Vernon Fire & Cas. Ins. Co. v. American Underwriters, Inc., 2--575A128

• Decision Date: 18 November 1976
• Docket Number: No. 2--575A128,2--575A128
• Citation: 356 N.E.2d 693,171 Ind.App. 309
• Parties: VERNON FIRE & CASUALTY INSURANCE COMPANY, Appellant (Plaintiff below), v. AMERICAN UNDERWRITERS, INC., Attorneys-in-Fact for the subscribers of American Interinsurance Exchange, Appellee (Defendant below).
• Court: Indiana Appellate Court

Page 693

356 N.E.2d 693

171 Ind.App. 309

VERNON FIRE & CASUALTY INSURANCE COMPANY, Appellant (Plaintiff below), v. AMERICAN UNDERWRITERS, INC., Attorneys-in-Fact for the subscribers of American Interinsurance Exchange Appellee (Defendant below).

No. 2--575A128.

Court of Appeals of Indiana, First District.

Nov. 18, 1976.

C. Wendell Martin, Robert L. Hartley, Jr., Bredell, Martin & McTurnan, Indianapolis, for appellant.

Marshall E. Williams, Heeter, Johnson, Salb & Williams, Indianapolis, for appellee.

LYBROOK, Judge.

Plaintiff-appellant, Vernon Fire & Casualty Insurance Company (Vernon), brings this appeal following an adverse ruling by the trial court on its Complaint for Declaratory Judgment against defendant-appellee, American Underwriters, Inc. (AUI).

The facts of this case indicate that on May 5, 1973, Joe Lancaster was a passenger on a motorcycle owned and operated by Jack A. Davidson. The motorcycle was involved in a collision with an automobile operated by Pete A. Hall, an uninsured motorist. As a result of the collision, Davidson was killed and Joe Lancaster was seriously injured. Lancaster was hospitalized for a period in excess of seven months and incurred medical expenses of $23,998.43. The parties stipulated that Hall was negligent and the proximate cause of the collision. It was further stipulated that the medical expenses were correct.

At time of the collision, Joe Lancaster and his father, Robert, who paid Joe's medical expenses, held a policy of insurance with Vernon which provided for uninsured motorist protection. At that time Davidson held a policy of insurance on his motorcycle providing both liability and uninsured motorist coverage. AUI issued Davidson's policy. AUI denied coverage to Lancaster on the basis of a policy defense, contending that its policy provisions precluded uninsured motorist coverage to passengers of vehicles owned by its insureds.

Vernon stood ready to pay its proportionate share of Lancaster's medical expenses, and initiated the declaratory judgment action to determine the respective rights of the parties.

The sole issue presented for our consideration challenges the correctness of the trial court's ruling that AUI did not provide coverage to Joe Lancaster or his father, Robert Lancaster, under the uninsured motorist provision of its policy issued to Davidson.

A resolution of the issue must be initiated with a study of the Indiana Uninsured Motorist Act and the legislative intent in enacting that statute. The relevant statute, IC 1971, 27--7--5--1 (Burns Code Ed.) in pertinent part reads as follows:

'Motor vehicle liability--Noninsured vehicle coverage--Rejection in writing.--No automobile liability or motor vehicle liability policy or insurance insuring against loss resulting from liability imposed by law for bodily injury or death suffered by any person arising out of the ownership, maintenance or use of a motor vehicle shall be delivered or issued for delivery in this state with respect to any motor vehicle registered ir principally garaged in this state, unless coverage is provided therein or supplemental thereto, in limits for bodily injury or death set forth in Acts 1947, chapter 159, sec. 14 (9--2--1--15), as amended heretofore and hereafter, under policy provisions approved by the commissioner of insurance, for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles because of bodily injury, sickness or disease, including death, resulting therefrom.

'Provided, That the named insured shall have the right to reject such coverage (in writing) and Provided further, That unless the named insured thereafter requests such coverage, in writing, such coverage need not be provided in or supplemental to a renewal policy where the named insured has rejected the coverage, in connection with a policy previously issued to him by the same insurer.'

The above cited statute must be incorporated into the policy of insurance issued by AUI to Davidson. It is Vernon's contention that any attempt to preclude coverage in an uninsured motorist case is against the intent of the Act and therefore not to be allowed. Specifically, Vernon objects to the following clause in AUI's policy of insurance:

'Persons Insured: The following only are insured under the Uninsured Motorists Coverage: The named insured and the lawful spouse of such named insured if, and only if, such spouse is living with the named insured at the time of the accident.'

It is Vernon's contention that this clause conflicts with AUI's definition of insured for liability purposes within the same policy. In the liability section of AUI's policy 'insured' is defined as:

'(3) Definition of Insured (Coverages A and B): With respect to the insurance provided by this contract, the unqualified word 'insured' means only the insured specified as the named insured on the application page of this policy...