of the Court of Appeals is vacated.

The facts pertinent to the disposition of this appeal are as follows: On August 11, 1967, plaintiff-appellee, Frank G. Rossini (hereinafter referred to as Rossini) was severely injured while riding as a passenger in a vehicle owned and operated by his son, Frank L. Rossini, when it was involved in a collision with another vehicle operated by Darlene Evan Dixon (hereinafter referred to as Dixon). At the time of this accident, neither the son nor Dixon had liability insurance and both subsequently had their drivers' licenses revoked by the Motor Vehicle Division of the Arizona Highway Department (hereinafter referred to as Vehicle Division) pursuant to A.R.S. § 28--1142, because of their failure to carry such insurance. Rossini, however, was the named insured under a valid automobile liability insurance policy with defendant-appellant, State Farm Fire and Casualty Company (hereinafter referred to as State Farm) which included uninsured motorist coverage.

The uninsured motorist clause of the State Farm Policy, however, contained the following exclusionary provision:

'This insurance does not apply under:

* * *

* * *

(n) coverage U to bodily injury to an insured or care or loss of services recoverable by an insured, with respect to which such insured, his legal representative of any person entitled to payment under this coverage shall, without written consent of the company, make any settlement with or prosecute to judgment any action against any person or organization who may be legally liable therefor; * * *'

The revocation of the son's driving privileges by the Vehicle Division came at a time when the son was in financial trouble and in definite need of his license for purposes of employment. But, in order to restore these privileges, the son had to present to the Vehicle Division both proof of future financial responsibility and a signed release from liability from those involved in the accident. With these considerations in mind, therefore, the son: (1) procured the necessary automobile liability insurance; (2) obtained liability release forms from the Vehicle Division; and (3) contacted Dixon with an offer to exchange signed releases from both him and his father in return for her signed release of him. Dixon readily agreed to this exchange since she had previously approached Rossini for such a release and had been refused.

Thereafter, the son approached Rossini with a blank release form and asked him to sign it so that he, the son, could have his license restored and thereby alleviate his financial distress. Rossini, apparently without knowledge of the nature or content of the document presented, signed the release. No money changed hands. The son then proceeded to have the name of Darlene Evan Dixon inserted as the released party and the document notarized.

The signed and notarized release authored by Rossini appeared at the trial as follows:

'ARIZONA HIGHWAY DEPARTMENT MOTOR VEHICLE DIVISION

RELEASE OF LIABILITY

TO: MOTOR VEHICLE DIVISION

Financial Responsibility Service

2324 N. 20th Ave.

Phoenix, Arizona 85009

F. R. Case No. 8117060

Accident

Date

(I) (We) the undersigned, for good and valuable consideration, do hereby release

DARLENE EVAN DIXON

(Name of Party being released)

2309 North Ralph

(Complete Address)

of and from any and all claims and liability and/or on account of a motor vehicle accident occurring on or about

the 11 day of August 1967 in which the undersigned were involved

FRANK G. ROSSINI SR.

(Signature of party giving release)

933 W. Drexel Rd.

(Address)'

Subsequently, the son exchanged releases with Dixon pursuant to their agreement, submitted Dixon's release to the Vehicle Division along with proof of future automobile liability coverage, and regained his driver's license. Rossini and his wife eventually filed suit against Dixon and State Farm in the Superior Court of Pima County and asserted two counts: (1) against Dixon for damages incurred as the result of her alleged negligence in operating a motor vehicle which resulted in injury to Rossini, and (2) against State Farm for breach of contract, I.e., refusal to pay uninsured motorist coverage benefits under the policy issued by it to Rossini.

State Farm filed a responsive pleading to Rossini's second count and alleged, Inter alia: (1) that Rossini had executed a fair and binding release to Dixon without the knowledge or consent of the insurer and thereby destroyed the insurer's right of subrogation; (2) that the execution of this release was in violation of the provisions of the exclusionary clause in the uninsured motorist provision of the insurer's policy; and, therefore, (3) that the execution of this release barred any further claims of Rossini against State Farm.

Pursuant to stipulation of counsel, Count Two of the complaint with respect to...

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