*1 because it is not located "within national subject property is
park, we that the hold .
exempt.4
Reversed.
KEITH, C.J., part took no in the
consideration decision this case. CORPORATION,
The HERTZ
Respondent, FARM
STATE MUTUAL INSURANCE
COMPANY, petitioner, Appellant.
No. C3-96-2050.
Supreme Court of Minnesota.
Jan. 1998. Having subject property concluded ruling an endorsement of the tax court’s 273.19, exempt County authority from taxation under Minn.Stat. lacked into enter the 1978 not, not, subd. we need agreement therefore do reach valuation and that the argument. Indeed, Frandsen’s public policy. alternative Our failure we have serious issue, however, reach this ruling. should not be read as concerns as of that correctness
OPINION GARDEBRING, Justice. application This case involves the Act in the Minnesota No-Fault context Specifically, rental cars. we are asked determine whether self-insured rental agency may obligations meet under Automobile Minnesota No-Fault Insurance 65B.41-.71(1996) (“No- Act, §§ Act”), by liability coverage providing Fault operator in the event that the renter or of the rented does not have liability coverage arising from his or her own policy. automobile Jeffrey Powers rented an automobile from driving Hertz in While car, accident, he in an was involved gave negligence rise to claims property damage personal inju- him for rental, ry. At the time declined Liability Supplement Insurance which, (LIS), fee, for an additional liability coverage full for automobile renters. agreement provided The rental that: you not purchase do insurance * * n (LIS) supplement at the commence ment rental and accident results car, your from use of insurance operator of the car primary. This means that Hertz will be grant any indemnity or will not defense protection paragraph if either operator the ear you or the are covered valid collectible automobile lia insurance, primary, bility whether contingent, equal limits at least required the minimum If nei financial law. state you operator nor of the car have ther insurance, grant you and such Hertz will limited ear authorized Hunt, Lommen, Nelson, Kay Nord Cole & the terms and conditions protection under P.A., Deter, Minneapolis, Stageberg, Line S. 10(a) subparagraphs stated above Associates, Paul, for Brett W. Olander & St. 10(c) below. appellant. import of was The intended Koziol, Koziol, Ditzler Min- Michael A. & apparently to make the neapolis, respondent. for opera- if the coverage effective had no automobile of the rented vehicle tor liability insurance. Act, personal liability- agreement
Powers had violates the No-Fault be- Hertz, self-insurer, through Farm for cause was II. Powers maintain on the vehicles on his 1985 Ford Bronco renewed 22, 1994, policy on owns. We reverse. his State Farm March a six-month term effect summary judg our review of the *3 The at time of the accident. State ment, we must determine “whether there are liability coverage has lim- with any genuine issues of material fact and $100,000 $50,000 per per person at and its applica trial whether the court erred its occurrence, liability coverage provided: “The of law.” tion Interstate Fire & Cas. Co. * * * insured, use, by an of extends to the a 82, v. Auto-Owners Ins. non-owned car.” The further stated (Minn.1988). undisput Because the facts are * * * car has “[i]f that a non-owned ed, of case raises issues it, liability coverage cov- on then this interpretation, ques and contract which are erage is excess.” subject tions of law to de novo review. Gar 709, brought judgment ac- rick Northland Ins. declaratory (Minn. 1991). Farm, against asserting that tion State primary duty has to defend and requires every The No-Fault Act that indemnify arising the claims Minnesota automobile owner maintain a involving from the accident the rented vehi- “plan reparation security,” specific, with In granting cle. Hertz’s motion for sum- benefits, statutorily set minimum including mary judgment, the trial court held 65B.48, liability coverage. § Minn.Stat. agreement Hertz rental was a valid en- 1; 65B.49, § subd. see also Minn.Stat. subd. provide forceable contract that did not Pow- 3(1) (stating the minimum required). benefits liability coverage ers at the time of the course, obligation may, That be met either also accident. It held the Hertz rental by of a commercial automobile agreement did not violate the under Minn.Stat. guaranteed liability coverage it if the 65B.48, 2, § by qualification subd. operator renter or was not insured. It con- entity, self-insured under Minn.Stat. 65B.49, § cluded that Minn.Stat. subd. 65B.48, In subd. 3. Hertz met its 3(3)(d), dictating priority the statute of cover- obligation by receiving seeking and the au- age, apply did not because Hertz not did thorization of the commissioner of commerce provide all on these operate entity. aas sélf-insured In seek- facts. The trial court further concluded ing approval, agreed “discharge 65B.49, subd. did not fully promptly payments obli- because it took effect on gations which are now due or shall become 1994, after the March 1994 renewal date provisions due under the of the Minnesota policy. Finally, the Powers’ State Farm the No-Fault Automobile Insurance Act and Farm, trial court held that State not amendments thereto.” Hertz, responsible defending State Farm asserts that Hertz’s rent indemnifying arising Powers for the claims agreement al violates No-Fault Act be out of the accident. cause it allows Hertz to “contingent” appeals The court affirmed the trial liability coverage owns, it on vehicles al court, holding that agree- Hertz rental though required, statutorily Hertz is as a ment satisfied the of the No-Fault vehicles, self-insured owner of the main provided liability coverage Act because Hertz liability coverage, regardless tain of whether operator in the event that the renter did the renter or of a rented vehicle is not have other automobile insurance. response, otherwise insured. ar appeals Because the court of held the Hertz gues that there is no No- violation enforceable, was valid and Fault Act because there no circum it priority reach the issue of of cover- stances which a under Hertz vehicle would age under the No-Fault Act. disagree. State Farm be We A uninsured. self-insured appeals, arguing agency now that the Hertz car rental does not meet obli- ity fully would be covered virtue an owner gations as automobile upon thrusting the renter omnibus clause.1 No-Fault Act provide liability cover- Further, no we find merit' is, age by providing —that argument this construction of that the renter without in the event the No-Fault Act violates freedom of liability coverage. may impact Legislation contract. contractu provisions at issue—Minn. obligations, al if certain conditions are met. 65B.49, §§ 1 and subd. Stat. Generally speaking, federal constitu “[t]he 3(2) require that their face —do impair prohibition against tional contract coverage that owner maintain ment, Const., I, art. U.S. cl. contingent upon presence of other state been construed to mean re Nevertheless, is inconsistent coverage. power modify serves some *4 general purpose of the No-Fault with the public requires.” when the Chris interest the manner advo- Act to read the statute in Minneapolis Employees tensen v. Mun. Re interpretation of the by Hertz. Hertz’s cated (Minn. Bd., tirement 331 N.W.2d 750 practical exemption to the Act would create a 1983). therefore, The can legislature, alter that all automobile statutory mandate broad by enacting long contract as statutes insurance, carry liability exemp- an owners “necessary legislation as is meet a the to language the of tion evident in the nowhere need, pressing social or economic broad and statute. reasonably adopted legislation if is for the Further, upon by the distinction relied involved, if problem the of and it solution the appeals, that the Hertz and the court of (quot is not over or over harsh.” Id. broad statutory Hertz are requirements on differ- Malone, Corp. ing Motor v. 599 F.2d White self-insured, contrary is it is to ent because (8th Cir.1979)). 283, 287 in reading Act our of the NoFault purposes of the Act are The is “[s]elf-insurance cases. We have said that spelled out in Minn Stat. 65B.42: to “re- equivalent of a commercial in- the functional uncom- lieve the severe economic distress of * * * policy. The of either surance victims”; pensated prevent overcompensa- to compensate form of insurance is to victims tion; prompt payment; to “ease to assure with the appropriately. certificate filed to im- litigation”; the correct burden is the functional [of commerce] commissioner in balances and abuses the automobile acci- equivalent policy.” McClain an insurance liability legiti- system. That these are dent (Minn.1991). 680, 682 Begley, v. 465 N.W.2d public purposes unquestionable, and mate Further, concurring opinion in in his linchpin statutory the of which a a scheme McClain, that, in Justice Simonett concluded requirement that each owner car- considering application of the No-Fault the ry liability coverage is harsh or not either self-insureds, “treat Act to we should overly broad. purchased policy if a self-insurer as it had stated, in the context a liability each of its This court has auto insurance for vehicles provisions that “contract Such a No-Fault with itself as named insured. statutory law will purchased, if contain an omni- which conflict with policy, would Roering v. Mut. Rein extending coverage permissive to enforced.” Grinnell bus clause (Minn. as unnamed insureds.” Id. surance drivers additional 1989). insur conceptual approach also stated that “an Applying We have at 684. here, governed the contract be identify permis- a er’s one could Powers as long parties coverage as whose liabil- tween sive driver rented McClain, through attempted a agency have car to the rental through approach all financial The Hertz dif- shift another automobile. provision in rental scope agency in than that of the rental ferent insuring responsible McClain, that the renter is the in fundamental aim but Here, Hertz car. N.W.2d at 681. has obligations statutory same—to avoid the responsibility, attempted a but similar shift of Act. No Fault provide coverage if agreed the renter does is a law not omitted and indemnity.” provisions not contravene stat- insured to do Family Mut. utes.” Streich American argues statutory State Farm (Minn.1984) 396, 399 Ins. because, according amendment does added). (emphasis We conclude that application for self-insurance, agreement purporting obligated “discharge fully itself liability obligation to limit Hertz’ to situations promptly payments obligations coverage, is no which there other' contra- now due or shall due become is, therefore, venes No-Fault Act and provisions Auto- of the Minnesota No-Fault ' unenforceable.2 mobile Insurance Act amendments thereto.” argues further attempted Because we hold that Hertz’s is the insur- equivalent an unenforceable, limitation of we and the amendment must determine which insurance inapplicable simply cannot be found primary begin case. We with the “policy,” uses the word rather than the consideration of Minn.Stat. “plan security.” reparation broader term 3(3)(d), No- amendment Fault Act which became effective on general We “the have stated that rule (1996). 1994. See Minn.Stat. 645.02 upon entirely is that each renewal new *5 (1996) 65B.49, 3(3)(d) § Minn.Stat. subd. independent contract of insurance is cre states that: governed by ated and is the in effect on laws (3) Every plan reparation security shall date Integrity the of renewal.” Hauer v. subject following provisions be to the (Minn. 406, Mut. 352 Ins. N.W.2d which need not be contained therein: 1984). However, “[o]n each reinstatement or policies, any
renewal of statutes or amend pertaining policies ments to such and enacted (d) 5a,3 Except provided in as subdivision incorporated after their issuance are into the liability policy residual be shall policies.” Taylor Id. (quoting new v. Ameri excess of a policy nonowned vehicle wheth- can Nat’l Ins. 264 Minn. er the nonowned vehicle or borrowed (1962)). Therefore, Hertz is rented, pleasure. or used business in incorrect its assertion Minn.Stat. A nonowned vehicle is one not used 65B.49, 3(3)(d) § apply subd. be does provided regular on a basis. cause after became effective Powers re argues 65B.49, § Hertz that Minn.Stat. subd. Farm policy. newed his State 3(3)(d) apply does not to the case instant (1) Powers’ State State Farm is correct in its conten accident, was effective the time of the application tion that Hertz’s for self-insur prior renewed to the effective comply date of this that Hertz the with (2) statutory statutory amendment and entirety in its Act and with applies “poli- Also, amendment to insurance amendments enacted in the future. stated, cies” not to Hertz previously self-insurers.' further neither this nor the court argues that State Farm’s “other legislature insurance” that self-insured en here, applicable because, is not as a tities should any differently be treated from self-insurer, reparation security insurers, simply and for that reason Hertz’s “other prop- insurance.” For statutory second assertion amendment osition, Hertz “a applies third-party certificate insurers mistaken. asserts.that Therefore, self-insurance is a with the state to we conclude Minn.Stat. protect 3(3)(d) public, 65B.49, whereas an automobile subd. deter- interpretation our provides every plan rep- No-Fault Act is 3. Subdivision 5a legislature, deemed incorrect and rental security insuring person aration a natural must agencies differently to be treated than damage cover rented automobiles. is, owners, legislature other automobile course, clarify free to the statute at time. even under com- pri- coverage primary coverage suranee deemed mine which should principles. mon law mary. away summary, In Hertz cannot contract 65B.49, applying Minn.Stat. primary obligations the No-Fault 3(3)(d) ease, we conclude instant
subd. by limiting to situa- Act primary. the Hertz self-insurance coverage exists. There- tions where no other secondary under policy The State fore, provide primary Hertz must coverage. statute, in excess of the resulting from damages for the court Even if this driving the Powers’ accident while rental car 3(3)(d) 65B.49, to this subd. by Hertz. owned primary un- still would be deemed Reversed. risk” “closest der common-law cases, to de- previous our doctrine. Under BLATZ, (concurring specially). Justice ap- primary we coverage is termine which majority result I concur in the deci- test, in which to the risk” plied the “closest clearly set in legislature forth sion. we ask: Minn.Stat. § that “a (1) specifically described policy Which policy shall be residual accident-causing instrumentality? policy.” This nonowned vehicle (2) premium is reflective Which to the No-Fault amendment exposure? greater contemplated 1,1994. The statute was effective (3) contemplate poli- the risk requires one Hertz’s nonowned vehicle Does accident-causing instru- cy primary providing use of the be deemed
mentality specificity coverage. with than greater This is, is day the cover- the other was effective the before amendment —that and, age primary the risk one Powers rented the there- *6 fore, by to the other? Hertz its mandates. and incidental is bound While legal agree with all of the other I do at 86. Fire & Cas. Interstate by ma- analysis reached and conclusions to Applying these factors is jority, Minn.Stat. specifically de- Hertz self-insurance Therefore, matter. I con- dispositive of this in the rental involved scribes the vehicle in the cur result. and its because Hertz is owner accident specifically is available to cov- KEITH, (concurring special- Justice Chief issue, at while Powers’ er State ty)- personal describes Powers’ special join concurrence Justice I factor, because As to the second automobile. Blatz. self-insure, to it avoided Hertz chose liability. cover payment premiums to PAGE, (dissenting). Justice However, clear Powers’ it is respectfully The court’s deci- contemplate primary coverage I dissent. car, sion, of a rental which allows damage than to a rental for more her own insurance fact. has his or premiums are reflective who factor, final who declines addressing the third and sup- company’s insurance that its rental car policy specifically State Farm states responsibility for the rent- escape is plement non-owned vehicle in an accident with the rent- policy covering the involvement er’s incidental unfair, car, fundamentally pri- wrong, attempts shift al vehicle. While purpose is served public policy. What macy policy through poor to the State Farm allowing the renter’s insur- the renter and by self insurance agreement, Hertz’s avoid for the damages company to provide must To suggest I none. action? would it renter’s caused the use of vehicles owns Therefore, that this result asserted self-in- the extent that offers for rent. Hertz’s necessary in purposes order to fulfill the Minnesota’s No-Fault Automobile Insurance
Act, simply pur- the case. The
pose of Act is “[t]o the No-Fault relieve uncompensated
severe economic distress
victims of automobile accidents.” Minn.Stat. 65B.42(1) (1996). us, On the facts before always will met. met and be issue
make clear circumstances nor [the customer] neither
“Elf insurance,” [liability] of the ear have Thus, “victim,” provide coverage.
will no
injured as a result of an accident one of cars, “uncompen-
Hertz’s rental will remain
sated.”
Finally, today poor the result reached
public policy. rely Hertz cannot on its
customers to either their liabili- own or,
ty protection insurance at the time of
rental, purchase
supplement, protection cost of
likely passed to all of its
rental car customers. There is no sound why
reason individual renters not be should
required to bear the of their cost own liabili-
ty protection.
Therefore, I dissent. *7 Minnesota, Appellant,
STATE
Lyf WILDENBERG, Christian
Respondent.
No. CX-96-652.
Supreme Court of Minnesota.
Jan.