Farmers Alliance Mut. Ins. Co. v. Reed

• Decision Date: 21 November 1975
• Docket Number: 9791,Nos. 9787,s. 9787
• Citation: 530 S.W.2d 470
• Parties: FARMERS ALLIANCE MUTUAL INSURANCE COMPANY, Plaintiff-Respondent, v. Leo J. REED et al., Defendants-Appellants.
• Court: Missouri Court of Appeals

Page 470

530 S.W.2d 470

FARMERS ALLIANCE MUTUAL INSURANCE COMPANY, Plaintiff-Respondent, v. Leo J. REED et al., Defendants-Appellants.

Nos. 9787, 9791.

Missouri Court of Appeals, Springfield District.

Nov. 21, 1975.

James L. Paul, Pineville, Emory Melton, Joe R. Ellis, Cassville, for defendants-appellants.

Raymond E. Whiteaker, Russell G. Clark, Woolsey, Fisher, Clark, Whiteaker & Stenger, Springfield, for plaintiff-respondent.

FLANIGAN, Judge.

This is an action for a declaratory judgment. The petition of plaintiff-respondent Farmers Alliance Mutual Insurance Company (Farmers) was filed on May 16, 1972, against three defendants: Leo J. Reed (the named insured in a Family Automobile Policy issued by Farmers), Georgiann Hendrix and J. D. Hendrix.

The petition alleged, in substance, the following:

1. On August 19, 1971, a collision occurred between a Datsun operated by defendant J. D. Hendrix, in which his wife, defendant Georgiann Hendrix, was a passenger, and a Pontiac operated by defendant Reed.

2. Part I of the policy issued by Farmers to Reed required Farmers to pay on behalf of Reed all sums which Reed shall become legally obligated to pay as damages because of bodily injury or property damage arising out of the use of the Pontiac and to defend any suit alleging such bodily injury or property damage and asking damages which are payable under the terms of the policy, even if the allegations of the suit are groundless, false, or fraudulent.

3. The policy contains this exclusion: 'This policy does not apply under Part I to bodily injury or property damage caused intentionally by or at the direction of the insured.'

4. A controversy exists between Farmers and defendant with respect to rights and liabilities under the policy. The controversy involves the issue of whether or not the injuries and damages being claimed by defendants Georgiann Hendrix and J. D. Hendrix were intentionally caused by Reed within the meaning of the exclusion.

5. On March 9, 1972, Georgiann Hendrix and J. D. Hendrix instituted civil action No. 4704 in the Circuit Court of McDonald County, Missouri, against Leo Reed. In case 4704 Georgiann Hendrix seeks $25,000 for bodily injuries, J. D. Hendrix seeks $5,000 for loss of his wife's services, and J. D. Hendrix seeks $500 for damage to the Datsun.

6. Farmers'investigation showed that '(t)he occurrence in question was not, in fact, accidental but intentional in nature.' As a result of such investigation Farmers refused to 'accept coverage' and 'declined to protect' Reed in case 4704.

7. Case 4704 'was instituted on a theory of negligence ¹ . . . Because of the allegations in said petition it may well be that (Farmers) owes (Reed) a defense to said suit; but if the facts are as claimed by (Farmers) then (Farmers) would owe nothing on any judgment that might possibly be rendered in favor of Georgiann Hendrix and J. D. Hendrix. . . . Because of the policy defenses as claimed in this petition, unless there is a declaration of the various rights and liabilities or absence of same under said policy an irreconcilable conflict of interest arises between (Farmers) and (Reed).'

The prayer requested that the court adjudge whether or not Farmers was obligated to defend Reed in case 4704 and whether or not Farmers was obligated to pay, within the limits of its policy, and judgment which defendants Georgiann Hendrix and J. D. Hendrix might obtain against Reed therein.

By his answer defendant Reed pleaded that the petition in case 4704 was grounded on negligence rather than intentional misconduct, requested a dismissal of Farmers' petition, and sought no affirmative relief.

The separate answer of Georgiann Hendrix and J. D. Hendrix admitted that on August 19, 1971, a collision occurred between the Datsun occupied by them and the Pontiac driven by Reed, admitted they had filed case 4704, denied the other allegations of the petition, sought no affirmative relief, and requested dismissal of the petition.

At the conclusion of the evidence that trial court, sitting without a jury, found the exclusion to be applicable and decreed that Farmers was not obligated to defend Reed or to pay any judgment which Georgiann Hendrix or J. D. Hendrix might obtain against Reed. From that judgment the three defendants appeal. This court affirms the judgment.

Reed's brief and the brief of the Hendrixes advance two points which are, in effect:

1. The trial court erred in entertaining the action for the reason that the remedy of obtaining a declaratory judgment was not available to plaintiff.

2. The trial court erred in exonerating plaintiff for the reason that the evidence adduced was insufficient to support the finding that the exclusion was applicable.

The Missouri Declaratory Judgment Act, §§ 527.010--527.140 V.A.M.S., some of which has been incorporated in Rule 87 V.A.M.R., was discussed in State v. Terte, 351 Mo. 1089, 176 S.W.2d 25 (1943). There our supreme court pointed out that the Federal Act (now Title 28 U.S.C.A. §§ 2201--2202) is sufficiently similar 'to make the decisions of the Federal courts persuasive' (Terte, supra, p. 28) in the interpretation of the Missouri Act. The court also stated that relief by declaratory judgment was not intended to displace all existing remedies and that the courts have a wide discretion in administering it. The discretion so exercised must be a sound judicial discretion, based on good reason, and calculated to serve the purpose for which the legislation was enacted, namely to afford relief from uncertainty and insecurity.

Terte was a mandamus proceeding in which the relator, a fire insurance company, sought an order compelling the trial court 'to take jurisdiction' of a declaratory judgment action which the relator had filed in that court. The trial court had entered an order staying the proceedings in the declaratory judgment action pending the outcome of a separate action which the insured had brought against the relator to recover on the policy. In declining to interfere, by mandamus, with the trial court's order staying the proceedings, the supreme court pointed out that a trial court, in exercising discretion to stay relief in a suit for declaratory judgment because of another action pending, may consider public policy and interest, efficiency, convenience, economy, and the good or bad faith of the party bringing the declaratory judgment action. The court stated that the most important factors are:

1. Whether the plaintiff in the suit for declaratory relief is in a position of uncertainty or insecurity;

2. Whether the suit will terminate the uncertainty and insecurity as effectually as the other action; and

3. Whether public policy and interest will be served.

In Terte the court emphasized that the trial court had not refused to take jurisdiction but had refused to exercise it.

Federal authority exists to the effect that here the trial court, as a matter of discretion, could have declined to exercise jurisdiction. United Pacific Insurance Company v. Brown, 240 F.Supp. 223 (E.D.Or.1965); Gulf Insurance Company v. Dooley, 286 F.Supp. 16 (N.D.Ill.1968); Home Indemnity Insurance Company v. Lively, 353 F.Supp. 1191 (W.D.Okl.1972); State Farm Mutual Automobile Ins. v. Moore, 177 F.Supp. 520 (D.Or.1959).

In each of those cases the same or a similar exclusion was involved and a separate action in tort was pending against the insured. In Brown and in Moore the tort action was based on alternative grounds of negligence and wantonness. In Dooley the tort action sought recovery on alternative grounds of negligence and willfulness. In Lively the tort action was grounded only on negligence.

In Brown the federal court held that an actual controversy of justiciable nature existed which the court could determine. The court said: 'There is no question but that this Court has jurisdiction to entertain plaintiff's declaratory action.' But, as a matter of discretion, it refused to exercise jurisdiction and sustained a motion to dismiss the complaint. Moore is to the same effect.

In Dooley the federal court also dismissed the declaratory judgment action and, in so doing, stated that it was clear that the insurance company had a duty to defend its insured. The court did say that 'a real and substantial controversy' existed.

In Lively the court said that since the petition in the tort action pleaded only negligence, the insurer had a duty to defend the insured, the exclusion being 'presently inapplicable.' However, the court declined to determine, at that time, whether or not the insurer would have a duty to pay the judgment (relying upon the Harbin case mentioned in footnote 2 of this opinion).

A similar result was reached in Employers Fire Ins. Co. v. Beals, 103 R.I. 623, 240 A.2d 397 (1968). There also a declaratory judgment action brought by an insurance company, and based on the same exclusion, was dismissed. After the declaratory judgment action had been brought, a separate action was brought against the insured by the injured person, based on allegations of negligence and willfulness. The dismissal of the action by the trial court was held to be a proper exercise of discretion.

Another factor which might have induced the court to decline to exercise jurisdiction is the principle enunciated in Martin v. Yeoham, 419 S.W.2d 937, 946(3) (Mo.App.1967) that proof of a willful act, in the tort case, 'will not justify or support jury submission of the case on a hypothesis that the injury for which recovery is sought was the result of an act of negligence.'

In Nations v. Ramsey, 387 S.W.2d 276, 279 (Mo.App.1965) it is said: '(t)he declaratory judgment act, while it is to be interpreted liberally, is not a general panacea for all real and imaginary legal ills, nor is it a substitute for all existing remedies. It should be used with caution. And except in exceptional circumstances plainly appearing, it is not to be used and applied where an adequate remedy already...