Title: Van Tassel v. Horace Mann Insurance Company
Citation: 207 N.W.2d 348
Docket Number: 43653
State: Minnesota
Issuer: Minnesota Supreme Court
Date: May 11, 1973

207 N.W.2d 348 (1973) May VAN TASSEL, et al., Respondents, v. HORACE MANN INSURANCE COMPANY, Whose Correct Name is Horace Mann Mutual Insurance Company, Appellant. No. 43653. Supreme Court of Minnesota. May 11, 1973. *349 Mordaunt, Walstad, Cousineau &amp; McGuire and Harold J. W. Sweet, Minneapolis, for appellant. Rider, Bennett, Egan, Johnson &amp; Arundel, David F. Fitzgerald and Wright S. Walling, Minneapolis, amicus curiae. Albertson, Norton &amp; Jergens, John V. Norton and John E. Cass, Stillwater, for respondents. Heard and considered en banc. KNUTSON, Chief Justice. This is an appeal from a declaratory judgment entered in favor of plaintiffs in an action brought to secure a judicial determination of the correct application of certain provisions of our uninsured-motorist statute to the insurance policies involved. Prior to the rendition of the judgment by the trial court, the issues of the nature and extent of plaintiffs' damages and the liability of the uninsured motorist were submitted to an arbitrator who rendered an award in favor of Beltram Van Tassel for $12,000 with respect to his derivative claim for his son's injuries and in favor of Theodore Van Tassel, the injured claimant, in the sum of $21,000. The derivative claim of the mother, May Van Tassel, was denied. By stipulation the parties reserved for trial by the court the issues involving the extent of the total liability of defendant insurer for the damages found by the arbitrator. The trial court ruled that the policy provisions relied upon by defendant were void and ordered judgment in favor of plaintiffs in the amount of $33,000. The facts have been stipulated. They may be summarized as follows: Plaintiffs had four separate insurance policies issued by defendant on four vehicles owned by plaintiffs. Each policy contained $10,000 uninsured-motorist coverage per person. Plaintiffs paid a separately stated semiannual premium for this coverage on each policy. Theodore Van Tassel, the son of plaintiffs May Van Tassel and Beltram Van Tassel, was injured on June 25, 1969, as a result of an accident with an uninsured motor vehicle. Theodore Van Tassel was a named insured within the definition of each of the four policies. 1. The case essentially involves a reconciliation, if possible, between restrictive provisions of the insurance contracts and our statute, Minn.St.1967, § 72 A. 149,[1] which requires all policies of automobile insurance issued after the effective date of the statute to contain uninsured-motorist coverage. The question involved in this case is really whether the insurer's liability is limited to recovery in the amount of one policy, or whether each policy carries its own liability which can be used to "stack" coverage up to the full amount of plaintiffs' damages. The restrictive policy provisions in each of the policies involved read: The relevant provision of our statutes is Minn.St.1967, § 72 A. 149, subd. 1, which reads: Minn.St. 170.25, subd. 3, contained in the Safety Responsibility Act, provides in pertinent part: There are two lines of authority construing statutes similar to ours and insurance provisions identical to those involved here. The problem posed by each is quite succinctly stated by the author of the annotation in 28 A.L.R.3d 551, 554, as follows: The cases pro and con are collected in this annotation. It would serve no useful purpose to discuss them here, as they are exhaustively discussed in the annotation. While those decisions representing the numerical weight of authority are not always the most persuasive, we are of the opinion in this case that the line of authority which appears to be developing into the majority rule offers the most convincing rationale. Those cases have held invalid restrictive insurance clauses such as those in this case. Among the more persuasive decisions following the majority rule are Blakeslee v. Farm Bureau Mutual Ins. Co., 32 Mich.App. 115, 188 N.W.2d 216 (1971), affirmed, 388 Mich. 464, 201 N.W.2d 786 (1972), and Collins v. Motorists Mutual Ins. Co., 36 Mich.App. 424, 194 N.W.2d 148 (1971). In Blakeslee, the Michigan Court of Appeals said (32 Mich.App. 120, 188 N.W.2d 218): In Stephens v. Allied Mutual Ins. Co., 182 Neb. 562, 571, 156 N.W.2d 133, 139 (1968), the Nebraska court said: See, also, Protective Fire &amp; Cas. Co. v. Woten, 186 Neb. 212, 181 N.W.2d 835 (1970); Bose v. American Family Mutual Ins. Co., 186 Neb. 209, 181 N.W.2d 839 (1970). Apparently, the effort on the part of insurers has been to limit their liability to the minimum requirement under safety responsibility acts. In Widiss, A Guide to Uninsured Motorist Coverage, § 2.58, Professor Widiss states the problem as follows: It seems to us that, in spite of the attempt by the insurer to limit its liability to one policy or to the amount recoverable under one policy, the fact that *352 the legislature required an uninsured-motorist provision in all policies, added to the fact that a premium has been collected on each of the policies involved, should result in the policyholder's receiving what he paid for on each policy, up to the full amount of his damages. It is true that such holding results in permissible recovery exceeding what he would have received if the uninsured motorist had been insured for the minimum amount required under our Safety Responsibility Act. But if the question must be resolved on the basis of who gets a windfall, it seems more just that the insured who has paid a premium should get all he paid for rather than that the insurer should escape liability for that for which it collected a premium. We are convinced that the trial court correctly held that defendant is liable on each of the policies involved as far as uninsured-motorist liability is concerned. 2. Two of the four policies involved contained provisions for payment of medical expenses of the insured.[2] These provisions were separable areas of coverage for which plaintiff paid an extra premium charge. On their face, these provisions purported to pay all reasonable medical expenses incurred within one year of the accident without regard for the fault or lack of fault of the injured person or for whatever damages the injured person might recover from a tortfeasor. One of the clauses of the uninsured-motorist provisions of the policies, however, contains the following specific limitation of coverage when recovery is allowed under the medical-expense provisions: Defendant contends that, if our decision permits recovery against all four policies under the uninsured-motorist provisions, its liability on the $33,000 judgment should, pursuant to the above-quoted clause, be reduced by the sum of $4,000 paid by defendant as medical expenses. Professor Widiss has this to say:[3] In this case, the limit of liability under all four policies exceeds the amount of damages, so Professor Widiss' statement may not be fully applicable. The question, however, is: Can the medical expenses paid be deducted from the damages when the liability under the policies involved exceeds the damages? In other words, does failure to deduct medical expenses from damages erroneously permit double recovery for such expenses? We have long held that, in an action against a tortfeasor, insurance carried by the injured party does not diminish the amount of recovery. Evans v. Chicago, M. &amp; St. P. Ry. Co., 133 Minn. 293, 158 N.W. 335 (1916); State ex rel. City of Duluth v. District Court, 134 Minn. 28, 158 N.W. 791 (1916); Wentworth v. Butler, 134 Minn. 382, 159 N.W. 828 (1916); Solberg v. Minneapolis Willys-Knight Co., 177 Minn. *353 10, 224 N.W. 271 (1929); Dahlin v. Kron, 232 Minn. 312, 45 N.W.2d 833 (1950); Dyson v. Schmidt, 260 Minn. 129, 109 N.W.2d 262 (1961). As we said in Donohue v. Acme Heating Sheet Metal &amp; Roofing Co. Inc., 214 Minn. 424, 426, 8 N.W.2d 618, 619 (1943): There is no statutory mandate for medical coverage in automobile insurance policies. It is entirely optional with the insured whether or not he will purchase and pay for such coverage. A separate premium is charged where he does seek such coverage. Under these circumstances, we think the medical insurance is no different from insurance carried to cover similar expenses recoverable in any action against a tortfeasor. The uninsured-motorist coverage now required by our statute was intended to provide protection to one suffering damages at the hands of an uninsured tortfeasor. It is in effect a substitute for insurance that the tortfeasor should have had. Turning to the precise question of the validity under our uninsured-motorist statute of the quoted clause, while we again find some authorities which seemingly support defendant's views, we think the most persuasive decisions hold otherwise. In the case of Keyes v. Beneficial Ins. Co., 39 Mich.App. 450, 454, 197 N.W.2d 907, 909 (1972), the Michigan Court of Appeals quotes with approval the following excerpt from the decision of Tuggle v. Government Employees Ins. Co., 207 So. 2d 674, 675, 24 A.L.R.3d 1343, 1345 (Fla.1968):[4] See, also, Bacchus v. Farmers Ins. Group Exchange, 106 Ariz. 280, 283, 475 P.2d 264, 267 (1970). We have not overlooked the case of National Union Fire Ins. Co. v. Grimes, 278 Minn. 45, 153 N.W.2d 152 (1967), but we do not believe that case is applicable here. That case dealt solely with the right of an insurance company to recover medical payments pursuant to a subrogation clause which had enabled the insured to obtain medical coverage at a premium lower than that otherwise available. Here the limitation of coverage was directed to diluting the statutorily mandated uninsured-motorist coverage. We are convinced that plaintiffs should get what they paid for and that medical coverage is a separate part of the contract from uninsured-motorist coverage. The medical insurance was not bought and paid *354 for by the insured for the benefit of the insurer. Consequently, medical insurance may not be used to dilute the statutorily mandated uninsured-motorist coverage. Affirmed. [1] This statute has been subsequently amended and is now renumbered as Minn.St. 65B.22. The legislative changes are not relevant to the resolution of the questions presented in this case. [2] While the original stipulation stated that no medical expenses had been paid, this was amended to read: "[T]hat the defendant has paid $4,000.00 as medical payments for the injuries sustained by Theodore Van Tassel." [3] Widiss, A Guide to Uninsured Motorist Coverage, § 2.62 (1971-1972 Supp.) [4] See, Annotation, 24 A.L.R.3d 1353, "Uninsured Motorist Insurance: Reduction of Coverage by Amounts Payable Under Medical Expense Insurance."