State Farm Mutual Automobile Ins. Co. v. Thompson

• Decision Date: 24 January 1967
• Docket Number: No. 20178.,20178.
• Citation: 372 F.2d 256
• Parties: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellant, v. Shirley C. THOMPSON, Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

372 F.2d 256 (1967)

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellant, v. Shirley C. THOMPSON, Appellee.

No. 20178.

United States Court of Appeals Ninth Circuit.

January 24, 1967.

Kenneth S. Scoville, Leroy W. Hofmann, Phoenix, Ariz., for appellant.

Robert D. Myers, of Langerman, Begam & Lewis, Phoenix, Ariz., for appellee.

Before MADDEN, Judge of the Court of Claims, and HAMLEY and KOELSCH, Circuit Judges.

HAMLEY, Circuit Judge:

Shirley C. Thompson was injured on August 4, 1959, at Scottsdale, Arizona, while riding as a passenger in an automobile driven by Joel Bailleres. On March 13, 1962, she obtained an Arizona state court judgment against him for damages resulting from the accident. The award was $32,658.50, including costs. Mrs. Thompson then brought this suit against State Farm Mutual Automobile Insurance Company to recover, up to the policy limit, under a policy of automobile liability insurance issued by the company, in which policy Joel Bailleres was an "additional insured" at the time of the accident.

The policy of insurance was in the amount of $10,000 for each person and $20,000 for each accident, together with court costs and interest. Mrs. Thompson sued State Farm Mutual for $10,158.50, plus interest at the rate of six per cent per annum on $32,500 from March 13, 1962.

In its answer, the company asserted several defenses, only two of which are material here. One of these defenses was based on a provision of the policy excluding liability for bodily injury to the insured or any "member of the family of the insured residing in the same household as the insured." Defendant alleged that, at the time of the accident, Mrs. Thompson was a member of the family of Joel Bailleres residing in the same household as Bailleres. The second defense was that Joel Bailleres failed to fulfill a condition of the policy requiring him to cooperate with the company in any damage suit brought against him arising out of an automobile accident covered by the policy.

Plaintiff moved for summary judgment. In her memorandum filed in support of this motion plaintiff countered the first defense referred to above by submitting affidavits and a document which, plaintiff asserted, incontrovertibly established that she was not a member of Joel Bailleres' family at the time of the accident. As for the non-cooperation defense, plaintiff relied upon an Arizona statute, A.R.S. § 28-1170, subsec. F as eliminating such a defense in that state. Defendant filed a cross motion for summary judgment.

The district court granted plaintiff's motion for summary judgment and entered judgment for plaintiff in the sum of $5,000 plus interest on that sum from March 13, 1962.¹ Defendant alone appeals.

The granting of plaintiff's motion for summary judgment, and the entry of judgment in her favor, represents a district court holding that, under the undisputed facts, Shirley C. Thompson was not a member of the family of Joel Bailleres residing in the same household as Bailleres on August 4, 1959, when the accident occurred. Defendant contends that the district court erred in so ruling.

The essential undisputed facts, substantially as set out in appellant's brief, are as follows: prior to August 4, 1959, Mrs. Thompson resided in an apartment in Scottsdale, Arizona. She was then married to, but separated from, John F. Thompson. However, she then erroneously believed that her marriage to Thompson had been finally terminated by a final divorce and that she was under no legal disability which would prevent her entering into another lawful marriage.

Over the weekend of August 1 and 2, 1959, Mrs. Thompson and Joel Bailleres traveled together to Nogales, Mexico, with the intent and purpose of getting married to each other. However, she became intoxicated on the trip and does not remember the marriage ceremony. The two registered at a hotel in Nogales as husband and wife. While so registered, they resided in the same room at the hotel and engaged in sexual relations.

They returned together to Scottsdale, Arizona, and Bailleres took up residence in the same household as Mrs. Thompson. They resided together in the same apartment from then until August 4, 1959, living as husband and wife. They prepared their meals together and ate together. Mrs. Thompson told some of her friends that she and Bailleres were married.

On August 4, 1959, after the couple had dined together in their apartment, they went next door to a friend's house to watch television. Around 10:00 or 10:30 p. m. they went to the Wagon Wheel bar. Later that evening the accident occurred.

After the accident, Mrs. Thompson was hospitalized. She told the nurses that she was married to Bailleres. When she was ready to leave the hospital, Bailleres picked her up and took her to their apartment where they continued to live together as husband and wife for another month and a half. Bailleres then told Mrs. Thompson that they were not really married in Mexico, and they separated.

Under the facts there can be no question but that, at the time of the accident, Mrs. Thompson was residing in the same household as the insured, within the meaning of the exclusion clause. But the exclusion does not apply unless, at the same time, she was a member of the family of the insured. Contending that she was, and that the district court erred in holding otherwise, the insurance company relies primarily on these circumstances: The two, although not legally married, were living together as husband and wife; they took their meals together, had sexual relations, and Mrs. Thompson introduced Bailleres to others as her husband.

While, in a sense, the facts show the existence of a "family" arrangement of sorts, the question remains whether it was enough to constitute Mrs. Thompson a member of Bailleres' "family," within the meaning of the exclusion clause. The term "family," which is not defined in the policy, is at best imprecise and having in view the possible meanings which may be given to it, may fairly be said to be ambiguous. Arizona follows the universal rule that where an insurance policy is ambiguous or susceptible of two constructions, that construction will be given it which is most favorable to the insured.²

The obvious purpose of a "family" exclusion clause is to exempt the insurer from liability to those persons to whom the insured, on account of close family ties, would be apt to be partial in case of injury. Tomlyanovich v. Tomlyanovich, 239 Minn. 250, 58 N.W.2d 855, 862, 864, 50 A.L.R.2d 108. As stated in the opinion in that case, the words used should be given that meaning which they ordinarily would have in order to effectuate the purpose of the exclusion.

Since this is a diversity suit, the question of whether, within the meaning of the policy, Mrs. Thompson was a member of Bailleres' family is to be determined in accordance with Arizona law. However, there are no Arizona state court decisions construing such an exclusion clause. The parties have therefore properly called our attention to decisions rendered elsewhere. But while several of them involve the same exclusion clause, their facts are so at variance with those of our case that we have not found these decisions particularly helpful.

The insurance company relies primarily on State Farm Mutual Automobile Insurance Co. v. James, 4 Cir., 80 F.2d 802, and Hunter v. Southern Farm Bureau Casualty Ins. Co., 241 S.C. 446, 129 S.E. 2d 59.

The James case is of no assistance because the exclusion clause there in question did not include the word "family." Instead, it read: "* * * other than the assured or persons in the same household as the assured or those in the service or employment of the assured."

The Hunter case involved an exclusion clause identical with that contained in the policy before us. In Hunter, while the insured share cropper and the person who was killed in the accident had never been married,³ they had been living together as man and wife continuously for about six years prior to the accident. During this time they had three children. In holding that the exclusion applied, the court said, 129 S.E.2d at page 61:

"In the light of the clear purposes intended to be accomplished by the exclusion clause in question, we think that the term `family,\' as here used, includes `such persons as habitually reside under one roof and form one domestic circle.\' Johnson v. State Farm Mutual Automobile Ins. Co., 8 Cir., 252 F.2d 158. If the injured person is a member of such family circle, liability of the insurer is excluded.

"The moral or legal standards violated by the relationship of the insured and the intestate are not involved. The intestate and the insured lived under the same roof as man and wife. Children were born of this relationship. The insured testified that they had lived together in the same home as man and wife for a period of about six years, giving to the relationship a permanent domestic character. The intestate was clearly a member of the insured\'s domestic circle."

In Hunter, the insured and the woman who was...