Court Opinion

ID: 9861569
Source: CourtListenerOpinion
Date Created: 2023-09-25 00:10:16.046447+00
Date Added: 2024-06-11T11:28:40.654808
License: Public Domain

UHLENHOPP, Justice
(dissenting).
I regret that the court majority has not taken this opportunity to abrogate the common-law rule which denies enforceability to executory arbitration agreements. We cited the rule in a recent decision, Joseph L. Wilmotte & Co. v. Rosenman Bros., 258 N.W.2d 317, 325 (Iowa): “Under principles developed under the common law of this state, a participant in arbitration can withdraw from arbitration proceedings at any time, and any agreement on the part of the parties to make such an agreement the binding and exclusive means of settling future disputes is not enforceable.”
I think the appeal presents four issues: (1) Does the present uninsured motorist coverage require arbitration for settling disputes regarding third-party liability and the amount of damages? (2) Under the policy arbitration clause, is the onus to go forward with arbitration proceedings on the party seeking relief? (3) Should our common-law rule on unenforceability of execu-tory arbitration clauses be abrogated? and (4) Is the present arbitration clause otherwise valid?
I. Policy Requirement of Arbitration. The uninsured motorist coverage in the policy contains these clauses:
The Company will pay all sums which the insured or his legal representative shall be legally entitled to recover as damages from the owner or operator of an uninsured highway vehicle because of bodily injury sustained by the insured, caused by accident and arising out of the ownership, maintenance or use of such uninsured vehicle; provided, for the purposes of this coverage, determination as to whether the insured or such representative is legally entitled to recover such damages, and if so the amount thereof, shall be made by agreement between the insured or such representative and the Company or, if they fail to agree, by arbitration.
And:
If any person making claim hereunder and the Company do not agree that such person is legally entitled to recover damages from the owner or operator of an uninsured highway vehicle because of bodily injury to the insured, or do not agree as to the amount of payment which may be owing under this insurance, then upon written demand of either, the matter or matters upon which such person and the Company do not agree shall be settled by arbitration, which shall be conducted in accordance with the rules of the American Arbitration Association unless other means of conducting the arbitration are agreed to between the insured and the Company, and judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. Such person and the Company each agree to consider itself bound and to be bound by any award made by the arbitrators pursuant to this insurance. (Italics added.)
We read an insurance policy by giving ordinary meaning to its language. Chipokas v. Travelers Indem. Co., 267 N.W.2d 393, 396 (Iowa); Rodman v. State Farm Mut. Auto. Ins. Co., 208 N.W.2d 903, 906-907 (Iowa). The first clause quoted from the policy states plainly that the questions of whether the insured is entitled to recover damages from the third person and the amount of damages owing are to be determined by agreement between the insured and the Company, failing which, by arbitra*882tion. The second clause states plainly that if the insured and the Company do not agree on the insured’s right to recover from the third person, or on the amount, those matters shall be settled by arbitration. Arbitration is thus not merely a condition precedent to suit; it is the method for determining the dispute, with judgment entered on the arbitration award.
In my opinion the policy plainly requires arbitration in order to resolve disputed questions regarding liability of the third person to the insured and damages. For treatment of various arbitration clauses, see Anno. 24 A.L.R.3d 1325.
II. Onus on Party Seeking Relief. I agree with the District Judge that the onus was on the insured to commence arbitration proceedings. The quoted clauses state first that liability and damages shall be ascertained by agreement. The parties did not agree on those issues. The policy then states that “upon written demand of either, the matter or matters upon which such person and the Company do not agree shall be settled by arbitration, which shall be conducted in accordance with the rules of the American Arbitration Association unless other means of conducting the arbitration are agreed to between the insured and the Company. . . . ” (The insured did not allege that “other means” of arbitration were agreed to.)
Had the Company desired to get the dispute determined and had Johnson not demanded arbitration, the Company would have had to demand arbitration and then institute arbitration under the American Arbitration Association rules. The insured, however, desired to get the dispute determined; she was the one seeking relief. She correspondingly had to demand arbitration, which she did, and then institute arbitration under the American Arbitration Association rules. She did not allege that she did so institute arbitration.
This policy makes arbitration the substitute for suit. If no arbitration clause existed, Johnson would have had the task and expense of initiating suit; she could not have required the insurer to sue itself. The rule is the same with arbitration substituted for suit: the party seeking relief is the one who must go forward with arbitration proceedings. A case quite similar to the present one is Mamlin v. Susan Thomas, Inc., 490 S.W.2d 634, 635, 639 (Tex.Civ.App.). There the plaintiff was a salesman of the defendant, on commission. The contract provided that disputes “ ‘shall at the demand of either party, be settled and determined by arbitration. . . . ” The defendant demanded arbitration. Each party contended that the other party was the one who had to go forward with arbitration. Although the defendant was the one who had demanded arbitration, the court held that the plaintiff as the party seeking relief had to go forward with arbitration:
We think it unlikely that the parties intended that the one seeking relief should be free to litigate in the courts unless his opponent assumes the burden to initiate arbitration proceedings by paying the fee required by the association and filing a statement of the nature of the dispute, the amount claimed, and the remedy sought. This burden naturally and logically falls on the claimant. In the absence of unequivocal language which we do not find here, placing the burden to initiate on the party desiring arbitration, we hold that the burden rests on plaintiff, the party seeking relief.
Circuit Judge Learned Hand stated in Shanferoke Coal & Supply Corp. v. Westchester Service Corp., 70 F.2d 297, 299 (2 Cir.), aff’d, 293 U.S. 449, 55 S.Ct. 313, 79 L.Ed. 583, “It was the plaintiff who declared the contract to be at an end; and with that the defendant was contented. If the plaintiff meant to proceed further and enforce a claim for damages, the initiative rested upon it; it should have named the first arbitrator. If it did not but sued instead, it was itself the party who fell ‘in default in proceeding with such arbitration,’ not the defendant.” Accord: Kulukundis Shipping Co. v. Amtorg Trading Corp., 126 F.2d 978 (2 Cir.) (follows Shanferoke); Guerra v. Richard G. Krueger Corp., 4 Misc.2d *883696, 697, 150 N.Y.S.2d 759, 760 (“He [plaintiff] cannot compel the defendant to set the arbitration machinery in motion.”); Klein Coat Corp. v. Peretz, 4 Misc.2d 341, 345,153 N.Y.S.2d 92, 97 (“the offensive in instituting proceedings for arbitration lies with the aggrieved party, and it was the plaintiff who contended, and still does, that it had been wronged”); New York Central R.R. v. Erie R.R., 30 Misc.2d 362, 213 N.Y.S.2d 15 (same); Matter of Finkelstein, 33 Misc.2d 929, 930, 228 N.Y.S.2d 502, 503, aff’d, 17 A.D.2d 137, 233 N.Y.S.2d 174 (“It is the respondents who contended, and still do, that they have been wronged. They cannot impose upon petitioner the burden of having set the arbitration machinery in motion.”). See also Lane-Tahoe, Inc. v. Kindred Constr. Co., 91 Nev. 385, 536 P.2d 491; 6 C.J.S. Arbitration § 41 at 235 (“The offensive in instituting proceedings for arbitration lies with the aggrieved party.”); Reasor, Uninsured Motorist Coverage, 12 Drake L.Rev. 119, 125 (“All that either party need do to initiate arbitration is send the other written notice of Demand for Arbitration, and file two copies with the referee, the American Arbitration Association.”). The following decisions, dealing with waiver under the particular facts, do not announce a different rule: Necchi Sewing Machine Sales Corp. v. Carl, 260 F.Supp. 665 (S.D. N.Y.) (waiver not found); Sucrest Corp. v. Chimo Shipping Ltd., 236 F.Supp. 229 (S.D.N.Y.) (waiver); Mayron’s Bake Shops, Inc. v. Arrow Stores, Inc., 149 Conn. 149, 176 A.2d 574; REA Express v. Missouri P.R.R., 447 S.W.2d 721 (Tex.Civ.App.).
The insured here commenced suit instead of initiating arbitration. Since she failed to allege that she went forward with arbitration under the American Arbitration Association rules, I agree with the District Judge that her petition in court is deficient — assuming the arbitration clause is enforceable and valid.
III. Abrogating Common-Law Rule of Unenforceability. The general common-law rule that executory arbitration agreements are unenforceable is not without exceptions. An agreement to arbitrate an “existing dispute,” that is, an arbitration agreement which is made after the dispute arises, is enforceable. 5 Am.Jur.2d Arbitration & Award § 36 at 548; 6 C.J.S. Arbitration § 2 at 162. Since the present policy and arbitration clause went into effect before the loss occurred, the existing dispute exception does not apply.
Another exception relates to agreements to arbitrate “special questions” or a “specific point.” These agreements are likewise enforceable. 6 C.J.S. Arbitration § 2 at 162, § 49 at 255; see also 5 Am.Jur.2d Arbitration & Award § 37 at 549. Thus the courts will enforce a contract clause which requires a finding by arbitrators or appraisers regarding a specific fact, before suit may be brought. Eighmy v. Brotherhood of Ry. Trainmen, 113 Iowa 681, 83 N.W. 1051 (fact as to total disability); E. H. Marhoefer, Jr. Co. v. Mount Sinai, Inc., 190 F.Supp. 355, 359 (E.D.Wis.) (fact of amount of loss, to be determined by architect); Carr v. American Ins. Co., 152 F.Supp. 700, 702 (E.D.Tenn.) (fact as to extent of fire loss — “but they may not oust a court of jurisdiction over legal issues”); White Eagle Laundry Co. v. Slawek, 296 Ill. 240, 245, 129 N.E. 753, 755 (general rule of unenforceability does not apply “to agreements to arbitrate special questions”); In re Lower Baraboo River Drainage Dist., 199 Wis. 230, 225 N.W. 331 (fact as to whether certain work done properly — to be determined by engineer); Fox v. Masons’ Fraternal Accident Ass’n, 96 Wis. 390, 395, 71 N.W. 363, 365 (fact as to “special matters” may be arbitrated). Here however the policy does not merely provide for arbitration as to a specific fact; arbitration encompasses the whole subject of liability of the third person and damages. Since those two legal-factual areas ordinarily embrace the entire controversy, the courts are displaced altogether in the usual uninsured motorist insurance claim; their role is merely to enforce arbitration awards. Rather than to attempt to place the present case under the rule enforcing arbitration of specific facts — where this broad clause for arbitration really does not fit — I must thus confront the common-law general rule that executory arbitration clauses are not enforceable.
*884Under the traditional common-law view, a contract clause requiring submission of future disputes to arbitration is unenforceable as ousting the courts from their jurisdiction. Joseph L. Wilmotte & Co. v. Rosenman Bros., 258 N.W.2d 317, 325 (Iowa); see also Prader v. National Masonic Accident Ass’n, 95 Iowa 149, 63 N.W. 601; 5 Am.Jur.2d Arbitration & Award § 5 at 522; 6 C.J.S. Arbitration § 2 at 161. This court in dictum took a somewhat friendlier view toward arbitration in City of Des Moines v. Des Moines Waterworks Co., 95 Iowa 348, 359, 64 N.W. 269, 273 (“If the parties to the agreement under consideration had provided that, in case of a dispute as to the readjustment of rates, it should be settled by arbitrators chosen as provided for in the ordinances of the city, we are not prepared to hold that the readjustment so made would not be valid and binding on the parties.”). The same may be said of Read v. State Ins. Co., 103 Iowa 307, 72 N.W. 665 (arbitration may be a condition precedent to action), and Knapp v. Brotherhood of American Yeomen, 139 Iowa 136, 117 N.W. 298 (arbitration clause enforceable as to facts). But the Iowa decisions, at least until recently, have generally rejected defenses based on failure to arbitrate, frequently by narrowly construing arbitration clauses or by finding waivers of arbitration. See 6 C.J.S. Arbitration § 2 at 162 (“[the] efforts perceptible in the earlier cases to construe arbitration proceedings and awards so as to defeat them”). E. g. Gere v. Council Bluffs Ins. Co., 67 Iowa 272, 274, 23 N.W. 137, 138, reh. den. 67 Iowa 272, 25 N.W. 159 (defense of failure to arbitrate not upheld — by construction of the arbitration clause); Davis v. Anchor Mut. Fire Ins. Co., 96 Iowa 70, 76, 64 N.W. 687, 689 (defense of failure to arbitrate rejected — policy construed not to require arbitration without prior written demand); Lesure Lumber Co. v. Mutual Fire Ins. Co., 101 Iowa 514, 70 N.W. 761 (similar); George Dee & Sons Co. v. Key City Fire Ins. Co., 104 Iowa 167, 173, 73 N.W. 594, 595 (defense of failure to arbitrate not upheld — finding of waiver); Ames Canning Co. v. Dexter Seed Co., 195 Iowa 1285, 1290, 190 N.W. 167, 169 (award of arbitrators enforced under agreement for arbitration but court stated, “The right, therefore, of a party to revoke a mere naked agreement of the character in question at any time before the decision or award of the arbitrators is generally recognized by the courts.”); In re Estate of Powers, 205 Iowa 956, 218 N.W. 941 (arbitration award not upheld — not filed); Oskaloosa Savings Bank v. Mahaska County State Bank, 205 Iowa 1351, 1359, 219 N.W. 530, 533, 534 (completed arbitration upheld — court stated however that “weight of authority” sustains doctrine the parties cannot “oust the courts of their jurisdiction” by general arbitration clause and that this “seems to be the trend of our cases”, also, “These cases, however, with many others which might be cited, were bottomed on the right of a party to such contract to revoke it at any time before decision had been reached or award made. We have found none of our own cases, nor any from our sister states, holding that, where a matter of this character has been submitted and final determination made by the person specified in the contract, one can then revoke such agreement.”); Wallace v. Brotherhood of Locomotive Firemen & Enginemen, 230 Iowa 1127, 1133, 300 N.W. 322, 325 (defense of failure to arbitrate not upheld— decision that Brotherhood’s secretary and treasurer could not be arbitrators, court also quoting from Prader v. National Masonic Accident Ass'n, 95 Iowa 149, 161, 63 N.W. 601, 605, that a general arbitration clause “will not deprive the courts of their appropriate jurisdiction, nor be enforced by them”). See also Zalesky v. Home Ins. Co., 102 Iowa 613, 619, 71 N.W. 566, 567-568 (district court ruled appraisal was condition precedent to suit and insured did not appeal from that ruling, which became law of case).
In recent times a definite trend away from traditional hostility to arbitration has developed in this country, receiving its impetus primarily from statute but also supported by judicial decision. The original Restatement of Contracts in § 551 took the historical position that a provision purport*885ing to require arbitration of the question of breach of contract is unenforceable. The American Law Institute omitted this section in Restatement of Contracts Second, which states:
A particularly important change has been effected by statutes relating to arbitration, which have now been enacted in so many jurisdictions that it seems likely that even in the remaining states, there has been a change in the former judicial attitude of hostility toward agreements to arbitrate future disputes. Such agreements are now widely used and serve the public interest by saving court time. The rules stated in this Chapter do not preclude their enforcement, even in the absence of legislation. Restatement, Contracts 2d Ch. 14 (Introductory Note) at 48 (Tent. Draft 12).
A principal decision giving support to the Institute’s new position is United Ass’n of Journeymen v. Stine, 76 Nev. 189, 351 P.2d 965. The Institute noted the trend also in the earlier Restatement of Conflict of Laws Second, Chapter 8, Topic 5 (Introductory Note) at 716 (“Commercial arbitration was originally in judicial disfavor. . This judicial attitude has now changed in partial consequence, at least, of the widespread enactment of statutes which in varying degrees declare arbitration agreements to be irrevocable and provide for their enforcement.”). See also 5 Am.Jur.2d Arbitration & Award § 5 at 522:
Although some of the courts formerly leaned strongly against enforcing arbitration agreements as tending to oust the courts from their lawful jurisdiction by private agreement, in some states arbitration early commanded much favor from the law as a means of promoting tranquility and the prompt and equitable settlement of disputes. Since the enactment of the arbitration statutes, beginning with the New York act in 1921 the courts have generally looked with favor on arbitration as a shortcut to substantial justice.
In addition, 6 C.J.S. Arbitration § 2 at 162-163:
Although as already noted arbitration was early recognized at the common law as a mode of adjusting matters in dispute, yet, from [the] efforts perceptible in the earlier cases to construe arbitration proceedings and awards so as to defeat them, it would seem that they were not originally favored by the courts. This hostility, however, has long since disappeared, and, by reason of the fact that the proceeding represents a method of the parties’ own choice and furnishes a more expeditious and less expensive means of settling controversies than the ordinary course of regular judicial proceedings, it is the policy of the law to favor and encourage arbitration. Thus, arbitration is said to be favored by a strong public policy, and it has been held that courts look with favor upon arbitration as a means of removing contentions from the area of litigation.
One of the first jurisdictions adopting the modern view upholding general arbitration clauses as a matter of common law was Colorado, in Ezell v. Rocky Mountain Bean & Elevator Co., 76 Colo. 409, 232 P. 680, followed in Zahn v. District Court in and for County of Weld, 169 Colo. 405, 457 P.2d 387, and Dominion Ins. Co. v. Hart, 178 Colo. 451, 454, 498 P.2d 1138, 1140 (“arbitration is favored in Colorado”). See Aksen, Resolving Construction Contract Disputes Through Arbitration, 23 Arb.L.Journ. 141, 148.
Another early state was Minnesota, in Park Constr. Co. v. Independent School Dist. No. 32, 209 Minn. 182, 296 N.W. 475. The Park rule upholding arbitration clauses was followed in Zelle v. Chicago & N.W. R.R., 242 Minn. 439, 446, 65 N.W.2d 583, 589 (“Arbitration has been looked upon with favor in this state both in the statutory and decision field.”), and in Grover-Dimond Associates v. American Arbitration Ass’n, 297 Minn. 324, 327, 211 N.W.2d 787, 788 (“Clearly, it is the policy of this state ... to encourage arbitration as a ‘speedy, informal, and relatively inexpensive procedure for resolving controversies arising out of commercial transactions.’ We do not in this *886state ‘intend to revive or encourage the historical common-law animosity toward arbitration in general.’ ”).
Pennsylvania likewise upholds arbitration clauses. Mendelson v. Shrager, 432 Pa. 383, 385, 248 A.2d 234, 235 (“Contracts that provide for arbitration are valid, enforceable and irrevocable, save upon such grounds as exist in law or in equity for the revocation of any other type of contract. This is equally true of both common law arbitration and the arbitration provided in the Act of 1927.”); Preferred Risk Mut. Ins. Co. v. Martin, 436 Pa. 374, 376, 260 A.2d 804, 805, cert. den. 398 U.S. 905, 90 S.Ct. 1697, 26 L.Ed.2d 65 (“all disputes arising under the uninsured motorist clause of the standard insurance policy must be settled by arbitration”); Flightways Corp. v. Keystone Helicopter Corp., 459 Pa. 660, 331 A.2d 184. Arbitration is also upheld in West Virginia. Board of Education of County of Berkeley v. W. Harley Miller, Inc., 236 S.E.2d 439 (W.Va.). See also E. E. Tripp Excavating Contractor, Inc. v. County of Jackson, 60 Mich.App. 221, 230 N.W.2d 556; L. H. Lacy Co. v. City of Lubbock, 559 S.W.2d 348 (Tex.); Martin v. Vansant, 99 Wash. 106, 168 P. 990.
Commentators supporting the arbitration approach to conflict-resolution include McLaughlin, Arbitration Under Uninsured Motorist Insurance, 1962 Ins.L.Journ. 353, 364 (“We can hope, however, that some of the states will follow the lead of the Nevada Supreme Court and re-examine the old prejudices against arbitration. It seems rather anachronistic in the light of the present day agitation about congestion in the courts to find decisions based upon concern about ousting the courts of their proper jurisdiction by an agreement to arbitrate controversies.”); Comment, Commercial Arbitration: A Need for Reform, 36 Mo.L. Rev. 343; Widiss, A Guide to Uninsured Motorist Coverage, 200 (1969); and Anno. 135 A.L.R. 59, 91-92.
The judicial trend favoring arbitration is discernible in two or our recent cases, Joseph L. Wilmotte & Co. v. Rosenman Bros., 258 N.W.2d 317 (Iowa), and Heck v. Geo. A. Hormel Co., 260 N.W.2d 421 (Iowa). In Wilmotte we applied New York arbitration statutory law under a conflict of laws rule and thus upheld arbitration, although we cited the traditional common-law rule against arbitration. In Heck we upheld arbitration as a condition precedent to suit and made no mention of the general common-law rule.
Upon consideration of the question of enforceability, I believe Iowa should reverse its historical opposition and join the ranks of states which enforce clauses for arbitration of future disputes when the clauses are otherwise valid.
IV. Validity of Arbitration Clause in Uninsured Motorist Coverage. Aside from the common-law rule of unenforceability, is this particular arbitration clause valid? A jurisdiction which enforces arbitration generally will not uphold an arbitration clause which is otherwise invalid, as where the contract or clause was induced by fraud or duress. 5 Am.Jur.2d Arbitration & Award § 83 at 583; 6 C.J.S. Arbitration § 14 at 183-184. Johnson does not alleged grounds of invalidity such as fraud or duress. Nor does she allege that the American Arbitration Association rules are improper or that an arbitrator the Association would assign would be incompetent or disqualified, or even that she sought other means of arbitration under the policy clause.
A. Two Iowa statutes in this field do not reach the question of the validity of the instant clause. One is chapter 516A of the Code which requires uninsured motorist coverage in motor vehicle liability policies unless expressly waived. The forms and provisions of such coverage are subject to insurance-commissioner approval, and neither party contends the present standard form of uninsured motorist insurance was not approved. Such forms of necessity deal with a variety of subjects in providing uninsured motorist insurance. One of the usual subjects is arbitration, such as the arbitration clause in this standard form. See Reasor, Uninsured Motorist Coverage, 12 Drake L.Rev. 119, 125-128. Chapter 516A neither mandates nor prohibits arbitration as a *887method of resolving uninsured motorist insurance claims.
The other statute, chapter 679, provides a procedure for arbitration of controversies. Since the requirements of that statute were not followed here, the statute is inapplicable. The statute does not, however, prohibit otherwise valid common-law arbitration. First National Bank in Cedar Falls v. Clay, 231 Iowa 703, 2 N.W.2d 85.
These statutes do not render the instant arbitration clause invalid.
B. Is this arbitration clause valid in the context of uninsured motorist coverage in an insurance policy? The clause is part of a standard form. The decisions show that standard forms containing clauses for arbitration of uninsured motorist coverage claims are commonly used. See e. g. Miller v. Allstate Ins. Co., 238 F.Supp. 565 (W.D. Pa.); Jeanes v. Arrow Ins. Co., 16 Ariz.App. 589, 494 P.2d 1334. Standard forms are used in other activities in today’s world, including those involving trade and employer-employee relationships. Normally one of the parties is not aware of all the terms in the form, but by assenting to the form by accepting, using, or signing it he is bound by its terms. Restatement, Contracts 2d § 237 (Tent. Drafts 1-7). An exception exists, however, under these circumstances: “Where the other party has reason to believe that the party manifesting such assent would not do so if he knew that the writing contained a particular term, the term is not part of the agreement.” Id. § 237(3).
Did Fireman’s Fund have “reason to know” that Johnson would not have assented to the policy if she had known of the arbitration clause relating to uninsured motorist insurance? The answer that a court will give to this question appears to depend to a considerable extent on the hostile or friendly attitude that the particular court brings to the subject of arbitration generally. Contrast Clayton v. Alliance Mut. Cas. Co., 212 Kan. 640, 512 P.2d 507, reh. den. 213 Kan. 84, 515 P.2d 1115 (jurisdiction not enforcing arbitration, takes view that arbitration clause is invalid in uninsured motorist coverage), with Wales v. State Farm Mut. Auto. Ins. Co., 559 P.2d 255, 257 (Colo.App.) (citing Clayton but holding “we decline to adopt this view in light of the discernible policy supporting arbitration in this state”). Other cases upholding arbitration clauses as a matter of common law in the uninsured motorist insurance context include Miller v. Allstate Ins. Co., 238 F.Supp. 565 (W.D.Pa.); Nelson v. Allstate Ins. Co., 298 A.2d 337 (Del.); Allstate Ins. Co. v. Pietrosh, 85 Nev. 30, 454 P.2d 106; and Hartford Ins. Group v. Kassler, 227 Pa.Super.Ct. 47, 324 A.2d 521. See also 16 Williston, Contracts, § 1922B at 495-496 (3d Ed.) (“the majority of courts have treated and continue to treat the arbitration provision in the uninsured motorist policy as fully enforceable”). Cases pro and con are gathered in Anno. 24 A.L.R.3d 1325.
Uninsured motorist coverage places the insured and insurer in a peculiar position. In order for them to resolve the insured’s claim against the insurer, two other issues must be resolved: the insured’s contention that the uninsured third party is liable to him and the amount of such liability. To resolve those issues expeditiously in case of disagreement, arbitration has been incorporated into policies. See Reasor, Uninsured Motorist Coverage, 12 Drake L.Rev. 119, 125. I do not view arbitration with such disfavor that I believe an insurer has “reason to believe” the insured would not accept a policy knowing of the arbitration clause to resolve the issues of third-party liability and damages. I would thus hold the clause to be valid in the uninsured motorist insurance setting.
The decision of the court majority in this case is another in our line of decisions which refuse to uphold the defense of failure to arbitrate by construction of the contract. For the reasons I have stated I believe the District Judge was right in holding that Johnson must arbitraté, and I would therefore affirm.
LeGRAND, J., joins in this dissent.