HORACE MANN INSURANCE, AN ILLINOIS CORPORATION, PLAINTIFF AND RESPONDENT, v. MATTHEW HAMPTON, SAFECO INSURANCE COMPANY OF AMERICA, A WASHINGTON CORPORATION, AND LAWRENCE BLUNDELL, AN INDIVIDUAL, DEFENDANTS AND APPELLANTS.
No. 88-212
Supreme Court of Montana
Jan. 11, 1989
Feb. 16, 1989
767 P.2d 343 | 235 Mont. 354
Submitted Aug. 11, 1988.
Kim L. Ritter, Milofragovich, Dale & Dye, Missoula, for plaintiff and respondent.
MR. JUSTICE HARRISON delivered the Opinion of the Court.
Respondent Horace Mann Insurance filed a declaratory judgment action in the District Court of the Fourth Judicial District of Montana, Missoula County, seeking to avoid coverage under its automobile liability policy issued to Bernard and Claudia Wever. The District Court granted summary judgment in favor of respondent, holding that the terms of the policy were violated when thе vehicle was not used within the scope of the owners’ consent. We reverse.
On the evening of January 21, 1987, near East Missoula, Montana, Matthew Hampton (Hampton) was seriously injured in an automobile accident caused by Lawrence Blundell (Blundell). Blundell was driving the other vehicle involved in this accident, a 1977 Chevrolet Malibu, owned by Bernard and Claudia Wever. Blundell was under the influence of alcohol, crossed the center linе, and struck Hampton‘s vehicle nearly head-on. The Wever vehicle was insured by Horace Mann. Blundell had no insurance of his own.
Blundell was a mechanic and rented a shop building and lot from Sophie Wever, Bernаrd‘s mother and de facto owner of the car. Because he was behind in his rent, Blundell agreed with the Wevers to overhaul the engine on the 1977 Chevrolet Malibu in exchange for three months rent credit. On January 21, 1987, at abоut 5:30 p.m., Blundell took possession of the car at Sophie Wever‘s house and drove it a short distance to the shop. Blundell expected another customer to pick up a vehicle which would make rоom for the Wever car at his shop. Blundell waited for approximately one hour but the customer did not arrive. As a result, Blundell believed it would be unsafe to leave the Wever car at his shop overnight because of possible theft or vandalism. For this reason, and to test drive it for diagnostic purposes, Blundell determined he would drive the car to his home that evening.
At about 6:30 p.m., Blundell drove with his son in the Wever car to a local tavern. There the two drank beer for several hours and talked. Blundell then drove his son home and was enroute to his home when the accident occurred about 11:15 p.m.
WHO IS AN INSURED?
When we refer to your car, a newly acquired car or a temporary substitute cаr, insured means:
1. you;
2. your relatives;
3. any other person while using your car if its use is within the scope of your consent;
...
Horace Mann contends the consensual use of the vehicle granted to Blundell by the Wevers was narrow and that Blundell еxceeded the scope of the consent by driving to the tavern for personal purposes and driving while intoxicated. The argument is that the Wevers did not consent to the use of the car for the purpose to which it was applied and for the atrocious behavior of drunk driving and causing an accident. Therefore, the consensual use was extinguished and liability insurance coverage did not extend. The effect оf Horace Mann‘s argument would be that permittee drivers become uninsured motorists when they exceed the scope of their authorized use.
The issue on appeal is whether Montana‘s Mandatory Liability Protection Act,
Prior to the enactment of
In 1979, Montana‘s Legislature enacted the Mandatory Liability Protection Act which reads in part:
61-6-301. Required motor vehicle insurance. (1) Every owner of a motor vehicle which is registered and operated in Montana by the owner or with his permission shall continuously provide insurance against loss resulting from liability imposed by law for bodily injury or death or damage to proрerty suffered by any person caused by maintenance or use of a motor vehicle, as defined in 61-1-102, in an amount not less than that required by 61-6-103, or a certificate of self-insurance issued in accordance with 61-6-143.
Thе clear purpose of this statute is to protect innocent members of the general public injured on the highways through the negligence of financially irresponsible motorists. Iowa Mutual Ins. Co. v. Davis (Mont. 1988), 231 Mont. 166, 752 P.2d 166, 45 St.Rep. 514. As stated in 12A Couch on Insurance 2d (Rev. еd.), § 45:692, the statute is remedial in nature, and insurance policies issued under this scheme must be liberally construed in light of the clear purpose and public policy of the statute — to provide compensation tо those injured by automobiles.
In Transamerica Ins. Co. v. Royle (1983), 202 Mont. 173, 656 P.2d 820, we examined a household exclusion in an automobile insurance policy in light of the Mandatory Liability Protection Act language requiring insurance protection against bodily injury and рroperty damage to any person. We held this statutory language to be an express outlawing of household exclusion clauses.
Similarly, in Bill Atkin Volkswagen Inc. v. McClafferty (1984), 213 Mont. 99, 689 P.2d 1237, we held Montana‘s Mandatory Liability Protection Act required an automobile dealer‘s insurance to extend to customers using loaner cars. By focusing on the statute‘s every owner of a motor vehicle language, we rejected the argument of the insurance company and held that an automobile dealer, though not an operator, is an owner and therefore required by law to provide liability coverage to its permittees.
Most recently, in Iowa Mutual, supra, we carefully examined the validity of a named driver exclusion in light of the Mandatory Liability Protection Act. We concluded that such an attempted exclusion was contrary to public policy and therefore invalid. The analysis made in Iowa Mutual is particularly pertinent to this case. We there pointed out that under Bill Atkin, other than the specific exceptions listed in
In Iowa Mutual, we next referred to Bain v. Gleason (Mont. 1986), 223 Mont. 442, 726 P.2d 1153, 43 St.Rep. 1897, where we stated:
In Bain we recognized that it is the public policy of [the state of Montana] . . . that every owner of a motor vehicle [licensed and] operated in Montana must procure a policy of insurance which continuously provides coverage up to the limits set forth in [
§ 61-6-103, MCA ]. Bain, 726 P.2d at 1156 . . .
Iowa Mutual, 752 P.2d at 169. This underscored thе need for an owner to provide continuous coverage up to the required statutory limits.
The insurance carrier argued in Iowa Mutual that the invalidation of the driver exclusion would thwart public policy and create a burden on the insureds. In response to those arguments we then stated:
We are convinced that the opposite is true. Our ruling today will eliminate yet another avenue through which the compensation of innocent automobile accident victims can be sidestepped. Our ruling does not, however, prohibit an insurer from entering into agreements with their insureds to limit coverage to the statutory minimum amounts as set forth in
§ 61-6-103, MCA . Other states have reached similar conclusions....
The enforcement of minimum statutory coverаge is mandated by statute in Montana and is a minor burden on insureds when compared to increased protection of the general traveling public.
Iowa Mutual, 752 P.2d at 170-71.
As we further stated in Iowa Mutual, 752 P.2d at 169, laws established for the benefit of the public cannot be сontravened by private contract. When an insurer fails to provide a policy in compliance with the requirements of a statute mandating insurance protection, the courts are forced to reform the policy so that it is in compliance. 12A Couch on Insurance 2d (Rev. ed.), § 45:692.
We conclude that we shall give effect to the requirement of
The judgment is reversed and remanded for further proceedings consistent with this decision.
MR. CHIEF JUSTICE TURNAGE and MR. JUSTICES WEBER, SHEEHY, HUNT and McDONOUGH concur.
MR. JUSTICE GULBRANDSON, dissenting.
I respectfully dissent.
In my view, the majority, by adopting thе initial permission test (more colorfully known by many writers as the Come hell or high water rule) has departed drastically from authority previously enunciated in decisions of this Court, without reference to, or discussion of, those decisions.
To illustrate the previous view, two examples should suffice. In Mountain West Farm Bureau v. Farmers Insurance (1984), 209 Mont. 467, 680 P.2d 330, this Court declared:
A complete and unreasonable departure from the intended use, or an intentionally dangerous and wrongful operation cоuld support a ruling that the use was outside of the scope of permitted use as a matter of law. (Emphasis included.)
Mountain West, 680 P.2d at 331. Thereafter, in Farmer‘s Ins. Exchange v. Janzer (Mont. 1985), 215 Mont. 260, 697 P.2d 460, 42 St.Rep. 337, this Court, in commenting on Mountain West, supra, stated:
Mountain West involved a question regarding the degree of permission granted . . . This court affirmed the lоwer court‘s ruling that Mountain West was the insurer of the defendant for the defense of the action and the payment of any damages arising out of the incident. The instant case, likewise, presents a question involving scope of ‘permission.’ (Emphasis added.)
Farmer‘s Ins. Exchange, 697 P.2d at 465-466.
The foregoing statements clearly indicated to the bench and bar of this state, in my opinion, that this Court had adopted, or would
I would affirm the judgment of the trial judge.