No. 88-212 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1988 

HORACE MANN INSURANCE, an Illinois 

corporation, 

Plaintiff and Respondent, 

-vsMATTHEW HAMPTON, SAFECO INSURANCE COMPANY 

OF AMERICA, a Washinton corporation, and 

LAWRENCE BLUNDELL, an individual, 

Defendants and Appellants. 

APPEAL FROM: District Court of the Fourth Judicial District, 

In and for the County of Missoula, 

The Honorable James B. Wheelis, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Richard Ranney; Williams Law Firm, Missoula, Montana 

For Respondent: 

Kim L. Ritter; Milodragovich, Dale & Dye; Missoula, 

Montana 

Submitted on Briefs: Aug. 11, 1988 

Decided: January 11, 1989 

. \, . . . - .- - - L ED SllITH .-. - -.. 

d !; Clerk 
Mr. Justice John Conway 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 the 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 line, 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, Bernard'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 about 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 room for the Wever car at his shop. 

Blundell waited for approximately one hour but the customer 

did not arrive. As a result, Rlundell believed it would he 

unsa'e 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., Rlundell drove with his son in the 

lilever car to a local tavern. There the two drank beer for 

several hours and talked. Rlundell then drove his son home 

and was enroute to his home when the accident occurred about 

11:15 p.m. 

Hampton made claim for his damages against Rlundell and 

Wevers' liability insurer, Horace Mann Insurance Company. 

Horace Mann filed this declaratory judgment action against 

Blundell, Hampton, and Safeco Insurance Company of America 

(Hampton's uninsured motorist insurer) denying liability 

coverage to Rlundell based on the omnibus clause in its 

policy which reads in part as follows: 

WHO IS AN INSURED? 

When we refer to your car, a newlv 

acquired car or a temporary substitute 

car, 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 Rlundell by the Wevers was narrow and that 

Blundell exceeded 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 of 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, S 61-6-301, MCA, requires 

automobile liability insurance policies to continue in force 

and effect for the use by Blundell of Wever's automobile. We 

answer that it does extend coverage to the minimum statutory 

requirement. 

Prior to the enactment of S 61-6-301, MCA, Montana 

relied solely upon a statutory scheme of insurance protection 

under what is known as the Financial Responsibility Act, or 

the "Motor Vehicle Safety-Responsibility Act," S 61-6-101, 

MCA. Under this act, a driver whose license has been revoked 

by the state must have proof of financial responsibility as 

required by the statute. This may be accomplished by filing 

a certificate of insurance, a bond or a certificate or 

deposit of money or securities. Section 61-6-132, MCA. 

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 property 

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. 

The clear purpose of this statute is to protect 

innocent members of the qeneral public iniured on the 
highways through the negligence of financially irresponsible 

motorists. Iowa Mutual Ins. Co. v. Davis (Mont. 1988), 752 

P.2d 166, 45 St.Rep. 524. As stated in 12A Couch on 

Insurance 2d (Rev. ed.), 5 45:692, the statute is remedial in 

nature, and insurance policies issued under this scheme must 

he liberally construed in light of the clear purpose and 

public policy of the statute -- to provide compensation to 

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 property damage to "any 

person." We held this statutory language to be an express 

outlawing of household exclusion clauses. 

Similarly, in Rill Atkin Volkswagen Inc. v. McClafferty 

(1984), 213 Mont. 99, 689 P.2d 1237, we held Montana's 

Mandatory Tiability 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 S 61-6-303, MCA, there were no exceptions to the 
statutory requirement that "every owner of a motor vehicle 

registered and operated in Montana by the owner or with his 

permission [is] to provide insurance for liability caused by 

maintenance or use of the motor vehicle." Iowa Mutual, 752 

P.2d at 168. In that case we emphasized the statutory 

requirement for insurance of a vehicle operated with 

permission unless it met one of the other exceptions. Those 

exceptions are not applicable to the present case. 

In Iowa Mutual, we next referred to Bain v. Gl.eason 

(Mont. 1986), 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 the 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 he 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 coverage 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, laws established 

for the benefit of the public cannot be contravened by 

private contract. Iowa Mutual, 752 P.2d at 169. 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 § 61-6-103, MCA, which requires motor vehicle 

liability insurance to provide continuous coverage up to the 

limits of the statute, for every motor vehicle operated with 

the permission of the owner. Where a driver of a motor 

vehicle initially obtains control and operates a vehicle with 

the permission of the owner, we hold that Montana's Mandatory 

Liability Protection Act requires liability insurance must 

continue to cover the vehicle even though the permittee may 

have exceeded the scope of the owner's permission or consent. 

As we did in Iowa Mutual, we further hold that the 

enforcement of minimum statutory coverage in Montana is 

mandated. We recognize that the lower court may wish to 

reconsider whether permission was given by the insured in a 

manner sufficient to warrant the extension of liability 

coverage in excess of the statutory minimum. 

The judgment is reversed and remanded for further 

proceedings consistent with this decision. 
We concur: - 
Mr. Justice 1,. C. Gulbrandson, a-issenting. 

I respectfully dissent. 

In mv view, the maiority, by adopting the "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 (15,841, 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 could 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), 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 

lower 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 adopt, some rule other than the "initial permission" rule. 

The decision to now adopt a minority absolute rule, in the light of 

contra expressions of this Court, should, in my view be left to the 

Montana Legislature. 

I would affirm the judgment of