Budget Rent A Car of St. Louis v. Guaranty Nat. Ins. Co., 69982

• Decision Date: 10 December 1996
• Docket Number: No. 69982,69982
• Citation: 939 S.W.2d 412
• Parties: BUDGET RENT A CAR OF ST. LOUIS, Plaintiff/Appellant, v. GUARANTY NATIONAL INSURANCE COMPANY, and ADCO General Corporation, Defendants/Respondents.
• Court: Missouri Court of Appeals

Page 412

939 S.W.2d 412

BUDGET RENT A CAR OF ST. LOUIS, Plaintiff/Appellant, v. GUARANTY NATIONAL INSURANCE COMPANY, and ADCO General Corporation, Defendants/Respondents.

No. 69982.

Missouri Court of Appeals,

Eastern District,

Division Five.

Dec. 10, 1996.

Motion for Rehearing and/or Transfer to

Supreme Court Denied Feb. 19, 1997.

Application to Transfer Denied

March 25, 1997.

Edward K. Fehlig, Mary Webster Murphy, Ziercher & Hocker, St. Louis, for plaintiff/appellant.

John G. Enright, Matthew J. Eddy, Kortenhof & Ely, St. Louis, for defendants/respondents.

CHARLES B. BLACKMAR, Senior Judge.

The plaintiff-appellant, Budget Rent A Car of St. Louis, owns and operates a large fleet of rental vehicles. In late 1987 an insurance broker, Terrill Agency, undertook discussions on Budget's behalf with defendant, ADCO General Corporation, an agent for defendant Guaranty National Insurance Company, about liability insurance for drivers who rented automobiles from Budget. A rate was quoted and, on December 1, 1987, ADCO issued a binder in return for Budget's payment of an initial premium deposit of $82,900. The binder insured "rentees" for "financial responsibility limits," which would appear to be the minimum required by state law. The premiums were to be computed on a monthly reporting basis. The binder makes no statement as to whether the insurance provided was primary, also referred to as "first dollar," coverage or excess coverage, requiring the lessee, and those claiming damages from the lessee, to look first to any other insurance covering the lessee's operation of the vehicle before resorting to the coverage provided by Guaranty. A certificate of insurance furnished to St. Louis Airport Authority, however, contained a blank space to be checked if the insurance was excess, and the box was not checked. The binder recited, "The insurance afforded by the policy(ies) described herein is subject to all of the terms, exclusions and conditions of such policy(ies.)"

A policy of insurance was received by Terrill on December 28, 1987. The policy contained an "other insurance" clause, the effect of which was to make the coverage excess rather than primary. We deem it immaterial that the tendered policy contained endorsements, known as "riders," in addition to the basic text. However annoying the format might be to readers, the several papers were tendered at the same time and must be read as a whole. There is no indication that a representative of Terrill or of Budget examined the policy promptly, but in January of 1988 Budget learned that Guaranty was not providing primary coverage to lessees who had other insurance. It submitted a protest through Terrill which was transmitted to ADCO. In a letter dated March 10, 1988, Guaranty, through ADCO, offered Budget two alternatives: (1) primary coverage for Budget's lessees throughout the term of the policy, with an increased rate of $6.70 per year per $1,000.00 of gross receipts as opposed to the $4.60 rate under the policy that was issued; or (2) primary coverage from February 22, 1988 at the $4.60 rate, with the further proviso that "if they [Budget] believe it necessary to settle the claims that have accrued thus far on a primary basis, to settle those claims on their own." Budget "reluctantly" accepted the second proposal.

As Murphy's law would have it, one of Budget's rental cars was involved in a serious accident on December 9, 1987, after the binder had been issued but before the policy had been received. The lessee's personal insurer deemed its coverage excess and declined to assume the defense. Budget then undertook to provide a defense and a substantial jury verdict was rendered which Budget paid up to the limits of the Guaranty policy. The driver's insurer paid the excess.

Budget then sued Guaranty and ADCO in three counts: Count I, seeking payment from Guaranty for its outlays in the defense of the suit; Count II, seeking contract damages against ADCO for its failure to procure primary insurance; and Count III, assigning the failure to procure primary insurance as negligence. The case was tried to the court, which entered judgment for the defendants on the ground of accord and satisfaction. Budget then prosecuted this appeal. We affirm.

Budget argues first that the accord and satisfaction is void and ineffective because it lacks consideration. It argues that an accord and satisfaction requires a showing of consideration, and that there is no consideration in doing or agreeing to do something which one is unconditionally bound to do, citing Ensminger v. Burton, 805 S.W.2d 207, 217 (Mo.App.1991). It argues that, by reason of the binder, Guaranty was obliged to furnish primary coverage for the full term of the policy, and that there is no consideration for an agreement which contemplates its...