Summary
In Gulf American Fire Casualty Co. v. McNeal (1967), 115 Ga. App. 286, 154 S.E.2d 411, the named insured owned three automobiles, but the uninsured motorist endorsement provided coverage with respect to "Car No. 3 only."
Summary of this case from Ohio Farmers Ins. Co. v. WrightOpinion
42417, 42418, 42419, 42420.
ARGUED NOVEMBER 9, 1966.
DECIDED FEBRUARY 24, 1967.
Declaratory judgment. Bibb Superior Court. Before Judge Long.
Martin, Snow, Grant Napier, George C. Grant, Hendley V. Napier, for appellant.
G. L. Dickens, Jr., for appellees.
1. Plaintiffs' petitions stated causes of action for a declaratory judgment.
2. Issuance of an endorsement which designates an additional automobile to be covered by automobile liability insurance under the provisions of a policy previously issued effects insurance with respect to the additional automobile and therefore constitutes the issuance of a policy within the meaning of the terms of Code § 56-407A.
3. The uninsured motorists insurance required by Code § 56-407A provides coverage to "the named insured and, while resident of the same household, the spouse of any such named insured, and relatives of either, while in a motor vehicle or otherwise." These persons are covered when they are occupying an automobile other than the "insured automobile."
4. (a) In a policy providing insurance coverage subject to Code § 56-407A, a provision requiring arbitration of any claim under the coverage is void.
(b) A provision for forfeiture of the uninsured motorists coverage if the insured should, without written consent of the insurer, settle with or prosecute to judgment any action against any person who might be legally liable for the insured's injuries, is also repugnant to Code § 56-407A and therefore void.
5. Before suit can be brought against the insurer to recover benefits under this kind of coverage, it is a condition precedent that suit must first be brought and judgment recovered against the known uninsured motorist.
6. The allegations showed that plaintiffs were subject to the risk of taking undirected action, and therefore these cases fall within the purview of Section 1 (b) of the Declaratory Judgments Act (Ga. L. 1945, p. 137).
7. There was no error in sustaining special demurrers to defendant's allegations of a mere conclusion of law.
8. The trial court erred in declaring that plaintiffs were entitled to limits of coverage in excess of the limits clearly stated in Code § 56-407A.
9. The error discussed in this division of the opinion was harmless to defendant.
ARGUED NOVEMBER 9, 1966 — DECIDED FEBRUARY 24, 1967.
Carolyn McNeal and Wendell McNeal separately brought suit against Gulf American Fire and Casualty Company. The petitions in the two cases showed the following facts:
On June 28, 1963, defendant issued to Carlton McNeal, as the named insured, an automobile liability insurance policy for a policy period from July 11, 1963, to July 11, 1964. The original policy declarations designated as owned automobiles a 1959 Ford (Car 1) and a 1963 Volkswagen (Car 2), and provided that the policy afforded insurance only with respect to coverages indicated by specific premium charges. No premium charge was made for uninsured motorists coverage. Defendant thereafter issued an endorsement, dated March 20, 1964, amending the policy declarations so as to afford insurance with respect to an additional automobile. The endorsement also indicated a change in coverage so as to add uninsured motorists coverage with respect to "Car #3 Only." On July 4, 1964, while driving Car 2, the named insured collided with an automobile operated by Elton Austin, an uninsured motorist. The plaintiffs, who are the wife and son of the named insured and who reside in the same household as the named insured, were passengers in the McNeal vehicle and were injured in the collision.
By virtue of the endorsement of March 20, 1964, the policy undertook: (Part IV) "To 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 automobile because of bodily injury, sickness or disease, including death resulting therefrom, hereinafter called `bodily injury,' sustained by the insured, caused by accident and arising out of the ownership, maintenance or use of such uninsured automobile, 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." The policy also provided: "This policy does not apply under Part IV . . . to bodily injury to an insured, or care or loss of services recoverable by an insured, with respect to which such insured . . . shall, without written consent of the company, make any settlement with or prosecute to judgment any action against any person or organization who may be legally liable therefor."
Defendant denied liability to plaintiffs "on the ground that said policy did not provide uninsured motorists protection in connection with the 1963 Volkswagen." (Car number 2).
Both petitions prayed for declaratory judgment adjudicating that the policy provisions for uninsured motorists coverage were subject to and were to be construed in accordance with an Act approved March 10, 1964 ( Code § 56-407A; Code Ann. § 56-407.1); that the provisions requiring agreement or arbitration as to claims arising under this coverage were null and void; that the provisions for forfeiture of coverage if the insured should, without written consent of the insurer, settle with or sue to judgment any person who might be liable for the insured's injuries, were null and void; and that the policy afforded uninsured motorists coverage with respect to the alleged injuries. Both petitions prayed that the court require defendant to give its written consent for plaintiff to prosecute to judgment any action which might be appropriate against any person who might be legally liable to plaintiff on account of the alleged injuries. Both petitions also sought to recover the benefits provided by the uninsured motorists coverage plus a penalty for bad faith and attorney's fees.
Defendant filed demurrers and answers to the petitions and plaintiffs filed demurrers to defendant's answers. The trial court overruled all demurrers.
Plaintiffs thereafter made motions for summary judgment. The trial court rendered judgments declaring that plaintiffs could not recover directly against the insurer without first obtaining judgment against the uninsured motorist and could not recover damages and attorney's fees for bad faith. As to all other issues the court granted summary judgments for plaintiffs, declaring the rights of the parties according to plaintiffs' theory.
These cases were originally carried to the Supreme Court of Georgia, which transferred them to this court, holding that plaintiffs' prayers seeking equitable relief were surplusage as it did not appear from the petitions that the legal relief sought was not full and complete. Gulf American Fire c. Co. v. McNeal, 222 Ga. 454 ( 150 S.E.2d 685).
1. Plaintiffs' petitions stated causes of action for declaratory judgment. Thus the trial court did not err in overruling defendant's demurrers 1 through 5 in both cases. (See Division 6 of this opinion.)
2. Code § 56-407A (a) ( Code Ann. § 56-407.1 (a)) provides: "No automobile liability policy . . . shall be issued or delivered in this state to the owner of such vehicle, or shall be issued or delivered by any insurer licensed in this State, upon any motor vehicle then principally garaged or principally used in this state, unless it contains an endorsement or provisions undertaking to pay the insured all sums which he shall be legally entitled to recover as damages from the owner or operator of an uninsured motor vehicle. . ." The insurer contends that since the original policy was issued prior to the effective date of the Act, the Act is not applicable here. So far as the coverage on Car No. 3 is concerned, we cannot agree with this argument. "`Policy' means the written contract of or written agreement for or effecting insurance, and includes all clauses, riders, endorsements and papers attached or issued and delivered for attachment thereto and a part thereof." Code Ann. § 56-2402. The words of the Code section "effecting insurance" have special significance in this case. While the issuance of an endorsement may not in every case constitute the issuance of a policy, nevertheless in this case the "endorsement," together with the original policy, effected insurance as to Car No. 3. Under the Code definition of "policy," issuance of the endorsement here constituted issuance of a policy. Thus the insurance coverage on Car No. 3 is subject to provisions of the Act of 1964 ( Code § 56-407A).
(Note that under the Constitutional prohibition against impairing the obligation of contracts, the 1964 Act did not and could not affect the pre-existing insurance coverage as to Car No. 1 and Car No. 2.)
The trial court did not err in sustaining plaintiffs' demurrers 2 and 6 to defendant's answer in both cases.
3. "The [uninsured motorists] coverage applies not only to the owner of an insured automobile but to his spouse and relatives of either if they live in his household. It covers them while riding in the insured car, in any other automobile or while pedestrians if the injury is caused by an uninsured motorist." Mitchell on Insurance (1965 Ed.) § 120-102, p. 703.
Unless the uninsured motorists coverage is rejected by the insured, Code § 56-407A broadly requires that policies contain provisions "undertaking to pay the insured all sums which he shall be legally entitled to recover as damages from the owner or operator of an uninsured motor vehicle. . ." The Act does not restrict coverage only to instances where the "insured automobile" is involved. Thus an insured person is covered whether or not he is occupying the "insured automobile."
As defined in Code § 56-407A (b) "insured persons" can be grouped in two classes:
(1) "The named insured and, while resident of the same household, the spouse of any such named insured, and relatives of either, while in a motor vehicle or otherwise";
(2) "Any person who uses, with the consent, expressed or implied, of the named insured, the motor vehicle to which the policy applies, and a guest in such motor vehicle to which the policy applies."
The latter class are insured persons under Code § 56-407A only when the "insured automobile" is involved. The former class are insured persons even where the "insured automobile" is not in any way involved in the insured's injuries.
The obvious effect of Code § 56-407A (b) is to furnish coverage as to plaintiffs while they were riding in Car No. 2, although it was not an "insured automobile" under the uninsured motorists coverage.
Even if Code § 56-407A were not applicable here, we would reach the same result under the policy provisions, according to which the "named insured" and any "relative of the named insured who is a resident of the same household" had uninsured motorists coverage whether or not occupying the insured automobile. The effect of the restriction contained in the endorsement limiting the uninsured motorists coverage to "Car #3 only" was merely to exclude Car No. 1 and Car No. 2 from the policy definition of "insured automobile" under the uninsured motorists coverage, so that this coverage would be afforded to other persons only while occupying Car No. 3.
The trial court did not err in sustaining plaintiffs' demurrers 1 and 5 to defendant's answer in both cases. The court did not err in granting summary judgments declaring that the policy afforded uninsured motorists coverage with respect to plaintiffs' alleged injuries.
4. (a) Code § 56-407A (f) ( Code Ann. § 56-407.1 (f)) provides: "No such indorsement or provisions shall contain a provision requiring arbitration of any claim arising under any such endorsement or provisions, nor may anything be required of the insured, subject to the other provisions of the policy or contract, except the establishment of legal liability, nor shall the insured be restricted or prevented, in any manner, from employing legal counsel or instituting legal proceedings." Existing and valid statutory provisions enter into and form a part of all contracts of insurance to which the statute is applicable, and in case of conflict between the policy and the statutory provisions the latter control. Nelson v. Southern Guaranty Ins. Co., 221 Ga. 804, 807 ( 147 S.E.2d 424). The policy provisions requiring agreement or arbitration as to claims arising under the uninsured motorists coverage are repugnant to Code § 56-407A (f), and the trial court did not err in declaring them void. For the same reason the court did not err in sustaining plaintiffs' demurrer 3 to defendant's answer in both cases.
(b) The policy provision for forfeiture of the uninsured motorists coverage if the insured should, without written consent of the insurer, settle with or prosecute to judgment any action against the tortfeasor, is also repugnant to Code § 56-407A (f). In Cotton States Mut. Ins. Co. v. Torrance, 110 Ga. App. 4 (2) ( 137 S.E.2d 551), this court held a similar policy provision binding on the insured. However, Torrance is distinguishable from this case in that Code § 56-407A, applicable in this case, was not applicable in Torrance. The trial court correctly declared this provision void.
5. (a) Before suit can be brought against the insurer to recover benefits under this kind of coverage, it is a condition precedent that suit must first be brought and judgment recovered against the known uninsured motorist. State Farm Mut. Auto. Ins. Co. v. Girtman, 113 Ga. App. 54, 58 ( 147 S.E.2d 364); Turner v. Associated Indem. Corp., 113 Ga. App. 225 ( 147 S.E.2d 788); Smith v. Allstate Ins. Co., 114 Ga. App. 127, 128 ( 150 S.E.2d 354). The court erred in overruling defendant's demurrers 6 and 7 in both cases.
(b) The court did not err in granting summary judgments declaring that plaintiffs could not in these actions recover against the insurer benefits provided by the policy or penalties for bad faith and attorney's fees.
6. Defendant contends that the petitions fail to state causes of action for declaratory judgment because no facts or circumstances are alleged which show that an adjudication of plaintiffs' rights is necessary in order to relieve plaintiffs from the risk of taking future undirected action, citing Rowan v. Herring, 214 Ga. 370, 374 ( 105 S.E.2d 29); Pinkard v. Mendel, 216 Ga. 487, 490 (2) ( 117 S.E.2d 336); Allen Publications v. Ga. Assn. of Petroleum Retailers, 219 Ga. 665, 671 ( 135 S.E.2d 330). This argument is without merit. The petitions showed that plaintiffs contend that the policy in question provided coverage subject to Code § 56-407A. While plaintiffs also contend that they are entitled to recover against the insurer in these actions, nevertheless the applicable law, if the policy provided coverage subject to Code § 56-407A, is that plaintiffs must first recover against the known uninsured motorist before they can recover against the insurer. (See Division 5 of this opinion.) Plaintiffs also showed that the policy contains a provision for forfeiture of the uninsured motorists coverage if the insured should, without written consent of the insurer, settle with or prosecute to judgment any action against any person who might be liable for the insured's injuries. Assuming that Code § 56-407A were not applicable, then the forfeiture provision would be binding. (See Division 4 (b) of this opinion.) Had plaintiffs been wrong in their contention that Code § 56-407A is applicable and had they recovered judgment against the uninsured motorist, then this would have precluded recovery against the insurer, under Cotton States Mut. Ins. Co. v. Torrance, 110 Ga. App. 4, supra. Plaintiffs did not allege as a conclusion that they were in a position of uncertainty and insecurity, nor is it necessary to have done so. All that is required is that plaintiffs allege facts which show that plaintiffs are in this position. The facts alleged in these cases clearly showed that plaintiffs were subject to the risk of taking undirected action, and therefore these cases are within the purview of Sec. 1 (b) of the Declaratory Judgments Act (Ga. L. 1945, p. 137; Code Ann. § 110-1101 (b)).
7. The court did not err in sustaining in both cases plaintiffs' demurrer 4 attacking a portion of defendant's answers alleging a conclusion of law. Ozmore v. Coram, 133 Ga. 250 (2) ( 65 S.E. 448).
8. The court erred in declaring in Subparagraph 5 of Paragraph I of the summary judgments: "That defendant is obligated by the terms of said policy to pay plaintiff all sums up to but not exceeding $10,000.00 which plaintiff is legally entitled to recover as damages from Elton Austin because of the bodily injuries sustained by plaintiff, caused by said collision." This declaration failed to take into consideration pertinent language of Code § 56-407A (a), which prescribes "limits exclusive of interest and costs which shall be no less than ten thousand dollars because of bodily injury to or death of one person in any one accident, and, subject to such limit for one person, twenty thousand dollars because of bodily injury to or death of two or more persons in any one accident." There were three persons riding in the McNeal vehicle, and more than one claim could have arisen on account of injuries to any one of these persons. See State Farm Mut. Auto. Ins. Co. v. Hodges, 221 Ga. 355 ( 144 S.E.2d 723). The policy in question did not provide limits of coverage in excess of those required by Code § 56-407A (a).
9. If the trial court erred in directing the clerk of court, on behalf of defendant, to give written consent to plaintiffs "to institute and prosecute to judgment any and all actions which may be appropriate against any and all persons or organizations who may be legally liable," this error was harmless because it had merely the same effect as the trial court's declaration, discussed in Division 4 (b) of this opinion, that the forfeiture provision of the policy was invalid. Gulf American Fire c. Co. v. McNeal, 222 Ga. 454, supra.
10. The judgments of the trial court discussed in Divisions 5 (a) and 8 of this opinion are reversed on the main appeals. In all other respects the judgments of the trial court are affirmed on the main appeals. The judgments are affirmed on the cross appeals.
Judgments reversed in part; affirmed in part on the main appeals. Judgments affirmed on the cross appeals. Jordan and Eberhardt, JJ., concur.