Allstate Insurance v. Hankinson

No. 89-562

IN THE SUPREME COURT OF THE STATE OF MONTANA

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ALLSTATE INSURANCE COMPANY, ::. r
an Illinois Corporation,
Plaintiff and Appellant,

WILLIAM R. HANKINSON, LUKE
HANKINSON, GERALD BAASCH,
and GWEN GRENFELL,
Defendants and Respondents.

APPEAL FROM: District Court of the Fourth Judicial District,
In and for the County of Missoula,
The Honorable Jack L. Green, Judge presiding.

COUNSEL OF RECORD:
For Appellant:
Susan P. Roy, Garlington, Lohn & Robinson, Missoula,
Montana
For Respondent:
Milton Datsopoulos and Darla J. Keck, Datsopoulos,
MacDonald & Lind, Missoula, Montana
Hugh Kidder, Attorney at Law, Missoula, Montana

Submitted: May 15, 1990
Decided: July 16, 1990
Filed:
Justice John Conway Harrison delivered the Opinion of the Court.

Allstate Insurance Company appeals a decision in a declaratory
action it filed to determine its duty to indemnify and defend Luke
Hankinson for any claims arising out of an automobile accident in
which Hankinson was at fault. The Fourth Judicial District Court,
Missoula County, Montana, granted summary judgment in respondents'
favor. We reverse and remand.
Issues:
1. Did the District Court err in concluding that Hankinson
had the owner's permission by defining owner as any driver and by
assuming facts not in the record?
2. Is the word lfowner'sll
ambiguous?
3. Is Allstate entitled to summary judgment when the
undisputed facts show that Cloninger controlled her son's use of
the automobile and both the son and his friend, the driver at the
time of the accident, knew that the driver did not have permission
to drive the automobile?
On July 30, 1988, Luke Hankinson, a minor, was driving a car
when an accident occurred injuring Gerald Baasch and Gwen Grenfell.
The car belonged to Kathy Cloninger who had given her son, Brian
Young, permission to use the vehicle. Despite Ms. Cloninger's
express instructions that no one but Brian was to drive the car,
Brian gave Luke Hankinson permission to drive the car. It is
undisputed that Luke Hankinson knew that he did not have Kathy
Cloninger's permission to drive that vehicle.
Luke Hankinson was an insured on William Hankinson's, Luke's
father, Allstate automobile owner's liability insurance policy.
Respondents sought coverage under William Hankinson's Allstate
policy, specifically under the non-owned automobile provision which
provided the following coverage:
A non-owned auto used by you or a resident
relative with the owner's permission[.]
Allstate denied coverage because Luke Hankinson did not have Kathy
Cloninger's permission to use the non-owned automobile.
Relying on two Montana cases, the District Court found that
Brian Young was an owner of the non-owned automobile for insurance
coverage purposes. Since Brian gave Luke permission to drive, Luke
drove the non-owned automobile with the owner's permission
triggering coverage under Luke's father's Allstate policy.
Did the District Court err in concluding that Hankinson had
the owner's permission by defining owner as any driver and by
assuming facts not in the record?
Upon review, we find that 5 61-6-301, MCA (1989) (amended
effective July 1, 1990), guides the proper resolution to this case.
In pertinent part, 5 61-6-301, MCA, provides:
(1) Every owner of a motor vehicle which is
registered and operated in Montana by the
owner or with his permission shall
continuously provide insurance against loss
resulting from liability imposed by law for
bodily injury or death or damage to property
suffered by any person caused by maintenance
or use of a motor vehicle, as defined in 61-
 1-102, in an amount not less than that
required by 61-6-103, or a certificate of
self-insurance issued in accordance with 61-
6-143. (Emphasis added.)
The mandatory liability coverage statute compels a motor vehicle
owner to provide continuous liability coverage for the use by the
owner or with the owner's permission of any motor vehicle as
defined in 5 61-1-102, MCA. Kathy Cloningerts automobile falls
within 5 61-1-102's definition of a motor vehicle. Thus, under
Montana's mandatory liability protection statutes, the only
question regarding coverage under the Hankinson policy should be
whether Luke's father gave him permission, either express or
implied, to drive the Cloninger vehicle.
The problem in this case arises because the Hankinson policy's
non-owned automobile coverage conflicts with the mandatory coverage
required by § 61-6-301, MCA. Section 61-6-301, MCA, refers to
9 61-6-103 (2) which is the statute that draws in Hankinson's
automobile owner's liability policy. The applicable section is
$j 61-6-103(2), MCA (1989) (amended effective July 1, 1990), which
states:
2) Such owner's policy of liability insurance
shall :
(a) designate by explicit description or by
appropriate reference all motor vehicles with
respect to which coverage is thereby to be
granted; and
(b) insure the person named therein and any
other person, as insured, using any such motor
vehicle or motor vehicles with the express or
implied permission of such named insured,
against loss from the liability imposed by law
for damages arising out of the ownership,
 maintenance, or use of such motor vehicle or
motor vehicles within the United States of
America or the Dominion of Canada, subject to
limits exclusive of interest and costs, with
respect to each such motor vehicle . ..
The language "by appropriate reference1' found in 61-6-
103(2)(a), MCA, refers to Hankinson's policy's non-owned vehicles
provision which provides coverage for "[A] non-owned auto used by
you or a resident relative with the owner's permission." In this
case, the effect of the non-owned auto provisionls qualifying
language ''with the owner's permission1'is to provide less than the
minimum mandatory coverage required by § 61-6-301, MCA.
Our prior decisions interpreting insurance policies in light
of Montana's Mandatory Liability Protection Act establishes that
when policy language excludes coverage otherwise statutorily
mandated then that policy language is void as contrary to public
policy. See, Horace Mann Ins. v. Hampton (1989), 235 Mont. 354,
767 P.2d 343; Iowa Mutual Ins. Co. v. Davis (1988), 231 Mont. 166,
752 P.2d 166. If Luke's father gave Luke permission to drive the
non-owned vehicle, then 5 61-6-301, MCA, mandates coverage.
However, under Hankinson's policy terms even if Luke's father gave
permission, coverage is cut short if the non-owned vehicle's owner
did not give permission. Such an exclusion is contrary to public
policy. Thus, we hold that Hankinson's policy's non-owned
automobile provision's qualifying language "with the owner's
permission1' is void as contrary to the public policy established
by Montana's Mandatory Liability Protection statutes.
 In summary, the key issue for this case is whether Luke's
father gave him permission to drive the non-owned vehicle.
However, that has not yet been addressed by the District Court.
Because of our holding on this issue, we need not address the other
issues raised. We reverse the District Court's granting of summary
judgment and remand for proceedings consistent with this opinion.

We concur: A

~ Y P Chief Justic

Justices
Justice Fred J. Weber dissents as follows:
I respectfully dissent from the majority opinion. The intent
of the majority opinion is to require the following with regard to
the insurance purchased by a father on his owned vehicle where he
has named his son as an insured: Any motor vehicle driven by his
son shall be covered by the father's insurance policy, even where
the son was denied permission to drive the vehicle by its owner.
While it may be commendable to require that every driver of a motor
vehicle be covered by insurance, I am unable to find such
requirements in the statutes.
I will restate portions of the pertinent code sections.
Section 61-6-301, MCA (1989), (amended effective July 1, 1990),
provides in part:
(1) Every owner of a motor vehicle which is . . .
operated in Montana by the owner or with his permission
shall continuously provide insurance against loss ...
suffered by any person caused by maintenance or use of
a motor vehicle, as defined in 61-1-102 . . . (Emphasis
is supplied in majority opinion.)
In pertinent part 9 61-1-102, MCA, provides:
ItMotorvehiclettmeans every vehicle propelled by its own
power and designed primarily to transport persons or
property upon the highways of the state. ... The term
does not include a bicycle ...
The majority concludes that the Kathy Cloninger automobile falls
within the definition of a motor vehicle as contained in 5 61-1-
102, MCA. That section covers all automobiles, and of course does
include the Cloninger vehicle. I find it misleading to suggest
that section somehow assists in reaching a conclusion that the
Cloninger vehicle comes within the definition of § 61-6-301, MCA,
in such a manner that all that is left is to determine if the
father gave his son permission to drive the Cloninger vehicle. Our
problem is to determine if 5 61-6-301(1), MCA, requires coverage.
In substance 5 61-6-301, MCA, requires the owner of a motor
vehicle operated with his permission to provide insurance. Clearly
that reference to providing insurance is a reference back to the
owned motor vehicle. It also seems clear that the reference to
insurance against loss caused by use of a motor vehicle is merely
descriptive of the type of insurance which is required on the motor
vehicle. I therefore conclude that 5 61-6-301, MCA, clearly
requires every owner of a motor vehicle being operated in Montana
with his permission to continuously provide insurance against loss
resulting from use of the owned motor vehicle. I can find nothing
in that section which applies to any vehicle other than the owned
motor vehicle. I must dissent from the key conclusion of the
majority opinion--that in some manner the foregoing statute compels
an owner of a motor vehicle to provide continuous coverage for the
use of anv motor vehicle which is used with the owner's permission.
Having reached the foregoing conclusion, I of course cannot
agree with the further conclusion that the policy as written
violates the public policy of the statute so that the limitation
of the use by Brian Hankinson of an automobile with his father's
permission is void as contrary to public policy.
I further note that the majority's interpretation does not
consider statutory provisions such as 5 61-6-103, MCA (1989),
(amended effective July 1, 1990), which in pertinent part provides:
 (1) A "motor vehicle liability policy1' ... shall mean
an owner's ... policy of liability insurance .. .
(2) Such owner's policy of liability insurance shall:

(a) designate by explicit description or by
appropriate reference all motor vehicles with respect to
which coverage is thereby to be granted; and
(b) insure the person named therein and any other
person, as insured, using any such motor vehicle or
motor vehicles with the express or implied permission of
such named insured . . .
Clearly the foregoing section allows an owner to purchase insurance
which designates which vehicles shall be covered by appropriate
reference, and therefore allows the limitation contained in the
present policy which grants coverage to motor vehicles driven by
an insured used with the permission of the owner. Such a
limitation seems completely consistent with 5 61-6-103, MCA.
As suggested at the beginning of this dissent, it may be
commendable to require insurance so that the driver of anv car is
covered. Under the facts of this case, it is not proper for this
Court to make such a change in the statutes. That change should
be left to the legislature.

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