Waller v. Rocky Mountain Fire and Casualty Co.

TONGUE, J.,

dissenting.

I respectfully dissent from the opinion by the majority because, in my opinion, Jerry Waller was entitled to uninsured motorist coverage as a “person designated as named insured in the schedule” of this automobile insurance policy, under policy provisions required by OBS 743.792, but which were not included in this policy.

1. The statute and the policy provisions.

At the time of the trial the attention of the *82trial court was not called by either party to the fact that ORS 743.792(2) extended uninsured motorist coverage to not only the “named insured” and to relative “residents of the same household,” as provided by the terms of the policy, but also to “any person designated as named insured in the schedule.”① The policy in this case did not include a provision extending uninsured motorist coverage to such persons.

ORS 743.792 required, however, that every policy covered by its provisions should provide uninsured motorist coverage “no less favorable in any respect to the insured or the beneficiary than if the following provisions were set forth in the policy.” Thus, if plaintiff’s decedent, Jerry Waller, was a “person designated as named insured in the schedule,” he was entitled to uninsured motorist benefits.

2. The facts of this case.

Upon the return of Jerry Waller from service in the U.S. Navy, a “change application” to the policy of his father, H. E. Waller, was prepared, by the agent of the insurance company. The name “Jerry Waller” appears on that form under the designation “The following new drivers have been added.” It also appears from that form that the 1962 Pontiac was added and that the additional insurance coverage was to include uninsured motorist. It was stipulated that defendant *83was advised by that application that Jerry Waller, then an “under age 25 male driver,” would be a “principal driver” of that car and that “an additional premium was charged by the defendant for these changes.”

Shortly thereafter, an “endorsement” was issued, dated October 3, 1967, in the form of a new and revised “declaration.” That document still listed H. E. Waller as the “named insured.” This new “declaration” included a revised “schedule” describing the automobiles covered, including the automobile operated by H. E. Waller (although not designating him by name as its driver), together with the various types of coverage for that vehicle, the limits of such coverage, and the premium charged for each type of coverage. In addition, this “schedule” described the added 1962 Pontiac and the various types and limits of coverage for that vehicle, including “uninsured motorist,” as well as the additional premium for each type, and the amount of the additional premiums for the uninsured motorist coverage. This “schedule,” under the heading “driver class” for that automobile included the designation: “500.” (Similarly, the number “200” was listed as the “driver class” for the automobile operated by H. E. Waller.)

The insurance agent testified that the number “500” in the schedule of the new endorsement was intended to refer to Jerry Waller. His testimony was as follows:

“Q Does the endorsement show not only an additional car but an additional driver? Is that how it’s reflected or just explain it.
“A Well, in this endorsement, there was an additional premium charged. There was the car noted on the endorsement and there is a driver class change.
“Q What do you mean by driver class change?
“A Well, there is a different charge for dif*84ferent aged drivers and the type of use; if it’s a part-time or full-time use, or if it’s a business or pleasure use.
“Q Okay. What does your change reflect?
“A This indicates that this is a — it’s a 500 driver change and that’s a full-time operator.
“Q And that’s in reference to Jerry Waller?
“A Yes, it is.”

The insurance agent also testified that insurance companies have a rule that if an “under twenty-five” driver lives “permanently away from home,” you have to submit an application “and that if accepted by the insurance company there would be no change of premium,” but “just a change in what the records reflect as to where the individual was living.”

In response to a question by the trial court whether there was “any other way that you, as agent for the company, could have submitted this to the company for treatment,” and whether Jerry Waller could have been “treated” as “additional named insured,” the agent answered “As an additional named insured; no, sir.”

A casualty insurance underwriter for defendant testified that “generally speaking,” a driver is not added by name to the policy, but that the endorsement that was issued “denotes a change of vehicles and the additional charge for a full-time, under age, male driver,” as “shown by being coded 0500,” but without changing the “named insured”; that the difference was that “the named insured is the individual shown on the declaration of the policy,” while “a principal operator would apply in respect to the appropriate rate to be charged on a policy,” i.e., “solely for reasons for rating the policy,” and that there could be several “principal operators,” under “one named insured.”

*853. Jerry Waller was a “person designated as named insured in the schedule.”

The words “any person designated as named insured in the schedule” are unique to uninsured motorist coverage and do not appear in the liability provisions of the standard automobile insurance policy. Thus, as stated in Pretzel, Uninsured Motorists 34-35, § 19.2 (1972):

“The phrase, ‘designated insured,’ appears only in UM coverage and is not found in any other portion of any standard automobile policy. Its definition is found in Section V of the policy entitled ‘Additional Definitions’ and reads: ‘ “designated insured” means an individual named in the schedule under Designated Insured.’
“The ‘schedule’ is usually found on the first page of the entire policy. It is that listing of vehicles, coverages, limits of liability and premium costs that describes the coverage requested by the insured and proffered by the company. In the case of the father-son relationship referred to in subsection 19.1, supra, it would be good practice for the father, who has legal title to the vehicle, to be the ‘named insured’ and the son, who owns and uses the vehicle, to be the ‘designated insured.’ ” (Emphasis added)

See also 2 Long, Law of Liability Insurance 24-16.3, § 24.07 (1974).

The “declaration” of the original policy was issued in September 1965 to H. E. Waller, decedent’s father, and listed H. E. Waller as the “named insured.” It included a schedule listing the vehicles covered, the types of coverage, including uninsured motorist coverage, the limits of liability and premium costs, as well as the premium paid for uninsured motorist coverage. That schedule did not list the name of Jerry Waller as a “designated insured.” Indeed, that policy did not include a schedule with provision *86for “designation of named insured” for purposes of uninsured motorist coverage, followed by a space to be filled in with the name of such an individual, as provided by the Standard Form Policy provisions for uninsured motorist coverage then in effect.②

It is clear from the evidence, however, that on October 3, 1967, H. E. Waller paid an additional premium for additional uninsured motorist coverage at the time of the acquisition of the 1962 Pontiac to be driven by his son and that defendant was informed of that fact for the purpose of preparing and issuing a proper endorsement for the additional coverage.

The endorsement issued by the defendant, including the new schedule made a part of that endorsement, although stating that an additional premium had been paid for additional uninsured motorist coverage, did not include a provision with the words: “Designated Insured-,” as provided by the 1966 Standard Form for uninsured motorist coverage.③ Neither did the new endorsement include a definition of persons “insured” for the purposes of uninsured coverage so as to include “designated persons,” as provided by OES 743.792(2) (a)(A). This new schedule also did not refer to Jerry Waller by name. It did, however, under the title “driver class” for the 1962 Pontiac include the designation “500.” According to the. testimony of the insurance agent that designation was intended to refer to Jerry Waller.

As also noted, the insurance agent testified that there was not “any other way” that he, as agent for the defendant, could have “treated” the matter and that he could not have “treated” Jerry Waller as an *87“additional named insured.” This was inaccurate in view of the fact that ORS 743.792(2) (a) (A) expressly provided for “person(s) designated as named insured in the schedule;” the fact that the standard form schedule then in effect also included such a provision; and the fact that it would have been “good practice” to so “designate” Jerry Waller under these circumstances, as stated in Pretzel, supra.

Under these facts and circumstances, it is my opinion that even though the name “Jerry Waller” does not appear on the “declaration” or “schedule,” he was nevertheless “designated” by the code device “500,” as an “insured” for the purposes of the uninsured motorist coverage under ORS 743.792(2).

In any event, it appears to be obvious that the insurance policy issued by the defendant, including the endorsement with the code device “500” was ambiguous. Under well recognized rules, such ambiguity is resolved in favor of the insured and against the insurance company. See Chalmers v. Oregon Auto Ins. Co., 262 Or 504, 508-09, 500 P2d 258 (1972), and cases cited therein.

My view of a modern automobile insurance policy is that it is a contract of adhesion which all persons who own or operate automobiles are required to purchase, at least as a practical matter, and which they must purchase on a “take it or leave it” basis, including all of the complicated and seemingly contradictory provisions in large print which appear to “give” coverage, as well as the maze of provisions, exceptions, conditions and other “fine print” which “take away” much of the coverage that has appeared to have been “given.”

Indeed, there is reason to support the view that unless and until the day comes that automobile policies are written in simple terms that the ordinary person *88can understand, the purchaser of such a policy is entitled to the benefit of his “reasonable expectation” when he purchases such a policy and that all of the terms of the policy which are unclear or otherwise ambiguous should be construed in favor of the purchaser and to the end that his “reasonable expectation(s)” are not frustrated.

This court held, in Borgland v. World Ins. Co., 211 Or 175, 181, 315 P2d 158 (1957), in referring to a policy of life insurance, and in quoting with approval from another case, that:

“The policy should be construed according to its character and its beneficient purposes, and in the sense in which the insured had reason to suppose it was understood. * * *” (Emphasis added)

This rule has also been followed by this court in more recent cases.④

When the father of a family purchases a policy of automobile insurance he is ordinarily the “named insured.” When he pays a premium for uninsured motorist coverage he has “reason to suppose” that such coverage will apply to him and to the members of his household, and regardless of whether they are injured by an uninsured motorist while driving or riding in the automobile for which the policy was purchased.

Similarly, when the father of a family purchases an automobile for an adult son or daughter, who may or may not be living as a member of the household, but may be away at college or working on a *89job, and when he undertakes to make arrangements with his insurance agent for additional coverage to protect his son or daughter, including the payment of an additional premium for uninsured motorist coverage, he has, in my view, “reason to suppose” that the uninsured motorist coverage will extend to his son or daughter while away at school or working on a job— and regardless of whether he or she is then driving or riding in that car, just as he or she would be covered under his original policy on the family car while living at home.

Indeed, coverage of an adult son or daughter in this common family situation appears to be at least one of the principal reasons for legislation such as ORS 743.792, which, for the purpose of expanding the protection of uninsured motorist coverage, requires insurance companies selling automobile insurance to provide that uninsured motorist coverage shall extend not only to (1) the “named insured” and to (2) persons residing in the same household, but also to (3) “any person designated as [a] named insured in the schedule.” Indeed, this would be the proper manner for an insurance agent and company to write an endorsement for additional coverage in such a situation. See Pretzel, supra.

In my view, this result should follow under a policy of automobile insurance sold by an insurance company which failed to include the provision required by ORS 743.792 relating to an additional person “designated as [a] named insured,” when a father has purchased an automobile for an adult son or daughter and, in arranging for insurance to cover his son or daughter, pays an additional premium for uninsured motorist coverage. This result should particularly follow, in my view, if there is anything in the new policy or endorsement which makes reference to the adult son or daughter, either by name or other*90wise, or if there are any other eircnmstanees which satisfy the objective test to the effect that a father who purchases such additional insurance and pays an additional premium for additional TTM coverage would have “reason to suppose” that such coverage would extend to his adult son or daughter to the same extent as his son or daughter would have been covered by the policy on the family car while living as a member of the family.

Under the circumstances of this case, and applying these well established rules of insurance law, I believe that plaintiff is entitled to have this court interpret the ambiguity against the insurance company which was responsible for it and in favor of recovery by the plaintiff, in accordance with his “reason to suppose” that it would be applied when he paid the additional premium for the additional uninsured motorist coverage.

4. Contentions by the majority opinion.

The majority opinion relies upon definitions taken from the liability portion of the automobile policies in the cases of Holthe v. Iskowitz, 31 Wash 2d 533, 197 P2d 999 (1948), and Griffin v. State Farm, 129 Ga App 179, 199 SE2d 101 (1973). Those eases, however, were not concerned with the uninsured motorist coverage definition of “insured,” as stated in OES 743.792(2), so as to include “designated” persons. The majority also quotes from 1 Long, Law of Liability Insurance 3-3, § 301 (1974). Long, however, was also discussing the definition of “insured” and “named insured” under the general liability portion of an automobile policy, and not under uninsured motorist coverage. Although the definitions discussed in these authorities are similar to the definitions contained in the policy under consideration, they are inapplicable in this case because the wording of the policy must be expanded to include “persons designated in the sched*91ule” so as to be “no less favorable” than the provisions required by OES 743.792(2).

The majority contends that “we should not reverse and remand a case to the trial court to take evidence on an issue not raised in the trial court” except for “special circumstances,” citing Fawver v. Allstate Ins. Co., 267 Or 292, 516 P2d 743 (1973), and find no such “special circumstances” in this case. I do not find any reference in Fawver to such a rule.⑤ Even if that is normally a proper rule, the circumstances of this case in which an insurance company doing business in Oregon failed to draft its policy in accordance with mandatory provisions of a statute enacted to protect the victims of uninsured motorist accidents are sufficient to constitute “special circumstances” within the meaning of such a rule, so as to make it proper, in my opinion, to remand this ease to the trial court for the taking of additional evidence.

For all of these reasons, I must respectfully dissent.

ORS 743.792(2) provides:

“(2) As used in this policy.
“(a) ‘Insured,’ when unqualified means when applied to uninsured motorist coverage:
“(A) The named insured as stated in the policy and any person designated as named insured in the schedule and, while residents of the same household, the spouse of any such named insured and relatives of either; provided, neither such relative nor spouse is the owner of a vehicle not described in the policy; and provided further, if the named insured as stated in the policy is other than an individual or husband and wife who are residents of the same household, the named insured shall be only a person so designated in the schedule; * * (Emphasis added)

See Widiss, A Guide to Uninsured Motorist Coverage 305 (1973).

See Widiss, supra, note 2 at 298.

Growers Refrig Co. v. Amer. Mtr. Ins., 260 Or 207, 215, 488 P2d 1358 (1971); and Chalmers v. Oregon Auto Ins. Co., 262 Or 504, 509, 500 P2d 258 (1972). See Cimarron Ins. Co. v. Travelers Ins. Co., 224 Or 57, 64-72, 355 P2d 742 (1960); Finley v. Prudential Ins. Co., 236 Or 235, 245, 388 P2d 21 (1963); Pope v. Benefit Trust Life Ins. Co., 261 Or 397, 400, 494 P2d 420 (1972); and Bailey v. Universal Underwriters Ins., 258 Or 201, 209-10, 474 P2d 746, 482 P2d 158 (1971). See also Reed v. Commercial Ins. Co., 248 Or 152, 156, 432 P2d 691 (1967).

There is reference in that opinion to this court’s refusal to consider an issue not raised by plaintiff, but there is no mention of the question of remanding for further evidence. Fawver v. Allstate Ins. Co., 267 Or 292, 294-95 n.2, 516 P2d 743 (1973).