*1 Company, a Insurance Farm Mutual Automobile State company, a corporation, appellant and cross-appellee, v. patricia A. farm mutualautomobile state appellees single al„ person, Hildebrand, et and cross-appellants. single appellee, person, Rudo, v. Farm State
Scott S. appellant. Company, Insurance Automobile Mutual
P. Shawn McCann and Clark J. Sodoro, appellees & et al. Hildebrand Garland, Law,
Raymond Speer Gregory and of Garland P.C., appellee Rudo. C.J.,
Hastings, Boslaugh, White, Caporale, Shanahan, JJ. Fahrnbruch, Lanphier, Per Curiam. court, cases, disposition These consolidated for this are declaratory judgment concerning validity actions
household exclusion contained in the State Farm automobile cases, In both the district involved each case. against public policy
court held that the household exclusion is and, therefore, reverse, of the State of Nebraska void. We
remand with direction.
FACTS Both actions involved one-vehicle accidents in which the *2 passenger personal injury. sustained case, sought declaratory
In the Hildebrand State Farm a judgment duty that it no pay judgment had to defend or regard any negligence by brought action Patricia A. parents concerning
Hildebrand or her a motor vehicle accident September that occurred on At the 1987. time of the accident, passenger pickup Hildebrand was a in a truck which being she owned and which was driven Susan with Walters permission. accident, Hildebrand’s In the one-vehicle the over, pickup went into a ditch resulting and rolled personal injury. accident,
Hildebrand’s At the time of the State Farm coverage had on the Hildebrand pickup. parents After Hildebrand and her against made a claim personal State under injury liability coverage Farm the pickup, on the State declaratory judgment Farm filed its against
action Hildebrand parents. and her case, In the litigation Rudo the involved an accident that September occurred on accident, 1989. Before the and so that year Scott S. Rudo could finish high his senior of school in Omaha, brother-in-law, Rudo moved in Hayes, with his Eric Hayes family. and the State Farm had issued a motor vehicle liability policy on a Ford Escort which Hayes’ was owned Roche, employer, Inc., doing Copy business as The Center.
Hayes was authorized to use the Escort for both business and personal visiting reasons. After friends and returning while Hayes home, Hayes the driving Escort, was in which Rudo passenger. was-a Hayes When swerved to oncoming miss an vehicle, the gravel, ditch, Escort hit some loose went into a
overturned, resulting personal injury. Rudo’s After State coverage Farm denied personal injury claim, for Rudo’s Rudo brought declaratory judgment action, seeking judgment that there was coverage injury his sustained in the automobile accident.
Pertaining to the motor vehicles involved in both of the cases, policies issued State Farm had “pay damages which that State Farm will which state bodily because of . . . legally pay liable to
an insured becomes others, resulting from the injury to . . . caused accident your (Emphasis car.” ownership, or use of maintenance “your when car” is omitted.) policies The further state that to, using “any person while includes other referred “insured” you your scope if consent of or a car its use is within such (Emphasis omitted.) policies Each also contains spouse.” exclusion, following commonly referred to as the exclusion,” printed capital letters: “There is “household all coverage:.... any bodily injury Any to:.... insured For residing family in the insured’s member of an insured’s omitted.) (Emphasis household.” summary for a and Rudo each moved
Hildebrands granted summary judgments, judgment. district courts The
declaring in the Farm the household exclusion State (Reissue (policy Rev. Stat. 1988) violates Neb. under the Motor contents and, therefore, Responsibility Act) violates *3 case, State of In Hildebrands’ Nebraska. language of the the district court held that the household ambiguous Hildebrands an exclusion clause is not and awarded against attorney fee in action State Farm. their contained in the “Proof of Financial
Section 60-534 is Responsibility” section of Nebraska’s Motor Vehicle Act, seq. (Reissue Rev. et
Responsibility Neb. Stat. 60-501 § Supp. governs policies. 1989), & “certified” Section 1988 60-534 states: liability policy:...
Such vehicle hall insure the motor [S] insured, person, person therein and other as named using any express motor . . . with the such vehicle insured, against loss of such named
implied permission motor arising out the .. . use such damages ... the United States of America----
vehicle... within OF ERROR ASSIGNMENTS Farm that the district court summary, In State contends holding the household exclusion clause State erred that 746
Farm’s policies automobile insurance against public is
and, therefore, is void. State argues Farm also that the district court erred in awarding attorney an fee to Hildebrands.
In their cross-appeal, argue Hildebrands that the household exclusion clause the State policy ambiguous. Farm is
STANDARD OF REVIEW Interpretation of an unambiguous provision term or in an policy presents question of law. See v. Farm Polenz Co., 703, Bureau Ins. 227 Neb. 419 N.W.2d (1988). 677 “In an appeal from a declaratory judgment, court, the appellate regarding questions law, obligation has an to reach its conclusion independent from the conclusion reached
trial court.” State Spire ex rel. Co., v. Northwestern Bell Tel. 262, 265,
233 284, Neb. 445 N.W.2d 287 (1989). Accord State Ag. Bd. Comm., v. Racing State 239 Neb. 478 N.W.2d (1992). See, also, Huffman, v. 232 Neb. Huffman N.W.2d 899 (1989).
HOUSEHOLD EXCLUSION Both Hildebrands and argue Rudo the household exclusion in policies State contrary Farm’s to Nebraska’s evidenced Neb. Rev. (Reissue Stat. 60-302 § 1988) (proof of financial registration of a and, motor vehicle) therefore, is unenforceable. Additionally, argue Hildebrands that as the result of the 1985amendments to 60-302, § elected to treat all motor vehicle as policies, and, certified therefore, because the household exclusion is not authorized
(permissible exclusions in a certified policy) or
(permissible provisions in a policy), certified the household exclusion is invalid. provides,
Section 60-302 pertinent part: No motor vehicle... shall operated be highways on the of this state unless such registered vehicle is in accordance 3____ Chapter 60, with article *4 applications All registration motor vehicles shall for of accompanied by be proof responsibility. of financial Proof of responsibility financial shall be evidenced a copy proof of of responsibility financial pursuant filed bearing the (4) 60-528 (2), (3), or of section
subdivision by a Vehicles or Department of Motor seal or Such certificate policy certificate or of insurance. by an insurance carrier of shall be written policy insurance in this state and shall duly to do business authorized liability policy certify effect vehicle that there is in a motor of person required proof to furnish for the benefit of the policy shall. responsibility. financial Such certificate liability of motor vehicle give the effective dates such designate all vehicles
policy . . . and shall ... motor thereby. covered other Section contains no
(Emphasis supplied.) 60-302 concerning the of the insurance contents specifications registration liability policy required for certificate or insurance motor vehicle. of a (Reissue Neb. Rev. 44-508 and44-514to44-521 Stat. §§ general Supp. 1992) prescribe standard and & Cum. liability policy for valid of motor vehicle requirements a and, prescribe do certain consequently, in Nebraska insurance liability requirements policies motor vehicle limited any However, not these statutes do mention insurance. exclusion, question, and do such household exclusion as the exclusionary language prohibits that an clause contain not insurance; hence, liability of motor vehicle §§ a statutory limiting or language 44-514 to 44-521 contain liability under the household prohibiting potential an insurer’s policy. in a vehicle
exclusion clause contained motor courts, relying requirements expressed on The district liability motor vehicle concerning proof responsibility, in reference to was Section that household exclusion invalid. concluded Safety Responsibility Act part of Motor Vehicle 60-534 is provide certain mandates that automobile coverage. The Motor Vehicle minimum provides suspension license
Responsibility Act in an accident in Nebraska vehicle involved operator of motor death, property bodily injury, or substantial results motor vehicle operator when the does not have damage the time at or other of financial *5 Suspension accident. operator continues until provides proof of future responsibility. financial See §§
and 60-508.
However, the scope of Safety Motor Vehicle Responsibility Act is limited. specifically As 60-533 states:
A motor vehicle liability policy, as said term is used in 60-569, sections 60-501 to shall mean an owner’s or an operator’s policy liability insurance, certified as provided in proof sections 60-529 to 60-531 as of financial responsibility, issued, except provided as otherwise section 60-531 duly an insurance carrier authorized to state, transact business in this to or for the benefit of the person named therein as insured.
(Emphasis By terms, supplied.) its own the Motor Vehicle Safety Responsibility specifies Act provisions only those policies insurance pursuant certified to the act and used for compliance with Consequently, the act. the Motor Vehicle Safety Responsibility apply Act does not policies to insurance that proof are not used Also, as responsibility. 60-302 does not incorporate the requirements of the Motor
Vehicle Responsibility part Act as a proof financial responsibility required register to a motor vehicle. Equity
In Co., Mut. Ins. Co. 515, v. Allstate Ins. 190 Neb. 518-19, 592, 594 209N.W.2d (1973), this court noted that most kinds of Legislature insurance the
[w]ith has specified requirements various particular provisions as to required to be included or policies, omitted. Fire insurance life policies, insurance policies health and accident all type must meet this statutory requirement. The statutory requirements for liability automobile insurance respect with provisions to such have been under the Motor Safety Responsibility In Act. 1965the amended the . . provide . Act to specifically that sections 60-544, 60-516 to R. R. S. apply shall not liability
automobile policy which has not been certified as provided by 60-531, sections 60-528 to R. R. S. 1943. As a amendment, result of that this court held in State Farm Pierce, Mut. Auto. Ins. Co. v. 182Neb. 157N.W .2d 399, that the requirement omnibus clause applicable only liability policies to automobile which have proof responsibility.
been certified as of financial We held agreement limiting also a driver exclusion of an automobile to a particular against driver was not public policy. Automobile which are not as responsibility, except certified of financial minimum coverage limits and uninsured motorist provisions, subject virtually are statutory directives. (Emphasis supplied.) *6 recently, Musil,
More 64, Allied Mut. Ins. Co. v. 242 Neb. 69, 493 N.W.2d 174 (1992), this court held that
pertains “only policies to which have been filed with the Department
Nebraska of Motor Vehiclesand proof certified as of future responsibility pursuant financial to the requirements Safety Responsibility [Motor Act].” As we held Co., Allstate Ins. Co. v. Farmers Mut. Ins. 233
. 248, 252, 444 Neb. N.W.2d (1989), parties to an “[t]he may insurance any contract contract for lawful coverage, and may the insurer liability limit its impose restrictions and upon obligation conditions its . . . not inconsistent with policy or statute.”
Having been directed to no statute which mandates that noncertified liability automobile policies provide
categorical coverage for an insured policy under a of motor liability insurance, vehicle we hold that a household exclusion policy clause contained in a of motor vehicle that is not used as of future under the Motor Vehicle Responsibility Act not does violate public policy of the State of Nebraska and is an enforceable
provision in policy motor vehicle insurance. For reason, the district judgments courts erred in their that the
household exclusion clause State Farm’s violates and, therefore,
Nebraska’s is void. IS THE EXCLUSION AMBIGUOUS? cross-appeal, In their argue Hildebrands that the household policy ambiguous exclusion clause in State Farm’s is for two contend, first, reasons. Hildebrands that it is not clear whether disjunctive or the language should be read the policy and, second, to conjunctive that it would be unreasonable sense deny coverage of Hildebrands’ parties to all under facts case. policy
An should be considered as other ordinary given according and be effect contract used, they they and if are clear will be sense of the terms dinary meaning.... according plain to their and or applied language ambiguity policy will not be read into which An unambiguous against plain and in order to construe it preparer of the contract. Co., 252, 444 233 Neb. Allstate Ins. Co. v. Farmers Mut. Ins. at N.W.2d at 678-79. — — above, Liability Coverage “Section I A” of As noted “pay damages will the State Farm states that State Farm legally pay which an insured becomes liable to because of . . . others,
bodily injury resulting . . . caused accident ownership, your maintenance from the or use of car.” “your (Emphasis omitted.) The further states that when to, car” is referred “insured” includes you;
1. your spouse; 2. person named in the of the first 3. the relatives declarations; using if use is while such a car its person other
4. *7 you your spouse; and scope consent of or within the organization liable for the use of any person or 5. other by one of the aboved insureds. such a car
(Emphasis omitted.) policy Section I of the also contains the coverage: household exclusion: “There is no .... For
bodily injury Any to: ... . insured or member of an family residing in (Emphasis insured’s the insured’s household.” omitted.) argue Hildebrands that it is not clear whether the term “insured” the household exclusion refers to an insured as categories defined in the five quotation the above from State is, policy, categories conjunctive Farm’s that whether the are disjunctive. disagree. We The provisions above-mentioned in State policy Farm’s are — — part Liability
all I Coverage of “Section A” of the agreement. Clearly, the household exclusion limits coverage by excluding coverage under section I bodily insured, injury by any which, definition, suffered includes any person using the named insured’s car with the insured’s Furthermore, permission. coverage existence or extent of does not determine whether an policy’s. language is ambiguous. Thus, ambiguity we find language in the
State Farm’s and hold that the district court did err in not finding policy unambiguous. that the
ATTORNEY FEES Neb. Rev. (Reissue 1988) Stat. provides that the court, “upon rendering judgment against [an insurance] company . . . plaintiff shall allow the a reasonable sum as an attorney’s fee in addition to the recovery, amount of his or her part be taxed as (Emphasis costs.” supplied.) Because we have determined that the district court erred in Hildebrands’ by rendering case declaratory judgment against Farm, State Hildebrands are not attorney entitled to an fee authorized Therefore, 44-359. we reverse the district court’s award of an
attorney fee to Hildebrands.
CONCLUSION Because the household exclusion clause contained in State Farm’s proceedings involved these does not violate public policy Nebraska, of the State of judgment in each of reversed, the consolidated cases is and these causes are remanded to the district courts with direction to enter judgments in favor of State Farm and consistent with this opinion.
Reversed and remanded with direction. J., concurring. Shanahan, The district courts’ decisions that the household exclusion in the automobile contrary omnibus clause is to the
of this state raise regarding several concerns Nebraska’s kaleidoscopic regarding liability collection of statutes vehicles, drivers, for motor passengers. their and their
The district courts’ decisions are based on may doctrine: A court refuse to provision enforce contractual *8 752 People The v. Wiersema State public policy. law or
that violates the Bank, 75, (1935). 537 Fundamental to 361 Ill. 197 N.E. definition or characterization of courts’ decisions is the
district in Alderman et al. v. “public policy.” As the court observed 9, 22-23, 181 et al., 897, 902 (1935): 178S.C. S.E. Alderman aptly described one of our “Public has been shifting . . wide domain of . The judges as ‘a sands.[’]” something imports that is uncertain and
term in itself needs, changing fluctuating, varying, with the economic customs, aspirations people.... of a For social and moral frequently expressive that the that reason it has been said susceptible of exact (expression?) is not may purposes juridical application But it definition. regarded policy, public
be as well settled that a state has no Courts, properly cognizable by the which is not derived or implication derivable clear from the established law of State, Constitution, statutes, as found in its decisions____ judicial “ duty ‘It is to make laws and of them, subjects . expound
the Court to . . the which the (of Court undertakes to make the law mere declaration public policy) should not be increased number without ” pressing necessity.’ the clearest and the most reasons O’Neill, Magee from v. 19 S.C. 45 Am. [Quoting Rep. (1883).] 765 expression,
In a somewhat similar the court stated in Julien v. B., Asso., 79, 91, Model L. & I. 116 Wis. 92 N.W. (1902): view,
When we leave constitutional limitations out of legislative government, will of the branch of the when expressed, highest public policy. is the evidence of To will, judicially expressed condemn its when exercised limitations, plainest within constitutional would be the Parke, usurpation. kind Egerton Baron v.
Brownlow, 122, 123, expressed 4 H. L. Cas. the same idea substantially province thus: “It is the of the statesman and discuss, lawyer not of the legislature and of the good, public provide
determine what is best for the and to by proper province for it judge enactments. It is the he finds it law, policy as expound *9 to declare proper a Public is written law. unwritten and in the the policy of only in the sense ground for a decision to what is judicial notions as law, mere not in the sense of an act inter [speaking An of good. act public for the best contrary to illegal when it is to be properly said partes] law.” established principles the of App. 200 Mo. also, League,
See, Mutual Protective v. Griffith 286, 291 87, 105, 205 (1918): S.W. expressed to be found as a State is public policy The of laws, of its in the decisions and its Constitution and court, general of from considerations highest and not beyond policy of the State public interests and
supposed to the make known sources of information what such court. moral, comes from
Thus, potency of James economic, institutional, considerations. and other social Policy: An Henderson, Jr., on Public Judicial Reliance A. Decisions, Geo. Liability 59 Analysis Products
Empirical of 1570(1991). L. Rev. Wash. attempts to define foregoing cognizant of the
Perhaps actions has condemned certain policy,” this court “public see, v. Schriner policy; example, public
violate Nebraska’s
85,
(an
Co.,
(1988)
Nebraska’s on basing their decisions when especially be careful courts must “ ‘ contract, not matter of is a because public policy, [insurance ” 150, Shield, 242 Neb. Cross Blue Howard v. Blue sympathy.’ &Marine 99, 105 St. Paul Fire 160, 494 (1993) (quoting N.W.2d Insurance Company Purdy, 356, v. App. 129 Ga. 199 S.E.2d Moreover, (1973)). pervasively in an regulated, area so “it is judiciary not the function second-guess wisdom, policy, expediency legislative enactments.” State v. Two Games, 145, IGT Video Poker 237 Neb. 465 N.W.2d
458 (1991).
Although Nebraska’s prescribed has not program compulsory liability protect insurance to those who use this highways streets, state’s registration of a motor vehicle is conditioned on showing that the vehicle to be registered is covered liability insurance. See Neb. Rev. Stat. Also, 60-302 (Reissue 1988).
§ an owner of a Nebraska-licensed proof vehicle must have responsibility, required as by 60-302, in operated the vehicle when in Nebraska. Failure to have such certificate or in the motor vehicle is a misdemeanor. See Neb. Rev. (Reissue Stat. 1988).
Moreover, a driver in involved certain vehicular accidents is required proof to show of insurance. Failure to show will suspension lead to operator’s
license. See Neb. Rev. Stat. seq. (Reissue 60-501 et § 1988 & Supp. Thus, 1989). Nebraska operators owners and of vehicles statutorily are inculcated with the need for insurance coverage protect themselves and other members of the motoring public. ordinary To the operator, owner or policy
standard insurance personal meets that legal need. However, through mirrors, smoke and the household exclusion of the omnibus clause in the policy presents standard insurance Take, an illusion of insurance. for example, an owner of a riding vehicle who is in a vehicle which the owner has insured under a standard that includes the household exclusion. household,
The driver is a member say of the owner’s a son or daughter, operating or someone the vehicle with the owner’s permission, driving such as a mechanic the owner home before embarking repairs on to the vehicle. As a result of the driver’s negligence, occurs, an accident and the owner-passenger is seriously injured. today’s cases, In view of in decision these
owner’s provides coverage for injury indemnification of the owner’s and loss. illustration,
To avoid the preceding unfortunate result in the exclusion the household have held that in some states courts however, decisions, on are based policy. Those
violates insurance; example, specific required certain statutes Reed, 712 P.2d 109 Idaho Group v. see Farmers Ins. “[e]very required that (1978) Code (1985) (Idaho § continuously provide . . . shall motor vehicle owner of a liability imposed law resulting from against loss suffered damage property bodily injury death or or vehicle,” or use of a motor by maintenance person caused family members left clause but the household exclusion member was family or household when another unprotected statutorily therefore, exclusion violated driving; the household Call, 712 Exchange v. Ins. insurance), and Farmers
mandated Insurance Automobile No-Fault (Utah 1985)(the Utah P.2d 231 be registered in Utah
Act that all automobiles mandated conformity security with Utah’s types of specific covered Act, prohibited which Safety Responsibility Motor hence, clause; exclusion the household exclusion
household No-Fault Insurance Utah Automobile contravened the clause
Act). concerning
However, Nebraska statutes inspection of the an culminates coverage on motor vehicles liability insurance Section on vehicles. uncertainty regarding specific insurance of an the contents specification for 60-302 contains no registration of a required for certificate or should specification Absence of motor vehicle. statutes of the other Nebraska surprise in view
cause little Rev. Stat. Neb. motor vehicle insurance. pertaining to “Policy mean an shall Supp. 1992) states: 44-514(1) (Cum. part liability policy providing all automobile 44-514(2) Section section----” (2) of this defined subdivision *11 liability coverage shall include provides: “Automobile then liability, damage bodily injury property only coverage and coverage, and motorist payments, uninsured medical 44-514, Thus, coverage.” under § underinsured motorist coverage may include liability policy although an automobile damage, payments, and medical bodily injury property and motorists, none uninsured underinsured damage caused Similarly, required law. coverages are permissible of these liability policies 60-509.01 states that all § delivered or issued in Nebraska must coverage, include uninsured motorist but an may reject Likewise, insured coverage. uninsured motorist Act,
Underinsured Motorist Coverage Insurance Neb. Rev. (Reissue Stat. 60-571to 1989), requires 60-582 §§ that all motor liability policies vehicle include underinsured coverage motorist coverage rejected by unless such the insured. Safety
Section 60-508 of the Motor Responsibility provides Act operator that if an in “had effect at the time of such liability policy accident an automobile respect with to the accident,” motor vehicle involved in such his or her license will suspended not be following However, an accident.
proceeds to state: policy
No such . . . shall be effective under section 60-508 unless issued an company surety or company authorized to do in Every business this state.... subject,
such or bond is if the accident has resulted bodily sickness, in injury, disease, death, limit, to a costs, exclusive of interest and of not twenty-five less than thousand bodily injury dollars because of to or death of person any and, one subject one accident to such limit person, for one fifty a limit of not less than thousand bodily injury dollars because of to or death of two or more persons and, one accident if the accident has injury resulted to or property, destruction of to a limit twenty-five of not less than thousand dollars because of injury to or destruction property others one accident.
Consequently, compliance with Safety the Motor Vehicle Act, Responsibility an provide must certain minimum coverages preserve the license of an owner or operator who is involved in an accident within purview
the act. registration
For Nebraska, of a motor vehicle in require any does not minimum insurance such as that required by the Motor Vehicle Responsibility Act.
Although Legislature obviously hoped to increase the number of streets, insured vehicles on highways Nebraska’s reason, for some unexplained settled for
[757] present any 60-302 its form specificity concerning
§ without precise type “proof the responsibility.” of of financial Because 60-302 neither includes the specific stringent § and requirements (contents of 60-509 a § of for the Motor Safety Responsibility Act)
Vehicle by nor defines what is meant insurance,” “a produces certificate or § public misperception mirage mandatory and the insurance
coverage. analysis, In although the final requires responsibility register
individuals to show of financial vehicles, their motor the statute never defines is what meant responsibility.” legislative deficiency “financial This eliminates ascertaining basis for public policy concerning Nebraska’s liability coverage insurance for motor vehicles. Because
Nebraska provisions statutes contain no indication that the Safety Responsibility the Motor apply Act shall to all liability policies, automobile regarding nor instruction the scope 60-302,1 the financial required am is, exclusion, unable to find that the household unfair as it public policy. noted, violates Nebraska’s one As court has “ ‘ is duty “it the make laws them, expound court to subjects ... the the which court undertakes to make (of public the law mere declaration policy) should not be in number increased without clearest ’ ” pressing necessity.” Estep reasons and the most v. State Co., 105, 112, Farm Mut. Ins. 103 Auto. N.M. 703 P.2d J., (1985) (Stowers, dissenting) Lavender, 889 (quoting State v. 69 N.M. (1961)). 365 P.2d In the absence of a legislatively expressed public policy insurance
coverage, might public policy what open violate remains an reason,
question. For I the majority. that concur with What is all too obvious that the various Nebraska statutes coverage on insurance for motor vehicles are a series of grafts body intermittent amorphous skin on an of law with the deficiency anatomical of no backbone: law Nebraska contains specifications particular concerning insurance It provides responsibility.” that “financial is a fact of life in the industry little, any, leverage individuals have if Therefore, purchasing policies. when if Legislature believes that the welfare of citizens Nebraska’s operating riding in persons automobiles
requires that all by liability in case of motor protected state be this accident, statutorily express that Legislature must vehicle as in Nebraska. belief JJ., join in this
White, Lanphier, Fahrnbruch, concurrence. *13 Johnson, Timothy E. appellee, Nebraska, appe v.
State of
llant.