State Farm Mut. Auto. Ins. Co. v. Bafus, 40045

• Decision Date: 05 March 1970
• Docket Number: No. 40045,40045
• Parties: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY and Aetna Casualty and Surety Company, Respondents, v. Karen Montgomery BAFUS, Appellant.
• Court: Washington Supreme Court

Page 720

77 Wn.2d 720

466 P.2d 159

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY and Aetna Casualty and Surety Company, Respondents, v. Karen Montgomery BAFUS, Appellant.

No. 40045.

Supreme Court of Washington, En Banc.

March 5, 1970.

MacGillivray, Jones, Clarke & Schiffner, Spokane, for appellant.

Turner, Stoeve & Layman, Spokane, for respondents.

HALE, Judge.

Defendant qualifies for recovery under the uninsured motorist clause of two insurance policies. The question is whether the policy limits may be stacked or whether recovery is limited to the greater of the two.

Karen Bafus, then Karen Montgomery, 19 years old and unmarried, lived with her parents in Spokane. July 25, 1965, she was riding as a passenger in an automobile driven by one Robert Ellenwood near the town of Polson in Lake County, Montana. The driver stopped the car and Karen was injured as she alighted when her car was struck by a car driven by Richard Temanson. Everyone agrees that Richard Temanson was an uninsured motorist within the meaning of the two insurance policies.

The Montgomerys and Karen, as a member of their household, at the time were covered by two policies of automobile casualty insurance, one issued by the plaintiff, State Farm Mutual, and the other by plaintiff Aetna Casualty and Surety Company. Both policies had an uninsured motorist clause affording protection to Karen, it is agreed, against personal injuries caused by uninsured motorists.

Aetna's uninsured motorist clause had a $20,000 limit and State Farm's a $10,000 limit, each expressed in nearly identical language and of the same legal effect, the Aetna clause reading:

AETNA CASUALTY will pay all sums which the Insured or his legal representative shall be legally entitled to recover as damages from the owner or operator of an uninsured highway vehicle because of bodily injury sustained by the Insured, caused by accident and arising out of the ownership, maintenance or use of such uninsured highway vehicle; provided, for the purposes of this coverage, determination as to whether the Insured or such representative is legally entitled to recover such damages, and if so the amount thereof, shall be made by agreement between the Insured or such representative and Aetna Casualty or, if they fail to agree, by arbitration.

Except for the lower $10,000 limit, State Farm's uninsured motorist protection gave the Montgomerys the same coverage as Aetna, each policy insuring to the extent that the insured would be 'legally entitled to recover' from the owner or operator of an uninsured automobile for bodily injuries.

Both policies, using nearly the same language and of identical legal effect, had excess insurance clauses limiting the insurer's liability to the extent that the respective policy exceeded in amount any other policy under which the insureds might recover, Aetna's clause reading:

With respect to bodily injury to an Insured while occupying an automobile not owned by the named Insured, the insurance under the Uninsured Motorists Coverage shall apply only as excess insurance over any other similar insurance available to such Insured and applicable to such automobile as primary insurance, and this insurance shall then apply only in the amount by which the limit of liability for this coverage exceeds the applicable limit of liability of such other insurance.

Each policy also contained an arbitration clause enabling either the insured or the insurer to demand arbitration in case of disagreement either as to the right to recovery or the amount of damages and declaring that when accomplished the arbitration should be deemed binding and final.

Karen Bafus commenced an action on or about October 15, 1965, in the United States District Court for the District of Montana against State Farm Mutual and Aetna alleging the numbers and terms of the companies' respective policies and thus giving each company notice of her claim upon the other. The federal court dismissed this action August 5, 1966, for want of citizenship diversity. Then, August 22, 1966, giving each insurance company adequate notice, Mrs. Bafus brought an action for personal injuries in the Fourth Judicial District Court for Montana against Robert Ellenwood and Richard Temanson. September 27, 1966, State Farm Mutual notified Mrs. Bafus in writing that it demanded arbitration; Aetna orally requested arbitration December 20, 1966; and Mrs. Bafus acceded to arbitration under the Aetna policy a month later, in January, 1967. Thus, both insurance companies made timely demand for and Mrs. Bafus agreed to arbitration with both of them.

The main dispute arises now from the fact that defendant Bafus insisted on two separate arbitrations--one with each insurance company. She requested and Aetna agreed that the American Arbitration Association arbitrate her rights under the uninsured motorist provision of the Aetna policy. Aetna and Bafus then proceeded to...