Travelers Indemnity Company v. Wells

• Decision Date: 10 October 1962
• Docket Number: Civ. A. No. 482.
• Citation: 209 F. Supp. 784
• Parties: The TRAVELERS INDEMNITY COMPANY, Plaintiff, v. Mildred Yancey WELLS, Executrix of the Estate of Willie Wells, Deceased, and Mildred Yancey Wells, Defendants.
• Court: U.S. District Court — Western District of Virginia

209 F. Supp. 784

The TRAVELERS INDEMNITY COMPANY, Plaintiff, v.Mildred Yancey WELLS, Executrix of the Estate of Willie Wells, Deceased, and Mildred Yancey Wells, Defendants.

Civ. A. No. 482.

United States District Court W. D. Virginia, Danville Division.

October 10, 1962.

Edwin B. Meade of Meade, Tate & Meade, Danville, Va., for plaintiff.

Don P. Bagwell, of Tuck, Bagwell, Dillard & Mapp, South Boston, Va., Fred B. Gentry of Gentry, Locke & Rakes, Roanoke, Va., for defendants.

DALTON, Chief Judge.

This is a declaratory judgment action filed by The Travelers Indemnity Company to determine whether there is any liability on it by reason of a public liability insurance policy, containing the uninsured motorist endorsement required by Virginia law, issued to Willie Wells Garage on March 13, 1960.The facts of the case, unlike the point of law they raise, are very clear and almost entirely undisputed:

On July 24, 1960, a 1956 Buick, licensed in the State of Virginia and owned and operated by Floyd Lee Smith, was struck by a 1959 Chevrolet owned and operated by John George Stahl on a Delaware highway.The collision was due solely to the negligence of Stahl, and it has since been determined that he was uninsured.Riding in the car with Mr. Smith, the driver, at the time of the accident, were his wife, Frances Wells Smith, their two children, Wanda Lee Smith and Sidney Wells Smith; Joseph V. Price and Esther Wells Price; and the two insureds under Travelers' policy, Willie Wells and Mildred Yancey Wells.Willie Wells and Sidney Wells Smith were killed, and the remaining occupants of the car suffered extensive personal injuries.

The Smiths, under their uninsured motorist endorsement asserted claims against and collected from Fidelity and Casualty the full $30,000.00 allowed by Fidelity's policy, and it was conceded that the claims of the Wellses are in an amount in excess of $30,000.00.The Smith payment came about as follows:

Floyd Lee Smith was insured by the Fidelity and Casualty Company of New York under an uninsured motorist endorsement identical to the one in Travelers' policy.These endorsements, entitled Family Protection Coverage Endorsements, are prescribed as to form by the State Corporation Commission under authority of Section 38.1-382, Code of Virginia(1950), as amended, and are required by law to be included in automobile liability policies issued in this state.

Section 38.1-381(c), Code of Virginia(1950), as amended, defines an insured as:

"* * * the named insured and, while resident of the same household, the spouse of any such named insured, and relatives of either, while in a motor vehicle or otherwise, and any person who uses, with the consent, express or implied, of the named insured, the motor vehicle to which the policy applies and a guest in such motor vehicle to which the policy applies or the personal representative of any of the above."(Emphasis added)

Under this statutory definition all the passengers in the Smith car were insureds under Fidelity and Casualty Company's endorsement, while Willie Wells and Mildred Yancey Wells were also insureds under Travelers' endorsement.Minimum liability under each endorsement is fixed by statute at $15,000.00 for injuries or death to one person, $30,000.00 for injuries or death to more than one person, and $5,000.00 for property damage; and as a practical matter all endorsements issued in Virginia provide the minimum coverage and no more, since the State Corporation Commission has approved only one form that is standard in all respects, including amount.The endorsements contain "Other Insurance" clauses that have also been approved and standardized by the State Corporation Commission.Those clauses read as follows:

"6.Other Insurance.With respect to bodily injury to an insured while occupying an automobile not owned by the named insured under this endorsement, the insurance hereunder shall apply only as excess insurance over any other similar insurance available to such occupant, and this insurance shall then apply only in the amount by which the applicable limit of liability of this endorsement exceeds the sum of the applicable limits of liability of all such other insurance."(Emphasis added.)

Note: This first clause is the one which is relevant here.

"With respect to bodily injury to an insured while occupying or through being struck by an uninsured automobile, if such insured is a named insured under other similar insurance available to him, then the damages shall be deemed not to exceed the higher of the applicable limits of liability of this insurance and such other insurance, and the company shall not be liable under this endorsement for a greater proportion of the applicable limit of liability of this endorsement than such limit bears to the sum of the applicable limits of liability of this insurance and such other insurance.

"With respect to bodily injury to an insured and subject to the foregoing paragraphs, if the insured has other similar insurance available to him against a loss covered by this endorsement, the company shall not be liable under this endorsement for a greater proportion of such loss than the applicable limit of liability hereunder bears to the total applicable limits of liability of all valid and collectible insurance against such loss.

"With respect to property damage, the insurance afforded under this endorsement shall be excess insurance over any other valid and collectible insurance against such property damage. * * *"

The Fidelity and Casualty Company of New York, once it had determined that John George Stahl was an uninsured motorist, recognized its liability of $30,000.00 as a result of the accident but was hesitant to pay the amount to any of its insureds until judgments had been obtained against Stahl, since the Virginia statute gives a covering insurance company subrogation rights against the uninsured motorist, and Fidelity and Casualty wished to preserve these rights (Section 38.1-381(f) of the Code of Virginia(1950), as amended.Accordingly, judgments were obtained on February 4, 1961, against Stahl in the amount of $15,000.00 each in favor of Floyd Lee Smith and Floyd Lee Smith, Administrator of the estate of Sidney Wells Smith, deceased.The Fidelity and Casualty Company of New York promptly paid the $30,000.00 in exchange for a release by all occupants of the car.In signing this release, Mildred Yancey Wells, in her own right, and as Executrix of the estate of Willie Wells, expressly reserved any rights she might have against Travelers Indemnity Company resulting from the accident.The proceeds from the Fidelity and Casualty Company uninsured motorist endorsement were completely exhausted by payments to the Smiths, but the Wellses received nothing thereunder.

Although a diligent search has been made to ascertain whether there are any reported court decisions on the point at issue, none have been found.It is unfortunate that the Supreme Court of Appeals of Virginia has not yet had an opportunity to consider and pass upon the Uninsured Motorist Law as it relates to our problem, but not having done so, it is our responsibility here to reach a conclusion — not from precedent, but from applicable statutes and policy provisions, construing policy provisions against the insurer and resolving conflicts between policy provisions and statutory law in favor of the statutes.

Travelers argues that the "Other Insurance" provisions (above quoted) are valid and operative and that the meaning of "available" in clause one is "available at the time of the accident," and does not mean some time subsequent thereto.Therefore, Travelers continues, by the terms of clause (1) of the "Other Insurance" provisions, Travelers is, by the words of the insurance contract, relieved of any and all liability by reason of Fidelity and Casualty's $30,000.00 payment to the Smiths.

The Wellses, on the other hand, contend that the "Other Insurance" provision of the Family Protection Coverage Endorsement as approved by the State Corporation Commission, if interpreted as plaintiff contends, conflicts with the statutory requirements regarding uninsured motorist coverage, and therefore to make the clause effective under the statute, the words "available to such occupant" must be interpreted to mean actually available to the insured, thus establishing liability on the part of Travelers to the Wellses since there is no insurance actually available to them — Fidelity and Casualty's $30,000.00 having been exhausted in paying off the Smiths' judgment.

In considering the "Other Insurance" clause, it is necessary to examine, by way of background, the relationship between this Commission approved form and the statute which the form purports to implement.The State Corporation Commission is vested with the power to promulgate standard forms for insurance contracts which must be used by all companies writing insurance in Virginia.(Section 38.1-382 of the Code of Virginia(1950), as amended.)The Commission, of course, does not have any right to require adherence to contract forms which violate statutory provisions, and wherever such a conflict between form and statute is found to exist, the statute is controlling and the Commission's conflicting form provision is null and void.Maxey v. American Casualty Co. of Reading, 180 Va. 285, 23 S.E.2d 221(1942);State Farm Mutual Automobile Ins. Co. v. Duncan, 203 Va. 440, 125 S.E.2d 154(1962).

It would seem that the Family Protection Coverage Endorsement form, as approved by the State Corporation Commission, does conflict in certain respects with the statutory requirements regarding uninsured motorist coverage.For example, Section 38.1-381(h) of the Code of Virginia(1950), as amended, provides:

"The provisions of paragraphs (a) and (b) of this section requiring an omnibus clause and the uninsured motorist endorsement shall not apply to any policy of insurance to the extent that it

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