Estate of Calibuso Ex Rel. Calibuso v. Pacific Insurance

*425OPINION OF THE COURT BY

NAKAMURA. J.

We are again called upon to determine the limits of an insurer’s liability under an uninsured motorist endorsement of a single multi-vehicle policy of automobile liability insurance, a question we believed to have been settled by Allstate Insurance Company v. Morgan, 59 Haw. 44, 575 P.2d 477 (1978) and American Insurance Company v. Takahashi, 59 Haw. 59, 575 P.2d 881 (1978). Appellant insurer, however, asserts the unjust consequences of an application of the rule adopted in Morgan and Takahashi to the calamitous accident involved in this case demonstrate its questionable wisdom and efficacy. Hence, we are urged to modify the rule to accommodate a fairer result, particularly for appellant insurer and the policyholder, which allegedly would he consonant with provisions of the insurance policy. We have considered appellant insurer’s arguments and reviewed our prior decisions but are impelled by applicable provisions of both the statute and the insurance policy, as well as the reasons underlying earlier decisions, to affirm the circuit court's holding.

I.

On November 3, 1973, an automobile operated by Rosita Calibuso collided with another motor vehicle driven by an uninsured motorist. The collision caused the deaths of Mrs. *426Calibuso and three other persons, Leonila B. Cabatu, Fe Buncayao Pascua, and Espanita M. Tabladillo, who were passengers in Mrs. Calibuso’s vehicle. The ill-fated automobile was covered by a single multi-vehicle liability policy, with an uninsured motorist endorsement, issued to Mrs. Calibuso and her husband Silvestre Calibuso by Pacific Insurance Company; Mr. and Mrs. Calibuso were then the owners of two other vehicles.

The premiums for the policy included small sums1 to defray the possible costs of protecting each person “insured”2 under the policy against the contingency of sustaining injury or death through the negligent operation of a motor vehicle by an impecunious uninsured motorist.3 The limits of insurer liability under the endorsement were $10,000 per person and $20,000 per accident.

On March 18, 1975, the Estate of Rosita Calibuso and her survivors filed an action in the Circuit Court of the Second Circuit seeking a declaration on the scope of Pacific Insurance Company’s liability under the endorsement in question. The estates and survivors of the fatally injured passengers *427subsequently joined in the declaratory action. On May 10. 1977, the circuit court held that the insurer’s total liability was the product of the policy’s stated liability limits multiplied by the number of vehicles covered thereby.4 In effect, the ruling anticipated our holding in Morgan and Takahashi that HRS §§ 431-448 and 287-7 mandated a minimum of $10,000 in protection for each “insured'" up to an overall minimum limit of $20,000 per accident on each vehicle covered by an uninsured motorist endorsement to a multi-vehicle liability policy and that the foregoing amounts may be aggregated or “stacked,” if necessary. The appeal here was perfected before the foregoing decisions issued from this Court.

While it registered a strong disagreement with Morgan axíáTakahashi during oral argument, Pacific’s primary thesis was that our broad “stacking” rule resulted in injustice for the policyholder and his family and required reexamination. It contended that only the policyholder and his family should be permitted to recover “stacked” benefits because they were the intended primary beneficiaries of the policy and that the recovery of other “insured” should be subject to the limits applicable to the vehicle in w’hich injury or death occurred. The argument is not devoid of logic; it also evokes much sympathy. The suggested application would probably result in a total recovery of $25,000 by the estate and survivors of Mrs. Calibuso, a named insured, and a recovery of $5,000 by each of the other families. An application of Morgan and *428Takahashi to this case would probably result in a recovery of $15,000 by each of the families, including the Calibusos. However, for reasons stated in Palisbo v. Hawaiian Insurance & Guaranty Co., 57 Haw. 10, 547 P.2d 1350 (1976), and Walton v. State Farm Mutual Automobile Insurance Co., 55 Haw. 326, 518 P.2d 1399 (1974), as well as those stated in Morgan and Takahashi, we reject the suggestion to modify our earlier decisions.

II.

An uninsured motorist endorsement is subject to the requirements of HRS §§ 431-4485 and 287-7.6 We first considered the relationship between the relevant insurance policy provision and the foregoing statutory provisions in Walton v. State Farm Automobile Insurance Co., supra, where a passenger in a vehicle was injured as the result of the negligence of the uninsured driver of another. The passenger sought recovery under both the uninsured motorist endorsement of *429his own policy and a similar endorsement of his host driver’s policy. A specific clause, commonly referred to as an “other insurance” clause, in both policies precluded such recovery, any sums received under any insurance policy serving to limit or bar further recovery. We voided the clause pursuant to HRS § 431-448 to the extent that it served to prevent a full recovery of actual damages and recovery under both was approved so long as the total amount recovered did not exceed the actual damages suffered. The broad purpose of HRS § 431-448 “to promote protection ... for persons who are injured by uninsured motorists ... ,” in our opinion, mandated the foregoing decision. 55 Haw. at 331, 518 P.2d at 1402.

Palisbo v. Hawaiian Insurance & Guaranty Co., supra, involved a one-car accident where the host driver was the adjudged tortfeasor. The victims of his negligence sought recovery under the uninsured motorist endorsements of their own policies because the host driver’s insurance coverage was insufficient to compensate them for their damages. The issue before us was whether an “underinsured” driver was an “uninsured” driver within the meaning of HRS § 431-448. In answering the question in the affirmative we said:

The statute under consideration must be liberally construed in accordance with its remedial purposes and consistent with the legislative intent. Accordingly, we hold that where the tortfeasor’s automobile liability insurance is inadequate to provide compensation to the injured policyholder of an uninsured motorist policy, for at least the minimum amounts specified by the financial responsibility law, the tortfeasor is, as to that policyholder, “uninsured” to the extent of the insufficiency for the purposes of the statute. Porter v. Empire Fire and Marine Insurance Company, supra; Hanlon v. Buckeye Union Insurance Co., 73 Ohio Op. 2d 267. 324 N.E.2d 598 (C.P. 1975). A contrary finding would tend to subvert the statutory scheme designed to protect innocent victims of the financially irresponsible driver, and render the uninsured motorist statute in these cases ineffective.

*43057 Haw. at 15-16, 547 P.2d at 1354. Thus, in Walton and Palisbo we were guided by a specific legislative intent to protect innocent victims of financially irresponsible drivers and applied § 431-448 to best effectuate such purpose.

Walton and Palisbo set the stage for our decision in Allstate Insurance Company v. Morgan, supra. Lindarae Morgan sustained injuries while operating a friend’s vehicle that collided with another vehicle being driven by an uninsured driver. Allstate sought a declaration of its liability limits for uninsured motorist coverage under a policy issued to Donald Morgan, her father. The circuit court ruled against the insurance company and it appealed to this court. The factual situation was one “in which three automobiles were insured under a single liability policy, but the insured was injured while operating a fourth, independently owned and insured motor vehicle which was struck by an uninsured motorist. ’ ’ 59 Haw. at 45, 575 P.2d at 478. Our holding was:

[Tjhat Lindarae Morgan was entitled to potentially recover the statutorily provided minimum of uninsured motorist insurance for all three of the automobiles insured under her father’s policy. To elaborate, Lindarae Morgan was protected under HRS § 431-448 to the extent of $10,000 in per person uninsured motorist insurance for each vehicle insured under the policy. Since three vehicles were insured under the policy, three separate coverages of $10,000 were available to her. As we have stated, this coverage was available to her regardless of whether or not she was injured while in one of the insured vehicles. Consequently, Lindarae Morgan is entitled to recover the combined total of $30,000 in uninsured motorist insurance benefits from Allstate.

Id. at 49, 575 P.2d at 480.

American Insurance Company v. Takahashi, supra, followed shortly thereafter and similar questions produced similar answers. However, we wére also compelled there to determine the validity of a “limits of liability” clause in the pertinent policy because the circuit court had found it validly limited American’s uninsured motorist liability to a maximum of $20,000, the “per accident” limitation specified by the *431policy.7 We found this “wholly inconsistent” with Morgan and as two vehicles were covered by the policy, ruled that the insured were “entitled to recover the statutorily provided coverage of $20,000 for each of the vehicles insured under the policy, or a combined total recovery of $40,000.” 59 Haw. at 64, 575 P.2d at 884. The decision further stated:

[T]hat the limits of liability clause in the policy before us is invalid insofar as it attempts to defeat the statutory requirements of HRS § 431-448. American cannot reduce its liability for uninsured motorist coverage below the statutorily required minimum amounts for each insured vehicle. See Walton v. State Farm Mutual Automobile Insurance Co., 55 Haw. 326, 518 P.2d 1399 (1974). Therefore, the limitation of uninsured motorist coverage to a maximum of $20,000 “regardless” of the number of automobiles to which the policy applies is null and void.

Id. That statutorily mandated coverage could not be diminished by insurance policy provisions was the governing principle.

III.

Pacific asserts “stacking” should operate in a manner that will enhance recovery by the “real” intended beneficiaries of uninsured coverage, i.e., the policyholder and his immediate family. It proposes an alteration of our rule on aggregation of coverage so the Calibusos would probably recover $25,000, rather than the $15,000 that appears to be in store for them under Morgan and Takahashi. It would have *432the court draw a distinction between classes of “insured” to favor relatives of the policyholder residing in his household over others who may be exposed to the same risks, a distinction drawn by neither the statute8 nor the insurance policy.9 This would diminish coverage for the other families involved and result in each such group probably recovering $5,000.10 It would also reduce the insurer’s total liability from $60,000 to $40,000. Pacific’s rationale is a presumed absence of any intent on the part of a policyholder to extend protection for non-family members beyond that which attaches to a vehicle in which they may be passengers. It also relies on the “limits of liability” clause of the policy to bolster the contention that neither insurer nor policyholder contemplated coverage for such passengers extending beyond the protection provided for the vehicle they occupied. This aspect of the problem, however, was discussed and decided in Takahashi.

While an application of Morgan and Takahashi to the tragic circumstances involved here may result in unfairness for the policyholder and his family, an application of Pacific’s proposed rule to other more common occurrences may likewise result in injustice. For example, we think it would also be unfair to apply Pacific’s suggested limitation where the death or serious injury of a fiancee or a close relative not resident in the policyholder’s household is involved, even from the standpoint of a policyholder.

*433David J. Dezzani (Michael D. Tom with him on the briefs; Goodsill, Anderson & Quinn of counsel) for defendant-appellant. B. Martin Luna (Ueoka & Luna of counsel; Ja m es Krueger for plaintiffs-appellees with him on the brief) for intervenors-appellees.

Our decisions from Walton to Takahashi reflect a conviction that the effectuation of a legislative policy to provide protection for innocent victims of negligent uninsured drivers in stated amounts precludes any contractual diminution of recovery below such minima. Where protection in the sum of $60,000 under the multi-vehicle policy in question is statutorily mandated, a limitation of recovery premised on an unexpressed intent of an insurance policy clause would be an impermissible reduction of coverage for some of those insured under the policy, even if such limitation brought a “fairer” result for others insured thereunder. It would be inconsistent with the law and its purpose of providing widespread protection against a recognized peril to rule otherwise.

Affirmed.

The record indicates that premiums for the uninsured motorist endorsement covering the three vehicles amounted to $4.00, $3.00, and $3.00, respectively.

The term “insured” is defined by the policy for relevant purposes in the following manner:

(1) the named insured as stated in the policy (herein also referred to as the. “principal named insured”) 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;
(2) any other person while occupying an insured automobile; and
(3) any person, with respect to damages he is entitled to recover because of bodily injury to which this endorsement applies sustained by an insured under(l) or (2) above.

The insurer’s liability under the uninsured motorist endorsement is stated, in pertinent part, as follows:

The company will pay all sums which the insured or his legal representative shall be legally entitled to recover as damages from the owner or operator of an uninsured automobile because of bodily injury, sickness or disease, including death resulting therefrom, hereinafter called “bodily injury”, sustained by the insured, caused by accident and arising out of the ownership, maintenanceor use of such uninsured automobile. ...

The relevant portion of the court's order reads as follows:

IT IS FURTHER ORDERED that there is no just reason for delay in the entry of a final judgment on the issues adjudicated by this Order, and. accordingly, a final judgment is hereby entered in favor of plain tiffs and intervenors. and against defendant, establishing that, for the accident of November 3. 1973. defendant must provide uninsured motorist coverage to plaintiffs and intervenors in the amount of S30.000.00 per person and $60.000.00 per accident.

The circuit court was not asked to prorate or allocate the recoverable sums among the insured and the question of the extent of each insured person's recovery is not before us. Thus, the sole issue presented on appeal is whether Pacific must provide uninsured motorist coverage in a sum of $60.000 or in a lesser amount.

HRS § 431-448 provides:

Automobile Liability; coverage for damage by uninsured motor vehicle. No automobile liability or motor vehicle liability policy 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, issued for delivery, or renewed in this State, with respect to any motor vehicle registered or principally garaged in this State, unless coverage is provided therein or supplemental thereto, in limits for bodily injury or death set forth in section 287-7, under provisions filed with and approved by the insurance commissioner, 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, provided, however, that the coverage required under this section shall not be applicable where any insured named in the policy shall reject the coverage in writing.

HRS § 287-7 states the minimum statutory limits of liability as follows:

[Ejvery such [automobile liability] policy ... is subject, if the accident has resulted in bodily injury or death, to a limit, exclusive of interest and costs, of not less than $10,000 because of bodily injury to or death of one person in any one accident and. subject to such limit for one person, to a limit of not less than $20,000 because of bodily injury to or death of two or more persons in any one accident.

The limits of liability clause in Takahashi provided in pertinent part as follows:

Regardless of the number of. . . (4) automobiles or trailers to which this policy applies,

(C) the limit for Uninsured Motorists Coverage stated in the declarations as applicable to “each accident” is the total limit of the company's liability for all damages because of bodily injury sustained by one or more persons as the result of any one accident.

HRS § 431-448 states in pertinent part that coverage should be provided:

[F]or the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles. . . . (Underscoring added).

As the statute clearly draws no distinction between classes of “insured,” there appears to be no basis for a construction thereof' that would favor one class of “insured" over another.

The policy provides identical coverage for each class of persons “insured” thereunder. See n.2, supra.

In answer to interrogatories propounded by Pacific, the administrators of the Estates of Leonila B. Cabatu. Espanita M. Tabladillo. and Fe Buncayao Pascua responded that their decedents were not covered by uninsured motorist endorsements of other liability insurance policies.