Sparling v. Allstate Insurance Company , 249 Or. 471 ( 1968 )

HOLMAN, J.

This is a declaratory judgment proceeding seeking a construction of the uninsured motorist coverage of a policy of automobile liability insurance.

Plaintiff’s decedent met his death by the negligence of an uninsured motorist while he was the occupant of a vehicle owned by the State of Oregon. At the time of his death the state was the named insured of a policy of liability insurance issued by Continental Casualty Company. The policy contained an uninsured motorist provision with limits of $5,000 for each person within a state vehicle who was killed or injured by the negligence of an uninsured motorist. The policy contained the following “other insurance” provision:

“* * * if the insured has other similar insurance available to him and applicable to the accident, * * * the company shall not be liable for a greater proportion of any loss to which this Coverage applies than the limit of liability hereunder bears to the sum of the applicable limits of liability of this insurance and such other insurance.”

Continental Casualty paid plaintiff its policy limits under the uninsured motorist provision.

At the same time decedent was the named insured of a policy of liability insurance issued by defendant which policy contained a provision insuring decedent against death or injury by the negligence of an uninsured motorist with limits of $5,000. This section of the policy contained the following “other insurance” provision:

“Exclusions — what this Section does not cover This Section of the Policy does not apply:

1. to bodily injury of an insured sustained while in * * * any automobile, other than an owned automobile, if the owner has insurance similar to that afforded by this Section and such insurance is available to the insured;”

The trial court construed the uninsured motorist provision of defendant’s policy to have covered plaintiff’s decedent at the time of his death and entered judgment for plaintiff in the sum of $5,000 plus attorney’s fees. Prom this judgment defendant appeals.

The provision of defendant’s policy quoted above is known as an escape clause and defendant contends the trial court was in error in not giving effect to it and absolving defendant of all responsibility under its policy for damage caused by the death of plaintiff’s decedent. The first issue presented is whether what is known in this state as the “Larnb-Weston”^① doctrine should be applied to the present state of facts. In six eases^② this court has applied it and has held that where there is coverage by two insurers of the same loss and both attempt to limit the extent of their coverage when there is other insurance, one by a pro rata clause and the other by an excess clause, the clauses are repugnant and incapable of logical application. In that situation, therefore, the respective clauses have been disregarded and held of no effect. Defendant contends that the doctrine has no application here because, while there may be repugnancy between a pro rata clause and an excess clause, there is no repugnancy between an escape clause and a pro rata clause which is the present situation.

In effect, defendant’s policy provides that if there is other insurnace, there is no coverage, while Continental’s policy provides that where there is other insurance it will pay only part of the loss. Each policy gives complete coverage except for the other’s policy. Each says it is responsible for less than the loss where there is other insurance. In order to give effect to the respective provisions it is necessary to determine which insurer bears the primary obligation. There is no basis for such a determination other than an arbitrary designation. There is no rational basis for distinguishing the present situation of an escape clause versus a pro rata clause from that in Lamb-Weston where there was an excess clause versus a pro rata clause. The disposition of this case was anticipated by the dictum in Lamb-Weston at page 110:

“The ‘other insurance’ clauses of all policies are but methods used by insurers to limit their liability, whether using language that relieves them from all liability (usually referred to as an ‘escape clause’) or that used by St. Paul (usually referred to as an ‘excess clause’) or that used by Oregon (usually referred to as a ‘prorata clause’). In our opinion, whether one policy uses one clause or another, when any come in conflict with the ‘other insurance’ clause of another insurer, regardless of the nature of the clause, they are in fact repugnant and each should be rejected in toto.

Where one of the provisions is an escape clause, as in the present case, one runs into exactly the same circularity of reasoning in attempting to determine which policy should be given preference as one would if it were a pro rata or an excess provision. Regardless of the type of provision each policy attempts to limit its coverage where there is other insurance. Bach policy affords complete coverage in the absence of the other company’s policy. It is impossible, therefore, to say there is no other insurance regardless of which policy is being considered. Lamb-Weston is still a minority holding but the following eases have adopted the rule.^③ The literature on the effect of “other insurance” clauses has become extensive.^④

Means of determining primary responsibility sneli as whether an owned automobile was involved is purely arbitrary. It has been urged that, by the use of substantially identical language in attempting to limit or escape their liability when the injury occurred in other than an owned automobile, the two insurance companies intended that the insurer of the owner of the vehicle have primary responsibility. In the first place, this is contrary to their expressed intent. In the present factual situation the intent, as demonstrated by the policies, was to escape liability in one instance and limit it in the other if there was other insurance. Secondly, it is extremely difficult to understand how it can be said that the two companies, who have no contractual relationship, are governed in their priority of responsibility for a given accident by some sort of a presumed mutual intent or understanding which arose from language used by each in their contracts with third parties. It must always be remembered that, in the factual situation that occurred, the owned-automobile provision of one policy is applicable while the non-owned provision of the other applies. If the terms of the applicable provisions are repugnant it is of little consequence that the policies are identical and their provisions parallel.

Defendant contends that the application of the Lamb-Weston doctrine should be limited to eontroversies between insurers concerning allocation of losses and should have no application to an action by an insured on his policy against his insurer. Allocation between insurers is based on what the respective insurers owe the insured under their policies. What one of the insurers owes the insured is the issue in the present litigation. Because the policy issued to plaintiff’s deceased is conditioned on other insurance, the obligation to plaintiff cannot be determined until the effect of the respective “other insurance” clauses is established. The situation in this case is identical with that in Smith v. Pacific Auto. Ins. Co., supra, note 2, except that in Smith the other insurance provision of the plaintiff’s policy was treated as an excess clause rather than an escape clause, and the policy had a provision that the total recovery from all insurance, regardless of its source, was limited to $5,0Q0.

Defendant also contends that even if the clauses are repugnant, the court erred in holding that plaintiff was entitled to recover $5,000 from defendant because plaintiff did not seek judgment for any sum and there was neither stipulation nor proof of damages and therefore the record submits only the question of liability. Plaintiff’s complaint contained the following allegation and prayer:

“X

“Plaintiff and Defendant disagree as to the construction, interpretation and legal effect of the ‘other insurance’ provisions of the policies herein-above mentioned. Plaintiff is entitled to be paid by the defendant the sum of $5,000.00 for the benefit of the widow and dependent child of George G. Sparling. Defendant has denied plaintiff’s claim and has refused to pay that sum or any portion thereof.

“XI

“Defendant’s refusal and failure to make payment has been vexatious and without reasonable cause. * * *”

& # & # #

“WHEREFORE, plaintiff prays that the court make and enter a declaratory judgment construing and interpreting the ‘other insurance’ provisions of the contract of insurance between plaintiff’s decedent and the defendant and declaring and decreeing that plaintiff is entitled to be paid under the contract the sum of $5,000.00 for the benefit of the widow of George G. Sparling and his dependent child, and entering judgment in favor of the plaintiff and against the defendant for plaintiff’s attorney’s fees in the sum of $2,125.00 together with plaintiff’s costs and disbursements incurred herein.”

Defendant’s answer denied the allegations set forth and prayed that plaintiff take nothing by her complaint. The trial court’s order contained the following recitation:

“The above entitled action came on for trial on the 26th day of August, 1966, before the Honorable Val D. Sloper, Circuit Judge, and the plaintiff appeared by Francis E. Marsh, his attorney, and the defendant appeared by Wayne Hilliard, its attorney, and it was agreed between the parties that the action should be tried before the judge without a jury; and

“It appearing to the court that the parties had stipulated that the only issue involved was one of law for the court to determine whether or not the defendant is liable under its policy in view of the provision contained therein, * *

A written stipulation of facts contained no agreement concerning damages.

The complaint and answer were sufficient to sustain a judgment. The distinction between requesting a judgment declaring plaintiff was entitled to be paid $5,000 and requesting a judgment for $5,000 is- too fine for this court to appreciate.

The fact that the written stipulation contained no agreement relative to damages-does not negate the possibility that the parties otherwise represented to the court that the only issue involved was the one of law presented by the stipulation. The judgment order recites that the parties agreed that this was the only issue. We have no transcript of any of the proceedings before the court. In the absence of a transcript showing the contrary, the recitals in the judgment concerning the events occurring in open court import absolute verity. '

The judgment of the trial court is affirmed.

① Lamb-Weston, et al v. Ore. Auto. Ins. Co., 219 Or 110, 341 P2d 110, 346 P2d 643, 76 ALR2d 485 (1959).

② Liberty Mut. Ins. v. Truck Ins., 245 Or 30, 420 P2d 66 (1966); Firemen’s Ins. v. St. Paul Fire Ins., 243 Or 10, 411 P2d 271 (1966); Smith v. Pacific Auto. Ins. Co., 240 Or 167, 400 P2d 512 (1965); Gen. Ins. Co. v. Sask. Gov. Ins. Office, 238 Or 8, 391 P2d 616 (1964); Cimarron Ins. Co. v. Travelers Ins. Co., 224 Or 57, 355 P2d 742 (1960); Lamb-Weston et al v. Ore. Auto. Ins. Co., 219 Or 110, 341 P2d 110, 346 P2d 643, 76 ALR2d 485 (1959).

③ Travelers Insurance Co. v. Peerless Insurance Co., 287 F2d 742 (9th Cir 1961); Oregon Auto. Ins. Co. v. United States Fidelity & Guar. Co., 195 F2d 958 (9th Cir 1952); Globe Indemnity Co. v. Capital Insurance & Surety Co., 228 F Supp 494 (D C Guam 1964), vacated on other grounds, 352 F2d 236 (1965); New Amsterdam Cas. Co. v. Lloyd’s Underwriters, 56 Ill App 2d 224, 205 NE2d 735 (1965); Graves v. Traders & General Insurance Company, La App, 200 So 2d 67 (1 Cir 1967); Woodrich Construction Co. v. Indemnty Insurance Co., 252 Minn 86, 89 NW2d 412 (1958).

④ Billings, The “Other Insurance” Provision of the Automobile Policy, 318 Ins L J 498 (July 1949); Rollins, Conflicting Automobile Coverage, 64 N J L J 329 (1941); Russ, The Double Insuranee Problem — A Proposal, 13 Hast L Rev 183 (1961); Watson, the “Other Insurance” Dilemma, 518 Ins L J 151 (March 1966); Concurrent Coverage in Automobile Liability Insurance, 65 Col L Rev 319 (1965); Conflicting Interpretations of “Other Insurance” Clauses, 28 Ind L J 429 (1953); Automobile Liability Insurance— Effect of Double Coverage and “Other Insurance Clauses,” 38 Minn L Rev 839 (1954); Comments, 52 Col L Rev 1063 (1952); 55 Harv L Rev 1218 (1942); 46 N Car L Rev 433 (1968); 5 Stan L Rev 147 (1952); 13 Vand L Rev 409 (1959).