No. 13047 INTHE SUPREME COURT OF THE STATE OF MONTANA 19 

### 75

MOUNTAIN WEST FARM BUREAU, eta1.y Plaintiff and Appellant,

ROBERT L. NEAL, individually and as Administrator of the Estate of DEBORAH NEAL, Deceased, and ROBERT C. DRIGGS, Defendants and Respondents.

Appeal from: District Court of theFirstJudicial District, Honorable Gordon R. Bennett, Judge presiding. Counsel of Record:

Scanlon and Connors, Anaconda, Montana Joseph C. Connors argued, Anaconda, Montana Radonich, Brolin and Reardon, Anaconda, Montana 

# -p~/ 0/&~7e& For Reqmdmts:L.L -& Johnson and Foster, Lewistown, Montana Robert L. Johnson argued, Lewistown, Montana

Submitted: December 17, 1975

Filed:Mr. Justice Frank I. Haswell delivered the Opinion of the Court.
Plaintiff Mountain West Farm Bureau Mutual Insurance Company (Farm Bureau) brought a declaratoryjudgment action against defendants Neal and Driggs seeking a declaration that Farm Bureau 

### is liable topay no more than $10,000 to 

### its insured,

It Neal, under 

### its uninsured motorist" coverage. Neal counterclaimed that Farm Bureau 

### is liable in the amount of $80,000. The district court, Lewis and Clark County, found Farm ~ureau's liabilitytobe $40,000. Farm Bureau and Neal appeal from this order. The underlying issue iswhether and under what circumstances a person carrying a single policy of automobile liability insurance, which insures two ormore vehicles and includes a provision foruninsured motorist coverage, may "stack" or

II

pyramid" theuninsured motorist coverage limits. The district court held that under the insurance policy in question theuninsured motorist coverage limitsmay be stacked on the basis of thenumber of vehicles insured, but that those limitsmay not be stacked on both thewrongful death and survival claims. We affirm. The facts of this casewere stipulated in the district court and areundisputed here. Prior to July4, 1971, Farm Bureau issued 

### itspolicy of automobile liabilityinsurance toNeal, the policy included a provision foruninsured motorist coverage in the amount of $10,000 for one person inany one accident. Four motor vehicles, allowned by Neal, were covered by the same policy. Neal, 

### hiswife, and his daughter Deborah were named insureds by definitionunder the policy, which was in fullforce and effect on July

### 4, 1971. On July b, 1971, Deborah Neal was riding on a motorcycle owned and operated by Robert Driggs, the other defendant herein. An accident occurred inwhich Deborah was injured; she died onJuly 10, 1971. Driggs was an uninsured motorist atthe time of the accident. Neal brought an action against Driggs and Farm Bureau in the district court of Gallatin County seeking damages from Driggs for ~eborah's injury and death, and reimbursement from Farm Bureau under the uninsured motorist provisions of 

### its policy with Neal. Thereafter, on February 

### 6, 1974, Farm Bureau filed 

### its complaint for declaratoryjudgment inLewis and Clark County against Neal and Driggs. The Gallatin County actionbetween Neal and Driggs ispending, Farm Bureau having been dropped asa party thereto. Farm Bureau alleged in 

### itscomplaint that it had tendered $10,000 toNeal to satisfy its obligation under the uninsured motorist provisions of 

### itspolicy; that said tender had been repeatedly refused; and that Neal believed he was entitled to multiply the $10,000 limitforuninsured motorist coverage by the number of automobiles Neal had insured under the same policy. Farm Bureau prayed for a declaratoryjudgment tothe effect that itwas under no duty or obligation topay more than $10,000 to Neal for injuries to and death of Deborah Neal under the terms of the policy. Defendant Neal answered by admitting allof Farm Bureau's allegations save those which would limitFarm Bureau's liability to $10,000 or to $40,000. Neal counterclaimed for a declaratory judgment declaring that Farm Bureau's maximum obligation under the policy 

### is $80,000 ---$40,000 for the damages to theheirs for thewrongful death of Deborah Neal, and $40,000 for thebodily injuries and personal suffering of Deborah Neal under her survival claim. Thus Neal sought to "stack" uninsured motorist coverage limitsin two ways, viz. (1) by multiplying the $10,000 limitby the number of insured vehicles (four), and 

### (2) by multiplying the$40,000 liabilityresulting thereby by thenumber of claims prosecuted by Neal as an insured individual and representative of the heirs of Deborah Neal, and as administrator of Deborah Ileal'

### s estate, (two). The districtcourt of Lewis and Clark County had before it the stipulated facts and a copy of the insurance policy issued by Farm Bureau toNeal. Following hearing and submission of briefs, the court held that Farm ~ureau's maximum totalobligation toNeal under 

### itspolicy for allinjuries to and the death of Deborah Neal 

### is the sum of $40,000. Farm Bureau appeals from that portion of the district court's orderwhich permits stacking the $10,000 uninsured motorist coverage limiton the theory that four vehicles were insured by one policy; Neal appeals from the portion of the orderwhich denies his attempt to stack the two claims as
an insured individual and as administrator of Deborah ~eal's estate. The issues on appeal are: (1) Do the insurance policy provisions relating to uninsured motorist coverage contain contradictions which render thepolicy ambiguous, thus permitting ajudicial construction of the policy which allows stacking based on thenumber of vehicles insured? 

### (2) Can the insurance claimant Neal stackuninsured motorist coverage limitson the basis of his capacity to sue on two claims, i.e., as an insured individual and as administrator of Deborah ~eal's estate? In itsorder and opinion dated March 12, 1975, the district court disposed of the first issue in this language: "1t isthe opinion of the Court that the provisions of the policy dealingwith and labelled '~imits of ~iability' (pg.32) and those provisions of paragraph 

### '1' of the definitions section of the policy (pg.37) are contradictory, ambiguous and beyond reconciliation and must therefore be construed in favor of the policyholder. When so construed, the effect of paragraph 

### '1'af the definitions is to provide four separate 

# - policies of uninsured motorist insurance with maxlmum liabilityof $10,000 each for each person physically injured or killed in a particular occurrence, there having been four vehicles insured under the policy at the time of the injury. JC JC JX" (Emphasis supplied.) The limitsof liabilityprovision referred to states i.n part: "(a) 'The limitof liability, as stated in the declarations for uninsured motorist coverage, as 

## ' applicable to each person' is the limitof the company's liability for alldamages, including damages for care or loss of services, because of bodily injury sustained by one person as the result of any one accident and, subject to the above provision respecting each person, the limitof liability stated in the declarations as applicable to 'each accident' is the total limitof the Company's liability for alldamages, including damages for care or loss of services, because of bodily injury sustainedby two or more persons asa result of any one accident.II
I' It L~aragraph 1 of the definitions section provides in oertinent part:
I'(1) Two (2) or more automobiles--- Fhen two (2) or more automobiles are insured hereunder, the terms of Section 111 shallapply separately to each JX it 

### J;." This provision 

### is referred to as the separability clause. The rule of construction of insurance policies inMontana

<"a is stated in section 40-3725, R.C.M. 1947:

1'Construction of policies. Every insurance contract shallbe construed according, to the entiretv of its terms and conditions as set-forth in the and as amplified, extended, ormodified by any rider, endorsement, or applicationwhich is a part of the policy. 11 

### It is also the rule inMontana that where an ambiguity in an insurance policy exists after viewing it in 

### its entirety, the terms thereof willbe construed liberally in favor of the insured and strictlyagainst the insurer. In Atcheson v. Safeco Insurance Company, 165 Mont. 239, 527 P.2d 549, 31 St.Rep. 839,846, it is said: "When an ambiguity arises ik J;

# * the insured isentitled tothe benefit of any doubt. II

### See also: Lamb v. 

### "age, 

### 153 Mor~t.

### 171, 455 P.2d 

### 337; St. Paul Fire & 

### Marine Ins. Co. v. Thompson, 150Mont. 182, 433 

### P.2d 

### 795; Johnson v. Equitable Ins. Co., 142Mont. 128, 381 P.2d 778; Eby

v. 

### Foremost Insurance Co., 141Mont. 62, 374 P.2d 857. Cf. Stonewall Ins. 

### Co. v. West, 163 Mont. 12, 514 P.2d 764; Jones v. Virginia Surety Co., 145 Mont. 440, 401 P.2d 570; Section 13-720,R.C.M. 1947. Viewing the limits of liability clause and separability clause in juxtaposition and as part of the entire policy leads

II 

### to the conclusion that they are contradictory, ambiguous and

11 

### beyond reconciliation. The separability clause is expressly made part of the uninsured motorist coverage. The limits of liability clause limits coverage for "each person" in any one accident to $10,000. 

### On the other hand, under the separability clause each separate automobile is governed by the limits of liability clause of the policy. Thus, under the former clause Neal would
recoverno more than $10,000;under the latter he could recover up
co 

### $40,000. Applying the rules of construction of insurance policies hereinabove stated,we hold the district court was correct in construing the ambiguous provisions in favor of the insured, Neal, and stacking uninsured motorist coverage limits to a maximum of $40,000. Further clarification of this holding can be found in uninsured motorist cases fromMontana and other jurisdictions. Farm Bureau and Neal strongly contested the application to the instant case of Sullivan v. Doe, 159 Mont. 50,59,60,62,495 P.2d 193, 

### the only other reported Montana case dealing with uninsured motorist coverage. The pertinent issue in Sullivan as stated by the Court was:

'I* 

# ** whether it is permissible for an insurance company in Montana to place limitations in its t

### uninsured motorist1coveragewhich reduce or eliminate its liabilitybelow the statutory limits."This Court unanimously held where there were two insurance policies on one individual, both of which contained uninsured motorist coverage, neither insurer could limit

### its liability below the $10,000 statutory limitby deducting workman's compensation or "other insurance" benefit payments by virtue of certain policty clauses. These clauses, as applied by the insurance companies, were in derogation of the letterand spirit of Montana's uninsured motorist statute, section40-4403, 

### R.C.M. 1947, and were declared void. In Sullivan we were dealingwith two insurance policies and with a "primary" and "excess1'insurer. Nevertheless, Sullivan aids our task here by declaring: 

# "* Jc

# * The basic purpose of this [uninsured motorist] statuteisobvious---to provide protection for the automobile insurance policyholder against the riskof inadequate compensation for injuries or death caused by the negligence of financially irresponsible motorists.

tI The legislative purpose

# *

# * is simply toplace the injured policy holder in the same position he would have been if the uninsured motorist had liability insurance

# * *

# *.'1

11 In discussing the excess" insurer's contention that its "other insurance" clause relieved it of any liability, we stated:
119c

# ** the statutoryrequirement of $10,000 Iuninsured motorist' coverage prescribes a minimum

amount only and does not purport to fixa statutory maximum. lI The legislative policy considerations enunciated in Sullivan apply with equal forcehere. Therefore, where an insurer does not validly limit

### its liabilityto the statutory minimum, che uninsured motorist coverage limitscan be stacked to effectuate the purpose of the uninsured motorist statute. That purpose is indemnification for the insured up to the limitof the insurer's Liability, as stacked, or the total damages sufferedby the insured--- whichever isless. Both parties inthis appeal cited cases from otherjurisdictions in support of their contentions regarding the stacking of uninsured motorist coverage limitsbased on number of vehiclesinsured. Without extensivelyreviewing those conflicting cases inthis opinion, we find ~eal's authorities more persuasive. In 

### itsorder and opinion, the district court expressly relied on the Indiana case of Jeffries v. Stewart, (1nd.App. 1974), 309 N.E.2d 448. In Jeffries the court found an ambiguity created by a limitsof liabilityclause and separability clause almost identical tothose in the instant case, and construed the policy in favor of stacking coverage 

### limits. Subsequently inMiller v. Hartford Accident & Indemnity Co., 506 F.2d 11,15, the Court of Appeals applied Indiana law toan uninsured motorist coverage stacking situation, affirmed the District Court and held that stackingwas not permissible. However, itreconciled thisholding with Jeffriesby stating:

If*

# *

# * Resolving the ambiguity in favor of the

insured, it [the Jeffries court1held that the insured was entitled toaggregate the liability limits. In the case atbar, however, therewas no separability clause affecting theuninsured motorist coverage and no ambiguity in the policy coverage, and the case logicallymay be distinguished. f: ik -'-I1 48 It 

### iswith the reasoning of this statement from 

### Miller thatwe distinguishWestchester Fire Insurance Company v. Tucker, (Tex.1974), 512 S.W.2d 679, relied on by Farm Bureau. 

### Cf. Talbot v, StateFarm Mutual Automobile Ins. Co. (Miss.1974), 291 So.2d 699, (no reference to separability clause). Other cases citedby Farm Bureau either dealwith general liabilitycoverage rather than uninsured motorist coverage, Pacific Indemnity Company v. Thompson, 56 Wash.2d 715, 355 P.2d 12; or failtomake any distinction between the two types of coverage, Castle v. United Pacific Insurance Group, 252 Or. 44, 448 P.2d 357; Kennedy v. American Hardware Mutual Ins. Co., 255 Or. 425, 467 P.2d 963; Allstate Insurance Company v. Schmitka, 21Cal.App.3d 59, 

### 90 Cal.Rptr. 399; Arminski v. United States Fidelity and Guaranty Co., 23 Mich.App. 352, 178 N.W.2d 497; Otto
v. Allstate Insurance Company, 2 I11.App.3d 58, 275 N.E.2d 766; Allstate Insurance Company v. IlcHugh, 124N,J.Super. 105, 304 A,2d 

### 777; Hurles v. Republic Franklin Ins. Co., 39 Ohio App,2d 118,316 N.E.2d 494. In order topromote the adjudicated purpose of
our uninsured motorist statute, we decline to follow these cases. Farm Bureau urges one more point with respect to the

I I first issue, namely, that the duplicate coverage" clause of the policy entitled the insured toonly one set of uninsured motorist coverage limits. However, we agree with the district court, which stated in itsorder and opinion:

I IThe 'duplicate coverage' provision 9: 

# *

# * dealswith duplicate coverage within a single policy, not similar coverage inmultiple policies. If itwas intended to limitthe statutorilyrequired and accepted uninsured motorist coverage within any of the separate policies, it 

### is invalid.It Cf. Sullivanv, Doe, 159Mont. 50, 495 P.2d 193. 

### On cross-appeal Neal maintains the $40.000 liabilityof

. ', Farm Bureau should be doubled because there aretwo claims inthe main tort action--survival and wrongful death. In effect, Neal claims coverage as (1) the legalrepresentative as administrator of Deborah Neal's estate forher personal injuries and death, and (2) an insured.individua1under the policy and representative of Deborah ~eal's heirs, alsoinsureds under the policy, Alternatively, Neal seems toclaim that in event the $20,000 limitof liability for "each accident" set forth in the 

### limitsof liabilityclause and the policy declarations canbe stacked on the four separate policies to $80,000. The main argument runs afoul of that portion of the policy definition of "Named 

### insuredi' which provides:
IIThe insurance affordedunder Coverage P [uninsured

motorist] applies separately toeach insured, but the inclusion herein of more than one insured shall not operate to increase the limitsof the Company's liability.

## " Accordingly ~eal's claim of $80,000 uninsured motorist coverage must fail. Neal's alternativecontention that the "each accident" limitof $20,000 can be stacked 

### iswithout merit. The 

### limitsof

### liability clause, heretofore set forth, subordinates the "each

It 

### accident1' provision to the each person" provision. The district courtwas correct in denying this claim. The order of the district court is affirmed.

Justice 

# .

We Concur: 

### n

Chief'Justice James T. Harrison and Justice Wesley Castles dissenting: We dissent. We do not agree that there is any ambiguity in the liability and separability clauses and thus would not construe anything.However,we do agree with the majority's discussion of the cross-appeal.

Justice. 

# i' "".-