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

• Decision Date: 26 March 1970
• Docket Number: No. 40--40236--III,40--40236--III
• Citation: 467 P.2d 189,2 Wn.App. 169
• Parties: , 46 A.L.R.3d 1013 STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, a foreign mutual insurance company, Appellant, v. Chester PHILLIPS and Clark Phillips, Respondents.
• Court: Washington Court of Appeals

Page 169

2 Wn.App. 169

467 P.2d 189, 46 A.L.R.3d 1013

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, a foreign mutual insurance company, Appellant, v. Chester PHILLIPS and Clark Phillips, Respondents.

No. 40--40236--III.

Court of Appeals of Washington, Division 3.

March 26, 1970.

Rehearing Denied May 4, 1970.

Review Denied May 29, 1970.

Robert A. Southwell, of Malott & Southwell, Spokane, for appellant.

Lawrence Monbleau, of Cashatt, Williams, Connelly & Rekofke, Spokane, for respondent Clark Phillips.

W. Walters Miller, of Miller & Sackmann, Ritzville, for respondent Chester Phillips.

EVANS, Chief Judge.

Appellant, State Farm Mutual, brought an action for declaratory judgment, claiming its policy did not cover an accident that occurred March 10, 1965 between respondents, Chester Phillips (insured) and Clark Phillips, his son. State Farm Mutual appeals from a judgment to the contrary.

Appellant claims 41 assignments of error. All are directed to the findings of fact and conclusions of law entered by the trial court, and to the refusal of the trial court to enter appellant's proposed findings of fact and conclusions of law. Appellant concedes, however, that all assignments of error relate to and ultimately narrow down to one principal question: At the time of the accident was the son Clark Phillips a member of the family of and residing in the same household as his father Chester Phillips, within the meaning of the following exclusion in the named insured's policy This insurance does not apply under:

(i) coverage A, to bodily injury to the insured or any member of the family of the insured residing in the same household as the insured; * * *.

The coverage under the insuring agreement provided:

COVERAGES A and B--

(A) Bodily Injury Liability

and (B) Property Damage Liability

(1) To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of (A) bodily injury sustained by other persons, and (B) property damage, caused by accident arising out of the ownership, maintenance or use, including loading or unloading, of the owned automobile; and to defend any suit against the insured alleging such bodily injury or property damage and seeking damages which are payable hereunder even if any of the allegations of the suit are groundless, false or fraudulent; but the company may make such investigation, negotiation and settlement of any claim or suit as it deems expedient.

There is no material dispute as to the facts. Respondent, Chester Phillips, is a life-long resident of Adams County. For the past 25 years or more he has operated a combination wheat farm and cattle ranch located just outside the city limits of Lind. Since 1945 these operations for the most part have required the full-time assistance of at least one hired hand on a year-round basis, who, as a condition of employment, lived on the premises.

The buildings on the premises consist of a house which Chester Phillips occupied with his wife, daughter, and son Clark. There is also a machine shed and a repair shop, but no bunkhouse or similar facility separate and apart from the house. The Phillips' home is the only place where quarters are available for occupancy by live-in hired help.

From 1946 to 1963 Chester Phillips employed a total of four hired hands. As a condition of their employment they were required to live on the premises and to occupy a room in the Phillips' home. This conformed to a long-standin general custom and practice prevailing in the Adams County area on farms and ranches where no bunkhouses or separate housing facilities are available. In such situations, hired hands are afforded room and board in their employers' homes, enjoying full and unrestricted use thereof to the same extent as members of their employers' families. All four hired hands employed by Chester Phillips during the period from 1946 to 1963 occupied a room in his home, took their meals at the same time and table as did the Phillips family, and enjoyed the same unrestricted use of the Phillips' home and its conveniences as did its permanent occupants. Laundry, ironing and such mending and the like as was necessary was attended to by Mrs. Phillips at no charge to her husband's hired help.

In 1961 respondent Clark Phillips graduated from high school. Following his graduation he was employed by his father on a full-time basis as a laborer on the farm. Clark was paid $10 per day. As additional compensation for his services he was furnished room and board in his father's home in the same manner as other employees.

From the beginning, Chester Phillips carried Clark as an employee on his payroll records, made the necessary deductions from his wages for social security and federal income tax, and carried an insurance policy covering injuries sustained by Clark and other employees in the scope of their employment. During his employment Clark was fully self-supporting and paid all expenses incidental to his own maintenance, including the medical expenses arising from injuries he sustained in the accident from which this action stems. He worked regular hours as fixed by his father, did such work as he was directed to do, and was otherwise treated in the same manner as other hired hands.

Clark had resided in his father's home all his life. It was his home and at no time in his life had he resided away from this home. He had never been married, nor had he been in the armed services. He received his mail at his father's postoffice box and had been doing this all his life. His legal residence for the purpose of selective service registration was the same as that of his father. He had free use of the family home and was not restricted to any part of the house; he took his meals with the family in the same manner as when he was going to high school; and he enjoyed the same use of the house as when he was in school. His mother was in the habit of washing and mending his clothes, just as she did when he was attending high school, and her attitude toward him as a son was no different than it was when he was in school. He was not excluded from any family gatherings, and was treated as a member of the Phillips' family the same as was his sister. His father would give fatherly advice to Clark, if he was asked. Such was the relationship between Chester Phillips and his son, Clark, when the former applied to appellant for an automobile liability insurance policy.

After issuance of the policy in question, and on March 10, 1965 while Chester Phillips was operating the vehicle described in appellant's policy, he collided with a motorcycle driven by his son Clark on a public street in the business area of Lind. Clark was severely injured. He was 23 years of age. Neither Chester Phillips nor the son Clark knew the other was in the area at the time. In fact, Chester Phillips was unaware it was Clark he had struck until after the collision.

Chester Phillips thereafter gave appellant notice of the accident. After investigation of the facts and circumstances, appellant by letter directed to Chester Phillips declined coverage, resting its denial on the basis that 'at the time of the accident your son, Clark Phillips, was a resident of your household and a member of your family.'

Two years later Clark Phillips commenced an action against his father in the Adams County Superior Court. Appellant, State Farm Mutual, thereupon commenced this action in the same court, pursuant to the provisions of RCW 7.24.010 Et seq., the Uniform Declaratory Judgment Act, seeking an adjudication that its policy did not afford coverage for the accident on March 10, 1965, and it had no obligation to defend any litigation arising from it, thus invoking the exclusionary effect of paragraph (i), Supra, of its policy.

The trial court entered findings of fact, including finding of fact XIV, which provided: 'At all times since said employment agreement was entered into the relationship between Chester Phillips and Clark Phillips has been that of an employer and employee, and not that of members of the same family residing in the same household.'

Thereafter, judgment was entered declaring that appellant's policy covered the accident, and appellant was obligated to defend the action commenced by Clark in Adams County Superior Court and pay all sums adjudged due and owing as damages arising from that accident, except as limited by other terms of the policy.

Appellant contends the uncontroverted facts establish as a matter of law that Clark was a member of the family of the insured, residing in the same household of the insured within the meaning of the policy provisions, and retained that same status after he was employed by his father on a full-time basis. Appellant argues creation of the relationship of employer-employee did not destroy the family relationship that existed during all of Clark's life; he was more than a mere farm employee; and the normal relationship of father and son still existed and Clark remained the natural object of his father's affections.

On the other hand, respondents took the position, and the trial court found, that the exclusionary clause relied on by appellant is ambiguous and inapplicable to an employee, whether or not related to appellant's insured, who, as a condition or requirement of his employment is obliged to become or remain a member of his employer's household. Respondent contends the word 'family' has no fixed or unalterable meaning; that it is a term connoting a variety of meanings and relationships, a circumstance that has led some courts to conclude, as did the trial court in this case, that the so-called family-exclusion clause was ambiguous. In support of this contention respondent cites State Farm Mut. Auto. Ins. Co. v. Thompson, 372 F.2d 256, 258 (9th Cir. 1967); Umbarger v. State Farm Mut. Auto. Ins. Co., 218 Iowa 203, 254 N.W. 87, 89 (1934); State Farm Mut. Auto. Ins. Co. v. Hanna, 277 Ala. 32, 166...