# Martin v. Midwestern Group Ins. Co.

> Ohio Supreme Court · October 4, 1994 · 1994 Ohio 407

URL: https://www.frixlaw.com/law-library/cases/11148808

## Case

- **Court:** Ohio Supreme Court
- **Decided:** October 4, 1994
- **Citations:** 1994 Ohio 407
- **Precedential status:** Published
- **Opinion:** Opinion
- **Judges:** Francis E. Sweeney, Sr., J.
- **Cited by:** 16 later opinions in the Frix Law Library

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## Opinion text

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Martin, Appellant, v. Midwestern Group Insurance Company,
Appellee.
[Cite as Martin v. Midwestern Group Ins. Co. (1994), Ohio
St.3d .]
Automobile liability insurance -- Uninsured motorist coverage
designed to protect persons, not vehicles -- Validity of
insurance policy exclusion of uninsured motorist dependent
upon whether it conforms to R.C. 3937.18 -- Policy
provision which eliminates uninsured motorist coverage for
persons insured thereunder who are injured while occupying
a motor vehicle owned by an insured, but not specifically
listed in the policy, violates R.C. 3937.18 and is invalid.
1. Pursuant to R.C. 3937.18, uninsured motorist coverage was
designed by the General Assembly to protect persons, not
vehicles. (Abate v. Pioneer Mut. Cas. Co. [1970], 22 Ohio
St.2d 161, 51 O.O.2d 229, 258 N.E.2d 429, followed.)
2. The validity of an insurance policy exclusion of uninsured
motorist coverage depends on whether it conforms to R.C.
3937.18.
3. An automobile liability insurance policy provision which
eliminates uninsured motorist coverage for persons insured
thereunder who are injured while occupying a motor vehicle
owned by an insured, but not specifically listed in the
policy, violates R.C. 3937.18 and is therefore invalid.
(State Farm Auto. Ins. Co. v. Alexander [1992], 62 Ohio
St.3d 397, 583 N.E.2d 309, syllabus, approved and
followed; Hedrick v. Motorists Mut. Ins. Co. [1986], 22
Ohio St.3d 42, 22 OBR 63, 488 N.E.2d 840, overruled.)
(No. 93-1178 -- Submitted May 16, 1994 -- Decided October
5, 1994.)
Appeal from the Court of Appeals for Ashtabula County, No.
92-A-1722.
On June 17, 1990, plaintiff-appellant, Gerald C. Martin,
was seriously injured when an intoxicated, uninsured motorist
crossed the center line and struck appellant's motorcycle. At
the time of the collision, appellant was insured by appellee,
Midwestern Group Insurance Company ("Midwestern"). The policy
listed two vehicles owned by appellant: a 1979 Chevrolet wagon
and a 1984 Pontiac Fiero. Appellant's 1982 Yamaha motorcycle
was not an insured vehicle under the policy.
Appellant's claim for uninsured motorist benefits was
denied by appellee under a policy provision that excludes
coverage for bodily injury to a person occupying or struck by a
vehicle owned by the insured but not named in the policy.
After his claim was denied, appellant filed a complaint
for declaratory judgment. After an answer and counterclaim for
declaratory judgment were filed, both parties moved for summary
judgment.
The trial court granted appellant's motion for summary
judgment and denied appellee's motion. Based upon State Farm
Auto. Ins. Co. v. Alexander (1992), 62 Ohio St.3d 397, 583
N.E.2d 309, the trial court found appellee's policy exclusion
invalid and unenforceable. By distinguishing Alexander, the
court of appeals reversed the judgment of the trial court and
entered summary judgment in favor of appellee. In so doing,
the appellate court relied upon Hedrick v. Motorists Mut. Ins.
Co. (1986), 22 Ohio St.3d 42, 22 OBR 63, 488 N.E.2d 840.
The cause is now before this court pursuant to the
allowance of a motion to certify the record.

Tyler & Fire and Thomas S. Tyler, for appellant.
Weston, Hurd, Fallon, Paisley & Howley, Kathryn M. Murray
and Ronald A. Rispo, for appellee.

Francis E. Sweeney, Sr., J. The issue before us is
whether the "other owned vehicle" exclusion in the uninsured
motorist coverage of appellant's automobile insurance policy is
enforceable. For the following reasons, we hold that the
exclusion is not enforceable. Accordingly, we reverse the
judgment of the court of appeals.
The General Assembly has determined that automobile
liability carriers must offer uninsured motorist coverage to
their customers. R.C. 3937.18 provides in part:
"(A) No automobile liability or motor vehicle liability
policy of insurance insuring against loss resulting from
liability imposed by law for bodily injury or death suffered by
any 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 * * * the following
[is] provided:
"(1) Uninsured motorist coverage, which shall be in an
amount of coverage equivalent to the automobile liability or
motor vehicle liability coverage and shall provide protection
for bodily injury or death * * * 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[.]" (Emphasis added.)
This court has consistently held that the purpose of
uninsured motorist coverage is to protect persons from losses
which, because of the tortfeasor's lack of liability coverage,
would otherwise go uncompensated. Abate v. Pioneer Mut. Cas.
Co. (1970), 22 Ohio St.2d 161, 165, 51 O.O.2d 229, 231, 258
N.E.2d 429, 432; Stanton v. Nationwide Mut. Ins. Co. (1993), 68
Ohio St.3d 111, 113, 623 N.E.2d 1197, 1199, citing Watson v.
Grange Mut. Cas. Co. (1988), 40 Ohio St.3d 195, 532 N.E.2d 758.
In fact, R.C. 3937.18(A)(1) explicitly provides that
uninsured motorist coverage is "for the protection of
persons." We have held that R.C. 3937.18 is remedial
legislation. Stanton, supra, 68 Ohio St.3d at 113, 623 N.E.2d
at 1199. Thus, we must liberally construe this law in order to
effectuate the legislative purpose. Curran v. State Auto. Mut.
Ins. Co. (1971), 25 Ohio St.2d 33, 54 O.O.2d 166, 266 N.E.2d
566.
While R.C. 3937.18 does not displace ordinary principles
of contract law, a party cannot enter into contracts that are
contrary to law. See Hedrick v. Motorists Mut. Ins. Co.
(1986), 22 Ohio St.3d 42, 51, 22 OBR 63, 71, 488 N.E.2d 840,
847 (A.W. Sweeney, J., dissenting). Therefore, the validity of
an insurance policy exclusion of uninsured coverage depends on
whether it conforms to R.C. 3937.18.
The insurance policy issued by Midwestern to appellant
specifically names him as the insured. Midwestern relies upon
the following exclusionary language to deny coverage:
"We do not cover bodily injury to a person:
"1. Occupying, or struck by, a motor vehicle owned by you
or a relative for which insurance is not afforded under this
part."
This exclusion is commonly known as the "other owned
vehicle" exclusion and is found in virtually every automobile
insurance policy written in this state.
Appellant argues, and the trial court determined, that
State Farm Auto. Ins. Co. v. Alexander (1992), 62 Ohio St.3d
397, 583 N.E.2d 309, is dispositive of this case. Alexander
involved an insured who was injured while a passenger in his
own vehicle. The State Farm policy in that case excluded from
the definition of "uninsured motor vehicle" any vehicle
"insured under the liability coverage of this policy" as well
as one "furnished for the regular use" of the insured, his
spouse or any relative. In striking down this exclusion,
commonly known as "the household exclusion," we held that any
provision depriving an insured of uninsured motorist coverage
for tort claims against an uninsured motorist is invalid and
unenforceable. The syllabus in Alexander states:
"An automobile insurance policy may not eliminate or
reduce uninsured or underinsured motorist coverage, required by
R.C. 3937.18, to persons injured in a motor vehicle accident,
where the claim or claims of such persons arise from causes of
action that are recognized by Ohio tort law."
The rationale of Alexander is not limited to the analyzed
exclusion. Instead, this court made clear that R.C. 3937.18 is
the yardstick by which all exclusions of uninsured motorist
coverage must be measured. Under Alexander, the statute
mandates coverage if (1) the claimant is an insured under a
policy which provides uninsured motorist coverage; (2) the
claimant was injured by an uninsured motorist; and (3) the
claim is recognized by Ohio tort law.
Applying this test, it is clear that appellant has
satisfied the requirements of R.C. 3937.18: (1) appellant is
the named insured on the insurance policy; (2) the tortfeasor
did not have liability insurance; and (3) appellant has a cause
of action under Ohio tort law.
Relying on Alexander, we recently invalidated a "for fee"
exclusion in Stanton v. Nationwide Mut. Ins. Co., supra, 68
Ohio St.3d 111, 623 N.E.2d 1197, which would have eliminated
uninsured motorist coverage mandated by R.C. 3937.18.
In keeping with precedent, and finding no reason for
holding otherwise, we now invalidate the "other owned vehicle"
exclusion.
In striking down this exclusionary provision, it is
necessary to revisit our decision in Hedrick, supra, which
appellee asserts directly supports its position.
Hedrick involved an automobile accident with an uninsured
motorist in which the plaintiff was riding a motorcycle owned
by his father. The motorcycle was not insured under the policy
issued by the defendant insurance company. The insurance
company denied coverage on the basis of an exclusion
essentially identical to the one at issue here. This court
upheld the exclusion. The Hedrick syllabus provides:
"An insurance policy provision which denies uninsured
motorist coverage, when bodily injury is sustained by any
person while occupying a motor vehicle owned by an insured but
which vehicle is not specifically insured under the policy, is
a valid exclusion." (Emphasis sic.)
Because we do not believe Hedrick is in accord with the
law of our state, which is that uninsured motorist coverage was
designed by the General Assembly to protect persons, not
vehicles, we now expressly overrule it. If an insured is
negligently injured by an uninsured motorist, he cannot be
denied uninsured motorist coverage by a policy exclusion
requiring that he be occupying an insured automobile under the
policy.
Accordingly, we hold that an automobile liability
insurance policy provision which eliminates uninsured motorist
coverage for persons insured thereunder who are injured while
occupying a motor vehicle owned by an insured, but not
specifically listed in the policy, violates R.C. 3937.18 and is
therefore invalid.
In so holding, we are not unmindful of Midwestern's
argument that a premium was not paid on the vehicle appellant
was riding when injured. But the amount of the premium
received by Midwestern is irrelevant. The fact is that
appellant accepted and paid for uninsured motorist coverage.
Pursuant to R.C. 3937.18(A)(1), such insurance must provide
coverage "for bodily injury * * * for the protection of persons
insured thereunder who are legally entitled to recover damages
from owners or operators of uninsured motor vehicles * * *."
The statute does not permit insurers to eliminate this required
coverage on the basis that the injury was incurred in a vehicle
not listed in the policy.
Appellant paid a premium for uninsured motorist insurance
which covered him, not his vehicles. It certainly cannot be
argued that appellant would not be covered if he had been
injured by this same tortfeasor while standing on a sidewalk,
or riding or driving a vehicle owned by another. Indeed,
Midwestern's counsel admitted as much during oral argument. To
deny it in this instance would contravene Ohio law.
It is state law (R.C. 3937.18) which determines the scope
of uninsured motorist coverage, not the insurance policy or the
amount of the premium paid. It is the responsibility of the
insurance company to set a premium in accordance with the risks
involved.
For the foregoing reasons, the judgment of the court of
appeals is reversed and the judgment of the trial court is
reinstated.
Judgment reversed.

A.W. Sweeney, Resnick and Pfeifer, JJ., concur.
Douglas, J., concurs separately.
Moyer, C.J., and Wright, J., dissent.
Douglas, J., concurring. I authored the court's
opinion in Hedrick v. Motorists Mut. Ins. Co. (1986), 22 Ohio
St.3d 42, 22 OBR 63, 488 N.E.2d 840. Today, the court
overrules Hedrick and I am concurring in that judgment. In
doing so, I am persuaded by language contained in two opinions
written for the court by Justice Wright, both of which were
decided after our decision in Hedrick.
In Watson v. Grange Mut. Cas. Co. (1988), 40 Ohio St.3d
195, 197, 532 N.E.2d 758, 760, Justice Wright, in discussing
uninsured motorist coverage, said: "The coverage's clear focus
is on the operator, not the vehicle. It is axiomatic that
drivers cause accidents, not inanimate vehicles. The purpose
of the uninsured motorist statute is not to provide coverage
for an uninsured vehicle but rather to afford the insured
additional protection in the event of an accident. This form
of coverage protects against losses caused by a limited group
of tortfeasors." (Emphasis added.)
In Stanton v. Nationwide Mut. Ins. Co. (1993), 68 Ohio
St.3d 111, 113-114, 623 N.E.2d 1197, 1199-1200, Justice Wright,
writing for the court, said:
"I
"The General Assembly determined by enacting R.C. 3937.18
that automobile liability carriers must offer uninsured
motorist coverage to their customers. Watson v. Grange Mut.
Cas. Co. (1988), 40 Ohio St.3d 195, 532 N.E.2d 758. This court
has described the purpose behind R.C. 3937.18 in various ways
over the years, all of which may be summarized by stating that
the uninsured motorist statute is meant to ensure that innocent
persons who are injured by negligent uninsured motorists are
not left without compensation simply because the tortfeasor
lacked liability coverage. State Farm Auto. Ins. Co. v.
Alexander (1992), 62 Ohio St.3d 397, 583 N.E.2d 309. The
statute protects persons who purchase insurance by providing a
remedy to them in the event they are injured by uninsured
motorists who cannot pay for the damages they cause. By
allowing victims of automobile accidents to seek compensation
from their own insurance carriers, the statute attempts to
place those victims in the same position they would have been
[in] had the tortfeasors possessed liability coverage.
Bartlett v. Nationwide Mut. Ins. Co. (1973), 33 Ohio St.2d 50,
62 O.O.2d 406, 294 N.E.2d 665. In short, the statute is
remedial in nature, and is meant to provide a means of
compensation to those injured by uninsured motorists.
"The General Assembly has determined, however, that
automobile liability carriers must only offer uninsured
motorist coverage to their customers; it has not made the
purchase of uninsured motorist coverage mandatory. Orris v.
Claudio (1980), 63 Ohio St.2d 140, 17 O.O.3d 85, 406 N.E.2d
1381. We have previously stated that R.C. 3937.18 does not
displace ordinary principles of contract law and that, as a
result, reasonable exclusions in the uninsured motorist
coverage of automobile insurance policies do not necessarily
conflict with the policy behind R.C. 3937.18 and are sometimes
enforceable.1 However, this court has since changed its view
on this matter.
"II
"In 1992, this court stated in State Farm, supra, that
automobile insurance policies may not eliminate or reduce
uninsured motorist coverage. Specifically, the court held:
"'An automobile insurance policy may not eliminate or
reduce uninsured or underinsured motorist coverage, required by
R.C. 3937.18, to persons injured in a motor vehicle accident,
where the claim or claims of such persons arise from causes of
action that are recognized by Ohio tort law.' Id. at
syllabus.2
"When the syllabus law in State Farm is applied to the
facts in this case, it is clear that appellant's 'for fee'
exclusion is unenforceable. Notwithstanding appellees'
argument that the exclusion is ambiguous, the exclusion plainly
eliminates coverage to at least those persons, like appellee,
who are injured while driving vehicles that are being used for
commercial purposes. In addition, appellant does not dispute
that appellee has a cause of action in tort against the
uninsured motorist whose car caused the accident. Thus the
facts of this case fit squarely within the syllabus law in
State Farm. Appellant argues, however, that this court should
still enforce the 'for fee' exclusion in appellee's insurance
policy.
"* * *
"Despite the cogency of appellant's arguments, we decline
to carve out a commercial-context exception from the syllabus
law set forth in State Farm. This is a matter of public policy
best left to the General Assembly. We believe that enforcing
appellant's 'for fee' exclusion at this time would only
frustrate the policies of predictability and stability found in
the doctrine of stare decisis." (Emphasis added.)
Footnotes 1 and 2 in the opinion read:
"1. See, e.g., Dairyland Ins. Co. v. Finch (1987), 32
Ohio St.3d 360, 513 N.E.2d 1324, paragraph two of the syllabus,
overruled by State Farm Auto. Ins. Co. v. Alexander (1992), 62
Ohio St.3d 397, 583 N.E.2d 309.
"2. State Farm gave a different interpretation to R.C.
3937.18. The writer authored Dairyland and dissented in State
Farm. However, the General Assembly has not reacted to State
Farm. Given a time frame of well over one year, State Farm
must be regarded as settled law and the doctrine of stare
decisis must apply." (Emphasis added.)
Given the foregoing, Justice Francis E. Sweeney's opinion
herein is clearly correct. Accordingly, I concur in the
syllabus, reasoning and judgment.
Moyer, C.J., dissenting. Being unable to agree with the
reasoning of the majority, I respectfully dissent.
The issue presented in this case could easily be disposed
of if we were to follow the law announced by this court on
precisely the same issue as recently as 1986 in Hedrick v.
Motorists Mut. Ins. Co. (1986), 22 Ohio St.3d 42, 22 OBR 63,
488 N.E.2d 840.
We could begin by applying the law of the case that holds:
"An insurance policy provision which denies uninsured motorist
coverage, when bodily injury is sustained by any person while
occupying a motor vehicle owned by an insured but which vehicle
is not specifically insured under the policy, is a valid
exclusion." (Emphasis sic.) Id. at syllabus. We could also
apply the rationale of Hedrick that is as relevant today as it
was when announced only eight years ago: "Some may argue that
uninsured motorist coverage is applicable to persons, not
vehicles, and thus an exclusion to coverage as to any vehicle
owned by an insured is without effect. To find the exclusion
clause ineffective because uninsured motorist coverage is only
personal coverage, and thereby exclude vehicle coverage, would
permit recovery when the opposite was intended by the precise
language in the policy. This interpretation *** also unduly
restricts the parties' right to freely contract." (Emphasis
added.) Hedrick, 22 Ohio St.3d at 45, 22 OBR at 65-66, 488
N.E.2d at 843.
The general purpose of mandatory uninsured motorist
coverage is to put an injured policyholder in the same position
he would have been in if the tortfeasor had carried liability
insurance. Sexton v. State Farm Mut. Auto. Ins. Co. (1982), 69
Ohio St.3d 431, 436, 23 O.O.3d 385, 388, 433 N.E.2d 555, 559.
R.C. 3937.18 mandates uninsured coverage in an amount equal to
the policyholder's liability coverage if none is offered. As
such, parity of position for Martin is defined by his liability
limits. In this case Martin carried no liability insurance, so
by granting him coverage the majority places him in a position
superior to what he would have been in, contrary to this
court's statement of the statute's purpose.
Both the above law and rationale apply to the facts of
this case. Martin owned three motor vehicles. He insured two
of them and chose not to insure the third, the motorcycle,
which he rode only several months a year and which he
unfortunately chose to ride at the time of the collision that
produced this case.
The message delivered by the majority opinion is that a
person who owns more than one motor vehicle may choose not to
insure one vehicle and bear no financial risk for the decision
because he will be deemed to have in effect purchased liability
coverage for the vehicle he decided not to insure if he is
struck by another uninsured motorist. Since the responsibility
of payment for injuries resulting from an accident involving
such uninsured vehicles has now been shifted to the entity
deemed to have provided the insurance, it is predictable that
all other owners of motor vehicles who conscientiously purchase
liability insurance for their vehicles will share the
responsibility of paying for those who choose to insure some
but not all of their owned vehicles. The General Assembly has
provided for, and this court should permit to exist, a system
of liability insurance that enables each person to purchase the
insurance coverage that she or he chooses to purchase and to
bear the responsibility for that decision. I would apply the
law of Hedrick to this case and affirm the judgment of the
court of appeals. Such a judicial decision did, under Hedrick,
and would continue to place the responsibility for one's acts
precisely where the parties here, and the law, intended it to
be.
Wright, J., concurs in the foregoing dissenting opinion.
Wright, J., dissenting. I concur in the Chief Justice's
dissent and feel that a brief response to Justice Douglas's
concurring opinion is in order. Justice Douglas accurately
summarizes the purpose and scope of uninsured motorist
coverage, quoting this writer in Watson v. Grange Mut. Cas. Co.
(1988), 40 Ohio St.3d 195, 532 N.E.2d 758, and Stanton v.
Nationwide Mut. Ins. Co. (1993), 68 Ohio St.3d 111, 623 N.E.2d
1197. However, it would appear that the concurrence loses
sight of what this case is about. This matter is not about
whether uninsured motorist coverage covers persons or motor
vehicles. To the contrary, at bottom, this case involves
whether appellant should get something for nothing.
As the Chief Justice points out, appellant was offered and
specifically rejected any coverage arising out of the use of
his motorcycle. We learned in our first year in law school
that parties have the constitutional right to enter into
contracts and that courts will generally enforce same. That,
of course, is what Hedrick v. Motorists Mut. Ins. Co. (1986),
22 Ohio St.3d 42, 22 OBR 63, 488 N.E.2d 840, was all about.
That is what this case is all about. I think it an unfortunate
state of affairs that we depart from these principles and
discard yet another solid precedent, and, thus, I respectfully
dissent.

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