Title: Cotton v. State Farm Mut. Auto. Ins. Co.

State: alabama

Issuer: Alabama Supreme Court

Document:

540 So. 2d 1387 (1989)
Louis V. COTTON
v.
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY.
87-855.

Supreme Court of Alabama.
March 3, 1989.
Joseph M. Cloud of Cloud and Fees, Huntsville, for appellant.
Patrick W. Richardson and Denise A. Ferguson of Bell, Richardson & Sparkman, Huntsville, for appellee.
ADAMS, Justice.
This is an appeal from a declaratory judgment in favor of State Farm Mutual Automobile Insurance Company ("State Farm") on Louis B. Cotton's claim for underinsured motorist benefits.
Cotton was injured in an automobile accident in Huntsville, Alabama, in August 1986. The parties have stipulated that the other driver, Larry Bowen, was at fault. Cotton's injuries resulted in damages exceeding $100,000.00; however, Bowen's maximum liability insurance coverage was $50,000.00. Bowen's insurance company, Alabama Farm Bureau, offered Cotton its maximum liability limit of $50,000.00 in exchange for the release of Bowen and Alabama Farm Bureau. After notifying State Farm of the offer, Cotton accepted the $50,000.00 pro tanto and then proceeded to attempt collection of underinsured motorist benefits from his own insurer, State Farm.
The two $25,000.00 policies under which Cotton is claiming benefits were issued by State Farm in Humboldt, Tennessee. Cotton is originally from Atwood, Tennessee, not far from Humboldt, and he maintained a house in Atwood from 1973 until 1987. After selling his house in 1987, he purchased a lot there. Both of Cotton's cars were registered in Tennessee; and he is a resident of that State. However, Cotton has been employed at Redstone Arsenal in Huntsville, Alabama, since 1958, and he resides in a mobile home in Huntsville from Sunday through Friday of each week. He generally returns to Tennessee on the weekends.
When the two policies in question were issued, Cotton was dealing with the State Farm office in Humboldt. He never changed companies or sought to deal with the State Farm office in Huntsville. There also is no evidence that he notified State Farm that he was spending the majority of his time in Alabama. Cotton contends that because his automobile was principally garaged in Alabama, Alabama law should be applied in determining the amount of his uninsured/underinsured benefits. The application of Alabama law would be beneficial to him because under it he would be entitled to "stack" his policies, thereby receiving $50,000.00 in benefits above his settlement. Tennessee law, on the other hand, does not permit the stacking of policies. Therefore, his claim would only be for $25,000.00. In addition, in Tennessee *1388 uninsured/underinsured motorist benefits are offset by money recovered from the uninsured/underinsured motorist. § 56-7-1202, Tenn.Code.Ann. Therefore, should Tennessee law apply, Cotton's claim for underinsured benefits would be offset by the $50,000.00 he received in his settlement with Bowen and Alabama Farm Bureau.
In considering which state's law should apply to the facts before us, we note that the insurance contract was formed in Tennessee between a company doing business there and a Tennessee resident. In Davis v. Hartford Ins. Co., 456 So. 2d 302, 304 (Ala.1984), this Court held that Illinois law should apply with regard to an insurance contract where the contract "was made within the State of Illinois between an Illinois company and an Illinois resident." We cited American Interstate Ins. Co. of Georgia v. Holliday, 376 So. 2d 701 (Ala. 1979), and State Farm Mutual Automobile Ins. Co. v. Bradley, 293 Ala. 695, 309 So. 2d 826 (1975), as reaching the same conclusion with regard to contracts formed in Georgia and South Carolina, respectively.
The cases mentioned above, however, deal with insurance contracts in general and do not involve a mandatory statute, such as Alabama's uninsured motorist provision, § 32-7-23, Code of Alabama (1975). With regard to such compulsory insurance, Cotton's policy has the following language:
"B. 1. Out-of-State Coverage
We must determine whether § 32-7-23, supra, applies to the situation before us. That section states in pertinent part:
AFFIRMED.
HORNSBY, C.J., and MADDOX, ALMON and STEAGALL, JJ., concur.