National Union Fire Insurance v. Truck Insurance Exchange
Docket: No. 1 CA-CIV 1297
Court: Court of Appeals of Arizona; January 7, 1971; Arizona; State Appellate Court
The appeal concerns the validity of an Arizona statute from 1927 that permits rental vehicle insurers to exclude coverage for injuries sustained by passengers driven by lessees. Truck Insurance Exchange initiated a declaratory judgment against National Union Fire Insurance Company to clarify which insurer was responsible for defending Thomas Patrick Murphy in a lawsuit filed by passenger Toni Delores Hawthorne following an accident in a rented vehicle. The trial court ruled in favor of Truck Insurance, affirming the restrictive endorsement in its policy, which was supported by A.R.S. 28-324. This statute mandates that rental vehicle owners obtain public liability insurance, covering renter liabilities unless a written notice stating otherwise is provided. Murphy received such notice, evidenced by his signature.
National Union raised two main arguments on appeal: first, that A.R.S. 28-324 contradicts state public policy; and second, that it has been implicitly repealed by the Arizona Safety Responsibility Act. The court dismissed the first argument, noting that National Union did not provide case law supporting its claim that legislative enactments can be deemed void based on public policy considerations. Arizona courts have consistently maintained that, absent constitutional constraints, the legislature determines public policy. The court emphasized that questions of the law's wisdom and expediency should be directed to the legislature, reaffirming that public policy is within its purview.
Holding a statute invalid based on judicially declared public policy would constitute a significant misuse of judicial power, which the court refuses to undertake. The court examines National Union's argument regarding implied repeal, asserting that the Safety Responsibility Act, enacted in 1951 and addressing automobile insurance, did not implicitly repeal the earlier A.R.S. 28-324 statute from 1927, despite both dealing with similar subject matter. National Union cites Jenkins v. Mayflower Insurance Exchange to argue that the omnibus insured clause of the Safety Responsibility Act is incorporated into every automobile policy, implying a repeal of A.R.S. 28-324 through judicial interpretation. However, the court emphasizes that implied repeals are generally disfavored unless no reasonable construction allows both statutes to coexist.
Upon analysis, both statutes, while related to automobile insurance, target different issues. A.R.S. 28-324 mandates that vehicle owners obtain public liability insurance before registering a vehicle, ensuring that those with minimal financial resources can cover potential damages. Non-compliance can lead to serious legal consequences. In contrast, the Arizona Safety Responsibility Act addresses a wider range of drivers, allowing individuals to demonstrate financial responsibility without insurance as a means to avoid sanctions. It stipulates that if insurance is obtained, specific terms must be included in the policy, but does not make insurance or proof of financial responsibility a requirement for obtaining a driver's license or vehicle registration. Thus, the court concludes that the statutes can function simultaneously without one implicitly repealing the other.
A.R.S. 28-324 prohibits financially irresponsible individuals from using highways, while the Safety Responsibility Act assumes vehicle owners are financially responsible unless an inquiry arises. The court finds no implied repeal of A.R.S. 28-324, despite differing insurance coverage amounts specified in A.R.S. 28-1170 and A.R.S. 28-324, suggesting legislative intent for varied coverage requirements. The court holds that the omnibus clause applies to all motor vehicle liability policies, affirming that Murphy qualifies as an omnibus insured under A.R.S. 28-324, which mandates public liability insurance for vehicle rentals. National Union's argument that the omnibus clause is unrestricted is contrasted with Arizona law, which allows exclusions for passenger injuries in rented vehicles, unlike the cited California case. The court finds the Illinois case, Stearns v. Hertz Corp., more applicable, as it acknowledges similar exclusions under Illinois law. Consequently, A.R.S. 28-324 is upheld as valid and not impliedly repealed, allowing for exclusion clauses in insurance policies for injuries to passengers in rented vehicles. The trial court's judgment is affirmed.
