No. 14386
IN TKE SUPREME C O W OF THE STATE OF I"DNTANA
LXEITA S. KEMP, A i h h i s t r a t r i x ,
Representative and Successor i n I n t e r e s t
t o KIM KAFEL KEMP, Deceased,
P l a i n t i f f and Respondent,
ATJSPATE INSURAXE COMPANY, a Corporation,
and IynaELL A. PRIM,
Defendants and Appellants.
Appeal froan: D i s t r i c t Court of the Second Judicial D i s t r i c t ,
Honorable Arnold Olsen, Judge presiding.
Counsel of Record:
For Appellants:
Henningsen, Purcell & Genzberger, B u t t e , mntana
Mark Vucurovich argued and James E. Purcell appeared,
Butte, mntana
For Respondent:
Poore Law F h , Butte, Mntana
Urban Roth argued and Jams P. Harrington argued, Butte,
&bntana
Suhnitted: May 2, 1979
Filed: '
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Mr. Justice John C. Sheehy delivered the Opinion of the Court.
Defendant Allstate Insurance Company appeals from a
summary judgment entered in favor of the plaintiff in the District
Court, Second Judicial District, Silver Bow County, applying Montana
law to two insurance policies, one issued in New York and one
issued in Vermont. The court "stacked" uninsured motorist
coverages and construed other language in the policies to grant
plaintiff a judgment of $200,000 against Allstate. Allstate contends
that its liability under the policies is limited to $20,000.
On July 17, 1976, on Interstate 15, near the Montana Street
Interchange in Butte, Montana, 19 year old Kin Karel Kemp was a
passenger in a car which was struck from the rear by a vehicle
operated by Mitchell A. Prim. Kemp was thrown from the automobile
and sustained multiple injuries from which she died about
an hour later.
The driver of the car in which Kim Kemp was a passenger,
was a resident of Vermont, and the car was registered in Vermont.
She had attended the University of Vermont for two years.
Kim Kemp's parents are residents of New York.
Mitchell A. Prim is a resident of Montana. It is conceded
in this action that his negligence caused Kim Kemp's injuries.
There is no doubt that Mitchell A. Prim was an uninsured motorist.
Nevertheless, Kim Kemp's cause was in good hands. With Allstate
as the issuing company, the vehicle in which Kim Kemp was a
passenger was covered by an automobile insurance policy issued
in Vermont, which policy included uninsured motorist coverage
which Allstate concedes extended to Kemp. It also appears that
Kim Kemp's parents, in New York, had a policy of insurance issued
by Allstate. The Kemp policy covered family cars registered
in New York. As with the Vermont policy, the New York
policy contained uninsured motorist protection and Allstate
again concedes this protection extended to Kim Kemp. In
addition, the New York policy contained mandatory "no-fault"
personal injury protection required under New York law.
The policy issued in Vermont to the driver of the car
in which Kemp was a passenger covered two vehicles, for each
of which separate premiums for uninsured motorist protection
were paid. The policy issued in New York to Kemp's parents
covered at least three vehicles, for each of which separate
premiums for uninsured motorist protection (as well as for
"no-fault" protection) had been assessed and paid.
At the time of the accident giving rise to this appeal,
Montana's uninsured motorist statute required coverage in
limits for bodily injury death of $25,000 for one person, on
all policies issued in Montana, unless such coverage was
rejected in writing by the insured. Section 40-4403, R.C.M.
1947, now section 33-23-201 MCA. In New York and Vermont,
however, the statutory amount was $10,000 for one person,
and this figure was the limit stated in each of the policies
involved here as to each vehicle covered. The limit of
liability was $50,000 per person for no-fault coverage in
the New York policy.
On December 29, 1976, a complaint was filed in the
District Court, Silver Bow County, by the mother of Kim
Karel Kemp, deceased, as administratrix, representative and
successor in interest to the decedent, naming Allstate
Insurance Company and Mitchell A. Prim as defendants, and
stating claims in the nature of actions for wrongful death
and survivorship. An amended complaint was later filed
adding a claim for recovery under the "no-fault" provision
of the New York policy.
-3-
On May 4, 1977, the District Court entered findings of
fact, conclusions of law and judgment on behalf of the plaintiff
against Mitchell A. Prim, upon evidence presented by the plaintiff
in support of a default judgment. The judgment against Prim
included $300,000, representing loss of future earnings and
earning capacity, or in the words of the court, "extended economic
loss in the sum of $300,000; general damages in the sum of
$200,000; and punitive damages in the sum of $75,000 under section
93-2824, R.C.M. 1947;" additionally, the District Court entered
judgment against Prim under section 93-2810, R.C.M. 1947, for
the sum of $150,000, and for an additional punitive damages award
in the sum of $75,000. The total judgment against Prim amounted
After the judgment against Prim was entered, plaintiff moved
for summary judgment against Allstate on the issue of the amount
of coverage Allstate was obligated to provide under the two policies.
Plaintiffs motion requested the court to order that Montana law
controlled; that the uninsured motorist coverages for all the
vehicles in both policies could therefore be "stacked"; that the
"no fault" coverage in the New York policy was applicable and
could also be stacked for each of the three vehicles conceded
to be included under the New York policy; and that therefore
plaintiff was entitled to judgment in the sum of $200,000. The
$200,000 figure breaks down as follows:
Vermont policy uninsured
motorist coverage: 2 cars at $10,000 = $20,000
New York policy uninsured
motorist coverage: 3 cars at $10,000 = $30,000
New York policy "no-fault"
coverage : 3 cars at $50,000 = $150,000
TOTAL = $200,000
On April 27, 1978, an order granting plaintiffs motion
for summary judgment was entered by the District Court. It
granted all the relief requested in plaintiff's motion for summary
judgment and awarded plaintiff the sum of $200,000, plus
costs of the action. From that order of summary judgment,
Allstate has brought this appeal.
Implicit in the summary judgment is that the applicable
amount of uninsured motorist coverage is the $10,000 figure
provided in Vermont and New York rather than the $25,000
figure in the Montana statute. Plaintiff has not cross-
appealed or otherwise raised any objection to the order.
Plaintiff does contend in her brief on appeal, that "should
the court decide that by operation of law, the uninsured
limits are expanded to $25,000.00 per automobile, then the
9
sum of $125,000.00 would be due. . ." In other words, plaintiffs
ideal total recovery would be $275,000; five stacked uninsured
motorist coverages of $25,000 and three stacked coverages of
the $50,000 limit under the New York policy "no-fault"
provision.
The threshhold issue we must address is whether the
District Court erred in applying Montana law to the policies
rather than applying New York law and Vermont law respectively.
We conclude that it did not as to the uninsured motorist
coverage.
Allstate maintains that this case is controlled by the
rule of - - contractus.
lex loci Accordingly, Allstate would
have us apply Vermont law to the Vermont policy and New York
law to the New York policy. Plaintiff, on the other hand,
contends that -- contractus is an archaic doctrine
lex loci
which has lost its usefulness and should no longer be adhered
to. Plaintiff urges us to adopt the revisionist position of
the Restatement (Second) of Conflict of Laws 56, whereby
choice of law questions are resolved by analyzing the "contXacts"
and applying the law of the state with the most significant
relationship to the parties, the transaction or occurrence
with regard to the issues in dispute.
Neither party has correctly interpreted the affect in
this case of section 13-712, R.C.M. 1947, now section 28-3-
102 MCA, which provides:
"A contract is to be interpreted according
to the law and usage of the place where it is
to be performed; or, if it does not indicate
a place of performance, according to the law
and usage of the place where it is made."
That statute is not a declaration of the rule of -
lex
loci contractus, as Allstate maintains. Rather, it is a
declaration that generally a contract is to be interpreted
under the rule of -- solutionis, the law of the place
lex loci
of performance. Under the statute, it is only when the
contract does not indicate a place of performance that the
interpretation would fall under the rule of - - contractus.
lex loci
In this situation, we look to the contract to determine if
there is a place of performance indicated; if there is, the
law of the place of performance controls under our statute,
and there is no need to determine the law of the place where
the contract was made, nor to adopt the "grouping of contacts",
or "the center of gravity" approach to determine the applicable
law.
To determine the place of performance, we turn to the
respective insurance contracts. Under the uninsured motorist
coverage, the following language appears:
"Allstate will pay all sums which the insured
or his legal representative shall be legall
entitled to recover as damages fromthe ow
n
:,
or operator of an uninsured automobile because
of bodily injury . .. including death ...
sustained by the insured, caused by accident
arising out of the ownership, maintenance
or use, of such uninsured automobile. . ."
(Emphasis added.)
The territory to which the uninsured motorist coverage
applies is described thusly:
"This coverage applies only to accidents which
occur on and after the effective date hereof,
during the policy period, and outside the
State of New York but within the United
States of America. its territories or
possessions, - Canada." (Emphasis added.)
or
The payment of the loss by Allstate under the uninsured
motorist coverage in this case comes under the following
provision:
of Loss % Allstate. Any amount due hereunder
"Payment - -
is payable ...(d) to a person authorized by law
to receive such payment or - - person legally entitled
to a
to recover the damages which the payment represents;
-
. . ."
(~mphasis added.)
In this case, the person legally entitled - recover
to
the damages against Prim is the plaintiff mother of the
decedent, as administratrix, representative and successor in
interest. Those damages have been fixed by the terms of a
judgment entered - District Court , Silver - County,
the Bow
Montana, which judgment has become final. When Allstate
makes payment under the uninsured motorist coverage, subrogation
in the ordinary sense is, of course, inapplicable; however,
Allstate has taken care to provide in the terms of its
uninsured motorist coverage, that the plaintiff here, having
received such payments, will hold in trust for the benefit
of Allstate, all rights of recovery she may have against
Prim, who resides in Montana, and those responsible for him
or his insurers, to the extent of the uninsured motorist
payments made by Allstate.
Allstate's policies, under their terms, contemplate
that an accident to which the uninsured motorist coverage
will extend could occur in any state, including Montana.
Allstate is obligated to pay all sums which the legal
representative is legally entitled to recover as damages
from Prim in this case. The legal representative has a
judgment in Montana based on Montana law, determining the
sums to which such representative is legally entitled to
recover as damages. Montana, the place where the judgment
was obtained, is thus the place of performance of Allstate's
obligations under the uninsured motorist coverage. Norfolk
and Western Railway Co. v. Hartford Acc. and Indem. Co.
(N.D. Ind. 1976), 420 F.Supp. 92.
-7-
It is correctly stated in Norfolk, with respect to
ordinary liability coverage, that:
"It is important to note that, to an extent, the
policy incorporates the substantive law of every
state in which the insured's activities may take
place. Within the category of compensatory
damages, which the contract concededly covers,
it could not be argued that only such forms of
recovery as may be had in Missouri (the state
in which the contract was made) are recoverable
under the policy. The policy anticipates that
the insurer will respond to whatever damages
are made available by the applicable law of the
state in which the insured's tort liability arises.
In this context, it is important to observe that
the insurance contract here has nationwide effect
and that it is a standard contract issued by
Hartford through diverse insurance agents across
the country. . ." 420 F.Supp. at 94.
We therefore determine that under section 28-3-102 MCA,
quoted previously, and under the terms of Allstate's policies,
Montana law is to be applied in determining the rights of
plaintiff with respect to the uninsured motorist coverage
provided in the Allstate policies, and not the law of either
Vermont or New York. This ruling is in harmony with the
longstanding rule that the law of place of performance of an
insurance contract controls as to its legal construction and
effect, but the law of the place where the contract was made
governs on questions of execution and validity, unless the
terms of the contract provide otherwise, or circumstances
indicate a different intention. Blair v. New York Life Ins.
Co. (C.A. Cal. 1940), 104 P.2d 1075, 1078. It is also in
harmony with the Restatement (Second) of Conflict of Laws,
-
5206, which states that: ". . . issues relating to details
of performance of a contract are determined by the local law
of the place of performance."
We recognize that some states have held otherwise. For
example, Davis v. State Farm Mutual Ins. Co. (Ore. 1973) ,
.
507 P.2d 9; Aetna Casualty and Surety Company v. Enright ( ~ 1 19721,
4
258 So.2d 472; Breen v. Aetna Casualty and Surety Company (Ct. 19661,
220 Atl.2d 254; Eagle Star Ins. Co. v. Parker (F1.App. 1978),
365 So.2d 780; and Government Emp. Ins. Co. v. Sheerin (N.Y.
1978), 410 N.Y.S.2d 641. Our conclusion here is based upon
the plain meaning of section 28-3-102 MCA, which commands
the application of the law of the place of performance.
In applying Montana law, we determine that the uninsured
motorist coverages are to be "stacked"; that is, in policies
of insurance which cover two or more vehicles, if a separate
premium has been charged and collected on each vehicle for
uninsured vehicle coverage, the insured is entitled to
recover under uninsured motorist coverage sums found legally
recoverable unto the aggregate sum of the coverages on all
the motor vehicles so insured. Sullivan v. Doe (1972), 159
Mont. 50, 495 P.2d 193; Mountain West Farm Bureau v. Neal
t
(1976), 169 Mont. 317, 547 P.2d 79; ChaBse v. U.S. Fid. &
Guar. Co., et al. (1979), Mont . , 591 P.2d 1102,
36 St.Rep. 398.
Since there are five such vehicles involved here in the
two policies (plaintiff contended at trial for one more
vehicle, but that is not before us here) and since the
policies provided for $10,000 uninsured motorist on each
vehicle, and since plaintiff's judgment exceeds the aggregate
sum of such coverage, plaintiff is entitled to $50,000 under
the uninsured motorist policy provisions.
Plaintiff has also contended in briefs, that since Montana's
uninsured motorist coverage statute, section 33-23-201 MCA,
requires limits for bodily injury or death in at least the
sum of $25,000, that we should also decide that in conformance
with Montana law the New York and Vermont coverages should be
construed to provide limits of $25,000 uninsured motorist coverage
on each vehicle covered, and thereafter "stacked", to make a
total recovery to the plaintiff on this coverage of $125,000.
We do not find that the Montana law requires such a result.
Montana's uninsured motorist statute is not mandatory, in the
-9-
sense that the insured has the right to reject in writing
such coverage in policies issued in Montana. Section 33-23-
201(2) MCA. Moreover, neither the New York policy nor the
Vermont policy was certified under either sections 61-6-133
MCA or 61-6-134 MCA as proof of financial responsibility
under Montana law, nor does it appear that the insured had
made himself subject to such a financial requirement. In
that situation, we have no basis to raise the uninsured
motorist coverage limits to $25,000, instead of the New York
and Vermont limits of $10,000 for such coverage. See American
Hardware Mut. Ins. Co. v. Bradley (N.J. Super. Ct. App. ~ i v .
1977), 379 A.2d 53.
A final issue involved in this appeal goes to Allstate's
liability under the "no-fault" provisions of the New York
policy. That coverage is provided for in parts two and three
issued to the Kemp's. Part two is entitled "Coverage VA-
Mandatory Personal Injury Protection". TJnder that heading,
the following pertinent language appears:
"Allstate will pay first party benefits to
reimburse for basic economic loss sustained by
an eligible injured person on account of personal
injuries caused by an accident arising out of
the use or operation of a motor vehicle. This
coverage applies only to motor vehicle accidents
which occur during the policy period and within
the State of New York."
That section also defines the term "Basic Economic Loss":
"Basic economic loss shall consist of medical
expense, work loss and other expense. Basic
economic loss shall not include any loss sustained
- account of death. Basic economic loss of
on
each eligible injured person on account of any
single accident shall not exceed the amount shown
in the declarations." (Emphasis added.)
Part three of the policy is captioned "Coverage VB-Additional
Personal Injury Protection." Under that heading, it is provided
that "[all1 of the terms and provisions applicable to Coverage
VA shall also apply to Coverage VB except as modified herein."
VB coverage includes the following:
"Allstate will pay additional first-party benefits
to reimburse for extended economic loss on account
of personal injuries caused by an accident arising
out of the use or operation of a motor vehicle and
sustained by:
"(a) a named insured or any relative;
"(b) any other person occupying a motor vehicle owned
by the named insured; and
" (c) any other person occupying a motor vehicle (other
than a public or livery conveyance) operated by
the named insured or any relative.
"Such coverage shall not apply to an accident
arising out of the use or operation of a motor
vehicle owned by the named insured or any relative
with regard to which additional personal injury
protection has not been purchased during the policy
period; provided, however, that this coverage shall
apply only if Coverage VB is shown in the declara-
tions and a specific premium is charged therefor."
(Emphasis added.)
The VB section includes a definition of the term "[elxtended
economic loss":
"(a) basic economic loss sustained on account of -
an a c c i d e n t o c c u r r i n g i
- nh e r than
z
or
the State - - - - - in any po
of New York r* -
ofanada;
"(b) the difference between
" (i) basic economic loss; and
"(ii) basic economic loss recomputed in
accordance with the time and dollar limits
set out in the declarations; and
"(c) all reasonable and necessary funeral ex-
penses up to the limit set out in the declar-
ations." (Emphasis added.)
Kim Kemp's parents had paid a separate premium for both
VA and VB coverage for at least three cars under the New York
policy involved here. The declaration sheet attached to the
policy indicates that the limits of liability under the VB
coverage are $50,000 each person, work loss maximum $1,000 per
month, other expenses maximum $25 per day, and funeral expenses
maximum $2,000.
Allstate contends that the VB coverage is not applicable
here because "basic economic loss" as defined in the policy
does not include any loss sustained on account of death, and
"Extended economic loss" under the VB coverage incorporates
the definition of basic economic loss. Plaintiff argues that
the definition of basic economic loss is modified by the VB
coverage to include any loss sustained on account of an accident
occurring outside New York, and that "basic economic loss"
is defined by Montana law as including losses covered under
Montana's survivorship statute, section 93-2824, R.C.M. 1947,
now section 27-1-501 MCA.
In the District Court, plaintiff's argument prevailed.
The order of summary judgment appealed from interpreted the
term "basic economic loss" to mean "loss of future earnings or earning
capacity". Since the court had previously ruled in the default
judgment against Mitchell A. Prim that plaintiff was entitled
to $300,000 as damages for those elements in the survivorship
claim, the summary judgment ordered that the entire VB coverage
was applicable, stacked it for the vehicles, and awarded $150,000
in VB coverage. We do not find plaintiff's contentions so
convincing.
The nub of plaintiff's argument is that "basic economic
loss" equates with damages under our survivorship statute. We
do not find this to be so. The term "basic economic loss"
derives from language peculiar to the New York "no-fault" law.
The Insurance Law of the State of New York (S671, subd. 1). It
is not a term of art for which Montana has a controlling definition,
statutory or otherwise. A fair reading of the terms of the
policy and the New York statute indicates that the District
Court erred in its award. The "Coverage VB-Additional Personal
Injury Protection" clearly incorporates the definition of "basic
economic loss" from Coverage VA, which does not include loss
sustained on account of death. Plaintiff cannot recover any
damages on the survivorship claim under the VB coverage.
The VB coverage does, however, extend to certain other
elements of damages for which Allstate is contractually
obligated. Since it incorporates the definition of "basic
economic loss" from coverage VA, it necessarily includes the
"medical expense, work loss and other expense" entailed in
that definition, to the extent any such items of damages
accrued prior to the insured's death. Further, paragraph (c)
under "Extended Economic Loss" in the VB coverage contemplates
reasonable and necessary funeral expenses. Therefore, Allstate
is liable to plaintiff under the policy provisions for whatever
sums have been incurred in these areas up to the applicable
policy limits set forth in the declarations. It is clear from
the record that these sums will not exceed nor even approach
$50,000, and we therefore need not address the issue of stacking
the "no-fault" coverages.
The District Court order of summary judgment awarding
plaintiff $200,000 is reversed. The cause is remanded with
instructions to enter an order of summary judgment for plaintiff
against Allstate as follows:
Uninsured Motorist Coverage - Vermont Policy - $20,000
(stacked for 2 vehicles; 2 x $10,000)
Uninsured Motorist Coverage - New York Policy - $30,000
(stacked for 3 vehicles; 3 x $10,000)
"No fault" coverage under section VB - a.) medical expenses
New York Policy (to the extent of incurred prior to
declarations) death, if any;
b.) other expenses,
if any;
c.) funeral expenses.
In closing we note that there is a possible peripheral
issue involved here which has not been addressed in this opinion.
The question is whether under New York law an insured whose
damages exceed the applicable limits is allowed recovery under
both uninsured motorist coverage and no fault coverage. New
York case law is clear that such recovery is proper. Adams
v. Government Emp. Ins. Co. (1976), 52 App. Div. 2d 118, 383
N.Y.S.2d 319; Rabideau v. Aetna Cas. & Sur. Co. (1976), 54
App. Div. 2d 1055, 388 N.Y.S.2d 719. There is thus no
prohibited "double-recovery" here in allowing plaintiff the
limits of uninsured motorist coverage together with whatever
sums are due for the enumerated items provided for under the
New York policy's VB "no-fault" provisions.
Affirmed in part and reversed and remanded in part. No
costs to either party.
We Concur:
-,Chief Justice
Mr. Chief Justice Frank I. Haswell concurs in part and
dissents in part and will file his dissent later.