Carpenter v. Superior Court

BERNSTEIN, Justice

(dissenting).

I regret but I must disagree with the majority’s disposition of the instant case. The court’s majority decision in neglecting to consider the applicability of the case of Jenkins v. Mayflower Insurance Exchange, 93 Ariz. 287, 380 P.2d 145 to the present facts fails, I think, to take proper opportunity to rule on the limits of that decision. From its very inception the Mayflower decision has caused increasing confusion among insurance companies, insured motorists, and the courts of this state concerning the law as it relates to automobile liability insurance policies. It was my understanding that it was for the purpose of lending badly needed clarity to our insurance law that we chose to-grant certiorari in this cause. In the granting of such discretionary writs our guiding principle and major obligation is to provide an extraordinary remedy where it appears that essential justice cannot be satisfactorily accomplished by other means. A failure *573to here treat the confusion engendered by the Mayflower decision would, I believe, make it improvident to have granted certiorari in the first place.

Petitioners brace their case on two grounds: one, that this court’s decision in Mayflower, supra, precludes the defendant from asserting the policy defense of “noncooperation” on the part of the insured, and two, that should such a defense be recognized, the defendant has nevertheless failed to establish it. The majority chooses to side-step the petitioners’ first contention. They apparently feel that this case can best be decided on petitioners’ second contention, and to do so rely on their finding that the defendant has failed to prove “non-cooperation” as a matter of law. Although appellate evasiveness is a warranted tactic under proper circumstances, I do not think such circumstances are present here.

The decision of the majority represents considerable research and not inconsiderable declarations and conclusions concerning the policy defense of “non-cooperation”. Completely neglected, however, is the primary question of whether a defense of “non-cooperation” even exists in this state by reason of the Mayflower decision. Indeed, if Mayflower does apply to the present facts, as it certainly seems to, there is no such defense as “non-cooperation”. I would consider it a waste of time, effort and ink to expound at length on the elements of a non-existent defense. Such shadow boxing is better left for the gymnasium. It is my opinion, therefore, that under the circumstances, this court would better serve its purpose by meeting directly the petitioners’ contention that our decision in Mayflower abrogates an insurance company’s policy defense of non-cooperation. My analysis of the problem is set out below.

In Mayflower, we held that the omnibus clause in Arizona’s Motor Vehicle Safety Regulations Act, A.R.S. § 28-1170, subsec. B, par. 2, would be considered a party of every insurance policy issued in this state and that an insurer could not limit its liability contrary to its terms. Citing our decision in Schecter v. Killingsworth, 93 Ariz. 273, 380 P.2d 136 upholding the constitutionality of the Safety Responsibility Act, we refused to distinguish between voluntary and certified policies of insurance in applying the mandatory omnibus clause. (The basic difference between the two policies explained in detail, infra, is that the former is used to prove financial ability to pay a judgment that may result from a past accident while the latter is used to prove financial ability to pay judgments that may result from possible future accidents.) The public policy reasons for refusing to recognize the distinction, and which lay at the foundation of the Mayflower decision, appear in the following quote from the Mayflower opinion:

“Where the basis upon which this act has been declared constitutional is, ‘preventing financial hardship and possible reliance upon the welfare agencies,’ we cannot constitutionally allow artful distinctions between ‘motor vehicle liability policy,’ ‘automobile liability policy’ or ‘policy of insurance’ to defeat the purpose of the act.” Mayflower, supra, 93 Ariz. pp. 290-291, 380 P.2d p. 147.

The public policy reasons for refusing to distinguish between voluntary and certified insurance coverage in holding, as petitioners urge, that an insurance company cannot raise a defense of the insured’s “noncooperation” would be exactly the same. Just as the Safety Responsibility Act provides a mandatory omnibus clause,1 2it *574likewise provides, as follows, that policy violations by the insured will not preclude recovery by the injured plaintiff:

“F. Every motor vehicle liability policy shall be subject to the following provisions which need not be contained therein :
1. The liability of the insurance carrier with respect to the insurance required by this chapter shall become absolute when injury or damage covered by the motor vehicle liability policy occurs. The policy may not be cancelled or annulled as to such liability by an agreement between the insurance carrier and the insured after the occurrence of the injury or damage, and no statement made by the insured or on his behalf and no violation of the policy shall defeat or void the policy.” A.R.S. § 28-1170, subsec. F, par. 1.

It is reasonably concluded, therefore that the Mayflower case dictates a finding that an insurance company may not assert a “non-cooperation clause” defense just as it may not provide for restrictive coverage if an automobile was operated by certain persons other than the named insured. Therefore, if Mayflower is to continue as the law in this state, the majority’s concern with whether the defendant had established a defense of non-cooperation is purely academic.

Thus, it seems to me, we come face to face with our Mayflower decision and the question of whether it should remain the law in Arizona. For reasons outlined below, I for one, think it should not.

To properly understand the difference in meaning and effect between an “automobile liability” or uncertified policy on the one hand, and a “motor vehicle liability” or certified policy on the other,2 it is necessary to analyze the method of protection provided for injured motorists and pedestrians in our Uniform Motor Vehicle Safety Responsibility Act. A.R.S. Title 28, chap. 7.3

Briefly outlined, it works as follows. Whenever a driver is involved in an accident, he is required by A.R.S. § 28-1141 to file an accident report with the supervisor of financial responsibility. If damage in excess of one-hundred dollars to person or property results from the accident, then the supervisor will suspend the license and automobile registration of the driver unless he produces proof of his ability to satisfy a judgment that might, in the opinion of the supervisor, be rewarded against him. Such financial capability is normally proved by producing a qualified insurance policy covering the driver and automobile involved in the accident. This is what is called an “automobile liability policy.” To qualify as proof of financial responsibility under the Act it need only (1) to be a policy issued by an insurance company authorized to do business in Arizona (or if not authorized to do business in this state, have authorized the supervisor to accept service in its behalf), and (2) meet with certain minimum (monetary) coverage provisions. These procedures and requirements are included under Article 3 of the Act, entitled “Security Following an Accident.”

Under Article 4, entitled “Proof of Financial Responsibility for the Future” the Uniform Act provides a different approach for the protection of people injured on the highway. This Article applies only when a judgment against a driver has not been satisfied. His license is suspended until the judgment is paid and the driver gives proof of his future financial responsibility.

The proving of this future financial responsibility is when the “motor vehicle lia-_ *575bility policy” comes into play4 By filing this “certificate of insurance” with the supervisor, the driver can regain his right to drive. The certified policy differs significantly from the non-certified policy in that it must comply with extremely strict requirements concerning its coverage. As seen earlier, these requirements include a mandatory omnibus clause as well as the general provision prohibiting insurance companies from raising policy defenses that would prevent recovery by the injured third party.

Thus it is clear from the structure of the Uniform Act, as well as its specific provisions, that there is a meaningful distinction between a certified and a voluntary or uncertified insurance policy. Its clarity is attested to by the fact that almost every state that has ruled on the matter has recognized this distinction. Cohen v. Metropolitan Casualty Ins. Co., 233 App. Div. 340, 252 N.Y.S. 841; United States Fidelity & Guaranty Company v. Walker, 329 P.2d 852 (Okl.) ; McCarthy v. Insurance Co. of Texas, 271 S.W.2d 836 (Tex. Civ.App.) ; State Farm Mutual Automobile Ins. Co. v. Arghyris, 189 Va. 913, 55 S.E. 2d 16; Royal Indemnity Co. v. Olmstead, 9 Cir., 193 F.2d 451, 31 A.L.R.2d 635 ; Laughnan v. Griffiths, 271 Wis. 247, 73 N.W.2d 587; McCann for Use of Osterman v. Continental Casualty Company, 8 Ill.2d 476, 134 N.E.2d 302; Hoosier Casualty Company of Indianapolis, Indiana v. Fox, D.C., 102 F.Supp. 214. In Cohen v. Metropolitan Casualty Ins. Co., supra, the court said:

“A reading of the whole act, and, in particular, sections 94-i, 94-d and 94-e, convinces us that the words ‘Motor Vehicle Liability Policy’, as defined in the act must refer to ‘required’ policies only. To make the act applicable to all liability policies would mean that whenever such a mishap occurred the insurance carrier would always be absolutely liable under all circumstances. We cannot concur with this reading. The purpose to be furthered by the act, and its limitations, are clearly apparent. It is intended to protect the public from suffering loss through the carelessness of automobile owners who have manifested their financial irresponsibility. It differentiates between car owners who have shown themselves to be irresponsible, and those who have not. It declares that when those who carry liability policies through legal compulsion cause damage in automobile operation, their insurance carriers are absolutely liable for the resulting loss; but it lays down no such rule in the case of the automobile owner voluntarily carrying such a policy, whose responsibility has never been questioned.” 252 N.Y.S. p. 842.

And in Royal Indemnity Co. v. Olmstead, supra, the distinction was recognized in the following terms:

“ * * * As a general rule, unless a policy can be construed as creating an independent right of action in the injured party (footnote omitted), his right to recover, being derivative, normally is subject to any defense the company may have against the insured (citations omitted). An exception to the general rule has been made in situations where the insurance policy was issued to satisfy the requirements of a statute having as its purpose the protection of the public. Under such circumstances the beneficial purpose of compulsory insurance would be thwarted in the event the insurer be permitted technical defenses under the policy relating to conditions wholly outside the ability of the injured person to secure performance of. Hence, it has *576been held that in cases involving compulsory insurance the insurer cannot urge lack of cooperation by the insured as a defense in a suit brought by an injured member of the public within the class sought to be protected by statute (citations omitted).” 193 F.2d p. 453.

Although this court in Mayflower relied on the policy of protecting the public from uninsured motorists and the desire to avoid excessive reliance on welfare agencies, it was error to employ such a policy factor to read into a statute something that is clearly not there, or to ignore as “artful” distinctions that were clearly intended by the legislature. Though absolute liability regarding insurance coverage of injured third parties may be a legitimate goal, and indeed a desirable one, it is not the function of the courts to legislate such measures into the law. Of some consolation is the fact that, since the Mayflower case, the legislature of this state has added A.R.S. § 20-259.01 to our insurance code to cover many of the considerations that were at the heart of the Mayflower decision. That section provides:

“ § 20-259.01. Coverage to include protection from operators of uninsured motor vehicles; right of rejection; supplemental or renewal policy

On and after January 1, 1966, 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 or issued for delivery 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 § 28-1142, under provisions filed with and approved by the insurance director, 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. This coverage shall at the time the policy is issued be called to the attention of the named insured who shall have the right to reject such coverage. Unless the named insured requests such coverage in writing, such coverage need not be provided in or supplemental to a renewal policy where the named insured had rejected the coverage in connection with a policy previously issued to him by the same insurer.” Added Laws 1965, Ch. 34, § 1.

In White v. Bateman, 89 Ariz. 110, 358 P. 2d 712, we quoted with approval the following in regards to the force of case law precedence :

“A deliberate or solemn decision of a court or judge, made after argument on a question of law fairly arising in a case, and necessary to its determination, is an authority, or binding precedent, in the same court or in other courts of equal or lower rank, in subsequent cases, where ‘the very point’ is again in controversy; but the degree of authority belonging to such a precedent depends, of necessity, on its agreement with the spirit of the times or the judgment of subsequent tribunals upon its correctness as a statement of the existing or actual law, and the compulsion or exigency of the doctrine is, in the last analysis, moral and intellectual rather than arbitrary or inflexible.” 89 Ariz. p. 113, 358 P.2d p. 714.

The Mayflower case is clearly erroneous. I think that it should be overruled, and that the present case is in the proper posture for doing so.

Further, I feel the majority was wrong for not having remanded this case for a trial on the merits.

. “A.R.S. § 28-1170, subsec. B, par. 2:

B. The owner’s policy of liability insurance must comply with the following requirements:
2. It shall insure the person named therein and any other person, as insured, using the motor vehicle or motor vehicles with the express or implied permission of the named insured, against loss from the liability imposed by law for damages arising out of the ownership, maintenance or use of the motor vehicle or motor vehicles within the United States or the Dominion of Canada, subject to limits exclusive of interest and costs, with respect to each motor vehicle as follows

. Improvidently termed an “artful distinction (s)” in the Mayflower decision.

. Arizona, like the great majority of other states having no compulsory insurance law, lias adopted the Uniform Act as a means of inducing motorists to insure themselves. The method of this inducement will be made clear in the following text.

. A.R.S. § 28-1170, subsec. A provides the definition of a motor vehicle liability policy:

“A. A ‘motor vehicle liability policy’ as the term is used in this chapter means an owner’s or an operator’s policy of liability insurance, certified as provided in § 28-1168 or § 28-1169 as proof of financial responsibility, and issued, except as otherwise provided in § 28-1169, by an insurance carrier duly authorized to transact business in this state, to or for the benefit of the person named therein as insured.”