Court Opinion

ID: 9559535
Source: CourtListenerOpinion
Date Created: 2023-08-21 17:30:56.741074+00
Date Added: 2024-06-11T09:10:13.349360
License: Public Domain

*372DONALDSON, Justice.
The parties are in agreement as to the facts of the case. The appeal is brought by appellants, Mr. and Mrs. Sloviaczek, to recover damages for the wrongful deaths of their children. Those deaths occurred in a collision between an automobile owned by one B. H. Young in which those children were riding, and an uninsured automobile driven by an uninsured driver, Dean Russell Puckett. The Young automobile was insured by Safeco.
Three other insurance policies are in issue in this appeal. Safeco had issued a policy to Michael Sloviaczek, one of the deceased children, and Horace Mann Mutual Insurance Company had issued two policies to W. G. Sloviaczek. All of the policies, including the policy on the Young automobile, included uninsured motorist coverage in the minimum amount required by the Idaho Motor Vehicle Safety Responsibility Act — $10,000 per person or $20,000 per accident. The Sloviaczek children were included in the uninsured motorist coverage of all of the policies. All of the policies also included an identical “other insurance” proviso. In relevant part it reads as follows:
“Other insurance: with respect to bodily injury to an insured while occupying an automobile not owned by the named insured, the insurance under uninsured motorists shall apply only as excess insurance over any other similar insurance available to such insured and applicable to such automobile as primary insurance, and this insurance shall then apply only in the amount by which the limit of liability for this coverage exceeds the applicable limit of liability of such other insurance." (emphasis added)
Safeco paid $20,000 to Mr. and Mrs. Sloviaczek under the uninsured motorist provision of Young’s policy. Safeco also paid $2,783.24 under the medical and funeral expense provisions of the Young policy. The $20,000 was the maximum recovery allowed under the primary policy. It did not entirely compensate the Sloviaczeks for all of the actual damages they sustained as a result of the wrongful deaths of their children. They brought this action seeking compensation to the extent of damages actually sustained under the uninsured motorist coverage of Michael Sloviaczek’s Safeco policy and Mr. Sloviaczek’s Horace Mann policies. They contend that the policies should be “stacked” with the result that the aggregate amount recovered under the four insurance policies could exceed the limits on any single policy and equal the amount of damages incurred. Respondent Safeco counterclaimed to have the medical and funeral expenses that it paid to the Sloviaczeks deducted against the $20,000 uninsured motorist coverage paid under Young’s policy-
The District Court of the Fourth Judicial District denied both claims. Safeco does not appeal the lower court’s refusal to offset medical and funeral expenses. The Sloviaczeks, however, appeal the court’s refusal to allow recovery in excess of the $20,000 maximum provided by the Young insurance policy.
In order to prevail on their appeal, the Sloviaczeks must establish an independent legal basis for disregarding the “other insurance” provisions of the three insurance policies on which they seek recovery. They urge that Idaho should join the growing number of jurisdictions which when faced with the problem of reconciling conflicting “other insurance” clauses have adopted the Lamb-Weston doctrine. That doctrine holds that conflicting “other insurance” clauses are mutually repugnant and should be rejected in toto. It had its genesis in Oregon Auto Ins. Co. v. United States Fidelity and Guaranty, 195 F.2d 958 (9th Cir. 1952). It was amplified and adopted by the Oregon Supreme Court in Lamb-Weston, Inc. v. Oregon Auto. Ins. Co., 219 Or. 110, 341 P.2d 110 (1952) from which it derives its name. Since then it has been accepted by an impressive number of courts. Globe Indem. Co. v. Capital Ins. & Sur. Co., 352 F.2d 236 (9th Cir. 1965) (Guam); Allstate Ins. Co. v. American Underwriters, Inc., 312 F.Supp. 1386 (N.D.Ind.1970); Vance Trucking Co. v. Canal Ins. Co., 251 F.Supp. 93 (D.S.C.1966), aff’d 395 F.2d 391 (4th Cir.), cert. denied, *373393 U.S. 845, 89 S.Ct. 129, 21 L.Ed.2d 116 (1968); Continental Cas. Co. v. St. Paul Mercury Fire & Marine Ins. Co., 163 F.Supp. 325 (S.D.Fla.1958); Woodrich Constr. Co. v. Indemnity Ins. Co., 252 Minn. 86, 89 N.W.2d 412 (1958); Arditi v. Massachusetts Bonding and Ins. Co., 315 S.W.2d 736 (Mo.1958); Curran v. State Auto. Mut. Ins. Co., 25 Ohio St.2d 33, 266 N.E.2d 566 (1971) (alternative holding); Sparling v. Allstate Ins. Co., 249 Or. 471, 439 P.2d 616 (1968); Liberty Mut. Ins. Co. v. Truck Ins. Exch., 245 Or. 30, 420 P.2d 66 (1966); Firemen’s Ins. Co. v. St. Paul Fire and Marine Ins. Co., 243 Or. 10, 411 P.2d 271 (1966). We find the reasoning underlying the Lamb-Weston doctrine persuasive. We adopt it as the law of Idaho.
“Other insurance” clauses had their origin in property insurance policies. Their purpose was to discourage overinsurance and its presumed inducement of fraudulent recoveries. When insurance companies began to issue automobile liability policies, they included “other insurance” provisions as standard clauses in those policies as well, even though the possibility of overinsurance inducing contrived recoveries was remote. Initially their application was limited. Competition among automobile insurers, however, expanded insurance coverage beyond an insured’s own automobile and person. Omnibus provisions that covered a named insured as well as anyone in his household and drive-other-car provisions that extend the coverage beyond the named insured’s automobile became common in most insurance policies. This proliferation of coverages caused numerous situations to arise wherein a particular loss would have been covered by more than one insurance policy were it not for the “other insurance” clauses which were also standard items in most insurance policies.
“Other insurance” clauses fall into three general categories — pro rata, excess and escape.1 Pro rata clauses provide that the insurer will pay its pro rata share of the loss, usually in the proportion which the limits of its policy bears to the aggregate limits of all valid and collectible insurance. Excess clauses provide that the insurer’s liability shall be only the amount by which the loss exceeds the coverage of all other valid and collectible insurance, up to the limits of the excess policy. Escape clauses provide that the policy affords no coverage at all when there is other valid and collectible insurance. The effect of each in the event of concurrent coverage is to reduce the insurer’s loss.
In cases of concurrent coverage, the problem becomes one of allocating the loss among the respective insurers. The cardinal rule in automobile liability insurance cases is that, regardless of the method of apportionment used, the insured should not receive less coverage than if he were protected by only one of the policies in question. Aside from this universally accepted principle, however, there has been little agreement among the courts. Many cases have reached opposite results under identical factual situations. Because of the disparate language of “other insurance” clauses, moreover, factual variations are legion. This has stimulated a great deal of litigation with accompanying divergent and irreconcilable results.
Prior to Lamb-Weston three general theories had been used by the courts in apportioning the loss — the prior in time, specific versus general, and primary tort feasor theories. The prior in time theory, a carryover from property insurance cases, looks to the effective date of each policy and finds the one with the earliest date primarily liable for the loss. The specific versus the general theory assigns primary liability on the basis of the relative specificity of the policies — the insurer whose policy provides the most specific protection against the loss covers it. The primary tort feasor theory places the burden of primary liability upon the insurer whose named insured is the primary tort feasor; the other insurer, under whose policy the primary tort feasor is an additional insured, is liable only for the excess of the loss over the limits of the first insurer’s policy.
*374All of these theories have one characteristic in common — their application arbitrarily imposes liability on one of the insurers. A circularity problem is usually created when there is more than one “other insurance” clause.2 Each clause refers to and operates upon the availability of “other insurance.” Which insurance policy should bear primary liability is a conundrum that courts have tried to solve by applying various artificial theories, none of which are very persuasive. The Court of Appeals of the Ninth Circuit said it well in Oregon Auto Ins. Co. v. United States Fidelity and Guaranty Co., supra.
“We have examined cases in other jurisdictions cited by counsel where closely similar or substantially identical disputes between insurance companies have arisen. These decisions point in all directions. One group indicates that the policy using the word ‘excess’ is secondary and that containing the language of the Oregon policy is primary. * * * Their reasoning to us is completely circular, depending, as it were, on which policy one happens to read first. Other cases seem to recognize the truth of the matter, namely, that the problem is little different from that involved in deciding which came first, the hen or the egg. In this dilemma courts have seized upon some relatively arbitrary circumstance to decide which insurer must assume primary responsibility. Thus one group of cases fixes primary liability on the policy which is prior in date. Another group undertakes to decide which policy is the more specific, holding the one thought more specific to be primary. Another solution is represented by Maryland Casualty Co. v. Bankers’ Indemnity Insurance Co., 51 Ohio App. 323, 200 N.E. 849, where it was held that the policy issued to the person primarily liable for the damage is the primary insurance. In sum, the cases are irreconcilable in respect both of approach and result.” 195 F.2d at 959-960.
Oregon Auto Ins. Co. involved “other insurance” clauses of the pro rata excess and pro rata escape variety. Since the two clauses were found to be indistinguishable in meaning and intent, the court would not distinguish between them. Noting that under traditional insurance law, if neither insurance policy contained an “other insurance” clause, the loss would have been prorated in proportion to the amount of insurance provided by the respective policies, the court concluded that the same result should inhere when “other insurance” clauses were contained in the policies. The court held that the “other insurance” clauses there involved were mutually repugnant and should be disregarded.
In Lamb-Weston, the Oregon Supreme Court extended this holding to all “other insurance clauses.” “Any attempt to give effect to the ‘other insurance’ provision of one policy while rejecting it in another [was] like pursuing the will o’ the wisp.” 341 P.2d at 115-116. All conflicting “other insurance” clauses were mutually repugnant and should be rejected in their entirety. In the words of the Oregon Supreme Court,
“The ‘other insurance’ clauses of all policies are but methods used by insurers to limit their liability, whether using language that relieves them from all liability (usually referred to as an ‘escape clause’) or that used by St. Paul [Ins. Co.] (usually referred to as an ‘excess clause’) or that used by Oregon [Ins. Co.] (usually referred to as a ‘prorata clause’). In our opinion, whether one policy uses one clause or another, when any come in conflict with the ‘other insurance’ clause of another insurer, regardless of the nature of the clause, they are in fact repugnant and each should be rejected in toto.” 341 P.2d at 119.
All of the cases adopting Lamb-Weston operate from the same premise. In cases of concurrent coverage, the circularity of the *375interaction of the respective policies, each claiming that the other must pay first, creates a repugnancy. We hold that Lamb-Weston should apply in all cases where conflicting “other insurance” clauses of the excess, pro rata or escape types are found. When “other insurance” clauses conflict, they must be disregarded.
The “other insurance clauses” in the present case are all of the excess type. Each defers to another. If interpreted literally, they would result in no coverage at all. We find them mutually repugnant and disregard them in toto. The district court implied that it would have adopted the Lamb-Weston doctrine were it not for this Court’s holding in Viani v. Aetna Ins. Co., 95 Idaho 22, 501 P.2d 706 (1972). The facts of the Viani case are distinguishable, but we do not choose to base the result reached in this case on this factor. We hold that Lamb-Weston is the better rule of law. To the extent that the Court’s holding in Viani is inconsistent with Lamb-Weston, it is overruled.
In Oregon Auto Ins. Co. and Lamb-Weston the loss was less than the policy limits of both insurance policies. Since the other insurance clauses were disallowed, the loss was prorated in proportion to the amount of insurance provided by the respective policies. The case at bar involves a loss that equals or exceeds the aggregate limits of all four insurance policies involved in the case. We have already held that the “other insurance” clauses contained in the Safeco policies and the Horace Mann policies are mutually repugnant and should be disregarded. The question then becomes whether we should allow the Sloviaczeks to stack the respective policies to effect a recovery equal to their loss.
The same question was raised in Smith v. Pacific Auto Ins. Co., 240 Or. 167, 400 P.2d 512 (1965) and Werley v. United Services Automobile Association, 498 P.2d 112 (Alas.1972). Both courts specifically rejected the insurer’s argument that the plaintiff should not be permitted to stack benefits under several policies. We do likewise. The effect of the Lamb-Weston doctrine is to disallow conflicting “other insurance” clauses. Upon disallowance a plaintiff is effectively covered by more than one insurance policy. He is therefore entitled to recover an amount equal to his loss up to the combined limits of all of the policies. In the event his losses are less than the combined limits of all the policies, they should be allocated pro rata in proportion to the amount of insurance provided by the respective policies.
We do not find injustice in this result. In a case such as this, all of the companies will have collected premiums for their coverage; they should therefore bear the concomitant responsibility. We are aware that insurance rates are adjusted according to the amount of coverage requested and the anticipated liability. It may be that the premium rates currently in effect were based partially on the premise that “other insurance” clauses would continue to be viable in Idaho. The issuance of an insurance policy is always a risk taking venture. Calculation of the premium to be charged for that risk is a matter within the special competence of insurance companies.
Judgment reversed and remanded for further proceedings. Costs to appellants.
SHEPARD, BAKES and BISTLINE, JJ., concur.

. Combinations of the three are also found.

. The only time a circularity problem does not exist is when all the other insurance clauses are of the pro rata type. There being no conflict among them, they would operate unimpeded by Lamb-Weston.