Case Name: William OBDYKE, Appellant, v. HARLEYSVILLE MUTUAL INSURANCE COMPANY
Court: Superior Court of Pennsylvania
Jurisdiction: Pennsylvania
Decision Date: 1982-05-14
Citations: 299 Pa. Super. 298
Docket Number: No. 1429
Parties: William OBDYKE, Appellant, v. HARLEYSVILLE MUTUAL INSURANCE COMPANY.
Judges: Before SPAETH, CAVANAUGH and O’KICKI, JJ.
Reporter: Pennsylvania Superior Court Reports
Volume: 299
Pages: 298–312

Head Matter:
445 A.2d 763
William OBDYKE, Appellant, v. HARLEYSVILLE MUTUAL INSURANCE COMPANY.
Superior Court of Pennsylvania.
Argued Dec. 4, 1979.
Filed May 14, 1982.
Petition for Allowance of Appeal Granted Aug. 31, 1982.
Albert Ominsky, Philadelphia, for appellant.
William D. March, Media, for appellee.
Before SPAETH, CAVANAUGH and O’KICKI, JJ.
Judge JOSEPH F. O’KICKI of the Court of Common Pleas of Cambria County, Pennsylvania is sitting by designation.

Opinion:
SPAETH, Judge:
This is an appeal from an order vacating an arbitration award in an automobile accident case on the ground that there was no "uninsured motorist." We affirm.
On November 2, 1977, William Obdyke, while driving his automobile, was involved in a collision with an automobile driven by one Jose Antonio Mejias. Obdyke's right ankle was broken. Mejias was driving under the influence of alcohol. Obdyke's claim against Mejias was settled by Mejias's insurance carrier, Motor Club of America Insurance Company, for $15,000. Obdyke also filed a claim with his own carrier, Harleysville Mutual Insurance Company, for benefits under his "uninsured motorist" coverage. When 'Harleysville refused to pay the claim, an arbitration was held. On February 26,1979, the arbitrators by a 2-to-l vote awarded Obdyke $15,000. On March 8, 1979, Harleysville petitioned the lower court "to modify, vacate or correct" the arbitrators' award, on the ground that Mejias was not an "uninsured motorist" at the time of the accident. On June 27, 1979, the lower court granted the petition and vacated the award. Obdyke now appeals from that order.
As appellant, Obdyke argues that Harleysville waived any right to object to the arbitration award (and that the lower court therefore erred in vacating the award) by virtue of a provision in the arbitration clause of the policy that "[a] decision agreed to by two of the arbitrators will be binding." This argument was not raised in appellant's answer to Harleysville's petition in the lower court. However, since it could be construed as going to our jurisdiction, we shall consider it.
The arbitration clause provided that arbitration "shall be conducted in accordance with the Pennsylvania Arbitration Act of 1927." Arbitration under the Act of 1927 is subject to much broader judicial review than is common law arbitration. Wingate Construction Company v. Schweizer Dipple, Inc., 419 Pa. 74, 213 A.2d 275 (1965). Section 11(d) of the Act, 5 P.S. § 171(d), provides that on the application of any party the court shall make an order modifying or correcting the award "[wjhere the award is against the law, and is such that had it been a verdict of the jury the court would have entered different or other judgment notwithstanding the verdict." See Pennsylvania Turnpike Commission v. Smith, 350 Pa. 355, 39 A.2d 139 (1944).
This provision for broad judicial review is a critical feature of the Act of 1927. It follows that where an agreement provides for arbitration "in accordance with" the Act, to construe the agreement as precluding broad judicial review would be to construe it in a manner inconsistent with the Act. See Wingate Construction Company v. Schweizer Dipple, Inc., supra; Emporium Area Joint School Authority v. Anundson Construction and Building Supply Co., 191 Pa.Superior Ct. 372, 156 A.2d 554 (1959), rev'd on other grounds, 402 Pa. 81, 166 A.2d 269 (1960).
Here, a construction consistent with the Act of 1927 is obvious. The provision that "[a] decision agreed to by two of the arbitrators will be binding" simply means that a decision agreed to by two of the three arbitrators is as binding—has the same effect—as a decision agreed to by all three arbitrators. Whether by a majority or unanimous, the decision is subject to the same broad judicial review provided by the Act.
Since it is therefore apparent that Harleysville did not waive its right to petition the lower court to vacate, modify, or correct the award, we may turn to considering whether in vacating the award the lower court erred. In undertaking this consideration, we must draw every inference of fact in favor of appellant as the award winner, but it is also our duty to correct errors of law. Pennsylvania Turnpike Commission v. Smith, supra.
Here, the arbitrators made no findings of fact or conclusions of law. In vacating the award, the lower court said that "[i]t is not unreasonable to assume that the Arbitrators concluded that "underinsured" is to be equated with "uninsured." On this assumption the court held the award "patently improper." Slip op. at 3.
It seems likely that the lower court was correct in assuming that two of the three arbitrators concluded that "unde- • rinsured" is to be equated with "uninsured," for counsel for appellant argued vigorously to the arbitrators that Mejias was "uninsured" because he was "underinsured." N.T. 34, 47-48, 9/29/78 hearing; N.T. 5-9, 24-30, 1/27/79 hearing. If in fact two of the three arbitrators did equate "underinsured" with "uninsured," the lower court was justified in characterizing their award as "patently improper." This court sitting en banc has very recently held that there is no basis in law or policy for that equation. Davis v. Government Employees Ins. Co., 296 Pa.Superior Ct. 198, 442 A.2d 727 (1982); see also White v. Concord Mutual Ins. Co., 296 Pa.Superior Ct. 171, 442 A.2d 713 (1982).
In Davis the claimant had received $24,467 from the tortfeasor's insurance carrier in partial settlement of a claim alleged to be in excess of $100,000. He then sought payment under the uninsured motorist coverage of his own policy; when his carrier declined to pay, he sought arbitration. By a vote of 2 to 1 the arbitrators held that they lacked jurisdiction because under the policy definition—which was the same in all material respects as the definition in appellant's policy—there had been no "uninsured motorist" involved in the accident. The claimant sought judicial review of this holding, arguing among other things that the policy definition of "uninsured" was "contrary to constitutional, legislative or administrative mandate or against public policy or unconscionable." See Davis v. Government Employees Ins. Co., supra, 296 Pa. Super, at 203, 442 A.2d at 729-30. Both the lower court and this court en banc rejected this argument. We noted that the argument that "an automobile covered by a policy in the minimum amount required by the financial responsibility law should nevertheless be held 'uninsured' in the event that the claimant's damages exceed the face of the policy has been uniformly rejected [in other jurisdictions]." Id., 296 Pa.Super. at 203, 442 A.2d at 730 (Citations omitted).
In his brief to us appellant has abandoned the argument that Mejias was "uninsured" because he was "underinsured." Instead, he argues that Mejias was "uninsured" because the limit of his policy was less than the minimum limit required by law.
Appellant's policy with Harleysville defined an "uninsured motor vehicle" as one:
1. to which no bodily injury bond or policy applies at the time of the accident.
2. to which a bodily injury bond or policy applies at the time of the accident but its limits for bodily injury liability is [sic] less than the minimum limit for bodily injury liability specified by the Financial Responsibility Law of the State in which your covered auto is principally garaged.
3. which is a hit-and-run vehicle . . .
4. to which a bodily injury liability bond or policy applies at the time of the accident, but the bonding or insurance company denies coverage or is or becomes insolvent.
R.R. 19(a)
As the lower court noted, at the time of the accident the minimum limit of bodily injury liability specified by the Pennsylvania financial responsibility law was $15,000. 75 Pa.C.S.A. § 1747; 40 P.S. § 1009.104. In his brief, appellant asserts that "[although [appellant's] claim against Mejias was settled for $15,000.00 with MCA [Motor Club of America Insurance Company], the fact remains that the MCA policy had 'limits of bodily injury liability' of $5,000 per person and $10,000 per accident." Brief for Appellant at 6. Since these limits were less than the minimum limit of $15,000 specified by law, appellant argues, Mejias was "uninsured" within the meaning of paragraph 2 of the definition of "uninsured" in appellant's policy with Harleysville.
There were two hearings before the arbitrators. The first hearing was on September 29, 1978. In the course of the hearing, counsel for appellant asserted that "the Mejias' [sic] vehicle had $5,000 bodily injury liability." N.T. 37, 9/29/78. The assertion was contested by counsel for Harleysville as inadmissible hearsay, N.T. 40-41, 43, and after an extended argument, N.T. 37-77, the arbitrators ruled that the assertion was inadmissible. N.T. 77-78. The hearing concluded on the understanding that counsel for appellant would "get the information" as to Mejias's coverage. N.T. 78. The second hearing was on January 29, 1979. At the beginning of this hearing counsel for appellant stated:
The testimony at the last hearing, if you remember, there was a dispute because I had been notified by Motorists Insurance Company of Boston, Massachusetts, that their liability insurance for this accident was $5,000. That's the policy they wrote. Since that time, with great coaxing on my part and constant correspondence and everything else they have agreed to pay $15,000. Their argument was that it didn't—they didn't think the coverage was there, et cetera, but the agreement was that they'd pay $15,000 as far as Mr. Mejias' liability is concerned.
There's a stipulation that Mr. March and I signed and I think, Bernie, I sent it back to Mr. March because I felt that he sent it to me, so I sent you a copy of it but you now have the original signed stipulation.
N.T. 4, 1/29/79.
Paragraphs 5 and 6 of the stipulation thus referred to read:
5. William Obdyke obtained payment from the insurance carrier for Jose Antonio Mejias, Motor Club of America Insurance Company, in the sum. of $15,000.00.
6. The limit for bodily injury liability payable under the policy of insurance issued to Jose Antonio Mejias by Motor Club of America Insurance Company applicable to the automobile accident of November 2, 1977 was $15,000.00. Supplemental R.R. 124b.
The confusion over Mejias's coverage arose because although on the declaration page of his policy the bodily injury limit (per person) was indicated as $5,000, which satisfied the financial responsibility requirement of his home state, Massachusetts, at the time of the accident, the policy also included a provision that if Mejias was involved in an accident in another state with higher financial responsibility requirements, the coverage under the policy would be increased to that amount. See N.T. 71-73, 9/29/78 hearing. We have no difficulty holding as a matter of law that where an out-of-state policy has such an escalation provision, and where an amount at least equal to the Pennsylvania financial responsibility requirement has been paid, the automobile covered by such a policy is not "uninsured," regardless of the limits specified on the declaration page of the policy.
In view of the stipulation, in particular paragraph 6, we might have refrained from this holding. When counsel for the parties have stipulated to the arbitrators that the policy limit of the tortfeasor's policy is at least equal to the minimum specified by Pennsylvania law, the arbitrators may not find, and counsel should not argue, that the policy limit was less and that the tortfeasor was therefore uninsured. In re Monheim's Estate, 451 Pa. 489, 304 A.2d 115 (1973); K & C, Inc. v. Westinghouse Elec. Corp., 437 Pa. 303, 263 A.2d 390 (1970).
AFFIRMED.
O'KICKI, J., files a concurring and dissenting opinion.
. Act of April 25, 1927, P.L. 381, No. 248, as amended, 5 P.S. § 161 et seq. The Act of 1927 was repealed by the JARA Continuation Act of 1980, Act of October 5, 1980, P.L. 693, No. 142, § 501(c), effective in 60 days. Statutory arbitration is now provided for by sections 7301-7320 of the Judicial Code, 42 Pa.C.S.A. § 7301-7320.
. We deferred our decision in this case until the opinions in Davis and White had been filed.
. Although counsel for appellant described the stipulation as having been s,gned by himself and counsel for Harleysville, we find in the record only a copy of the stipulation without signatures. However, since counsel for appellant has admitted to having signed the stipulation, we shall assume that his statement was correct.
. We have not overlooked the fact that the lower court said it was "vacating" the award rather than "modifying" or "correcting" it. Under the Act of 1927 a court's power to vacate an award is defined in terms different from its power to modify or correct an award. Compare § 10, 5 P.S. § 170, with § 11, 5 P.S. § 171. The power to enter the equivalent of judgment notwithstanding the verdict is provided as part of the power to modify or correct an award. Thus the lower court should have said it was modifying or correcting the award, instead of saying that it was vacating it.