# Holcomb v. Farmers Insurance Exchange

> Supreme Court of Arkansas · May 21, 1973 · 254 Ark. 514

URL: https://www.frixlaw.com/law-library/cases/9668799

## Case

- **Full name:** James HOLCOMB and Leona HOLCOMB v. FARMERS INSURANCE EXCHANGE
- **Court:** Supreme Court of Arkansas
- **Decided:** May 21, 1973
- **Citations:** 254 Ark. 514; 495 S.W.2d 155; 1973 Ark. LEXIS 1545
- **Precedential status:** Published
- **Opinion:** Dissent by Fogleman
- **Judges:** Jones, Harris, Smith, Fogleman
- **Cited by:** 26 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/9668799

## Opinion text

John A. Fogleman, Justice, dissenting. My reasons dissenting in this case of first impression are First, I regret to see this court align itself with a pitifully small minority in deciding such a case. Second, I think that the decision either reads something into the uninsured motorist act that is not there, or reads something out of it that is there. While I probably would not dissent in the absence of those reasons, I feel further urged to do so because the court’s decision leaves Arkansas in the absurd position, as appellants point out, of requiring the automobile liability carrier to offer insurance providing persons insured under the liability policy with indemnity up to the required amounts against bodily injury by an uninsured motorist at any place, at least in this nation, except when occupying an owned automobile, on which the owner carried no liability insurance, or, if he did, that policy did not contain an uninsured motorist clause. The absurdity of this result is further illustrated by a statement in Winslow Drummond’s “Uninsured Motorist Coverage — A suggested Approach to Consistency,” 25 Ark. L. Rev. 167 , p. 171:
A comparison of the first two categories of “insured” leads to the obvious conclusion that the named insured and any member of his family in the same household need not be occupying any automobile, much less an insured automobile, at the time of injury in order for coverage to be extended. In other words, if one of this category, however situated, is injured through the negligence of an uninsured motorist, there is coverage.
I agree with that statement and think it should be applied in this case. 1 Other pertinent statements in that article include:
All courts which have considered the question are in accord that the purpose of or public policy underlying the compulsory uninsured motorist coverage statute is to guarantee that the injured insured will be in the same position in the event of injury attributable to the negligence of an uninsured motorist as that insured would be if he were injured through the negligence of a motorist carrying liability insurance to the extent required by the financial responsibility law of the state in question. In other words, the insured’s recovery should be the same in either situation — no more, no less.
* # #
A motorist who purchases liability insurance on his automobile does so for the benefit of an unidentified third party. On the other hand, the motorist who purchases uninsured motorist coverage does so for his own benefit and the benefit of his family and any passengers in his automobile. Uninsured motorist insurance is not liability insurance. To the contrary, it is, in effect, accident and health insurance, very similar to automobile medical payments insurance.
The purpose of our act is to establish a means of providing indemnity to the persons insured under an automobile liability policy for injuries arising out of the operation of a motor vehicle by an uninsured motorist in an amount not less than the minimum required by the Motor Vehicle Safety Responsibility Act. Travelers Ins. Co. v. National Farmers U. Prop. & Cas. Co., 252 Ark. 624 , 480 S.W.2d 585 ; Heiss, Executrix v. Aetna Cas. & Surety Co., 250 Ark. 474 , 465 S.W.2d 699 ; Farm Bureau Mut. Ins. Co. v. Mitchell, 249 Ark. 127 , 458 S.W.2d 395 ; MFA Mutual Ins. Co. v. Bradshaw, 245 Ark. 95 , 431 S.W.2d 252 . Any purchaser of “automobile liability insurance covering liability arising out of ownership, maintenance or use of any motor vehicle * * * delivered or issued for delivery in this State with respect to any motor vehicle registered or principally garaged in this State * * * ” is clearly entitled, at his option, to “coverage * * * therein or supplemental thereto, in not less than limits described * * * 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” — no more and certainly no less. Ark. Stat. Ann. § 66-4003 (Repl. 1966). Any exception or exclusion gives him less and is contrary to the public policy purposes of our act. It seems to me that the clear language of the statute dictates a result directly contrary to that reached by the majority.
We have recognized the right of the parties to contract in reference to such a policy, so long as the terms of the contract are not contrary to public policy and the statutes, but that these may not be contravened, even with the approval of the Insurance Commissioner. Travelers Ins. Co. v. National Farmers U. Prop. & Cas. Co., supra. I submit that, under our previous decisions, the exclusion here contravenes both. It is clear that the coverage required has nothing whatever to do with the vehicle for which the liability policy is issued. If this were not otherwise clear, the fact that the coverage need not be provided in the liability policy, but may be provided supplementally, seems to lead to no other conclusion. The insurer selling automobile liability insurance is simply required to offer to its prospective purchasers of liability insurance, either in the liability policy or by separate policy, indemnity against any personal injury damage done to persons insured under its liability policy indemnity in the minimum amounts that are required under the motor vehicle financial responsibility act — no more, no less. There simply is no “uninsured motorist protection or coverage” on any automobile, as premised by the majority.
This brings me to a consideration of authorities from other states on the question. Clearly a majority supports my position. First, however, I will direct my attention to Owens v. Allied Mutual Ins. Co., 15 Ariz. App. 181 , 487 P.2d 402 (1971), which seems to be the leading authority upon which the majority relies. The Arizona statute is quite similar to ours. This decision by an intermediate appellate court rests upon a rickety foundation, to say the least. That court not only failed to see a requirement of uninsured motorist protection to persons insured under a liability policy, which covered them when driving any automobile anywhere, but also failed to find any contrary authority. Furthermore, the Owens court did not rationalize its result. It simply concurred in the result reached in Rushing v. Allstate Insurance Co., 216 So. 2d 875 (La. App. 1968); National Union Indemnity Co. v. Hodges, 238 So.2d 673 (Fla. Ct. App. 1970); McElyea v. Safeway Insurance Co., 131 Ill. App. 2d 452 , 266 N.E. 2d 146 (Ill. App. 1970). It is interesting to note that even though each of these decisions by intermediate courts has been undermined and its authoritative effect impaired, the majority not only accepts Owens as authoritative, it also finds succor in McElyea.
McElyea was effectively overruled in Doxtater v. State Farm Mutual Automobile Ins. Co., 8 Ill. App. 3d 547 , 290 N.E.2d 284 (1972). In Doxtater, the court said that the issues before it were virtually identical to those presented in McElyea, but that McElyea was decided prior to the decision of the Illinois Supreme Court in Barnes v. Powell, 49 Ill. 2d 449 , 275 N.E.2d 377 (1971), and Madison County Automobile Ins. Co. v. Goodpasture, 49 Ill. 2d 555 , 276 N.E.2d 289 (1971). In overruling McElyea to the extent it conflicted with the opinion rendered, the language in Doxtater is so appropriate to the situation before us, our statute and our previous decisions, I take the liberty of quoting extensively from the Illinois court’s recognition of the effect of Barnes. It said:
Numerous authorities were cited for the proposition that the legislative purpose behind Section 143a was “to assure that compensation will be available to policyholders, in the event of injury by an uninsured motorist, to at least the same extent compensation is available for injury by a motorist who is insured in compliance with the Financial Responsibility Law.” (49 Ill.2d at 453, 275 N.E.2d at 379 .) It was further noted that “the intent of the legislature was that the uninsured motorist coverage would protect an insured generally against injuries caused by motorists who are uninsured, and by hit-and-run motorists, and that this would complement the liability coverage.” (49 Ill.2d at 454, 275 N.E.2d at 379 .) Therefore, it was held that, to the extent that the policy definition conflicted with the breadth of coverage envisioned by the statute, it could be of no force and effect.
Although we recognize that the facts of Barnes v. Powell are distinguishable from the facts at bar, we nonetheless cannot overlook the Supreme Court’s statements therein regarding the legislative intent behind Section 143a. The expansive interpretation applied by a majority of that court leads us to conclude that, presented with the issue at bar, our Supreme Court would interpret Section 143a of the Insurance Code as a direction to insurance companies to provide uninsured motor vehicle coverage for “insureds,” regardless of whether, at the time of injury, the insureds occupied or operated vehicles declared in the subject policy. We note that the highest coúrts in two other states have recently invoked similar statutory constructions to enforce coverage under facts identical to those at bar. (State Farm Mutual Automobile Ins. Co. v. Hinkel, Nev., 488 P.2d 1151 ; Mullis v. State Farm Mutual Automobile Ins. Co., Fla., 252 So.2d 229 , Contra: Shipley v. American Standard Ins. Co. of Wisconsin, 183 Neb. 109 , 158 N.W.2d 238 ; Owens v. Allied Mutual Ins. Co., 15 Ariz. App. 181 , 487 P.2d 402 . See also Vantine v. Aetna Cas. & Surety Co. (N.D.Ind.) 335 F.Supp. 1296 ; Vaught v. State Farm Fire & Cas. Co. (8th Cir.) 413 F.2d 539 ; Bryant v. State Farm Mutual Automobile Ins. Co., 205 Va. 897 , 140 S.E.2d 817 ).
It is only with great circumspection that we will overturn a ruling of as recent a vintage as McElyea v. Safeway Insurance Co. However, as the intermediate court of review in Illinois, we are obligated to adhere to the statutory constructions applied by our Supreme Court and to decide issues in conformity with the logical extensions of such constructions. Further, as jurists we cannot ignore the weight and trend of authority in jurisdictions outside of Illinois. Accordingly, based on the precedent of Barnes v. Powell, 49 Ill.2d 449 , 275 N.E.2d 377 , as well as on compelling out-of-state precedent, we hold that Exclusion (b) in the insurance policy issued to Ervin Doxtater conflicted with Section 143a of the Insurance Code. By virtue of Section 442 of that Code, said exclusion could be of no force and effect in limiting the Doxtaters’ uninsured motor vehicle coverage. Hartford Accident and Indemnity Co. v. Holada, 127 Ill. App.2d 472 , 262 N.E.2d 359 . To the extent that the case of McElyea v. Safeway Insurance Co., conflicts with this holding, it is overruled.
National Union Indemnity Co. v. Hodge, has suffered a similar fate. It was reversed by the Florida Supreme Court, 249 So.2d 679 (Fla. 1971). In Mullis v. State Farm Mutual Automobile Insurance Co., 252 So.2d 229 (Fla. 1971), the Florida Supreme Court undertook conflict certiorari review of Mullis v. State Farm Mutual Automobile Ins. Co., 251 So.2d 46 (Fla. App. 1970). The Supreme Court found the exclusion before us to be contrary to the Florida uninsured motorist statute, an act virtually identical to ours, and said:
Whenever bodily injury is inflicted upon named insured or insured members of his family by the negligence of an uninsured motorist, under whatever conditions, locations, or circumstances, any of such insureds happen to be in at the time, they are covered by uninsured motorist liability insurance issued pursuant to requirements of Section 627.0851. They may be pedestrians at the time of such injury, they may be riding in motor vehicles of others or in public conveyances and they may occupy motor vehicles (including Honda motorcycles) owned by but which are not “insured automobiles” of named insured.
Uninsured motorist coverage or family protection is intended by the statute to protect the described insureds thereunder to the extent of the limits described in Section 524.021(7) “who are legally entitled to recover damages, namely those from owners or operators of uninsured motor vehicles because of bodily injury” and is not to be “whittled away” by exclusions and exceptions.
Bodily injury to a member of the public due to motor vehicle accident, whether produced by the negligence of an automobile liability insured or by an uninsured motorist has the same financial loss impact on the injured member of the public, and in the eyes of our reciprocal motorist public protection laws, F.S. chapter 324 and section 627.0851, F.S.A., the injury is just as acute and damaging to the member of the public whether he was injured as a pedestrian or while riding in a public conveyance or in an “uninsured automobile.”
The public policy of the uninsured motorist statute (Section 627.0851) is to provide uniform and specific insurance benefits to members of the public to cover damages for bodily injury caused by the negligence of insolvent or uninsured motorists and such statutorily fixed and prescribed protection is not reducible by insurers’ policy exclusions and exceptions any more than are the benefits provided for persons protected by automobile liability insurance secured in compliance with the Financial Responsibility Law.
Insurers or carriers writing automobile liability insurance and reciprocal uninsured motorist insurance are not pen dtted by law to insert provisions in the policies they issue that exclude or reduce the liability coverage prescribed by law for the class of persons insured thereunder who are legally entitled to recover damages from owners or operators of motor vehicles because of bodily injury.
Certainly Hodge is not authoritative. The rule of Mullis has been subsequently applied in Florida in Gilligan v. Liberty Mutual Ins. Co., 265 So.2d 543 (Fla. App. 1972); Navarro v. Yosemite Ins. Co., 254 So.2d 33 (Fla. App. 1971); Government Employees Ins. Co. v. Smith, 257 So. 2d 90 (Fla. App. 1971); Midwest Mutual Ins. Co. v. Santiesteban, 266 So. 2d 102 (Fla. App. 1972).
The fate of Rushing has been little more auspicious. It does not appear to have ever been followed in Louisiana. In a much better-reasoned decision in a factual background much more nearly parallel to the case before us than was Rushing, the Court of Appeals for another Louisiana Circuit reached quite a different result from that in Rushing. The question answered in the negative in Elledge v. Warren, 263 So. 2d 912 (La. App. 1972), was the same as the majority answers in the affirmative here. Again some of the reasoning of the Louisiana court is appropriate to our consideration:
There existed in our society a situation whereby financially irresponsible people could acquire and drive vehicles capable of great damage. Because of their financial irresponsibility and lack of insurance, they were unable to respond to their victim in damages under LSA — C.C. Art. 2315. This created a class of injured people in our state who were left without recourse and who, without some form of relief, might become wards of the state. Insurance plans (such as the financial responsibility law) oriented toward coercing motorists to purchase insurance or removing them from the highways if they did not, proved ineffective. Other plans had to be developed.
In an effort to forestall plans distasteful to itself, the insurance industry set forth a plan of compensation for the innocent victims of the uninsured motorists. In surveying the problem, it became evident to our legislature that the source of the harm was a danger peculiar to the use of the automobile and the industry most capable and most interested in resolving the problem was the one most closely related thereto in terms of economics and self interest —the automobile insurers. Therefore, our legislature seized upon the solution set forth by the insurance industry and made the offering of uninsured motorist protection a mandatory condition precedent before the companies could conduct business in Louisiana.
The evil and the injuries existed. By the terms of our statute, whenever evil perpetuates itself upon a policy holder availing himself of uninsured motorist coverage (or insureds under his. policy), he is to be compensated for his injuries. In Booth v. Freeman’s Fund Insurance Company, 253 La. 521 , 218 So.2d 580, 583 (1969), our Supreme Court concluded “that the intent of our uninsured motorist statute and the policy endorsement issued thereunder is to afford protection to the insured when they become the inhocent victims of the negligence of uninsured motorists.” See also Valdez v. Federal Mutual Insurance Company, 272 Cal.App.2d 223 , 77 Cal.Rptr. 411, 413 (1969). “. . . Such statutes must be liberally construed to carry out this objective of providing compensation for those injured through no fault of their own.”
Clearly, we should not follow the Arizona intermediate court. This leaves the Nebraska decision in Shipley v. American Standard Ins. Co. of Wisconsin, 183 Neb. 109 , 158 N.W.2d 238 (1968), standing alone, except for the dissenting opinions mentioned by the majority. I submit that a reading of that opinion in contrast with the quotations above will clearly demonstrate the lack of logic supporting the decision in Shipley.
I do not find the majority’s distinction of cases supporting the majority rule to be wholly apt. It is true that Allstate Insurance Coinpany v. Meeks, 207 Va. 897 , 153 S.E.2d 222 (1967), and Aetna Ins. Co. v. Hurst, 2 Cal. App. 3d 1067 , 83 Cal. Rptr. 156 (1969), involve the construction of a statute and not a contract, and that the statute naming the persons insured is explicit as to coverage. So does Gulf American Fire & Casualty Company v. McNeal 115 Ga. App. 286 , 154 S. E. 2d 411 (1967), but the court said that if the “insured person” section of the statute (virtually identical to the Virginia and California statutes) did not apply, it would reach the same result under the policy provisions. I do not agree that the rationale of Mullís is distinguishable on the basis that the Florida Uninsured Motorist and Financial Responsibility Acts are complementary. So are ours.
State Farm Mutual Automobile Ins. Co. v. Hinkel, 87 Nev. 478 , 488 P.2d 1151 (1971), seems indistinguishable. It is a well-reasoned opinion which specifically rejected Rushing and Shipley, but found support in Allstate Ins. Co. v. Meeks, supra, Travelers Indemnity Co. v. Powell, supra, Aetna Insurance Co. v. Hurst, 2 Cal. App. 3d 1067 , 83 Cal. Rptr. 156 (1969), Bankes v. State Farm Mutual Automobile Ins. Co., 216 Pa. Super. 162 , 264 A.2d 197 (1970) and Gulf American Fire & Casualty Company v. McNeal, supra. The Nevada statute, substantially similar to ours, was held to be unambiguous, to be a part of every policy and to void an exclusion substantially similar to the one in the policy before us. The Nevada court, in holding that once a person was included as a “person insured” the insurer could not exclude him from coverage and that any limitation on his coverage was void, said:
If our legislature had intended to prevent an owner of two motor vehicles from paying for insurance on only one and recovering benefits for his injuries sustained while operating the other, it could have followed the lead of the legislatures in some of the other jurisdictions and limited the coverage by providing that N.R.S. 693.115(1) did not apply to bodily injury suffered by the insured while occupying a motor vehicle owned by him, unless the occupied vehicle was an insured motor vehicle. Such an amendment would be the prerogative and responsibility of the legislature and not the function of this court.
See also, Cannon v. American Underwriters, 275 N.E.2d 567 (Ind. App. 1971), where the court rejected an attempt of an insurance company to limit coverage to injuries while the insured was operating or occupying an insured automobile, upon the same basis and rationale as the majority rule; and Vantine v. Aetna Casualty & Surety Company, 355 F. Supp. 1296 (D.C.Ind. 1971), wherein an exclusion virtually identical to the one in issue was held void as being in conflict with a virtually identical Indiana statute, and the infirmities of McElyea are pointed out.
In conclusion, I find appropriate language in Motorists Mut. Ins. Co. v. Bittler, 14 Ohio Misc. 23 , 43 Ohio Op. 2d 64 , 235 N.E.2d 745 (1968), a frequently cited trial court case, where the court appreciated that its decision would require that uninsured motorists coverage would cover a named insured while he is operating or occupying another otherwise uninsured automobile owned by him. The court said:
Since the uninsured motorists protection chiefly constitutes indemnification in the nature of personal accident insurance for the named insured, there is, in the absence of any special provision or exclusion, no need for his procuring and paying for two such contracts for one injury. This special indemnification contract becomes effective because a third person, not the named insured, operates an automobile without Bodily Injury Liability coverage.
I would reverse the judgment because adoption of the position of the majority of jurisdictions considering the question is clearly indicated by our statute, and would produce a desirable result, consistent with the policy of which the act is expressive, and prevents erosion of coverage by exclusions, exceptions and limitation.
I am authorized to state that the Chief Justice and Mr. Justice George Rose Smith join in this dissent.
I am not unaware of Mr. Drummond’s statement that the exclusion of coverage involved here is designed to prevent recovery in those cases where uninsured motorist coverage is purchased for only one automobile within a particular household, and a member of the household sustains injury while occupying a second family car on which no premium for uninsured motorist coverage has been paid. He cites only Hilton v. Citizens Ins. Co., 201 So.2d 904 (Fla. App. 1967) as authority. He acknowledges that Hilton was distinguished in Travelers Indem. Co. v. Powell, 206 So. 2d 244 (Fla. App. 1968), on the ground that in the latter case (as here) the same carrier provided coverage to both vehicles. My analysis of Hilton causes me to doubt it as an authority for the author’s statement. At any rate, any doubt about the validity of such an exclusion has been dispelled in Mullis v. State Farm Mutual Automobile Ins. Co., 252 So.2d 229 (Fla. 1971), where it was held invalid. It must be recalled drat Drummond’s article was written in 1969.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/9668799. Public record. Not legal advice.