American States Ins. Co. v. Hartford Acc. & Indem. Co., 47784
| Decision Date | 24 January 1976 |
| Docket Number | No. 47784,47784 |
| Parties | AMERICAN STATES INSURANCE CO., Appellee, v. HARTFORD ACCIDENT AND INDEMNITY CO., Appellant. PIONEER TOWNSHIP, RUSH COUNTY, Kansas. Pleasantdale Township, Rush County, Kansas, Appellees, v. HARTFORD ACCIDENT AND INDEMNITY CO. (Appellant) and Ben F. Scheuerman d/b/a Otis Realty Insurance Agency, Appellant (Hartford Only), Great American Insurance Company, Intervenor. |
| Court | Kansas Supreme Court |
Syllabus by the Court
1. The doctrine of equitable contribution is a remedy available to one who is compelled to bear more than his fair share of a common burden or liability to recover from others their ratable proportion of the amount paid by him. Between insurers it is generally a prerequisite to enforcing contribution that their policies insure the same interests.
2. Where the question of contribution between joint tortfeasors is involved the courts will look to the substance of the transaction, not its form.
3. An insurer can stand in no better position than its insured, and where contribution is improper among the insureds it must also be improper as between their insurers.
4. Where the controlling facts are based upon written or documentary evidence by way of pleadings, admissions, depositions and stipulations, the trial court has no peculiar opportunity to evaluate the credibility of witnesses. In such a situation this court on appellate review has as good an opportunity to examine and consider the evidence as did the court below, and to determine de novo what the facts establish.
5. Whether a motion to intervene is allowed is normally a matter of judicial discretion.
6. A subrogation agreement is ineffective to confer a right to contribution between joint tortfeasors where it would operate to thwart the law of this state prohibiting contribution among joint tortfeasors.
7. When judgment is rendered in an action on an insurance policy the insured may also recover a reasonable attorney fee if the insurance company refused 'without just cause or excuse' to pay the loss. (K.S.A. 40-256.)
8. In a consolidated action brought against an insurer to recover the costs of settlement and defense of a personal injury action, the record is examined and it is held: (1) The trial court erred in applying the doctrine of equitable contribution; (2) the trial court did not err in denying Great American's motion to intervene; (3) the claim of American States for recovery of amounts spent in settlement and defense of the Rush County action is denied; (4) the claim of American Fidelity for recovery of amounts spent in settlement and defense of the Rush County action is denied; (5) the claim of the Townships for recovery of the $200.00 expended in settlement of the Rush County actions is granted; (6) the trial court did not err in granting the Townships attorney fees in the sum of $2,000.00. (On appeal we have designated $1,000.00 to Pioneer Township and $1,000.00 to Pleasantdale Township.)
Jerry G. Elliott of Foulston, Siefkin, Powers & Eberhardt, Wichita, argued the cause, and Charles E. Cole, Jr., Wichita, was with him on the brief for appellant.
Raymond L. Dahlberg of Turner & Hensley, Chartered, Great Bend, argued the cause, and H. Lee Turner, Great Bend, and Thomas C. Boone, Hays, were with him on the brief for appellees.
This is a consolidated action in which the plaintiffs, American States Insurance Company (American States), and the Townships of Pioneer and Pleasantdale, Rush County, Kansas (the Townships), on their own behalf and on behalf of American Fidelity Insurance Company (American Fidelity), seek to recover from the defendant, Hartford Accident and Indemnity Company (Hartford), the costs of settling and defending a personal injury lawsuit in which defendant denied coverage and refused to defend. Defendant Hartford appeals from the judgment of the trial court requiring it to contribute an equal share of the costs of defense and settlement. From a complicated set of facts, questions are raised as to the application of equitable contribution ordered by the trial court, the validity and effect of a subrogation agreement, and the right to recover attorney fees. Appeal is also brought from the order of the trial court denying the motion for intervention filed by Great American Insurance Company (Great American).
This litigation arose out of personal injuries suffered as a result of a grass fire in the City of Otis, Kansas, on March 26, 1968. The fire was started and supervised by the men of the Otis Fire Department in an effort to burn off the grass and weeds on the athletic field adjacent to Otis High School. The Townships of Pioneer and Pleasantdale maintained a volunteer fire department for their mutual protection and they owned a fire truck which was utilized in fighting the fire on that day. At the request of the school principal several high school students attempted to help the firemen keep the blaze under control. Shortly after the fire was started the wind picked up and the fire blew out of control. The Townships' fire truck had been driven into a dangerous position in the field, directly in the line of the oncoming fire. Two of the students, Charles Menzer, Jr., and Michael Bahr, were hanging on to the rear of the fire truck moments before they were injured by the fire. Bahr was permanently scarred by burns he received and Menzer suffered severe burns which ultimately led to his death.
Suit was subsequently brought in Rush County, Kansas, by Bahr for the injuries sustained, and on behalf of Menzer for wrongful death, against the Townships, various teachers and employees of the school system, two individual firemen, and the driver of the Townships' fire truck. Each of the named defendants in the action sought to have its respective insurer defend the suit and otherwise act on its behalf. Accordingly, American Fidelity represented the teachers and other school employees under the provisions of a liability policy; American States represented the two firemen, Lester Stieben and Rudolph Dumler, under separate homeowner's policies; and Great American represented the Townships' fire truck driver, Harry Schneider, under a homeowner's policy. The Townships requested Hartford to represent and defend them in the Rush County action under the provisions of an automobile liability policy issued by Hartford on the fire truck owned and operated by the Townships. The terms of the policy provided for coverage to the following extent:
The policy contained the following exception:
'It is agreed that such insurance as is afforded by the policy for Bodily Injury Liability and for Automobile Medical Payments with respect to any automobile does not apply to bodily injury, sickness, disease or death sustained by any volunteer fireman or volunteer worker of an insured named in the policy, while engaged in the operation or maintenance of the automobile or arising out of or in the course of his duties or other activities as a volunteer fireman or volunteer worker participating in rescue squad or ambulance corps operations.'
After conducting an investigation into the matter, Hartford concluded the losses claimed were not covered by its policy on the fire truck. Hartford consequently refused to represent and defend the Townships in the Rush County action, basing its refusal on the grounds the injuries received by Bahr and Menzer did not arise out of the 'ownership, maintenance or use' of the fire truck and that the injured students were 'volunteer firemen' so as to fall within the exclusion contained in its policy.
Despite Hartford's refusal to represent the Townships, a settlement was reached in the Rush County action prior to trial. According to the settlement agreement, American States paid the sum of $6,600.00, Pioneer Township paid $100.00, Pleasantdale Township paid $100.00, American Fidelity paid $5,900.00, and Great American paid $6,600.00. In an apparent attempt to effectuate the settlement, the Townships and American Fidelity entered into a separate subrogation of rights agreement. While American Fidelity recognized a duty to defend its own insureds, i. e., the teachers and other school employees, it took the position that any liability on its part was secondary to the liability incurred by the Townships on account of the acts of the Townships' agents and employees. Acting upon such theory, the subrogation agreement included a provision wherein the Townships acknowledged that if they were found to be liable in the matter their liability would be primary and any liability on behalf of American Fidelity's insureds would be secondary. The agreement specifically provided that American Fidelity would pay $5,900.00 on behalf of the Townships for the purpose of settlement, and to the extent of such payment the Townships assigned to American Fidelity any and all rights which the Townships might have against any person or persons, including any insurance carrier of the Townships. The agreement further authorized American Fidelity to take any action in law or equity in its own name or in the name of the Townships to enforce those rights.
Thereafter, plaintiffs American States and the Townships filed actions in the trial court against defendant Hartford. The action instituted by American States asserted that it insured two of the firemen employed by the City of Otis and involved in fighting the fire under a homeowner's policy which it claimed was secondary insurance, and that the firemen were also insured under a Hartford policy that provided their primary coverage. American States...
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