holding that household exclusions in automobile liability insurance policies violate the public policy of New Mexico
How later courts described this case
- holding that household exclusions in automobile liability insurance policies violate the public policy of New Mexico
- declaring household exclusion void and imposing liability to the policy limits
- suggesting that in consumer insurance transactions “to say there is freedom of contract ‘is to ignore reality5 ’’
- disagreeing with the Tenth Circuit’s holding in Farmers Alliance Mut. Ins. Co. v. Bakke, 619 F.2d 885 (10th Cir.1980)
Written by the judges who cited it.
The opinion
STOWERS, Justice, dissenting.
I dissent. The Financial Responsibility Act, NMSA 1978, Sections 66-5-201 to -248 (Orig.Pamp.) (the Act) is not applicable to this case because Mrs. Estep’s deceased husband does not fall within the purview of the Act as required by Section 66-5-205, which states:
The provisions of the Financial Responsibility Act [66-5-201 to 66-5-248 NMSA 1978] requiring the deposit of proof of financial responsibility for the future, subject to certain exemptions, shall apply with respect to persons who have been convicted of or forfeited bail for certain offenses under motor vehicle laws or who have failed to pay judgments or written settlement agreements upon causes of aciton [action] arising out of ownership, maintenance or use of vehicles of a type subject to registration under the laws of this state. (Emphasis added.)
(The Financial Responsibility Act was changed to the Mandatory Financial Responsibility Act, NMSA 1978, Sections 66-5-201 to -239 (Repl.Pamp.1984) and became effective January 1, 1984. The Mandatory Financial Responsibility Act is not applicable to this case.)
Thus, the owner or person covered by the policy must have been brought within the scope of the Act by a prior conviction or forfeiting bail for certain motor vehicle offenses or for having failed to pay a judgment or written settlement agreement upon a cause of action arising out of ownership, maintenance, or use of vehicles before the Act’s provisions applied. Because none of the above was alleged, the Act did not apply, and the household exclusion clause contained in the policy controls.
The majority’s opinion is clearly not supported by a reading of the entire Act. In fact, what the majority has done is to create law under the guise of public policy, thereby substituting its judgment for that of the Legislature.
“The term [public policy] in itself imparts something that is uncertain and fluctuating, varying with the changing economic needs, social customs, and moral aspirations of a people * * * For that reason it has frequently been said that the expressive public policy is not susceptible of exact definition. But for purposes of judicial application it may be regarded as well settled that a state has no public policy, properly cognizable by the courts, which is not derived, or derivable by clear implication from the established law of the state, as found in its constitution, statutes, and judicial decisions * * * Hence, since * * * it is the duty of the Legislature to make laws and of the court to expound them, * * * the subjects in which the court undertakes to make the law by mere declaration (of public policy) should not be increased in number without the clearest reasons and the most pressing necessity.”
State v. Lavender, 69 N.M. 220, 231-232 , 365 P.2d 652, 663-664 (1961) (quoting Barwin v. Reidy, 62 N.M. 183, 192-193 , 307 P.2d 175, 184-185 (1957)). The facts of this case did not warrant such action by the majority.
New Mexico is committed to the concept that valid contracts between parties govern their rights and duties. In this case the contract was valid because the parties, who were competent, freely entered into the contract. Jim v. CIT Financial Services Corp., 87 N.M. 362 , 533 P.2d 751 (1975); Smith v. Price’s Creameries, 98 N.M. 541 , 650 P.2d 825 (1982). Furthermore, exclusion provisions in insurance contracts will be enforced so long as their meaning is clear and they do not conflict with statutory law. Chavez v. State Farm Mutual Insurance Co., 87 N.M. 327 , 533 P.2d 100 (1975). Because the insurance contract provisions were neither ambiguous or in conflict with statutory law, it was not for this court to alter or amend the provisions of an otherwise legal contract for the benefit of one party and to the detriment of another. Smith v. Price’s Creameries.
Finally, the majority concludes by stating that the Legislature expressed its purpose in NMSA 1978, Section 66-5-201.1 (Repl. Pamp.1984); however, Section 66-5-201.1 is not applicable to this case because it did not become effective until January 1, 1984.
For the above reasons, I respectfully dissent.