Castoreno v. Western Indem. Co., Inc., 46953

• Decision Date: 03 November 1973
• Docket Number: No. 46953,46953
• Parties: Gregory Scott CASTORENO, a minor, by his mother, Ethel Castoreno, et al., Appellants. v. The WESTERN INDEMNITY COMPANY, INC., and John C. Rubow, Administrator of the Estate of Michial Wayne Lohse, Deceased, Appellees.
• Court: Kansas Supreme Court

Page 789

515 P.2d 789

213 Kan. 103

Gregory Scott CASTORENO, a minor, by his mother, Ethel Castoreno, et al., Appellants. v. The WESTERN INDEMNITY COMPANY, INC., and John C. Rubow Administrator of the Estate of Michial Wayne Lohse, Deceased, Appellees.

No. 46953.

Supreme Court of Kansas.

Nov. 3, 1973.

Syllabus by the Court

1. A personal representative of an estate generally must be sued in his individual capacity for torts committed by him while acting in his representative capacity.

2. A liability insurer owes a duty to the insured to act in good faith and without negligence in defending and settling claims against the insured.

3. A liability insurer may in good faith settle part of multiple claims arising from the negligence of its insured even though such settlements deplete or exhaust the policy limits of liability so that the remaining claimants have little or no recourse against the insurer.

4. In an action against a liability insurer and an administrator of an estate based upon alleged improper handling of multiple claims arising out of an automobile collision, the record on appeal is examined and it is held: The trial court did not err in dismissing the action as to the administrator or in entering summary judgment for the insurer.

Robert W. Kaplan of Kaplan, McMillan & Anderson, Wichita, argued the cause, and D. Keith Anderson, Wichita, was with him on the brief for appellants.

Richard C. Hite of Kahrs, Nelson, Fanning, Hite & Kellogg, Wichita, argued the cause, and Larry A. Withers, Wichita, was with him on the brief for appellees.

HARMAN, Commissioner:

This is an action by two sets of plaintiffs for recovery of money from a liability insurer and the administrator of an estate based upon alleged improper handling of multiple claims arising out of an automobile collision. The trial court dismissed the action as to the administrator and later entered summary judgment in favor of the insurance company. Plaintiffs bring the matter here.

The two claims in this case arose out of the same collision involved in In re Estate of Lohse (Martinez v. Rubow), 207 Kan. 36, 483 P.2d 1048.

On June 3, 1967, in Labette county, Kansas, an automobile driven by Michial Wayne Lohse collided headon with one driven by Horace Martinez. Indications were that the Lohse vehicle was at least partly on the wrong side of the highway. There was some indication the Martinez car may also have been partly on the wrong side of the road. Both drivers were killed. Also killed were Stanley Clark, a passenger in Lohse's vehicle, and Ramon Castoreno and James Hernandez, passengers in the Martinz vehicle. Jesse Martinez, a passenger in the automobile driven by Horace Martinez, was injured.

The Lohse vehicle was insured by Western Indemnity Co., Inc. The policy provided liability coverage for bodily injury and death with limits of $10,000 per person and $20,000 per accident. On September 27, 1967, in the probate court of Neosho county, Kansas, John C. Rubow, a Chanute attorney, was appointed administrator of the Lohse estate. Other than the insuance policy the assets of the estate amounted to about $3,600.

After his appointment Mr. Rubow made an investigation of the collision and was aware of the possibility of the assertion of multiple claims against the limited assets of the estate. The insurer, Western Indemnity, was also aware shortly after the collision of that possibility.

On October 19, 1967, Jesse Martinez filed a claim against the Lohse estate for $22,861.36 for injuries he sustained in the collision. On November 16, 1967, the mother of Horace Martinez filed a claim of $35,876.85 against the estate for the wrongful death of her son. These claimants were represented by Charles Forsythe, an Erie attorney. The insurer employed the firm of Henshall and Pennington of Chanute to act as attorney for the administrator in defense of these claims. The claims were transferred to the district court of Neousho county for trial.

Mr. Charles Henshall and Mr. Rubow discussed the potential liability of the Lohse estate and both were aware that, regardless of how the claims were handled, the insurance coverage might not be adequate to protect the estate. They concurred in the belief that the best alternative, in order to protect and preserve the assets of the estate, would be to take no action to notify other potential claimants.

The administrator made demand upon the insurer to settle the personal injury claim of Jesse Martinez, in response to which settlement was made, the insurer paying $9,500 to Jess Martinez on February 15, 1968. The administrator rejected a settlement offer of $9,500 made by the plaintiff in the action for the wrongful death of Horace Martinez because of the possibility of a finding that Horace might have been contributorially negligent.

On April 15, 1968, a son of Ramon Castoreno filed a claim for the wrongful death of his father. This plaintiff was represented by his present counsel. The insurer again hired the same law firm to defend on behalf of the estate. On April 23, 1968, this firm moved to consolidate for trial the two pending wrongful death actions. This motion was denied May 7, 1968. Upon the same day the administrator and the insurer orally moved that further proceedings in the Martinez death claim be stayed until after June 29, 1968, the date on which the nonclaim statute would bar any additional claims against the Lohse estate. This motion was overruled and the court set the Martinez case for trial on May 20, 1968. It appears that both of the foregoing motions were resisted by counsel prosecuting the Martinez claim. This action proceeded as scheduled and on May 22, 1968, a jury rendered a verdict against the estate for $24,584.85, upon which judgment was entered. On June 4, 1968, the insurer paid $10,000 to apply on that judgment (The case of In re Estate of Lohse (Martinez v. Rubow), supra, simply reflects further efforts to obtain more money in satisfaction of the Martinez judgment).

On May 31, 1968, the plaintiff in the Castoreno claim advised the administrator and the insurer he would accept in settlement of his claim the limits of the Lohse policy, meaning a pro rata share of the entire amount of the policy. On June 6, 1968, the insurer responded that the limits of the policy had been exhausted except for $500, which amount was offered in settlement and rejected.

On June 26, 1968, the parents of James Hernandez filed an action against the estate for the wrongful death of their son. This suit was filed by counsel from Mission, Kansas. Until the times of their filings the administrator did not know that a claim would be made for either the Castoreno or the Hernandez death. No claim was ever made against the estate as a result of the Stanley Clark death.

On August 8, 1968, the insurance company advised the Hernandez plaintiffs that the Lohse coverage had been exhausted except for $500, which amount it offered to divide between them and the Castoreno claimant. This offer was rejected and settlement demand was made for $9,500.

The Castoreno and Hernandez actions were consolidated and tried to a jury in the district court of Neosho county with the result judgments were rendered January 8, 1970, against the estate upon the Castoreno claim for $10,000 and upon the Hernandez claim for $5,869. On January 30, 1970, the insurer paid $500 into that court toward satisfaction of the two judgments.

Thereafter the plaintiffs Castoreno and Hernandez instituted this action in Sedgwick county district court. The administrative judge of that court (division No. 2) dismissed the action as against the administrator. Later, after assignment of the case to the judge of division No. 8, summary judgment was entered for the insurer. Plaintiffs have appealed from those orders.

The appeal as against the administrator may be quickly determined. For present purposes actions against executors and administrators may be classified into two groups, namely, those where suit is brought against them in a representative capacity and those brought against them in an individual capacity. Appellants' actions were brought against Rubow not individually but specifically 'in his fiduciary capacity as the Administrator of the Estate of Michial Wayne Lohse, deceased'. The basis of liability asserted was essentially negligence and bad faith in his handling of the claims. The rule is, a personal representative of an estate generally must be sued in his individual capacity for torts committed by him while acting in his representative capacity (34 C.J.S. Executors and Administrators § 716a; 31 Am.Jur.2d, Executors and Administrators, § 730). Appellants have already obtained judgments against the administrator in his representative capacity in the Neosho county district court for the same amounts sought in this action, which in effect is collateral to that in Neosho county. Hence the trial court properly dismissed this action as to the administrator.

In rendering summary judgment against appellants and in favor of appellee Western the trial court had before it appellants' lengthy petition reciting in considerable detail their version of events, appellee's answer admitting virtually all the evidentiary facts pleaded by appellants, a pretrial order containing an agreement as to certain facts as well as the issues of law to be decided by the court, the files in previous court proceedings involving the collision, several exhibits, including correspondence between some of the parties, and an affidavit of the administrator as to his activities and position in the case. From all this it appears there is no dispute as to any relevant fact in the case and, indeed no complaint that summary judgment was rendered prematurely has been or is now advanced. For all practical purposes the dispute has resolved itself into one of law.

In asserting error in the rendition of summary judgment against them appellants advance several theories...