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Show FRIDAY, APRIL 9, 1971 THE DAILY RECORD In The Supreme Court Of The State Of Utah Dorothy Christensen and Ann Marie Larsen, Plaintiffs and Appellants. v Carla Beth Peterson and Allstate Insurance Company, Defendants and Respondents. 1971 L. M. Cummings. Clerk and plaintiffs appeal. On appeal plaintiffs urge that their action is a rational extension of the ".uing of this court in Barnhart v. Civil Service Employees Insurance 1 Company. With this contention we cannot agree. In the Barnhart case, first, was not a party to the action; secondly, the validity of an the tort-feasarbitration clause was the sole legal issue before this court. This court held that a clause was unenforceable in an uninsured motorist provision, which required the insured to submit his claim to arbitration on demand as a condition precedent to maintaining an action against the insurer. or There is a recent case in point. The reasoning that supported this court's decision in Young v. Barney is equally applicable in the instant action, although there are certain factual distinctions, namely, in the Young case, plaintiff joined the liability insurer as a party defendant, and in the present action plaintiffs joined their own insurer as a party defendant. tort-feaso- r's , C.P. . r. This court observed that there was no party defendant with the reason to believe that the rules were intended to change the prior practice of not permitting disclosure to a jury of insurance coverage in a personal injury trial. The opinion stated that it had always been understood that it was prejudicial error to inject deliberately insurance into such a trial. In regard to Rule 20, U. R. C.P. . this court stated: tort-feaso- be noted that the rule is permissive. it is Second, generally held that it is not proper to join an action such as the primary one here, which is based on negligence, and therefore in tort, with one like the claimed supplemental action, which would be in contract, and thus based upon a claim of an entirely different character. . . . No. 12237 FILED v. April 5, 1971 Wood, Dianna L. Wood, and Michael D. Williams, Defendants and Respondents. Plaintiffs were insureds under an uninsured motorist provision in a policy issued by Allstate Insurance Company. Plaintiffs sustained injuries in an automobile collision with defendant Peterson. They filed a complaint against both Peterson and Allstate; the claim against Peterson sounded in tort; the claim against Allstate arose out of the insurance contract. Allstate filed a motion to dismiss on the grounds that there was an improper joinder of parties and a misjoinder of remedies. The trial court granted the motion, i USE THE DAILY RECORD FOR YOUR LEGAL NOTICES Jerry C. CALLISTER, Chief Justice: In Young v. Barney this court held that Rules 18(b) and 20. U. R. not be so construed as to permit joining an insurance company as a could LAWYERS State Farm Mutual Automobile Insurance Company, Plaintiff and Appellant, No. 12065 FILED April 2, FACE SEVEN First, it will In Lloyds' of London v. Blair, the court observed that plaintiff had joined two causes of action. One sounded in tort, and no contractual right or liability was involved. The other was against a group ol insurance carriers; the liability asserted was solely and exclusively contractual. No liability in the nature of a tort committed by the insurance company was involved. The court stated: . . . The two causes of action were separate and distinct with entirely different bases in law. No single party defendant was liable both as a tort feasor and as contractual obligee for the payment of compensation under an insurance agreement. And the issues as between plaintiffs and the United States on the one hand, and as between the plaintiffs and the insurance & carriers on the other hand, were not identical. The court concluded that there was nothing in the Rules of Civil Procedure or their historical background which would lend support to the view that it was intended or purposed that a suit against insurance carriers for the enforcement of a contractual obligation contained in a policy of insurance could be joined with an action against the United States under the Tort Claims Act. Accordingly, the court held that the motion to dismiss the defendant insurance companies should have been granted without prejudice. L. M. Cummings, Clerk TUCKETT, Justice: The plaintiff commenced these proceedings in the court bel.-.- seekto ab initio an automobile insurance policy issued by the plainrescind ing tiff and insuring Jerry C. Wood and Dianna L. Wood, the defendants. The plaintiff also requests declaratory relief declaring that in the event that the defendant Michael D. Williams commences an action against Jerry C. Wood or his wife to recover damages for injuries that the plaintiff is not obligated to defend the Wood defendants nor to pay any judgment which might b awarded in such action. w On March 1, 1968, the plaintiff issued to Jerry C. Wood and Dianna L. Wood an automobile liability policy. In Wood's application for the policy he misrepresented his age, his past driving record which included a number of traffic violations, and he also misrepresented the fact that his driver's license had been revoked. On May 6, 1968, while the policy was in effect, the defendant Jerry C. Wood drove his automobile into the defendant Michael D. Williams and as a result of that incident, Williams received serious injuries. At the time of the incident in question Williams was an employee of W. W. Clyde fc Company and as a result of his employment Williams was covered by workmen's compensation. After the plaintiff was notified of the impending claim of Williams, it commenced these proceedings on October 29, 1968. It would appear from the record that at the time the plaintiff issued the policy in question it made no further investigation of Wood's background or driving record other than that contained in Wood's application. There was a public record at the Department of Public Safety as to a number of traffic violations and also the fact that his driver's license had been revoked on two occasions by reason of those violations. The plaintiff owed a duty to the insured as well as to the public to make a reasonable investigation of the insurability of Wood within a reasonable time after accepting his application for a liability policy. An insurer cannot neglect its duty to make a reasonable investigation of insurability or postpone that investigation until after it learns of a probable claim and still retain its right to rescind. To permit an insurer to avoid its duty to make a reasonable investigation within a reasonable time would permit it to retain the premiums and avoid all risk under the policy. The trial court was of the opinion that the plaintiff was not entitled to a rescission of the policy issued and granted a summary judgment in favor of the defendants upon that issue. It would seem that the court below based its judgment in part at least upon the provisions of Sec. U.C. A. 1953. The minority view supports the trisl judge but we prefer to base our decision on the proposition of whether or not the plaintiff lost its right to rescind by reason of its failure to make a reasonable investigation of This matter is remanded to the district court for a further hearing upon the issue of whether the plaintiff made a reasonably thorough and prompt investigation of the insurability of Wood after it had issued the policy in question. The plaintiff has the burden of showing the adequacy of its During the course of these proceedings the plaintiff sought to have W. W. Clyde fc Company joined as a party defendant. The trial court refused to permit the joinder. We perceive no error in the ruling of the court below inasmuch as it does not appear that W. W. Clyde li Company is an interested party in this suit wherein the plaintiff seeks to rescind its policy issued to Wood. Respondents are entitled to costs. In Holt v. Bell7 the court noted that it had consistently held in tort actions when liability insurance was involved that the insurer could not be unless it was a policy required by statute. The joined with the tort-feasreason for such a rule is equally applicable where the insurer's obligation is under an uninsured motorist endorsement, namely, the presence of an insurer as a party defendant might have the same effect upon the jury as in WE CONCUR: or a liability policy. E. R. Callister, Jr, , Chief Justice The court stated: When the parties are placed in a position where the interest of an insurer is to defeat the claim of its own insured, F. Henri Henriod, Justice the position of the parties is such that the court cannot countenance the situation. The placing of the parties thusly virtually makes the plaintiffs' insurer the liability insurer of the defendant and interested in defeating plaintiffs' claim. Such being the case, under the holdings of this court, the insurer cannot be joined as a party defendant. A. H. Ellett, Justice J, Allan Crockett, Justice The trial court properly dismissed Allstate as a party defendant in this action, and its ruling is affirmed. Costs are awarded to defendant -- Allstate. 4 Warranty Deeds WE CONCUR: 025 Pro frail to stuz R. L. Tuckett, Justice 027 O36 F. Henri Henriod, Justice 0b2 Prao frail to J. Allan Crockett, Justice Gonstanoe V Jr Adana Vivian C Bertooh etux to Clyde P fydlaoh etux Gwie M Jr 050 Janas M Cunnings etal to Robert Barnett etux 052 Rosalie Hansen 0 W R etux to Janes etux O79 Dels to Heard J 080 HoMaughton Laddie Allan m George lananu Diana Lee Bernstein White etux C MUckelsen etux Hanson Leo A to J Qrant Bislpi etux L R1 shards Andersen letux- etux to J - etux to Ronald V |