Court Opinion

ID: 8535326
Source: CourtListenerOpinion
Date Created: 2022-11-23 11:05:47.43366+00
Date Added: 2024-06-11T16:51:59.090561
License: Public Domain

ON RECONSIDERATION
Mr. Justice Snyder
delivered the opinion of the court.
' This is a damage suit for injuries suffered by the wife of the plaintiff in 1941 while traveling as a passenger in a public automobile, P. A. 85, which was covered by an insurance policy issued pursuant to Act No. 33, Laws of Puerto Rico, 1941 (p. 548). The policy provided that it will not cover any accident which occurs while the automobile is driven by any person other than the owner. There is no dispute that at *283the time of this accident the automobile was being driven by a person other than the owner. The district court granted the motion of the defendant insurance company for summary judgment, and the plaintiff appealed.
The plaintiff argues that Act No. 33 provides for compulsory insurance of a “P. A.” automobile and that Act No. 33 also provides that such insurance shall cover the car whether it was being driven by the owner or not. The plaintiff therefore contends that under Rondón v. Aetna Casualty & Surety Co., 56 P. R. R. 418, the policy herein, issued pursuant to Act No. 33, covers an accident which occurred while a person other than the owner was driving, despite the provision of the policy excluding such an accident from its coverage.
Section 1 of Act No. 33, amending Act No. 75, Laws of Puerto Rico, 1916 (p. 140), as amended, establishes a schedule of license fees for automóviles and drivers; “Provided, however, That the automovile operated by its owner as a public carrier, if the owner personally drives it and he does not own, hold, or control other motor vehicles used in the transportation of passengers for pay, shall be considered his tool of work, and as such, shall not pay any fee, nor shall the owner thereof pay any fee for operating or driving said automobile. ” This proviso is made applicable only to cars having a capacity of eight passengers or less. And “Any person owning or operating as a public carrier more than one automobile owned by him... and who tries to obtain the benefits of this Act... shall be guilty of a misdemeanor ... and ... shall, upon conviction, be punished by a fine ... or by imprisonment...”
Section 1 then provides the following: “The owner of an automobile who operates it as a public carrier and receives the benefit of exemption from the payment of the fee because said automobile is considered a tool of work, shall pay the sum of twenty-nine (29) dollars a year. . . . Said sum of twenty-nine dollars shall be covered into a special *284fund in the Treasury of Puerto Eico and shall be applied by the Treasurer of Puerto Eico to pay the premium on an insurance policy covering the accidents caused by said vehicle to passengers traveling thereon, and to third persons, and to that end the Treasurer of Puerto Eico shall pay the said sum of twenty-nine dollars to the insurer who upon a public call for bids issued for the purpose by the Supply Committee of the Insular Government, offers the best terms and is awarded the contract in accordance with such rules as the said Supply Committee may prescribe therefor. In case no insurer should file a bid, or should the award not be made to any of those who file bids, because the terms offered are not considered acceptable, the sums paid by the owners of public automobiles and which were to be applied to such insurance policy, shall be withheld in the Insular Treasury in a special fund, until an insurer is found who is willing to establish the insurance desired, or until a state insurance fund is established to cover these accidents, or until the Legislature of Puerto Eico otherwise decides.
“No public carrier which has obtained the benefits of the exemption herein established may travel over the roads of Puerto. Eico unless it has paid the said sum for such insurance policy. The Treasurer of Puerto Eico shall issue a certificate of such payment which shall be posted on' a conspicuous part of the automobile.” (Italics ours.)
There are a number of differences between Act No. 33 and a typical compulsory insurance statute.1 First — under the latter the ear owner has no option; he must obtain an insurance policy. But under Act No. 33 an owner may or may not pay twenty-nine dollars into the insurance fund *285as lie chooses. Instead of paying the twenty-nine dollars, he may pay the regular license fee and operate as a public carrier without insurance.
Second — in a compulsory policy the coverage is for a specific amount. Here, even if the owner chooses to pay the twenty-nine dollars, no specific coverage is provided; the only insurance contemplated by Act No. 33 is, such insurance as the Treasurer is able to purchase with the fund.
Third — compulsory insurance statutes make the issuance of a policy a condition precedent to operation of the automobile on the highways. Under Act No. 33 the owner is not barred from the highways until he insures his automobile. He need only pay twenty-nine dollars into the fund to come within the statute. He thereupon receives a “P.A.” license and is no longer concerned with the matter. Thereafter, whether or not any insurance coverage is effected, depends > on the efforts of government officials.
Fourth — the insurance under a typical compulsory statute must cover the automobile, irrespective of the identity of the driver, provided he is an authorized agent to drive. Here, as we have seen, the question to be determined is whether Act No. 33 permits the policy to be limited to accidents occurring while the owner is driving.
Fifth — a compulsory insurance statute, is enacted primarily, if not exclusively, for the benefit of passengers and pedestrians. But, as we shall see, Act No. 33 was designed primarily to benefit those members of the chauffeur class who own only one car and operate it themselves for their livelihood.
Policies issued under compulsory insurance statutes frequently contain conditions disclaiming liability if the operator of the automobile drives without. a license or if the insured fails to notify the insurer of the accident or violates other conditions subsequent to the accident which *286are set forth in the policy. The rule is that under a compulsory policy violation of such conditions cannot prejudice the rights under the policy of an injured third party. Annotation, 76 A.L.R. 23, 231-35; Rondón v. Aetna Casualty & Surety Co., supra, and cases cited therein; Ott v. American Fidelity & Casualty Co., 159 S.E. 635 (S.C. 1931). The differences between Act No. 33 and the usual compulsory insurance statute may or may not require a different rule if a case arose under Act No. 33 in which such a condition of the policy were violated. But that question is not before us for decision here. In the same way, we need not decide whether a policy issued under Act No. 33 would be interpreted as a compulsory policy in other situations. Here we shall assume that»Act No. 33 establishes compulsory insurance to the extent that a policy issued thereunder will be held to provide the coverage contemplated by the statute even if the policy on its face provides a more limited coverage. But the question is precisely whether, as contended by the plaintiff, Act No. 33 provides that the policy issued pursuant thereto shall cover a public automobile, irrespective of the identity of the driver. Or whether, as the insurance company contends, Act No. 33 provides that a policy issued thereunder shall cover a public automobile only when operated, by its owner as his tool of work; that the provision in the policy herein limiting its coverage to accidents occurring while P.A. 85 is being driven by its owner as his tool of work is therefore in harmony with Act No. 33; .and that consequently this condition is valid and binding on an injured third party.
 In deciding this question, we find it significant that Act No. 33 was enacted primarily, not to furnish insurance for the public, but for the benefit of owners who drive their own public .automobiles, in order to free the tool of work of such owners from the threat of attachment. This conclusion flows from two features of Act No. 33. In the first place, *287whether an owner will come nnder Act No. 33 is voluntary. An owner of a public automobile may choose not to take advantage of its provisions. In that event, there is no protection for the public. Indeed, the insiirance company asserts without contradiction that only one out of five public automobiles is covered by a policy issued under Act No. 33. A true compulsory insurance statute would not permit any such limited protection for the public.
In the second place, the option to come under Act No. 33 with its insurance benefits is restricted to owner-drivers of public automobiles, making it evident that the chief purpose of Act No. 33 was to protect the tool of work of such owners from attachment. In this respect, the insurance policy is similar in purpose to «§> 249, paragraph 4, of the Code of Civil Procedure, which exempts from.execution for satisfaction of a judgment, “Tools or implements of a mechanic or artisan necessary to carry on his trade. . .”
In 1942 the Legislature provided even more protection for the owner who operates his own public automobile as his tool of work. It demonstrated that § 1 of Act No. 33 was always designed chiefly for the protection of such owners by adding thereto a provision that “As to the law providing that the costs in criminal cases be imposed upon the accused, approved March 9, 1911, the owner of a public automobile used as a working tool of the said owner, as defined in this Act, shall be considered insolvent, but this determination shall be limited to such cases of misdemeanor as are connected with the use and operation of said automobile.” (Section 9 of Act No. 55, Laws of Puerto Rico, 1942, p. 526).
The criminal provisions of Acts Nos. 33 and 55 also point to this result. As we have seen, Act No. 33 provided that it was a misdemeanor for any person owning more than one automobile to attempt to obtain the benefits of Act No. 33. And § 9 of Act No. 55 added a provision that “Every person operating a public automobile subject to the benefits of exemp*288tion herein established, without being the owner of said automobile, or without being authorized therefor by the Commissioner of the Interior, as the proper case, shall be guilty of a misdemeanor and, upon conviction, shall be punished by a... fine ... or by imprisonment... ”. These criminal provisions forestall circumvention of the purpose of Act No. 33 by owners who might otherwise buy a. number of automobiles and, after obtaining for each of them the benefits of the insurance fund provided in Act No. 33, hire chauffeurs to operate them as public automobiles. We therefore see that these criminal provisions lead us to the same conclusion: the purpose of Act' No. 33 was that the insurance benefits provided therein would apply only to cases where the owner himself always operated his public automobile as his tool of work.
As already noted, under a typical compulsory insurance statute the insured must obtain an insurance policy for, a specific amount as a condition precedent to the operation of his automobile on the highways. Here the owner is not required to obtain any insurance. He pays twenty-nine dollars into a fund. Thereafter, for all he knows, the Treasurer may never be able to obtain any insurance with this fund. The Treasurer is required to purchase the most insurance he can with this fund from the insurer “who upon a public call for bids... offers the best terms...” The Treasurer accepted the bid of the defendant insurance company which provided for a $1,000 policy with coverage limited to accidents occurring while the ownér was driving his public automobile as the tool of his work. There is nothing in the purpose of Act No. 33 which prohibits this contract. Bather, this limitation of coverage is more in harmony (with the spirit of the statute than á broader coverage. Apart from the fact that if the insurance contract provided for coverage even when the automobile was not being driven by the owner it would be in open violation of the criminal provisions of Acts No. 33 *289and No. 55 prohibiting that practice, to provide for such broader coverage would inevitably require a reduction in the amount of coverage which the companies would be willing to give for twenty-nine dollars. And coverage for less than the present figure of $1,000 would tend to defeat the chief purpose of the statute: the provision of sufficient coverage to avoid attachment of a public automobile operated by its owner as his tool of work.
We find nothing in the language of Act No. 33 which defeats the purpose of that statute to provide for insurance covering a public automovile only if it is operated by its owner as his tool of work. On the contrary, we believe that, reading § 1 of Act No. 33 as a whole and bearing in mind the purpose of the statute, the provision therein that the policy shall cover only accidents caused “by said vehicle” means that the policy shall cover only accidents caused by the vehicle when operated by its owner as his tool of work.
It may be argued that the symbol “P.A.” on the license plate of a public automobile is a representation to the public that the ear carries insurance, irrespective of the identity of its chauffeur. The answer .is that the Legislature has provided for a restricted representation: this public automobile is insured, provided it is being driven by its owner.
It remains only to distinguish the Rondón case. That ease involved a regulation of the Public Service Commission which provided for a fixed amount of insurance and for absolute liability for all accidents due to the negligent operation of a motor vehicle used as a public carrier, whether it was operated personally by the insured or by his agent. Since this was a typical compulsory insurance case, we followed the well-established rule that in such a case the insurer could not invoke against the injured third party the defense that the driver “lacked the age and the license required by law.”
*290As we pointed out in the Rondón case, it was (p. 430) “the intention of the legislator to provide for those who travel in I>ublic auto buses and to pedestrians the absolute guarantee of a bond.... ”. And we quoted with approval from Gillard v. Manufacturers Casualty Ins. Co., 104 Atl. 707 (N.J. 1918) that (p. 429) “The policy of insurance is filed only for the benefit of persons who might suffer injury. ..., The sole beneficiary of the statute is the person injured.”
The regulation of the Public Service Commission contemplated that the driver would be constantly changing. And it provided, primarily for the benefit of the public, as a condition precedent to operation of the vehicle in the transportation of passengers for hire, that a policy be issued providing for a specific amount of coverage against all accidents, no matter who was driving. Here we have a policy which is in the first instant optional, with the option exclusively to an owner who drives his public automobile as his tool of work. If the owner chooses to avail himself of this option, the statute provides for a policy of indefinite coverage. But this policy is primarily for his benefit to avoid attachment of his automobile; to this extent at least, the policy is more like voluntary insurance where the insured, while providing for protection to the public, is primarily interested in protecting himself and his property from damage suits. This case is therefore obviously different from the Rondón case. And since Act No. 33 contemplates that only a public automobile operated by its owner -will be entitled to the benefits thereof, a policy issued pursuant thereto may be properly restricted to accidents ocurring while the owner is operating the automobile as his tool of work.
The rule that conditions cannot be inserted in a compulsory insurance policy to the prejudice of ■ passengers or pedestrians is of course qualified to the extent that the policy may contain conditions which are in harmony with the statute which requires the policy. Cf. Annotation, 141 A.L.R. 628; *291Simon v. American Casualty Co. of Reading, Pa., 146 F.(2d) 208 (C.C.A. 4th, 1944); Travelers Ins. Co. v. Caldwell, 133 F.(2d) 649 (C.C.A. 8th, 1943); Foster v. Commercial Standard Ins. Co., 121 F.(2d) 117 (C.C.A. 10th, 1941); Stewart v. Hoffmeister, 65 S. W. (2d) 220 (Tenn. 1932). The condition in the policy herein that liability was limited to accidents occurring while the automobile was being operated by its owner as his tool of work was not in conflict with Act No. 33. And since the wife of the plaintiff was injured in an accident which occurred while the automobile was being driven by a person other than the owner, the defendant insurance company is not liable therefor under the terms of the policy.
The concurring opinion rests on considerably broader grounds than the views stated herein. If we accepted the reasoning of Mr. Justice Cordova, we would in effect be holding (1) that Act No. 33 provides for a policy which is wholly voluntary, and (2) that as a consequence a policy issued thereunder could validly provide, to the prejudice of an injured third party, any conditions on which the insurer and insured agreed. Under this theory, for example, the policy could properly provide that failure of the insured to notify the insurer of an accident within twenty-four hours of its occurrence would relieve the insurer of liability to the injured third party. But it will be time enough to state our views on such cases when they arise. The present case can be decided by holding that even if a policy under Act No. 33 is compulsory insurance to the extent already stated, the provision therein for limitation of coverage to accidents oc-' curring while the owner is driving his public automobile as his tool of work was contemplated by Act No. 33 and is therefore binding on the injured third party.
For the reasons stated, our opinion and judgment reversing the judgment of the district court will be withdrawn, and a new judgment will be entered affirming the judgment of the district court.
June 26, 1946.

 See Annotations, 95 A.L.R. 1224; 85 A.L.R. 20; 106 A.L.R. 516; Rondón v. Aetna Casualty & Surety Co., supra; Leonardo v. De Vellis, 198 N.E. 264 (Mass. 1935); Guzenfield v. Liberty Mut. Ins. Co., 190 N. E. 23 (Mass. 1934); Grasso v. Cannon Ball Motor Freight Lines, 81 S.W. (2d) 482 (Tex. 1935); Kruger v. California Highway Indemnity Exchange, 258 Pac. 602 (Calif. 1927).