Opinion ID: 1791860
Heading Depth: 1
Heading Rank: 2

Heading: The Financial Responsibility Act

Text: At the time the accident herein involved occurred on November 5, 1945, and at which time the policy involved was in effect, there was in effect the so-called Financial Responsibility Act of 1936 enacted by the Legislature of that year and compiled as Chapter 187, KRS 1944 edition. It is the contention of appellee that it was the intention of the Legislature in the enactment of the 1936 act to create an independent right of action by the injured person against the insurer, notwithstanding the failure of the insured to observe or comply with conditions subsequent contained in the policy, such as failure to give notice or failure to co-operate, although such failure on his part would constitute a defense to an action brought by the insured against the insurer. He contends that the decision of this court in the Dulaney case, which was decided in 1935, is no longer applicable since the Financial Responsibility Act of 1936 was in effect when this accident occurred. It is the contention of the appellant that the Financial Responsibility Act of 1936 has no application to the case here involved because the policy was not furnished as proof of ability to respond in damages under the act. The policy herein sued on was not a policy which had been executed in accordance with the 1936 act as proof of ability of the original defendants Williams or Stewart to respond in damages nor was it so alleged in the petition. Therefore the policy sued on never came within the purview of the 1936 act because the license of Williams, the policyholder, had never been suspended, no unsatisfied judgment had been reported to the motor department and no certificate of insurance had ever been issued to him or been filed with the motor department. Now had the license of Williams or Stewart been suspended under the provisions of the act for anything arising out of this accident in which appellee Boyd was damaged and they had then filed with the department a certificate of insurance as proof of their ability to respond in damages, then the 1936 act would apply to any policy issued under that certificate. The whole spirit and tenor of the 1936 act is that it acts in futuro. It does not apply to the first accident nor is it applicable where the insured had not been required to furnish proof of his ability to respond in damages by taking out a liability policy covering an accident occurring thereafter. While the 1936 act, as it relates to the question involved, has not been construed in this jurisdiction similar acts have been so construed in other jurisdictions. They hold that first accidents do not come within the purview of such acts. Hill v. Standard Mutual Casualty Co., 7 Cir., 110 F.2d 1001 (Indiana); Rasinski v. Metropolitan Casualty Ins. Co., 117 N.J.L. 490, 189 A. 373; Nulter v. State Road Commission, 119 W.Va. 312, 193 S.E. 549, 194 S.E. 270; and Cohen v. Metropolitan Casualty Ins. Co. of N. Y., 233 App.Div. 340, 252 N.Y.S. 841, 842. Condition No. 7 of the policy here involved provides that such insurance as is afforded by the policy shall comply with the provisions of the motor vehicle financial responsibility law of any state which shall be applicable. As we construe this, it means that if such law is not by its terms applicable, then other provisions of the policy govern. Since the present policy was not executed by the parties in accordance with or to meet the terms of the 1936 act or for the purposes thereof, the statute can have no bearing in this case. The motion for an appeal is sustained, the appeal is granted, and the judgment is reversed. THOMAS, J., dissenting.