Carona v. State Farm Ins. Co.

• Decision Date: 26 November 1984
• Docket Number: 84-C-0234,82-C-0274 and 84-C-0092,84-C-0279,Nos. 84-C-0287,s. 84-C-0287
• Citation: 458 So.2d 1275
• Parties: Joseph CARONA, Jr. v. STATE FARM INSURANCE COMPANY. Paul ROCHE v. CUMIS INSURANCE SOCIETY, INC. Anthony J. DALMADO, Jr. v. CUMIS INSURANCE SOCIETY, INC. Lois E. Halter, Wife of and Claude CANCIENNE v. Rodrigo M. SAAVERDRA, the Fidelity and Casualty Company of New York and State Farm Insurance Company. Mary H. Decedue, Wife of/and Charles DECEDUE v. GOVERNMENT EMPLOYEES INSURANCE COMPANY.
• Court: Louisiana Supreme Court

Page 1275

458 So.2d 1275

Joseph CARONA, Jr. v. STATE FARM INSURANCE COMPANY.

Paul ROCHE v. CUMIS INSURANCE SOCIETY, INC.

Anthony J. DALMADO, Jr. v. CUMIS INSURANCE SOCIETY, INC.

Lois E. Halter, Wife of and Claude CANCIENNE v. Rodrigo M. SAAVERDRA, the Fidelity and Casualty Company of

New York and State Farm Insurance Company.

Mary H. Decedue, Wife of/and Charles DECEDUE v. GOVERNMENT EMPLOYEES INSURANCE COMPANY.

Nos. 84-C-0287, 84-C-0279, 84-C-0234, 82-C-0274 and 84-C-0092.

Supreme Court of Louisiana.

Nov. 26, 1984.

Concurring Opinion Dec. 3, 1984.

Gregory J. Avery, Orrill & Avery, New Orleans, for plaintiff-applicant in No. 84-C-0287.

Daniel R. Hynes, Porteous, Hainkel, Johnson & Sarpy, New Orleans, for defendants-respondents in Nos. 84-C-0287, 84-C-0234 and 84-C-0274.

C. Gordon Johnson, Jr., Porteous, Hainkel, Johnson & Sarpy, New Orleans, for defendant-respondent in No. 84-C-0287 and No. 84-C-0274.

Dennis Jude Dannel, New Orleans, for plaintiff-applicant in No. 84-C-0279.

Robert E. Kerrigan, Jr., Philip D. Lorio, III, Deutsch, Kerrigan & Stiles, New Orleans, for defendant-respondent in No. 84-C-0279.

Raymond C. Burkart, Jr., New Orleans, for plaintiff-applicant in No. 84-C-0234.

Henry Leon Sarpy, Porteous, Hainkel, Johnson & Sarpy, New Orleans, for defendant-respondent in No. 84-C-0234.

Gary T. Breedlove, Metairie, Steven B. Witman, Gretna, for plaintiffs-applicants in No. 84-C-0274.

James S. Thompson, Porteous, Hainkel, Johnson & Sarpy, New Orleans, for defendant-respondent in No. 84-C-0274.

William W. Hall, Hall, Lentini, Mouledoux & Wimberly, Metairie, for plaintiff-applicant in No. 84-C-0092.

Carmelite M. Bertau, Hammett, Leake & Hammett, New Orleans, for defendant-respondent in No. 84-C-0092.

DENNIS, Justice.

We are called upon to decide whether a personal injury claimant who settles with an uninsured or underinsured tortfeasor renounces his rights against his uninsured motorist (UM) insurer if he fails to expressly reserve them. In each of these consolidated cases a summary judgment was rendered or an exception of res judicata was sustained by the trial court in favor of a UM carrier, and affirmed by an appeals court, because the UM insurer's insured made such a settlement without express reservation of his rights against other codebtors in solido. 444 So.2d 763 and 441 So.2d 72. Having granted certiorari, we now reverse. The rule of Civil Code article 2203(1870), according to which an obligee who remits a debt in favor of one solidary obligor without expressly reserving his right against others is deemed to have forfeited the entire obligation, does not apply to a personal injury claimant's right to recover from his UM insurer. Article 2203, which is an exception to the well settled general rule that no one is presumed to have renounced his rights against others unless it clearly appears that he intended to do so, has been superseded in part by the UM statute which preserves the insured's ability to exercise his rights of recovery after a settlement with one of his codebtors in solido. La.R.S. 22:1406(D)(4).

The tortfeasor and the uninsured motorist carrier are codebtors in solido. C.C. arts. 2091-94; C.C. art. 2315; La.R.S. 22:1406(D); Hoefly v. Government Employees Ins. Co., 418 So.2d 575 (La.1982). See also Narcise v. Illinois Central Gulf Railroad Co., 427 So.2d 1192 (La.1983); Johnson v. Fireman's Fund Ins. Co., 425 So.2d 224 (La.1982).

Civil Code article 2203 (1870) provides:

The remission or conventional discharge in favor of one of the codebtors in solido, discharges all the others, unless the creditor has expressly reserved his right against the latter.

In the latter case, he can not claim the debt without making a deduction of the part of him to whom he has made the remission.

The rule of Article 2203 is contrary to the general well settled precept that no one is presumed to have renounced his rights against others unless it clearly appears that he intended to do so. See Roy v. U.S.A.A. Casualty Ins. Co., 453 So.2d 564 (La.1984); Honeycutt v. Town of Boyce, 341 So.2d 327 (La.1976); Williams v. Desoto Bank & Trust Co., 189 La. 245, 179 So. 303 (1938); Landry v. New Orleans Public Service, 177 La. 105, 147 So. 698 (1933); Cusimano v. Ferrara, 170 La. 1044, 129 So. 630 (1930); Micaud v. Johnson, Man.Unrep.Cas., 327 (La.1880). Louisiana and French doctrine have unanimously criticized the rule of article 2203. See M.M. Harrison, Remission in the Civil Law, 2 La.L.Rev. 365, 371-72 (1940); Note, 13 Tul.L.Rev. 642, 644 (1939). French commentators criticizing the rule are collected in 1984 La.Acts, No. 331, Sec. 1, article 1803, comment (e): 13 Baudry-Lacantinerie et Barde, Traite theorique et pratique de droit civil--Des obligations 110-111 (2nd ed. 1905); 5 Colmet de Santerre, Manuel elementaire de droit civil, No. 144 bis-I (4th ed. 1901); 26 Demolombe, Cours de code Napoleon, No. 396 (1877); 17 Laurent, Principes de droit civil francais, No. 340 (1876); 8 Huc, Commentaire theorique et pratique du code civil, No. 138 (1894); 2 Pothier, Oeuvres de Pothier, No. 275 (Bugnet ed 1861).

No doubt in response to this criticism, the express reservation requirement of article 2203 has been abolished by the legislature in its revision of Louisiana obligations law. 1984 La.Acts, No. 331. In place of article 2203 (1870) the Act creates new article 1803 (effective January 1, 1985) which provides:

Remission of debt by the obligee in favor of one obligor, or a transaction or compromise between the obligee and one obligor, benefits the other solidary obligors in the amount of the portion of that obligor.

Surrender to one solidary obligor of the instrument evidencing the obligation gives rise to a presumption that the remission of debt was intended for the benefit of all the solidary obligors.

The comments to the new article confirm that the express reservation requirement has been rejected. 1984 La. Acts, No. 331, Sec. 1, art. 1803, Comment (e).

New article 1803 does not apply to the present cases which arose before its effective date. The reasons for the change in the law are relevant, however, to our determination that article 2203 is incompatible with the aim of the uninsured motorist insurance statute.

As Dean Harrison stated, Article 2203 works an inequity

... when the creditor desires to hold the other codebtors, but fails through ignorance of a technical rule to make the reservation required. The necessity of such a stipulation would not be likely to occur to the average layman; so any complete discharge of one solidary debtor granted without legal advice would probably result in a release of the other codebtors from their just obligation through an artificial presumption of the law. This has been obvious in many of the cases decided under Article 2203 by the courts of Louisiana.

... If this presumption was incorporated in article 2203 only to avoid difficulty in determining intention, the redactors were needlessly cautious. The subjective intention of the creditor need not be found; his objective intention, as manifested by the situation of the parties or by the creditor's words or actions, would supply an adequate and reasonably accurate test. In the absence of any such manifestation, the usual rule would be applied, that no one is ever presumed to have relinquished a right, so that the other codebtors could not sustain their burden of proving the discharge. Since the creditor who intends to discharge all of the solidary debtors almost invariably makes such intention clear, this solution would rarely work hardship; and the inequities which have abounded under the present law would be obviated. M.M. Harrison, Remission in the Civil Law, 2 La.L.Rev. 365, 371-72 (1940) (Footnotes omitted).

The object of the UM statute is to promote full recovery for damages by automobile accident victims. Bond v. Commercial Union Assur. Co., 407 So.2d 401 (La.1981). The strength of this policy is demonstrated by the requirements that any automobile liability insurance issued in Louisiana must include uninsured motorist coverage unless it is rejected by the insured, La.R.S. 22:1406(D)(1)(a), that the principal elements of UM coverage are prescribed by law, La.R.S. 22:1406(D), and by our cases holding that any clause in a UM insurance contract in derogation of the mandatory requirements set forth in the statute is invalid insofar as it conflicts with the statute. Bond, supra, 407 So.2d at 409-10; Block v. Reliance Ins. Co., 433 So.2d 1040 (La.1983); Breaux v. Government Emp. Ins. Co., 369 So.2d 1335 (La.1979); Seaton v. Kelly, 339 So.2d 731 (La.1976); Deane v. McGee, 261 La. 686, 260 So.2d 669 (1972).

The technical rule of article 2203 serves as a barrier to full recovery by innocent accident victims, and thereby conflicts with the basic object of the UM legislation. It is inevitable, perhaps, that a rule criticized by Bandry-Lacontinerie, Borde, Colmet de Santerre, Demalombe, Laurent, and Huc as being inexplicable before the turn of the century should clash hopelessly with social legislation necessitated by the twentieth century automotive age. See 1984 La. Acts, No. 331 Sec. 1, article 1803, Comment (e).

More specifically, article 2203 conflicts with and has been superseded by La.R.S. 1406(D)(4), of the UM statute, which provides:

In the event of payment to any person under the coverage required by this Section and subject to the terms and conditions of such coverage, the insurer making such payment shall, to the extent thereof, be entitled to the proceeds of any settlement or judgment resulting from the exercise of any rights of recovery of such person against any person or organization legally responsible for the bodily injury for which such payment is made.... (emphasis added)

This statutory provision, and Civil Code article 2162, make it clear that when the UM insurer pays part of the damages to which the insured is entitled from a tortfeasor and receives a release from the insured,...