Groves v. State Farm Mut. Auto. Ins. Co.

Decision Date13 September 1976
Docket NumberNo. 59337,59337
Citation540 S.W.2d 39
PartiesRobert E. GROVES, Plaintiff-Respondent, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant-Appellant.
CourtMissouri Supreme Court

Kenneth L. Dement, Sikeston, for plaintiff-respondent.

David G. Beeson, Buerkle, Buerkle & Lowes, Jackson, for defendant-appellant.

HENLEY, Judge.

This is an action by an insured against his insurer to recover under the comprehensive coverage provision of his policy for damages to his automobile. Verdict and judgment were for plaintiff. 1 Defendant appealed to the Court of Appeals, Springfield district. That court affirmed and, on application of defendant, we ordered the case transferred to this court. We reverse and remand with directions.

The substance of plaintiff's claim is: (1) that in January, 1971, the engine of his 1965 Ford automobile was vandalized by a person or persons unknown putting sugar either in the gasoline tank or in the engine's oil, resulting in destruction of the engine, and his damage in the amount of $700; (2) that in April, 1971, about two months after he reported his loss to defendant and demanded payment therefor, defendant refused to pay, claiming that the loss was not caused by vandalism but was the result of ordinary wear and tear for which it was not liable under provisions of the policy issued to plaintiff; and (3) that defendant's refusal to pay was vexatious, by reason of which he is entitled to recover, in addition to his actual damage, damages of 10% thereof ($70) and a reasonable attorney fee of $500.

Defendant's answer and its position at trial was that the damage to plaintiff's automobile was not caused by vandalism as claimed by its insured, for which the policy did afford coverage, but was caused by ordinary wear and tear or mechanical failure or breakdown, for which the policy did not afford coverage; that for these reasons it was not liable to plaintiff for his loss. Defendant further alleged in support of its defense to the claim of vandalism that it sought and in good faith relied upon the opinion of an expert who informed it that, based upon his experience, examination and tests, there was no evidence of sugar in the engine; and that it so informed plaintiff when it refused to pay his claim.

Plaintiff's evidence included the testimony of two experienced mechanics who stated that their experience is that when sugar reaches the cylinders of an automobile engine through the fuel or lubricating systems it causes a seizure or binding-up of its moving parts; that they examined plaintiff's engine and found thereon a 'brown gummy substance' which they identified as sugar; that they also found the pistons 'frozen' or locked to the walls of the cylinders, a condition caused by sugar.

Defendant's evidence included testimony of (1) a professor of chemistry who was also chairman of the division of mathematics and science at Southeast Missouri State University whose qualifications as an expert were not questioned; and (2) an adjuster or field representative of defendant who investigated and handled plaintiff's claim and who had had experience with claims involving damage to automobile engines allegedly caused by sugar.

The professor testified that he examined and made tests of a gasoline sample, oil sample and piston scrapings brought to him by defendant's adjuster; that in these tests he was looking for evidence of sugar, found none, and none was present; and that he so reported to defendant.

The adjuster testified that he took the samples referred to by the professor from the damaged engine of plaintiff's automobile and delivered them to the professor; that he found no evidence of sugar or damage caused by sugar when he examined plaintiff's engine; that the damage he found was caused by ordinary wear and tear, probably produced by water or antifreeze escaping onto the pistons and into the cylinders.

The main question presented is whether defendant's alleged vexatious refusal to pay plaintiff's claim should have been submitted to the jury. We hold that it should not have.

The law is well settled that the penalty for vexatious refusal of an insurance company to pay the claim of its insured should not be imposed unless the facts and circumstances surrounding the company's refusal to pay show that the refusal was wilful and without reasonable cause or excuse, as the facts would have appeared to a reasonable person before trial. An insurance company may question and contest an issue of fact relating to its liability if it has reasonable cause to believe, and does believe, that there is no liability under its policy and that it has a meritorious defense. The mere fact that the trial judgment is adverse to a defendant's contention is not sufficient reason for imposing the penalty. Young v. New York Life Insurance Co., 360 Mo. 460, 228 S.W.2d 670, 672(3) (1950); Camdenton Consolidated School District No. 6 ex rel. W. H. Powell Lumber Co. v. New York Casualty Co., 340 Mo. 1070, 104 S.W.2d 319, 331(10) (1937); Scott v. Missouri Insurance Co., 246 S.W.2d 349, 355(13--16) (Mo.App.1952).

There was no evidence of bad faith on the part of defendant. There was evidence indicating that there was a question of fact about which there could be an honest difference of opinion as to whether plaintiff's damage was caused by the vandalism claimed by plaintiff. The evidence indicated that defendant had reasonable cause to believe, and did believe, that this damage was not caused as claimed and that it was not liable under its policy. The court erred in submitting the issue of vexatious refusal to pay.

Defendant contends also that the court erred in not directing a verdict for it at the close of all the evidence, because even if it be assumed that the damage to plaintiff's engine was the result of the described act of vandalism, plaintiff failed to make a submissible case in that he failed to prove that the vandal did it wilfully with malicious intent to do damage.

It is common knowledge that sugar is a substance foreign to and not normally to be found in the fuel supply or crankcase of a motor vehicle and when it is found damage thereto accompanies operation of the engine.

Plaintiff testified that his automobile had been parked unattended in a large unenclosed parking lot of his employer, International Shoe Co., for several hours before he left his employment in the automobile enroute home late in the afternoon of January 10, 1971; that he had driven about three blocks when it 'just locked up, made a loud sound, and just stopped.' There is no suggestion that plaintiff was the culprit.

Plaintiff did not fail to make a submissible case in the respects suggested by defendant. A jury reasonably could find, as assumed by defendant in this point, that sugar did find its way into the fuel supply or crankcase of plaintiff's automobile; and a jury reasonably could infer from the evidence that the sugar reached the engine through the hands of a person wilfully and maliciously intending to do damage. Hence, the question was for the jury and the court did not err in overruling defendant's motion for directed verdict. Cruse v. Government Employees Insurance Co., 391 S.W.2d 1 (Mo.App.1965); State v. Kiplinger, 430 S.W.2d 616 (Mo.App.1968); Couch on Insurance, 2d, § 42:603, pp....

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