Court Opinion

ID: 9559536
Source: CourtListenerOpinion
Date Created: 2023-08-21 17:30:56.746683+00
Date Added: 2024-06-11T09:10:13.352705
License: Public Domain

McFADDEN, Chief Justice,
dissenting.
I am reminded in this matter of the Greek legend concerning the Gordian Knot. The knot, tied by King Gordius of Phrygia, was said to be so complex that it could not be undone. The oracles told that only he who would be master of Asia could undo the Gordian Knot. Many tried to untie it and failed. Alexander the Great, however, took one look and then cleaved the knot in half with his sword. This is not different from the approach taken by the majority opinion; faced with a problem of untangling insurance policy provisions, the majority has chosen to disregard the contract provisions of the policies and substitute a result totally unrelated to them. While such an approach to problem solving may *376lead to greatness in the executive or even the legislative branch of government, it is inappropriate in the judiciary.
The thrust of the majority opinion is the adoption of the Lamb-Weston doctrine. This doctrine lacks basis, both legal and rational, and should be rejected in Idaho. The correct interpretation of the insurance provisions involved here, giving due consideration to the intent of the parties, the policy provisions and the case law of the State does not allow the policies to be “stacked.”
Two comments should be made in preface. I would first clarify the record as to the present posture of this particular rule of law. The majority opinion cites a lengthy string of cases championing the doctrine. Let it not be inferred, however, that the so-called “Lamb-Weston” doctrine is particularly a majority rule. On the contrary, the authority is widely divided. See, Annot., 28 A.L.R.3d 551 (1969), and cases cited therein.
The position that “other insurance” clauses are valid and that policies do not stack is well supported in case law. McCarthy v. Preferred Risk Mut. Ins. Co., 454 F.2d 393 (9th Cir. 1972); Transportation Insurance Co. v. Wade, 106 Ariz. 269, 475 P.2d 253 (1970); Martin v. Christensen, 22 Utah 2d 415, 454 P.2d 294 (1969); M.F.A. Mut. Ins. Co. v. Wallace, 245 Ark. 230, 431 S.W.2d 742 (1968); State Farm Mut. Auto. Ins. Co. v. Bafus, 77 Wash.2d 720, 466 P.2d 159 (1970); Maryland Cas. Co. v. Howe, 106 N.H. 422, 213 A.2d 420 (N.H.1965); Tindall v. Farmers Auto Manag. Corp., 83 Ill.App.2d 165, 226 N.E.2d 397 (1967); Burcham v. Farmers Ins. Exchange, 255 Iowa 69, 121 N.W.2d 500 (1963); Sammons v. Nationwide Mut. Ins. Co., 267 A.2d 608 (Del.Super.1970); Alliance Mut. Cas. Co. v. Duerson, 184 Colo. 117, 518 P.2d 1177 (1974); Nelson v. Employers Mut. Cas. Co., 63 Wis.2d 558, 217 N.W.2d 670 (1974); Ray v. State Farm Mut. Auto. Ins. Co., 498 F.2d 220 (6th Cir. 1974); Darrah v. Cal. State Auto. Assoc., 259 Cal.App.2d 243, 66 Cal.Rptr. 374 (1968). We cannot be persuaded to adopt the “Lamb-Weston” rule based upon a predominance of authority, because there is relatively little agreement on the subject.
Secondly, the court should remember that a well established policy guides this decision from the outset. That is the rule that we must, if possible, give the language of each policy its intended effect. Viani v. Aetna Ins. Co., 95 Idaho 22, 501 P.2d 706 (1972); Zurich Gen. Acc. & Liab. Ins. Co. v. Clamor, 124 F.2d 717 (7th Cir. 1941); American Surety Co. v. Canal Ins. Co., 258 F.2d 934 (4th Cir. 1958). See, Watson, the “other Insurance” Dilemma, 16 Federation Ins. Counsel Q. 47 (1966); Comment, “Other Insurance” Clauses: The Lamb-Weston Doctrine, 47 Ore.L.Rev. (1968); Annot., 76 A.L.R.2d 502; Weemhoff v. Cincinnati Ins. Co., 41 Ohio St.2d 231, 325 N.E.2d 239 (1975). Effect can be given to the policies, and it is the obligation of this court to do so.
I would then turn to the Lamb-Weston doctrine itself. The thesis underlying the doctrine seems to be that an abundance of “other insurance” clauses results in a circle of denial, which is in some manner ‘“repugnant.” This repugnancy is then invoked as the basis for rejecting all of the provisions, with the result that all policies become available for satisfaction of damages. When damages exceed the limits of one policy, the policies may be “stacked” to reach the total of the damage.
First, I am mystified by the majority’s belief that there is a “repugnancy” which forms a basis for rejecting the contract provisions. It is only the illogic of circularity which yields the so-called repugnancy. It is not denied by the majority or the parties that the “other insurance” provisions were agreed upon by the parties; there is no allegation of fraud or deceit, or any contention of unequal bargaining power resulting in unconscionability.
This circularity is not repugnant. It is true that if all provisions are taken together, all compensation would be denied. If so interpreted, the result might be repugnant. However, neither of the insurance companies party to the suit contend that such an interpretation should be given to the various provisions. In fact, one insurer, under *377one of the policies, has already tendered policy limit payment, thus assuming singularly the obligation for compensation. Thus, there is no possibility of total denial of payment presented by this case.
Further, it is not necessary that we determine how the provisions are to be reconciled, as the parties have done so themselves here. (As the majority opinion notes, three different methods of allocating responsibility have been variously followed by courts around the nation. A reading of this court’s decision in Viani, supra, might suggest the appropriate method in Idaho.) And when this court is ultimately faced with that decision, I perceive no insoluble difficulty in assessing liability. It may be true that any one of the three alternatives chosen for breaking the circle of “other insurance” clauses would be arbitrary and not based on a clearly dominant legal or logical justification. However, a clear, non-arbitrary basis is not needed. The whole rationale underlying the requirement of uninsured motorist provisions by I.C. § 41-2502 is that liability assigned to an insolvent, uninsured tortfeasor is worthless and that some arbitrary method of providing compensation is necessary. There is no repugnancy in arbitrarily selecting one insurer over the other for payment; so long as the rule is chosen and uniformly invoked the risk can be allocated actuarily by the insurance companies. At any rate this court cannot shy from a decision merely because there is no clear cut answer. In child custody disputes, for instance, courts are often faced with parents of equal vice or virtue. That there is not one or the other of the parents who should clearly win does not mean that we throw the child away and declare both losers. Similarly, we can resolve the difficulty of circular “other insurance” provisions without totally disregarding all such provisions. There is nothing repugnant in such an approach, and certainly this court cannot'justify appellate court disregard for a valid contract by labeling the provisions of these contracts “repugnant.”
Several of the cases cited in the majority opinion hold that “other insurance” provisions are contrary to public policy. I would make it clear that no public policy violation stems from the existence and enforcement of the provisions. “Public policy” is not something that a court can, by some feat of prestidigitation, conjure up from thin air. That magic is left to the legislature and we may defeat a contract provision limiting insurance coverage only if it violates a policy clearly set forth by the legislature. Here, no such legislative policy is apparent. A singular statute relates to the policy of insurance coverage for uninsured motorists. I.C. § 41-2502 provides:
“Uninsured motorist coverage for automobile insurance. — No policy insuring against loss resulting from liability imposed by law for bodily injury or death suffered by any natural person arising out of the ownership, maintenance or use of a motor vehicle shall be delivered or issued for delivery in this state with respect to any motor vehicle registered or principally garaged in this state unless coverage is provided therein or supplemental thereto, in limits for bodily injury or death as set forth in section 49-1505, Idaho Code, as amended from time to time, under provisions approved by the director of the department of insurance, for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles because of bodily injury, sickness or disease, including death, resulting therefrom; provided, however, that the named insured shall have the right to reject such coverage, which rejection must be in writing; and provided further, such coverage need not be provided in or supplemental to a renewal policy where the named insured had rejected the coverage in connection with a policy previously issued to him by the same insurer.”
A policy requiring rejection of “other insurance” clauses is not reflected in the Idaho Statute. The Illinois Court discussed a similar statute in Putnam v. New Amsterdam Cas. Co., 48 Ill.2d 71, 269 N.E.2d 97, 104 (1970):
*378“The question of public policy, it seems to us, is largely manufactured. Construing an insurance contract accurately and giving it the effect which its language clearly commands, is not ipso facto a breach of public policy merely because it disappoints the innocent victim of an uninsured motorist. * * * While there is some split in authority, the courts have generally reasoned that the legislature’s intent in requiring such insurance is satisfied by coverage which assures that the insured will fare equally well whether the tortfeasor is insured or not.”
The policy which was intended by the legislature was articulated by that court in Tindall v. Farmers Automobile Man. Corp., 83 Ill.App.2d 165, 226 N.E.2d 397, 398 (1967):
“By adopting legislation concerning the financial responsibility of motorists the legislature has shown its concern for the economic hardships arising from damages caused by financially irresponsible motorist. Chap. 7 of Chap. 95V2 Ill.Rev.Stat. (1965) (Financial Responsibility Act), requires that after a motor vehicle mishap has occurred the parties involved must show some degree of financial responsibility such as liability insurance in the minimum amounts of $10/$20,000.00. Failure to meet the minimum financial responsibility requirement results in loss or suspension of operating or ownership privileges. Thus it can be seen that there are certain areas or gaps the results of which would impose serious financial hardship on innocent victims of automobile collisions. To protect persons from the risks and hazards beyond the scope of the financial responsibility act, uninsured motorist protection has developed, indemnifying against loss or damage caused by an uninsured motorist. Paragraph 755a (Sec. 143a) of Chap. 73, Ill.Rev.Stat. (Ill. Ins.Code), requires that liability insurance policies include uninsured motorist protection unless such coverage is rejected by the insured, the minimum limits of such coverage being as established by the financial responsibility act. Such provision is designed to promote and encourage protection complementary to that afforded by the financial responsibility act, thereby affording coverage to the same extent as would have been in effect if the tort feasor had complied with the minimum requirements of the financial responsibility act. Chandler v. Government Employees Insurance Company, 5 Cir., 342 F.2d 420; Maryland Casualty Company v. Howe, 106 N.H. 422, 213 A.2d 420 and Garcia v. Motor Vehicle Accident Indem. Corp., 18 A.D.2d 62, 238 N.Y.S.2d 195.”
Given, then, that the intent of the legislature was to guarantee that a victim injured by an uninsured motorist would be protected to the same extent as a victim injured by an insured motorist, it becomes palpably unjust to construe the statute to mean that a victim of an uninsured may collect from as many uninsured motorist policies as happen to be applicable. As one commentator has criticized:
“No thought has been given to the fact that the act was intended merely to fill, not overflow, an insurance vacuum. Surely the General Assembly did not intend to foster a scheme whereby the innocent victim of an insured motorist may be penalized.” Denny, Uninsured Motorist Coverage, 52 Va.L.Rev. 538 (1966).
The victim of an insured motorist with state-prescribed minimum liability coverage always will collect only that minimum amount. However, if the victim is injured by an uninsured motorist, the potential recovery blossoms upward with the number of policies applicable; in the instant case, four policies were available and plaintiffs would be entitled to coverage four times as great as if the tortfeasor had been insured. Not only is this contrary to the obvious intent of the legislature in requiring uninsured motorist coverage, but it is patently offensive to a reasoned sense of justice.
The majority opinion comments that
“We do not find injustice in this result. In a case such as this, all of the companies will have collected premiums for their efforts; they should therefore bear *379the 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.”
Surely by this excuse the majority opinion does recognize the injustice of its result. It is reasonable to assume that the premiums collected by each company were calculated actuarily based upon the assumption that policy payments would not be stacked. Thus, all companies did not collect amounts adequate to fairly compensate them for stacking of policies. There is no windfall profit for the insurance companies if policies are not stacked. The majority is correct in observing that the current premiums assume the validity of the “other insurance” clauses, and the result is that when the clauses are invalidated, premiums must rise for all policyholders, to maintain the actuarial soundness of the premium structure. The result of this opinion is that a motorist involved in an accident with an uninsured motorist whose negligence caused the accident will receive benefits in excess of those that would have been paid if the negligent motorist had been insured. Sadly, the brunt of this overpayment will be borne by all policyholders, in the form of increased premiums.
Ultimately, I believe that the policy provisions were agreed upon by the parties and should be honored if possible. It is possible to reasonably construe the provisions to give them the intended effect, and there is a total dearth of reason to do otherwise. No repugnancy and no violation of public policy is apparent. The result reached by the majority opinion is anomalous in the extreme. The provisions should be given effect and stacking of policies should not be allowed.