Harrod v. Meridian Mut. Ins. Co.
| Decision Date | 18 December 1964 |
| Citation | 389 S.W.2d 74 |
| Parties | Ruby HARROD, Administratrix of the Estate of Walter Coy Harrod, Appellant, v. MERIDIAN MUTUAL INSURANCE COMPANY, Appellee. |
| Court | United States State Supreme Court — District of Kentucky |
Ephraim K. Lawrence, Jr., Chris Duvall, Louisville, for appellant.
J. Walter Clements, Louisville, for appellee.
The question to be resolved in this appeal is whether the insurer, under the facts presented, was guilty of bad faith in not settling a claim against its insured and thereby became liable for the amount of a judgment in excess of the limits of a policy issued by it.
On August 30, 1960, in Shelby County a collision occurred between the automobiles of Charles M. Drury and Walter Coy Harrod. Both persons were killed in this accident. Drury at that time had an automobile liability insurance policy with appellee, Meridian Mutual Insurance Company, herein referred to as 'Meridian,' with coverage of $10,000 for one person.
On August 31, 1960, by telephone, followed up by letter of September 6, 1960, Meridian turned the case over to Crawford & Company, who are independent adjusters in Louisville, for investigation and a report. On September 14, 1960, appellant, Ruby Harrod, qualified as administratrix of the estate of her deceased husband. Her counsel then was and now is Ephraim K. Lawrence, Jr., of Louisville.
On October 26, 1960, Lawrence sent out two identical registered letters, one to Meridian's office at Louisville, and the other to Crawford & Company, stating that:
The letter was received at the home office of Meridian at Indianapolis, Indiana, on October 28, 1960, and Meridian's district claims manager, J. T. Lettelleir, called Crawford & Company on the telephone and authorized the payment, if there could be no further saving. For some unexplained reason, however, Crawford & Company did not contact Lawrence within the named ten-day period. On November 12, 1960, Lawrence filed suit in Shelby County against the Charles M. Drury estate for $288,070.
On November 22, 1960, eighty-two days after the accident, Crawford & Company, upon the instruction of Lettelleir, offered the limit of $10,000 under the policy, both verbally and in writing. This was tendered as an open, continuing offer, and it was agreed between Lawrence and Berry Langford of Crawford & Company that no responsive pleading would have to be filed in the pending suit in Shelby County until a reasonable time after Lawrence had either accepted or rejected the offer.
On November 26, 1960, Lawrence wrote to Langford rejecting the offer of settlement for the amount of the policy coverage. On December 2, 1960, when counsel for Meridian was employed, he renewed and confirmed, verbally and in writing, to Lawrence the open, continuing $10,000 offer for the death claim. On January 3, 1961, the suit in Shelby County was dismissed because it had been brought prematurely against the Drury estate. On February 9, 1961, a second and timely suit was filed against this estate in the same county for $228,070.
On March 2, 1961, Meridian filed answer, offering to confess judgment in the case for the sum of $10,000, tendering into court its check, pursuant to such offer. This check was later withdrawn and the $10,000 was applied in satisfaction pro tanto the judgment recovered by appellant against the Drury estate.
On October 19, 1961, the trial of the second suit in Shelby County resulted in a judgment for appellant against the Drury estate for $71,070.
On March 13, 1962, Susan B. Drury, as executrix of the Drury estate, assigned and transferred to Ruby Harrod, administratrix of the Harrod estate 'any and all claims' she had against Meridian 'arising out of any bad faith or negligence, or both,' exercised by Meridian, or its agents, in their negotiations with Ruby Harrod, or her attorneys, 'on the claim for wrongful death of Walter Coy Harrod.'
On March 14, 1962, appellant in the capacity of assignee filed suit against Meridian to recover $61,070, apparently on the theory that Meridian was guilty of a lack of good faith in not settling the death claim for $9,999,...
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