COLONIAL PENN FRANKLIN INSURANCE COMPANY, Plaintiff-Appellant, v. Paul WELCH and Lillian Welch, guardians ad litem for minor child Danny Welch, Jr., Robert Livingston and Margaret Livingston; Keith Dougherty, Sr., guardian ad litem for minor children Nikki D. Dougherty and Keith E. Dougherty, Jr., Robert Burkhardt, Denise Wolford and Daniel Willis, Defendants-Respondents.
No. 17992
Supreme Court of Idaho
May 10, 1991
811 P.2d 838
Boise, January 1990 Term.
Although by controlling and operating Haney, the bank was protecting its own interest in the several million dollars that Haney owed the bank, Haney continued as a separate entity and depended on the bank‘s approval of loan applications to continue operating. In a loan application dated November 26, 1984, Haney sought a $3,500,000.00 line of credit for the following year. This application stated that Haney‘s farm operations had been terminated and that the farm ground would be sold or turned back to the previous owners by way of deeds in lieu of foreclosure. The outstanding operating loans to Haney as of November 26, 1984 were $3,390,612.69. At the same time, Haney owed the bank $5,393,199.04 on other loans. On December 4, 1984, the bank approved an operating loan for Haney of $3,500,000.00, with the understanding that any advances over $3,000,000.00 had to be approved by the executive vice-president of the bank.
The statement in the letter of Haney‘s attorney to the Isaaks that it was impossible for Haney to service its debt obligation to the Isaaks was not false. Haney did not have funds to make the payment that was due on November 1, 1984. The bank was not obligated to pay the Isaaks, and, therefore, the bank‘s solvency was irrelevant. The trial court correctly concluded that Haney had failed to carry its burden of proving fraud by clear and convincing evidence.
V.
CONCLUSION.
Because we have concluded that the renegotiated note was not null and void, we find it unnecessary to address the Isaaks’ contention that the bank was obligated on the original note and the mortgage.
We affirm the judgment of the trial court dismissing the claims of the Isaaks.
We award costs on appeal to the bank, Haney, and the LeMoyne group. The bank and Haney did not request attorney fees on appeal. The LeMoyne group requested attorney fees in its initial brief pursuant to
BAKES, C.J., and BISTLINE, BOYLE and McDEVITT, JJ., concur.
Benoit, Alexander, Sinclair, Doerr, Harwood & High, Twin Falls, for plaintiff-appellant. John A. Doerr (argued).
Smith & Beeks, Twin Falls, for defendants-respondents Welch.
Hepworth, Nungester & Lezamiz, Twin Falls, for defendant-respondent Willis.
Webb, Burton, Carlson, Pederson & Webb, Twin Falls, for defendant-respondent Burkhardt.
R. Jeffrey Stoker, (argued), Twin Falls, for defendant-respondent Wolford.
BISTLINE, Justice.
Pursuant to Rule 12.1 of the Idaho Appellate Rules this Court accepted a certified question at the request of the Honorable Marion J. Callister, United States District Judge for the District of Idaho:
Whether under
Idaho Code § 49-1521(c) an insurance company in a motor vehicle liability policy may exclude from coverage any motor vehicle not owned by the named insured if such vehicle is furnished or made available to the named insured for his or her regular use.
We conclude that it was permissible, under the statutory law in effect at the time applicable to this suit,1 for an insurance company to exclude from coverage, in a motor vehicle owner‘s policy of liability insurance, non-owned vehicles regularly made available for use by the insured.
This certified question arose in a declaratory judgment action to which the facts were stipulated to by the parties:
Colonial Penn Franklin Insurance Company issued an automobile liability policy to Charlotte Welch as the named insured. The Colonial Penn policy listed a 1983 Pontiac Firebird as the only designated insured vehicle. Charlotte Welch was married to Daniel R. Welch. Daniel Welch owned a vehicle other than the 1983 Firebird and that vehicle was the only designated insured vehicle under the Viking Insurance Company policy. In addition, Daniel Welch had available for his regular use a pickup truck owned by T & W Excavating Company. This pickup truck was insured by Safeco Insurance Company.
On or about December 19, 1987, Daniel R. Welch was operating the pickup truck owned by T & W Excavating Company. Charlotte Welch, Denise Wolford, Robert Burkhardt and Daniel Willis were riding in the pickup truck as passengers. While Daniel Welch was operating the pickup truck, an accident occurred fatally injuring Daniel and Charlotte Welch and also injuring passengers Denise Wolford, Robert Burkhardt and Daniel Willis. After the accident, the injured passengers and relatives of the deceased Daniel and Charlotte Welch made claims against the policies insuring Daniel Welch‘s private automobile, (Viking Insurance), the pickup truck owned by T & W Excavating Company (Safeco Insurance Company of America), and the Colonial Penn policy insuring Charlotte Welch‘s 1983 Pontiac Firebird. Safeco Insurance Company of America paid its policy limits of $300,000.00 and Viking Insurance paid its policy limits of $50,000.00. Colonial Penn has denied coverage claiming that the pickup truck involved in the accident was available to Daniel Welch for his regular use, and that such regular use
Supplemental Appeal Record, 37-38. The district court‘s memorandum decision describes the impasse which prevented it from concluding the lawsuit:
The issue in this case is whether an insurance company like Colonial Penn has the power to exclude certain classes of non-owned automobiles in a motor vehicle liability policy issued pursuant to
Idaho Code § 49-1521 . The language of subsection (c) does not appear to allow the insurance company to make any exclusions for non-owned automobiles. [“Such operator‘s policy of liability insurance shall insure the person named as insured therein against loss from the liability imposed upon him by law for damages arising out of the use by him of any motor vehicle not owned by him, within the same territorial limits and subject to the same limits of liability as are set forth above with respect to an owner‘s policy of liability insurance.“] But this makes little sense in light of the fact that the insurance company can clearly write exclusions for owned automobiles. See Dullenty v. Rocky Mountain Fire and Casualty Company, 111 Idaho 98, 721 P.2d 198 (1986). See alsoIdaho Code § 49-1521(b)1 . [“Such owner‘s policy of liability insurance.... [s]hall designate by explicit description or by appropriate reference all motor vehicles with respect to which coverage is thereby to be granted; ....]
Memorandum decision, 3 (emphasis added; excerpts from
The pertinent portion of the vehicle owner‘s insurance policy involved in this suit is entitled “Bodily Injury Liability,” and states that:
We will pay all sums that anyone insured under this coverage is legally required to pay as damages for bodily injury or property damage. The injury or damage must result from the use of an auto or trailer listed on your Declarations Page or for certain persons, from the use of a non-owned auto. Bodily injury means injury to a person‘s body, sickness or disease, and death that results from any of these.... Use of an auto means owning, operating, loading, unloading or maintaining it. A non-owned auto is one that isn‘t owned by or registered to You or anyone living in your household. It also cannot be available to You or to anyone living in your household for regular use.
(Emphasis in original).
With that as background, we begin by examining the applicable statutory law provisions of the Motor Vehicle Safety Responsibility Act which were in effect at the time applicable to this suit. Under
[E]very owner of a motor vehicle which is registered and operated in Idaho by the owner or [by others] with his permission shall continuously provide insurance against loss resulting from liability imposed by law for bodily injury or death or damage to property suffered by any person caused by maintenance or use of a motor vehicle or motor vehicles described therein in an amount not less than that required by
§ 49-1521 , Idaho Code.
49-1521. ‘Motor vehicle liability policy’ defined—Expressed, permitted and implied provisions.—(a) A ‘motor vehicle liability policy’ as said term is used in this act shall mean an owner‘s or an operator‘s policy of liability insurance, certified as provided in
section 49-1519 or49-1520 as proof of financial responsibility, and issued, except as otherwise provided insection 49-1520 , by an insurance carrier duly authorized to transact business in this state, to or for the benefit of the person named therein as insured.(b) Such owner‘s policy of liability insurance.
1. Shall designate by explicit description or by appropriate reference all motor vehicles with respect to which coverage is thereby to be granted; and
2. Shall insure the person named therein and any other person, as insured, using any such motor vehicle or motor vehicles with the express or implied permission of such named insured, against loss from the liability imposed by law for damages arising out of the ownership, maintenance or use of such motor vehicle or motor vehicles within the United States of America or the Dominion of Canada, subject to limits exclusive of interest and costs, with respect to each such motor vehicle, as follows: $10,000 because of bodily injury to or death of one (1) person in any one (1) accident and, subject to said limit for one (1) person $20,000 because of bodily injury to or death of 2 or more persons in any one (1) accident, and $5,000 because of injury to or destruction of property of others in any one (1) accident.
(c) Such operator‘s policy of liability insurance shall insure the person named as insured therein against loss from the liability imposed upon him by law for damages arising out of the use by him of any motor vehicle not owned by him, within the same territorial limits and subject to the same limits of liability as are set forth above with respect to an owner‘s policy of liability insurance.
(Emphasis added.) Subsection (d) of
An owner, of course, will ordinarily own the motor vehicle which he operates (drives), but this is not so with an operator. A person who does not own the motor vehicles which he operates is relegated to purchasing an operator‘s policy. An operator‘s policy of liability insurance provides liability coverage to the purchaser as to any vehicle which he operates, provided only that it is not owned by him. Accordingly, a non-owner possessed of an operator‘s liability policy, on entering and driving any vehicle which he does not own2 would fall under both of two coverages—the coverage of his own operator‘s policy, and also the coverage of the owner‘s policy—as to the latter provided only that permission has been expressly or implicitly extended to drive the vehicle. Not only is there nothing amiss in that regard, but to the contrary it is reflective of legislative policy which recognized the societal need for liability coverage. Moreover, the legislatively set minimum limits of coverage do not preclude the owner or operator—either or both—from purchasing greater coverage than the statutorily set minimum limits. The legislature obviously had in mind that in every instance, whenever a driver gets behind the steering wheel or handlebars of a motor vehicle and assumes the responsibility for driving it, there be in existence and in effect at least one policy of insurance providing liability coverage.
As to an owner‘s policy,
With the foregoing analysis of the legislature‘s statutory scheme regarding liability coverage at hand, it is readily apparent that
In conclusion, the exclusion written into the owner‘s policy of liability insurance purchased by the Welches for the 1983 Pontiac Firebird was not unlawful, and did not contradict any of the statutory laws applicable to the policy. The case law mentioned by the district court, Dullenty v. Rocky Mountain Fire & Casualty Co., 111 Idaho 98, 721 P.2d 198 (1986), involved a different type of insurance coverage. The insurance issue there involved was uninsured motorist coverage, sold to Dullenty only as a supplement to his policies of liability coverage.
Judge Callister noted the apparent conflict in the provisions of
I.C. § 49-1521 only requires that the policy designate the vehicle or vehicles which are covered and in addition ‘... shall insure the person named as insured therein against loss from the liability imposed upon him by law for damages arising out of the use by him of any motor vehicle not owned by him,....’ We interpret that statutory language to require liability coverage of the named insured while he be driving any motor vehicle designated in the policy and owned by him, or any other vehicle not owned by him. It does not require liability coverage while he be operating a vehicle owned by him but not designated in the policy. Hence, an insurance carrier could, in compliance with the statute, specifically exclude coverage while the insured was driving an owned but non-designated vehicle.
Dullenty, 111 Idaho at 104-05, 721 P.2d at 204-05 (italics in original).
On a second analysis of the Dullenty rationale, necessarily done in response to Judge Callister‘s inquiry, it is belatedly ascertained that the language therein, albeit that it reads smoothly, is a grossly inaccurate composite recitation of the actual component paragraphs (a), (b), and (c) of
BAKES, Chief Justice, concurring specially:
I concur in that part of the Court‘s opinion today which holds that an owner‘s policy of vehicle liability insurance may exclude from coverage non-owned vehicles
JOHNSON, BOYLE and McDEVITT, JJ., concur.
Petra E. QUINTERO, Claimant-Respondent, v. PILLSBURY COMPANY, Employer, and Travelers Indemnity Company, Surety, Defendants-Appellants.
No. 18755.
Supreme Court of Idaho
May 15, 1991.
811 P.2d 843
Twin Falls, March 1991 Term.
Moffatt, Thomas, Barrett, Rock & Fields, Boise, for defendants-appellants. Glenna M. Christensen argued.
Goicoechea Law Offices, Chartered, Idaho Falls, for claimant-respondent. Michael R. McBride argued.