Farm & City Ins. Co. v. American Standard Ins. Co. of Wisconsin, 48015

• Decision Date: 23 July 1976
• Docket Number: No. 48015,48015
• Citation: 220 Kan. 325,552 P.2d 1363
• Parties: FARM & CITY INSURANCE COMPANY, Appellee and Cross-Appellant, v. AMERICAN STANDARD INSURANCE COMPANY OF WISCONSIN, Appellant and Cross-Appellee.
• Court: Kansas Supreme Court

Page 1363

552 P.2d 1363

220 Kan. 325

FARM & CITY INSURANCE COMPANY, Appellee and Cross-Appellant, v. AMERICAN STANDARD INSURANCE COMPANY OF WISCONSIN, Appellant and Cross-Appellee.

No. 48015.

Supreme Court of Kansas.

July 23, 1976.

Syllabus by the Court

1. The purpose of the Kansas automobile injury reparations act is to make personal injury protection insurance mandatory by requiring every owner of a motor vehicle to obtain first party coverage for personal injury protection benefits payable by his own insurance company.

2. The various provisions of a statute in pari materia must be construed together with a view of reconciling and bringing them into workable harmony if it is reasonably possible to do so.

3. The fundamental rule of statutory construction, to which all others are subordinate, is that the purpose and intent of the legislature governs when that intent can be ascertained from the statute, even though words, phrases or clauses at some place in the statute must be omitted or inserted.

4. That last qualifying provision in K.S.A.1975 Supp. 40-3109(a)(4), '. . . and the injured person is not himself the owner of a motor vehicle with respect to which a motor vehicle liability insurance policy is required under this act' modifies both preceding clauses seprated by the conjunctive word 'or'; such qualification relates to both an occupant and a pedestrian injured by another person's motor vehicle.

5. In cases where an injured party dies of his injuries following an automobile accident, two separate claims arise; one for the loss suffered by the injured person before his death and another for loss sustained by the survivors after his death. There is no overlapping between these claims and accordingly payment by an insurer for one claim does not entitle it to reimbursement if recovery is obtained from the tort-feasor or his insurer for the other claim.

6. Section 40-3113 of the Kansas automobile injury reparations act, providing for an insurer's or self-insurer's rights of reimbursement and indemnity, does not apply to survivors' benefits payable under the act.

7. In an action brought under the Kansas automobile injury reparations act (K.S.A.1975 Supp. 40-3101 et seq.) the record on appeal is examined and it is held (1) Section 40-3113 of the act does not provide rights of reimbursement for personal injury protection benefits paid to the survivors of the injured person; (2) that the trial court erred in holding exclusion (d) in the insurance policies was in derogation of the coverages required by the act; and (3) the trial court erred in requiring pro-rata sharing of the expenses of personal injury payment benefits paid to survivors.

John E. Rees, of Kassebaum & Rees, Wichita, argued the cause and was on the briefs for appellant and cross-appellee.

Greer Gsell, of Hershberger, Patterson, Jones & Roth, Wichita, argued the cause and was on the brief for appellee and cross-appellant.

FROMME, Justice:

This appeal is from a judgment of a district court construing certain provisions of the 'Kansas automobile injury reparations act'Commonly referred to as the no-fault insurance law. (K.S.A.1975 Supp. 40-3101 et seq.) The judgment was based upon the trial court's interpretation of certain provisions of the act which would indicate what company holds primary coverage and has the obligation to pay survivors' benefits on the death of an occupant in an accident vehicle. In addition the judgment concerns those provisions of the act relating to the rights and liabilities to reimbursement and indemnity of insurance companies for payments made by them to survivors of a deceased occupant of an accident vehicle.

The facts necessary for a determination of the present controversy were stipulated by the parties and the case was submitted to the trial court for determination without a jury. The accident vehicle was owned and driven by Kurt R. Zimmerman. Zimmerman was insured by American Standard Insurance Company of Wisconsin. Danny Ray Tiller, a passenger in the accident vehicle, died on the way to the hospital as a result of his injuries. Tiller was the owner of another vehicle, not involved in the accident, and was insured by Farm & City Insurance Company.

The accident and death occurred in April, 1974, in the state of Kansas. Zimmerman and Tiller were residents of the state of Kansas. It was stipulated for the purposes of the action that Tiller's death was the direct and proximate result of the negligence of Zimmerman. The automobile policy issued to Zimmerman by American Standard and the automobile policy issued to Tiller by Farm & City contained identical coverage provisions for personal injury protection (PIP). The phrase, 'Personal injury protection benefits', means the disability benefits, funeral benefits, medical benefits, rehabilitation benefits, substitution benefits and survivors' benefits required to be provided in motor vehicle liability insurance policies under the Kansas automobile injury reparations act. (K.S.A.1975 Supp. 40-3103(q).) The policies of both companies stated that any terms of the policy in conflict with the Kansas automobile injury reparations act were amended to conform to such law. We will comment further on the provisions of the policies later.

Tiller was survived by his wife, Linda, and two small children, Paula and Patrick. The children were under the age of eighteen years. Farm & City paid $1,000.00 PIP funeral benefits and $2,522.20 PIP survivors' benefits to the wife on May 7, 1974 (thirty days after the death of Tiller). Farm & City then notified American Standard and Linda Tiller that it claimed rights of reimbursement and indemnification for PIP payments against any amounts Linda Tiller received from Zimmerman or American Standard.

Subsequently Farm & City paid additional survivors' benefits to Linda Tiller of $5,134.40 making the total paid $8,656.60. The latter sum was the maximum required under the limits of the Tiller policy.

American Standard refused to honor Farm & City's request, and on June 3 1974, it settled Linda Tiller's wrongful death claim for $14,800.00 in exchange for a covenant not to sue for the elements of damage set forth in K.S.A. 60-1904 (The Kansas wrongful death statute).

Farm & City then filed this action seeking to recover the amount of the Tiller PIP benefit payments from American Standard Basically Farm & City's claim is twofold. First, that American Standard had primary coverage for all the Tiller PIP benefit payments because Tiller was covered by the American Standard policy as a passenger in the accident vehicle. Second, that in any event Farm & City was entitled to reimbursement under the provisions of K.S.A.1975 Supp. 40-3113(b) because of American Standard's refusal to include Farm & City as a joint payee in the $14,800.00 settlement check to Linda Tiller.

As a result of the construction placed on various provisions of the act the trial court held that sub-section 40-3113(a) does not create rights of reimbursement in favor of an insuring company for PIP benefits accruing after the death of an insured, i. e., for survivors' benefits. In other words it held that the reimbursement and indemnity provisions of the act are limited to PIP benefits payable to the injured person and accruing up to the date of the death. The court further held that under the policies and the act both companies provided identical PIP benefit coverage to Danny Ray Tiller while an occpant in the Zimmerman accident vehicle, and that under sub-section 40-3109(b) Farm & City was entitled to recover from American Standard one-half, or $4,328.30, of the amounts it had paid.

Sub-section 40-3109(b) provides for an equitable pro-rata sharing of liability if two or more insurers are liable to pay PIP benefits for the same injury to any one person. The trial court in effect required each company to bear the burden of one-half of the total PIP benefits payable under the act. The American Standard payment adjudged would be in addition to the $14,800.00 settlement it had paid on the Tiller tort claim.

Both insurance companies have appealed. American Standard, which insured Zimmerman and the accident vehicle, appeals from that portion of the judgment holding that American Standard provided PIP benefit coverage to the passenger Tiller. It denies any and all liability for the payments made by Farm & City to Tiller's survivors.

Farm & City cross-appeals from that portion of the judgment holding that subsection 40-3113(a) of the act does not create rights of reimbursement for PIP benefits accruing after the death of an insured, i. e., survivors' benefits. It claims a right to full reimbursement from American Standard for all PIP benefits paid to Tiller's survivors.

Before considering the issues raised it will be helpful to review a few of the observations of this court with respect to this entire act as set forth in Manzanares v. Bell, 214 Kan. 589, 522 P.2d 1291. In Manzanares the act withstood constitutional attack. At pp. 595 and 596, at p. 1298 of that opinion it is stated:

'. . . The operation of a motor vehicle on a highway of this state or property open to public use is prohibited, unless the prescribed liability insurance coverage is in force. . . .

'Section 7(f) requires that every liability insurance policy shall contain personal injury protection benefits. The section's phrase 'include personal injury protection benefits' merges traditional third party liability insurance with first party coverage. . . .

'Direct benefits are provided to the named insured, members of his family residing in his household, guest passengers, and others operating the insured motor vehicle with permission, and to pedestrians struck by the insured vehicle. . . .' (Emphasis supplied.)

So it appears in Manzanares this court recognized that the PIP insurance required by the act was 'first party coverage' with direct benefit payments coming from a party's own insurance company....