Drivers’ Licenses; Financial Responsibility Act of 1

Subject:

Requested By: Mr. Joe Register, Director Traffic Records Division of Motor Vehicles

Question: Are the mandatory provisions of G.S. 20-279.13(a) applicable to an unsatisfied judgment obtained by an owner or bailee against a negligent driver of the owner’s or bailee’s motor vehicle for the diminished value of such motor vehicle?

Conclusion: No.

An owner or bailee of a motor vehicle obtained a default judgment against a negligent driver of the owner’s or bailee’s motor vehicle and her master or employer for the diminished value of such motor vehicle resulting from a collision with a third party. A motor vehicle liability insurance policy was in effect. The judgment creditor has demanded the Division of Motor Vehicles to suspend the motor vehicle operator’s licenses of the judgment debtors under the provisions of

G.S.

20-279.13(a).

G.S.

20-279.21(a) provides in pertinent part: "(a) A "motor vehicle liability policy" as said term is used in this Article shall mean an owner’s or an operator’s policy of liability insurance, . . ."

G.S.

20-279.21 (b) provides in pertinent part:

"(b) Such owner’s policy of liability insurance:

(2) Shall 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, or any other persons in lawful possession, 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 . . . as follows: . . . five thousand dollars ($5,000) because of injury to or destruction of property of others in any one accident;" (Emphasis added).

G.S. 20-279.21(e) provides in pertinent part: "(e) Such motor vehicle liability policy need not insure against loss from . . . any liability for damage to property owned by, rented to, in charge of or transported by the insured."

Under G.S. 20-279.21(c) an operator’s policy of liability insurance is subject to the same limits of liability. G.S. 20-279.21(d) requires all motor vehicle liability policies to be subject to the provisions of Article 9A. G.S. 20-279.21(g) provides for excess and additional coverage, but "the term "motor vehicle liability policy" shall apply only to that part of the coverage which is required by this section."

From the foregoing statutory provisions, it is clear that a "motor vehicle liability policy" requires property damage coverage for the benefit of third party beneficiaries and not collision or upset insurance coverage for the benefit of the insured. Although the judgment in question appears to fall within the definition of judgment as defined in G.S. 20-279.1(3) and subject to the provisions of G.S. 20-279.13, when these statutes are construed in pari materia with the other provisions of Article 9A and Article 13, Chapter 20, of the General Statutes, it appears that such was not the intent of the General Assembly. The legislative intent is revealed not only by the provisions of

G.S.

20-279.21 in defining and setting forth the requirements of the motor vehicle liability policy but in other statutory provisions.

G.S.

20-279.1(11) provides in pertinent part:

"(11) "Proof of financial responsibility": Proof of ability to respond in damages for liability, on account of accidents . . . arising out of the ownership, maintenance or use of a motor vehicle, . . . in the amount of five thousand dollars ($5,000) because of injury to or destruction of property of others in any one accident. Nothing contained herein shall prevent an insurer and an insured from entering into a contract, not affecting third parties, providing for a deductible as to property damage at a rate approved by the Commissioner of Insurance." (Emphasis added).

The requirements as to security and suspension under the provisions of G.S. 20-279.5 do not apply to the operator or owner if an owner’s or operator’s motor vehicle liability policy was in effect or wherein no injury or damage was caused to the person or property of anyone other than such operator or owner. G.S. 20-279.5(c)(1); G.S. 20-279.6(1).

Although not involving a judgment for damages to the insured’s property, in Moore v. Young, 263 N.C. 483, 139 S.E. 2d 704 (1965), the Court stated:

"The Motor Vehicle Financial Responsibility Act obliges a motorist either to post security or to carry liability insurance, not accident insurance to indemnify all persons who might be insured’s car." Accord: McKinney v. Morrow, 18 N.C. App. 282, 196 S.E. 2d 585 (1973); See also Strickland v. Hughes, 273 N.C. 481, 160 S.E. 2d 313 (1968).

In Commonwealth of Kentucky, Dept. of Public Safety v. Robinson, 435 S.W. 2d 447 (Ky., 1968), the defendant, Robinson, owned two trucks used for hauling gravel. While being operated by his employees, the brakes on one truck failed causing it to run into the other truck, forcing it off the road and over a bluff killing the operator thereof. A judgment was obtained against Robinson and the other truck driver. The Department of Public Safety was permanently enjoined from canceling or suspending or refusing to renew the motor vehicle operator’s license or motor vehicle registration of Robinson. A Kentucky financial responsibility statute, similar to G.S. 20-279.21(e), KRS 187.490(5) provided:

"(5) The motor vehicle liability policy shall not insure any liability under any workmen’s compensation law nor any liability on account of bodily injury to or death of an employee of the insured while engaged in the employment, other than domestic, of the insured, or while engaged in the operation, maintenance or repair of the motor vehicle nor any liability for damage to property owned by, rented to, in charge of or transported by the insured."

In affirming the lower court decision, the Court of Appeals of Kentucky stated:

"The General Assembly set forth the minimum standards of the "motor vehicle liability policy" required. The parties agreed that appellee had complied in full with the requirements of The Financial Responsibility Law. KRS, Chapter 187. Again, in its wisdom had it seen fit, the General Assembly need not have provided the exclusion in KRS 137.490(5), which in this case resulted in appellee’s being uninsured. The remedy for such lack of coverage addresses itself to the General Assembly. Inasmuch as appellee had complied with the standards required, it was unlawful and unreasonable to revoke or suspend his license or registrations."

Since there was a motor vehicle liability insurance policy in effect meeting statutory requirements, the operator’s license of the driver and her master or employer should not be suspended under the provisions of G.S. 20-279.13(a).

Rufus L. Edmisten Attorney General

William B. Ray Assistant Attorney General