Unigard Sec. Ins. Co. v. Schaefer

• Decision Date: 05 July 1978
• Docket Number: No. B-7312,B-7312
• Citation: 572 S.W.2d 303
• Parties: UNIGARD SECURITY INSURANCE COMPANY, Petitioner, v. Charles SCHAEFER et al., Respondents.
• Court: Texas Supreme Court

Page 303

572 S.W.2d 303

UNIGARD SECURITY INSURANCE COMPANY, Petitioner, v. Charles SCHAEFER et al., Respondents.

No. B-7312.

Supreme Court of Texas.

July 5, 1978.

Gardere, Porter & Dehay, Gordon H. Rowe, Jr., Dallas, for petitioner.

Kolenovsky & Hulme, Bobby W. Kolenovsky, Moseley & Jones, Craig T. Enoch, Hayden H. Cooper, Dallas, for respondents.

DANIEL, Justice.

This is an action by Charles Schaefer, LaVerne Kennedy, individually and as next friend of Diana Kennedy, and Geraldine Craddock, individually and as heir at law of Melinda Craddock, to recover benefits under the Personal Injury Protection endorsement of an automobile liability insurance policy issued by Unigard Security Insurance Company to Abraham Wyloge. The case was submitted to the trial court on a stipulated statement of facts. The trial court rendered judgment that the plaintiffs, Schaefer, et al., take nothing by their suit because of an "Exclusion of Named Driver" endorsement. The Court of Civil Appeals reversed and rendered judgment for the plaintiffs. 559 S.W.2d 103. We affirm the judgment of the Court of Civil Appeals.

David Wyloge, the son of Abraham Wyloge, was the driver of a 1970 Javelin automobile which was involved in a violent one-car crash. David Wyloge was killed in the wreck, as was Melinda Craddock, a passenger in the vehicle. Two other passengers, Charles Schaefer and Diana Kennedy, were seriously injured.

Prior to the time of the accident, Abraham Wyloge obtained liability insurance coverage on the Javelin from Unigard. This policy included Endorsement 243, Personal Injury Protection, which was mandated by the Legislature in Article 5.06-3, Tex.Ins.Code Ann., ¹ reading in part as follows:

"Art. 5.06-3. Personal Injury Protection Coverage

"(a) No automobile liability insurance policy, including insurance issued pursuant to an assigned risk plan established under authority of Section 35 of the Texas Motor Vehicle Safety-Responsibility Act, covering liability arising out of the ownership, maintenance, or use of any motor vehicle Shall be delivered or issued for delivery in this state unless personal injury protection coverage is provided therein or supplemental thereto. The coverage provided in this article shall be applicable unless the insured named in the policy rejects the coverage in writing, and the coverage shall be provided in or supplemental to a renewal policy unless it is rejected in writing by the insured named in the policy.

"(b) 'Personal injury protection' consists of provisions of a motor vehicle liability policy which provide for payment to the named insured in the motor vehicle liability policy and members of the insured's household, any authorized operator or passenger of the named insured's motor vehicle including a guest occupant, up to an amount of $2,500 for each such person for payment of all reasonable expenses arising from the accident and incurred within three years from the date thereof for necessary medical, surgical, X-ray and dental services, including prosthetic devices, and necessary ambulance, hospital, professional nursing and funeral services, and in the case of an income producer, payment of benefits for loss of income as the result of the accident, . . . The personal injury protection in this paragraph specified shall not exceed $2,500 for all benefits, in the aggregate, for each person.

"(c) The benefits required by this Act shall be payable without regard to the fault or non-fault of the named insured or the recipient in causing or contributing to the accident, and without regard to any collateral source of medical, hospital, or wage continuation benefits. An insurer paying benefits pursuant to this Act shall have no right of subrogation and no claim against any other person or insurer to recover any such benefits by reason of the alleged fault of such other person in causing or contributing to the accident." (Emphasis added.)

The only exclusion of benefits provided by the Act is in the event the insured causes injury to himself intentionally or is injured while in the commission of a felony or attempting to elude arrest. Article 5.06-3(e).

As authorized by the Act, the State Board of Insurance promulgated a form for such coverage, which is entitled Endorsement 243, the "conditions" section of which reads:

"1. Policy Provisions. None of the insuring agreements, Exclusions or conditions of the policy shall apply to the insurance afforded by this endorsement except the conditions 'Premium,' 'Notice,' 'Assistance and Cooperation of the Insured,' 'Changes,' 'Assignment,' 'Cancellation' and 'Declarations.' " (Emphasis added.)

Mr. Wyloge did not reject the statutory Personal Injury Protection coverage. On the contrary the policy was written with the coverage included as set forth in Endorsement 243, and Unigard collected a premium of twenty-five dollars for such coverage.

While this statutory coverage was in full effect, but at a subsequent date, Mr. Wyloge signed a Form 119, "Exclusion of Named Driver" endorsement, which is reproduced in the margin. ² It excludes claims arising from any accidents occurring while any automobile is being operated by David Wyloge. Unigard asserts that the exclusion in Endorsement 119 was tantamount to a partial rejection (while David was driving) of the Personal Injury Protection required by Article 5.06-3. For this reason it denied plaintiffs' claims for benefits under the statutory coverage.

NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE

The plaintiffs counter with arguments that Endorsement 119 does not refer to or comply as a written rejection of the Personal Injury Protection coverage as required by Article 5.06-3; that it is excluded from Article 5.06-3 and Endorsement 243 coverage by the terms of the statute and the endorsement; and that Unigard's interpretation would be in derogation of the statute and contrary to public policy. We are in substantial agreement with the arguments advanced by plaintiffs.

It is correct that the wording of Endorsement 119 "Exclusion of Named Driver" does not mention or refer to the Personal Injury Protection coverage mandated by Article 5.06-3. In fact, the endorsement was promulgated as last revised in 1941, nearly thirty-two years prior to the time when Article 5.06-3 became effective in 1973. As attached to the Wyloge policy, it retained the same wording and revision date of October 20, 1941. Obviously, it was not promulgated as a form for partial or total rejection of the new type of statutorily mandated insurance coverage which must be incorporated in an automobile liability insurance policy unless the insured "rejects the coverage in writing."

Nevertheless, Unigard argues that 119 has the legal effect of a partial rejection of all insurance coverage contained within the policy. This disregards the fact that the basic policy's insuring agreements, exclusions, conditions, and other terms do not apply to the Personal Injury Protection required by Article 5.06-3. This is clear from the terms of the statute and the Policy Provisions section of Endorsement 243, quoted above, which specifically provide the "None of the insuring agreements, exclusions, or conditions of the policy shall apply to the insurance afforded by this endorsement . . ." except premium, notice and other specified conditions which do not relate to exclusions or...