American Motorists Ins. Co. v. Shrock, 25122

• Decision Date: 06 October 1969
• Docket Number: No. 25122,25122
• Citation: 447 S.W.2d 809
• Parties: AMERICAN MOTORISTS INSURANCE COMPANY, a corporation, Plaintiff-Appellant, v. Wanda F. SHROCK, Defendant-Respondent.
• Court: Missouri Court of Appeals

Page 809

447 S.W.2d 809

AMERICAN MOTORISTS INSURANCE COMPANY, a corporation, Plaintiff-Appellant, v. Wanda F. SHROCK, Defendant-Respondent.

No. 25122.

Kansas City Court of Appeals, Missouri.

Oct. 6, 1969.

Motion for Rehearing and/or Transfer to Supreme Court Denied

Dec. 1, 1969.

Application to Transfer Denied Jan. 12, 1969.

Chapman & Chapman, Nolan Chapman, Jr., Chillicothe, for plaintiff-appellant.

James P. Aylward, Jr., Charles A. Darby, Kansas City, for defendant-respondent.

CROSS, Judge.

This is an action for money had and received wherein plaintiff, American Motorists Insurance Company, undertakes to recover of its insured, defendant Wanda F. Shrock, certain 'medical payments' (actually burial expenses of her deceased husband) it had previously made to her under an automobile liability policy. Pursuant to defendant's motion for summary judgment, the trial court entered judgment in defendant's favor disallowing such recovery. Plaintiff has appealed.

In a single point plaintiff charges the trial court with error 'in entering judgment for the defendant and not entering judgment for the plaintiff on defendant's motion for summary judgment', and contends for restitution from defendant on the theory that she has been unjustly enriched by retaining the money it had paid her.

No genuine issue as to any material fact has been raised. The parties are in complete agreement as to what facts are before this court and control its decision. Such facts appear from the pleadings, an uncontroverted affidavit by plaintiff's counsel, and documentary exhibits filed on behalf of plaintiff, and are in substance here stated.

On October 16, 1959, plaintiff insurance company issued and delivered a policy of automobile liability insurance to defendant and her husband, Robert M. Shrock, as insureds. In addition to other coverage the policy provided for 'medical payments' to a maximum of $2,000.00. On December 10, 1959, while in the employ of Wolfe Auto Sales, Inc., as an automobile salesman, and while driving the insured vehicle, defendant's husband was involved in a collision and suffered fatal injuries. On February 15, 1960, upon demand and proof of loss by defendant, plaintiff paid her and took a receipt for the sum of $1,296.55 as and for expenses of her husband's burial, as provided for by the policy's medical coverage.

On March 29, 1960, defendant filed claim for workmen's compensation death benefits against her deceased husband's employer, Wolfe Auto Sales, Inc. The claim was prosecuted to a successful conclusion in that on July 16, 1962, the Supreme Court affirmed a judgment of the Clay County Circuit Court which affirmed a final award of benefits to defendant by the Industrial Commission in the sum of $15,500.00. Final payment to defendant under the award was made May 16, 1966.

On July 30, 1962, following the affirmance of the award by the Supreme Court on July 16, 1962, plaintiff made written demand upon defendant that she return the $1,296.55 it had paid her, together with interest, and renewed such demand on July 23, 1966, after defendant had received her final weekly payment of benefits under the compensation award. These demands were refused by defendant. Thereafter, and on August 3, 1966, this action was filed. In its petition plaintiff alleges that defendant was not rightfully entitled to the medical benefits it had paid her and that she should now refund them, because the following quoted policy exclusion exempted plaintiff from liability:

'COVERAGE C--Medical Payments * * *

'Exclusions

'This policy does not apply under Part II to bodily injury:

(d) sustained by any person who is employed in the automobile business, if the accident arises out of the operation thereof and if benefits therefor are in whole or in part either payable or required to be provided under any workmen's compensation law; * * *' (Italics used for emphasis).

Claiming entitlement to restitution, plaintiff argues to the effect that at the time it paid defendant her husband's burial expenses, it was under legal contractual obligation to do so; that the quoted exclusion had no operative effect prior to the final legal adjudication that workmen's compensation benefits were payable to defendant; but that from and after that adjudication the exclusion was effective, retroactively, so as to relieve plaintiff from any obligation under the medical provision of the policy. Consequently, says plaintiff, defendant holds money received from plaintiff 'which in equity and good conscience should be returned.'

It is apparent from plaintiff's argument, as well as from the facts established in the record, that plaintiff paid defendant the policy benefits under a misconception of its legal duty--that is, under a mistaken belief that workmen's compensation benefits for defendant were not 'payable' or 'required to be provided', and that consequently the exception in question did not operate to relieve it from liability under all the circumstances then existing. That conclusion was necessarily reached either with full knowledge of all the facts pertaining to its liability under the insuring clause, and any relief therefrom afforded by the exemption clause--or at least with unlimited opportunity to so inform itself. Therefore, plaintiff's misconception of its policy obligation may not be considered to have been a mistake of fact, but instead, must be regarded as a mistake of law. 'A mistake of law occurs where a person is truly acquainted with the existence or nonexistence of facts, but is ignorant of, or comes to an erroneous conclusion as to, their legal effect.' 70 C.J.S. Payment § 156 c, p. 366.

The rule of law is well settled that where money has been voluntarily paid with full knowledge of the facts it cannot be recovered on the ground that the payment was made under a misapprehension of the legal rights and obligations of the person paying--which is to say, under a mistake of law. See 53 A.L.R. 949, Annotation--Payment--Mistake as to Legal Rights, and Missouri cases there cited.

As stated in 40 Am.Jur., Payment, Sec. 157, pp. 820, 821: 'It is a universally recognized rule that money voluntarily paid under a claim of right to the payment, and with knowledge of the facts by the person making the payment, cannot be recovered back on the ground that the claim was illegal, or that there was no liability to pay in the first instance. This is true even though the payor makes the payment and expressly reserves hig right to litigate his claim, or under protest, or under the impression that the demand was legal.' Missouri courts have uniformly followed that rule ¹ since 1868 when the Supreme Court first applied it in Claflin v. McDonough, 33 Mo. 412, stating: 'The rule of law is well established, both in England and in this country, that a person who voluntarily pays money with full knowledge of all the facts in the case, and in the absence of fraud and duress, cannot recover it back, though the payment is made without a sufficient consideration, and under protest.' With specific reference to the law of insurance, it is considered by standard authority that payment by the insurer, with knowledge of fats to support a policy defense, amounts to a waiver of its right to rely thereupon or to recover the payment made. 16A Appleman, Insurance Law and Practice...