Court Opinion

ID: 9557765
Source: CourtListenerOpinion
Date Created: 2023-08-21 16:57:00.670918+00
Date Added: 2024-06-11T09:06:34.822750
License: Public Domain

SUTIN, Judge (specially concurring). I specially concur. The trial court made the following pertinent findings of fact: 3. The policy provides in pertinent part: * * * * * * PART II: Coverage C: Benefits For Bodily Injury Caused by Uninsured Motorists: To pay all sums which the owner or operator of an uninsured motor vehicle would be legally responsible to pay as damages to the insured because of bodily injury sustained by the insured, caused by the accident, . . . provided that: ... (3) no cause of action shall accrue to the insured unless within one year from the date of the accident (a) suit for bodily injury has been filed against the uninsured motorist, in a court of competent jurisdiction, or (b) agreement as to the amount due under this Part II has been concluded, or (c) the insured has formally instituted arbitration proceedings, CONDITIONS: * * * * * * 7. Action Against the Company: . No action shall lie against the Company under Coverage C except as provided under Part II of this policy. [Emphasis added.] * * * * * * 6. Celestino Sandoval did not, within one year from the date of the accident, (a) file suit in a Court of competent jurisdiction against the uninsured motorist, or (b) institute arbitration proceedings; no agreement has ever been reached between Celestino Sandoval and Farmers Insurance Group regarding the existence of liability or the extent thereof under the policy of insurance. 7. There is no issue of material fact and that Farmers Insurance Group is entitled to a judgment as a matter of law. The only issue in this case is whether plaintiff was bound by the “No Cause of Action” clause in the insurance policy. Farmers completely ignored this issue. The uninsured motorist statute, § 64-24-105, N.M.S.A.1953 (2d Repl. Vol. 9, pt. 2), is a compulsory statute that requires all automobile liability insurance policies to carry uninsured motorist coverage in the limited amounts set forth in § 64-24-79 of the Financial Responsibility Act. This section was amended in 1975 to allow compensation to an insured of $15,000.00 for personal injury or death of one person. Section 64— 24-79, N.M.S.A.1953 (2d Repl. Vol. 9, pt. 2, 1975 Supp.) This coverage is provided “according to rules and regulations promulgated by . . . the superintendent of insurance, for the protection of persons insured thereunder . . ..” This language means that the superintendent of insurance has the power to prescribe a standard or uniform endorsement that governs uninsured motorist coverage. This power, not generally found in similar statutes, should discourage a significant amount of litigation because a standard is fixed and the amount involved is moderate. Acting under this statutory authorization, the superintendent of insurance, in 1968, published Article 24, Chapter 64 on the subject of uninsured motorist coverage. Section 24-1.2 of Chapter 64 created a standard form of endorsement for uninsured motorist coverage to be attached to every automobile insurance liability policy. •This endorsement is a separate contract of insurance, as distinct and apart from the automobile insurance policy as though it were detached therefrom and separately delivered to the named insured. Kuvin, The Effect of Uninsured Motorist Proceedings of: State Of Limitations, etc., 29 Ins. Counsel J. 127 (1962). Farmers’ insurance policy did not contain this endorsement. What plaintiff had in force with Farmers was a standard automobile liability policy without the standard form of endorsement of uninsured motorist coverage. Neither the statute, nor the standard endorsement contain a “No Cause of Action” clause. It also appears that the original form of endorsement used did not contain a “No Cause of Action” clause. See, Kuvin, supra at 128. Rice, Uninsured Motorist Insurance, etc., 48 Calif.L.Rev. 516, 539 (1960). This clause is of comparatively recent origin and inserted in the policy to protect an insurer against delayed claims of the insured. Because of the difficulty or impracticability of fixing a definite and comprehensive rule under the statute, the authority granted to the superintendent of insurance was a lawful delegation of authority. Willey v. Farmers Insurance Group, 86 N.M. 325, 523 P.2d 1351 (1974). This authority, however, was not intended to be final where the endorsement adopted contained “exclusionary provisions” which strike at the very heart of the uninsured motorist statute. This function rests with the courts. Chavez v. State Farm Mutual Automobile Ins. Co., 87 N.M. 327, 533 P.2d 100 (1975). In Chavez, due'to the liberal construction that is given to the uninsured motorist statute, the Supreme Court declared void an “other provision” of the State Farm policy that denied coverage to an insured while riding on his uninsured motorcycle. In Sloan v. Dairyland Insurance Company, 86 N.M. 65, 519 F.2d 301 (1974), the Supreme Court declared void an “other provision” of Dairyland’s policy that contained an excess escape clause. We now declare void the “No Cause of Action” clause of Farmers’ policy because it is also an “escape clause.” The record does not disclose whether the superintendent of insurance approved Farmers’ policy under statutory authority. If it was approved, the approval would be declared void because it would contravene existing limitation statutes. Leuning v. Dornberger Ins. Co., S.D., 250 N.W.2d 675 (1977). The court said: Although the commissioner of insurance is delegated the power to approve insurance policy forms, he is not given the power to approve policies that contravened existing statutes. * * * ' * * * . [I]t is the public policy of this state that limitations on actions upon a contract shall be established by the legislature and not by contractual provisions or by the insurance commissioner. [250 N.W.2d at 678 and 679.] It is established law in New Mexico that a “No Cause of Action” clause in a fire insurance policy, or in a Livestock Transportation policy, is enforceable. It is not against public policy. Electric Gin Co. v. Firemen’s Fund Ins. Co., 39 N.M. 73, 39 P.2d 1024 (1935); Wiseman v. Arrow Freightways, Inc., 89 N.M. 392, 552 P.2d 1240 (1976). Since 1947, the statutory Standard Fire Insurance Policy contains a statutory “No Cause of Action” clause. Section 58-8-10, N.M.S.A.1953 (Repl. Vol. 8, pt. 2, p. 338). On the other hand the Livestock Transportation insurance policy is not governed by statute. However, where a provision of an insurance policy conflicts with statutory law, it is contrary to public policy and unenforceable. Chavez, supra. It is also well settled law in New Mexico that the obligation owed by a liability insurer to an insured is contractual. Willey, supra. Two things must be constantly kept in mind. First, the legislative purpose in creating compulsory uninsured motorist coverage was to place plaintiff, the insured policyholder, in the same position he would have been in if defendant tort-feasor had had liability insurance. Chavez, supra. This purpose does establish the ordinary rule of tort liability between an injured person and a tort-feasor. The 3 year limitation period is applicable. Section 23-1-8, N.M.S.A.1953 (Vol. 5). Second, the uninsured motorist coverage is based on contract, although it is conditioned upon the existence of this tort liability. In an action brought on an insurance policy, § 23-1-3, the six year limitation period pertaining to actions brought on a written contract, would govern the action. See Electric Gin Co., supra. It has been held almost without exception that an action against the insurer under an uninsured motorist clause in the policy is governed by the contract statute of limitations. Turlay v. Farmers Insurance Exchange, 259 Or. 612, 488 P.2d 406 (1971). This holding is in accord with the majority of other jurisdictions which have been faced with the same question. Annot., Uninsured Motorist Clause — Time Limit, 28 A.L.R.3d 580, 584-585 (1969); North River Insurance Company v. Kowaleski, 275 Or. 531, 551 P.2d 1286 (1976). However, the shorter tort statute of limitations is personal to and can only be asserted by the uninsured motorist. Booth v. Fireman’s Fund Insurance Company, 197 So.2d 352 (La.App.1967). When a court approaches a problem that affects the protection of the public as against private interests, the solution is simple. Salus Populi Suprema Lex (That regard he had to the public welfare, is the highest law). Broom, Selection of Legal Maxims, 1 (5th Am.Ed.1864). Justice to the public prevails. It is equitable. It is justice done. In the interpretation of statutes enacted for the benefit of the public, this concept should always be the pole star. To allow an insurer to lessen the period of time to bring an action on an insurance policy from six years to one year would thwart the purpose of the uninsured motorist statute. It is reasonable and fair to prevent this result for the benefit of the public. By omitting a limitation period, the legislature believed that six years was a reasonable time to allow the action to be brought. Farmers “No Cause of Action” clause is in conflict with general law and therefore void. Burgo v. Illinois Farmers Insurance Company, 8 Ill.App.3d 259, 290 N.E.2d 371 (1972) held that a “No Cause of Action” clause, identical with that in the instant case, was against public policy and void; that the general personal injury limitation statute of two years prevailed. However, Illinois holds that the plaintiff cannot assert the ten year limitation statute that pertains to actions on contract. Coyne v. Country Mutual Insurance Co., 39 Ill.App.3d 279, 349 N.E.2d 485 (1976). Globe American Casualty Co. v. Goodman, 41 Ohio App.2d 231, 325 N.E.2d 257 (1974) is contra. The majority opinion held that in the absence of a limitation period in the uninsured motorist statute, the limitation period in the insurance policy controlled. The dissenting opinion, however, stated the correct rule of law: Private limitations on the right to sue may be established if reasonable and not in conflict with general law. [325 N.E.2d at 262.] It is interesting to note that Ohio declares void as against public policy an “exclusion clause” in an insurance policy. Watters v. Dairyland Ins. Co., 50 Ohio App.2d 106, 361 N.E.2d 1068 (1976). In this respect, Globe American Casualty Co. is distinguished. We recognize this distinction, but it is a distinction without a difference. It splits public policy in half. A court should not lift one provision in an insurance contract, above public policy with the right hand and drop another provision below public policy with the left hand. For the protection of the public, the court’s left hand should know what the right hand is doing. We recognize that insurance is a very valuable asset to the operator of a motor vehicle; that insurance companies should not suffer by reason of untold litigation. However, it should not insert in its policy, a provision or clause that offends public policy. The insurer is presumed to know the law. It prepares the policy. The insured “cannot, ordinarily, read and understand the complex, complicated and intricate provisions of an insurance policy in words of fine print that ambles along the way.” Read v. Western Farm Bur. Mut. Ins. Co., 90 N.M. 369, 563 P.2d 1162, 1166 (1977). In my opinion, the six year limitation period governs an action by an insured against an insurer on an uninsured motorist coverage endorsement.