Cronin v. State Farm Fire & Cas. Co.

• Decision Date: 09 December 1997
• Docket Number: No. WD,WD
• Citation: 958 S.W.2d 583
• Court: Missouri Court of Appeals
• Parties: Harold CRONIN, Respondent, v. STATE FARM FIRE & CASUALTY CO., Appellant. 53803.

Page 583

958 S.W.2d 583

Harold CRONIN, Respondent, v. STATE FARM FIRE & CASUALTY CO., Appellant.

No. WD 53803.

Missouri Court of Appeals,

Western District.

Dec. 9, 1997.

Motion for Rehearing and/or Transfer to

Supreme Court Denied Jan. 27, 1998.

Kevin P. Schnurbusch, Patricia B. Frank, Evans & Dixon, St. Louis, for appellant.

Mark D. Pfeiffer, Sapp, Orr, Bley & Pfeiffer, Columbia, for respondent.

Before EDWIN H. SMITH, P.J., and BERREY and ELLIS, JJ.

ELLIS, Judge.

State Farm Fire and Casualty Company appeals from a declaratory judgment finding that its homeowner's policy issued to Edwin and Nancy Hippo provided insurance coverage for personal injuries sustained by Harold Cronin when he was physically assaulted by the Hippos' son, Frederick.

On March 3, 1994, Mr. Cronin was socializing with friends when he was struck and injured by Frederick Hippo. Mr. Cronin brought a personal injury action against Frederick Hippo. In Count I of his petition, Mr. Cronin alleged Mr. Hippo negligently and carelessly caused injuries to him. In Count II, Mr. Cronin asserted that Mr. Hippo intentionally caused him harm.

Frederick Hippo's parents, Edwin and Nancy Hippo, had a homeowner's insurance policy issued by State Farm Fire & Casualty Company ("State Farm"). The policy covered Frederick Hippo as well. The Hippos' notified State Farm of Mr. Cronin's claim. However, State Farm denied coverage. Moreover, State Farm refused to provide a defense, even declining to offer to defend under a reservation of rights.

After State Farm denied coverage, Mr. Hippo entered into a confession of judgment on Mr. Cronin's claim that he had negligently and carelessly caused injuries to Mr. Cronin. Pursuant to the confession of judgment, the trial court entered judgment against Mr. Hippo for $150,000 in damages on January 25, 1996. On February 20, 1996, Mr. Cronin brought a declaratory judgment against State Farm seeking a declaration that State Farm was liable for the damages under the terms of its homeowners policy issued to Edwin and Nancy Hippo. The trial court ultimately found in favor of Mr. Cronin and rendered judgment accordingly on December 3, 1996. From that judgment, State Farm appeals.

When reviewing a declaratory judgment, our standard of review is the same as in any other court tried case. McDermott v. Carnahan, 934 S.W.2d 285, 287 (Mo. banc 1996). We will affirm the decision of the trial court "unless there is no substantial evidence to support it, unless it is against the weight of the evidence, unless it erroneously declares the law, or unless it erroneously applies the law." Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). Moreover, we are concerned primarily with reaching a correct result, and thus we do not need to agree with the reasoning of the trial court in order to affirm its decision. Graue v. Missouri Property Ins. Placement Facility, 847 S.W.2d 779, 782 (Mo. banc 1993).

In its first point, State Farm contends the trial court erred in granting Mr. Cronin a declaratory judgment because § 379.200 ¹ provides an exclusive remedy by which a tort claimant who has obtained a judgment against an insured may proceed directly against the insurer. Alternatively, State Farm asserts that even if the remedy provided in the statute is not exclusive, it is nevertheless an adequate remedy at law such that an action in equity will not lie. We disagree. A declaratory judgment action is not an equitable proceeding, and the remedy provided in § 379.200 is neither exclusive nor is it one at law.

Sections 379.195 and 379.200 were originally enacted as sections 1 and 2 of the same act in 1925. ² State ex rel. McCubbin v. McMillian, 349 S.W.2d 453, 465 (Mo.App. E.D.1961). They have been construed together on numerous occasions and it is axiomatic that since they are provisions of the same legislative act, they should be read together and harmonized if possible. Id. The two sections provide:

§ 379.195 1. In respect to every contract of insurance made between an insurance company, person, firm or association, whether a stock, a mutual, a reciprocal or other company, association or organization, and any person, firm or corporation, by which such person, firm or corporation is insured against loss or damage on account of the bodily injury or death or damage to property by accident of any person, for which loss or damage such person, firm or corporation is responsible, whenever a loss occurs on account of a casualty covered by such contract of insurance, the liability of the insurance company, if liability there be, shall become absolute, and the payment of said loss shall not depend upon the satisfaction by the assured of a final judgment against him for loss, or damage, or death, or if the insured becomes insolvent or discharged in bankruptcy during the period that the policy is in operation or any part is due or unpaid, occasioned by said casualty.

2. No such contract of insurance shall be canceled or annulled by any agreement between the insurance company and the assured after the said assured has become responsible for such loss or damage, and any such cancellation or annulment shall be void.

§ 379.200 Upon the recovery of a final judgment against any person, firm or corporation by any person, including administrators or executors, for loss or damage on account of bodily injury or death, or damage to property if the defendant in such action was insured against said loss or damage at the time when the right of action arose, the judgment creditor shall be entitled to have the insurance money, provided for in the contract of insurance between the insurance company, person, firm or association as described in section 379.195, and the defendant, applied to the satisfaction of the judgment, and if the judgment is not satisfied within thirty days after the date when it is rendered, the judgment creditor may proceed in equity against the defendant and the insurance company to reach and apply the insurance money to the satisfaction of the judgment. This section shall not apply to any insurance company in liquidation.

Prior to enactment of §§ 379.195 and 379.200, it had long been the custom of many insurance companies to insert a "no action clause" in their contracts. Schott v. Continental Auto Ins. Underwriters, 326 Mo. 92, 31 S.W.2d 7, 11 (1930). Such clauses provided, in effect, that the insurance company was liable only for reimbursement of the amount of the loss actually incurred by, and paid in money by the insured, after trial of the issues. Id.

It had not infrequently happened that an insolvent insured, after incurring liability, effected a collusive settlement with the insurer and canceled his policy in order to thwart the collection of a judgment against him through garnishment of the insurance company.

The mischief which the Legislature had in mind is obvious; to remedy that mischief it passed an act to regulate the payment under contracts of casualty insurance.

Id. at 12 (emphasis in original). Analysis of §§ 379.195 and 379.200 together reveal that they regulate the payment in three ways: (1) they prescribe the time when payment shall be made, (2) the person to whom the payment is made, and (3) the manner in which it may be enforced. Id. " 'Regulation of the payment' is the single objective of the act...." Id.

"[Section 379.200] establishes a temporary lien in favor of one, who has put the damages, resulting to him from the casualty insured against, in the form of a judgment, on the amount due under the policy as between the insured and the insurer. It also affords him the usual remedies of a judgment creditor.... No discussion is required to demonstrate that the Legislature may establish appropriate forms of relief for existing rights or those rightly created, and that it may provide equitable procedure for the enforcement or protection of such rights."

The remedy provided for in the act is essentially that of a creditor's bill or equitable garnishment. It is one that has long been applied by courts of chancery, and one which may be invoked by a judgment creditor when the property and funds, including choses in action, of the judgment debtor cannot be reached by execution, and when execution cannot be otherwise satisfied. The act therefore does not deny right of trial by jury as enjoyed at common law and as guaranteed by the Constitution of this state.

Id. (quoting Lorando v. Gethro, 228 Mass. 181, 117 N.E. 185, 188 (1917)) (citations omitted).

The cases likewise teach that § 379.200 did not create an exclusive remedy. The general rule as to the exclusiveness of a statutory remedy is set out in Hawkins v. Burlington Northern, Inc., 514 S.W.2d 593 (Mo. banc 1974):

Where a statute prescribing a remedy does not create a new right or liability, but merely provides a new remedy for an independent right or liability already existing, the general rule is that the remedy thus given is not regarded as exclusive but as merely cumulative of other existing remedies, and does not take away a preexisting remedy, or, as more specifically stated, if a statute gives a new remedy in the affirmative, and contains no negative, express or implied, of the old remedy, the new remedy is merely cumulative; and in such a case, the party having the right may resort to either the preexisting or the new remedy. The general rule applies whether the preexisting right or liability is one previously enforceable at common law, or by virtue of some other statute or constitutional provision; and whether it was previously enforceable at law or in equity.

Id. at 598 (quoting 1 C.J.S. Actions, § 6c., p. 976). Consistent with the general rule, § 379.200 did not eliminate any remedy by which an insurance fund could be subjected to the judgment creditor's claim. Linder v. Hawkeye-Security Ins. Co., 472 S.W.2d 412, 415 (Mo. banc 1971). Rather, "its purpose was to afford another remedy by which, with existing remedies, [insurance] funds, under all...