State Farm Mutual Automobile Insurance Company v. Shirley C. Thompson

Shirley C. Thompson was injured on August 4, 1959, at Scottsdale, Arizona, while riding as a passenger in an automobile driven by Joel Bailleres. On March 13, 1962, she obtained an Arizona state court judgment against him for damages resulting from the accident. The award was $32,658.50, including costs. Mrs. Thompson then brought this suit against State Farm Mutual Automobile Insurance Company to recover, up to the policy limit, under a policy of automobile liability insurance issued by the company, in which policy Joel Bailleres was an “additional insured” at the time of the accident.

The policy of insurance was in the amount of $10,000 for each person and $20,000 for each accident, together with court costs and interest. Mrs. Thompson sued State Farm Mutual for $10,158.50, plus interest at the rate of six per cent per annum on $32,500 from March 13, 1962.

In its answer, the company asserted several defenses, only two of which are material here. One of these defenses was based on a provision of the policy excluding liability for bodily injury to the insured or any “member of the family of the insured residing in the same household as the insured.” Defendant alleged that, at…