Haswell v. Liberty Mut. Ins. Co.

• Decision Date: 14 November 1977
• Docket Number: No. 59267,59267
• Citation: 557 S.W.2d 628
• Parties: R. J. HASWELL, Respondent, v. LIBERTY MUTUAL INSURANCE COMPANY, and Liberty Mutual Fire Insurance Company, Appellants.
• Court: Missouri Supreme Court

Page 628

557 S.W.2d 628

R. J. HASWELL, Respondent, v.LIBERTY MUTUAL INSURANCE COMPANY, and Liberty Mutual Fire Insurance Company, Appellants.

No. 59267.

Supreme Court of Missouri, En Banc.

Nov. 14, 1977.

Russell G. Clark, Springfield, for appellants.

Lincoln J. Knauer, Jr., Springfield, Thomas G. Strong and Matthew W. Placzek, Jr., on rehearing Springfield, for respondent.

FINCH, Judge.

This is an action for wrongful initiation of a civil action against the plaintiff herein.The jury returned a verdict against both defendants for $25,000 actual damages, plus $75,000 punitive damages against Liberty Mutual Insurance Company and $25,000 punitive damages against Liberty Mutual Fire Insurance Company.On appeal by defendants to the Court of Appeals, Springfield District, the court affirmed.The case was ordered transferred to this court which then adopted an opinion which reversed and remanded for new trial.Subsequently, plaintiff's motion for rehearing was sustained and additional briefing was requested.We now affirm.In this opinion we utilize without quotation marks portions of the opinion of the court of appeals and the prior opinion in this court.

On appeal defendants attack the sufficiency of the evidence to support the verdict and judgment in certain particulars hereinafter discussed, allege various trial errors and contend that the verdict was excessive.

Defendants were authorized to write casualty, property, fire and marine-type insurance as well as bonds.They are described as "direct writers," i. e., companies which write insurance or bonds only through their own employee-agents rather than through general agents, brokers or others who may be licensed to write for or broker insurance business for other companies.Prior to 1963, one Don W. Kinder was a licensed agent of defendant companies in St. Louis.In 1963he became their resident representative in Springfield, Missouri.Under various writings agreed to by Kinder, he was bound to devote full time to defendants' business.He was not to act as an intermediary for a policyholder or prospect with another company or indirectly place insurance in another company through some other broker or agent nor was he to accept remuneration of any type for any such referrals or services.¹Although it was common knowledge in the insurance world that defendant companies were "direct writers," the foregoing agreements between Kinder and defendants and the restrictions placed on Kinder by such agreements were kept in Kinder's personal file by defendants, were kept confidential and were not generally known by general agents, brokers or others in the insurance business.

In order to retain the good will of policyholders or prospects requiring coverage on risks undesirable to or not insured against by defendants, it sometimes became advisable for defendants' agents to assist those persons in procuring coverage with other companies.In such event Kinder could perform that service only with defendants' full knowledge and consent.If granted, Kinder was not permitted to receive any commissions, gifts or other compensation for such services.When he was in St. Louis, Kinder did have permission to solicit boiler insurance which was placed in the Mutual Boiler Company under a corporate agreement between that company and defendants.However, that agreement did not apply to Springfield and no comparable agreement existed between defendants and any company or broker in Springfield.

In 1963 Kinder met plaintiff who then was employed by an insurance agency-broker in Springfield.Kinder told plaintiff of the arrangements defendants had in St. Louis for brokerage services and inquired whether plaintiff would help him with similar problems in the Springfield area.Plaintiff agreed and thereafter assisted Kinder in securing coverage which Kinder said the defendants could not or would not write.²When plaintiff could not provide the desired coverage, he sought assistance from other brokers or agents.

In January 1967plaintiff started his own insurance business.He was a licensed broker and was agent for several companies which accepted regular and specialized risks.He continued on request to assist Kinder in securing coverage.He did the same for other agents and by October 1967he was placing business for about 35 other agents.This increased to some 100 agents by January 1969.This placement of business for other agents became very time consuming because an agent who is not a broker may not solicit business to be placed in another company by which he is not licensed.Consequently, it was necessary for plaintiff personally to contact all prospective policyholders referred to him by Kinder.The same was true in the case of other agents who asked him to place business for them.As plaintiff's business increased, he did not have the time to make all of these personal contacts.Therefore, plaintiff began to assist these agents, including Kinder, to obtain licenses as agents for companies which plaintiff represented.That permitted them to deal directly with prospective policyholders and they could receive 50 per cent of the commission on policies written.This lessened plaintiff's workload in connection with insurance written for Kinder and other agents but also decreased the amounts he received as commission on those policies.After this change occurred, Kinder dealt primarily with plaintiff's secretary rather than with plaintiff.

In June 1968defendants' district manager became concerned about sales through Kinder's office because defendants' business was down some $80,000 from the previous year.He was advised by an agent for defendants in the Kansas City area that Kinder had been placing business with plaintiff's agency.No inquiry was made of plaintiff and, apparently, the manager and other personnel employed by or representing defendants neglected to discover that Kinder also was placing business with agencies other than plaintiff's.The manager also ascertained from the Missouri Division of Insurance that Kinder had become licensed with several other companies.

On August 13, 1968, the defendants' district manager and his superior confronted Kinder with what they had learned.He readily admitted that he had violated his contract with defendants.He was terminated on the spot and he then delivered defendants' records to the district manager pursuant to his contract.

Apprehensive of what Kinder might do subsequent to being fired, the district manager requested that defendants' resident claims adjuster in Springfield keep watch as to Kinder's activities.After developments which will be detailed subsequently, defendants filed suit against Kinder and plaintiff on October 23, 1968.Counts I and II sought to enjoin Kinder from engaging in the insurance business in violation of his contract with defendants and to recover damages from him for breach of contract.Counts III and IV were against both Kinder and plaintiff herein.Count III alleged that the two of them had conspired together to use confidential information relating to defendants' business and to divert business from defendants to other companies.The petition alleged that in furtherance of the conspiracy, licenses for Kinder were secured with other companies competing with defendants and that business was placed with those companies to the detriment of defendants.³The petition also alleged that Kinder and plaintiff misrepresented the nature and quality of defendants' policies.Count IV sought to enjoin Kinder and plaintiff from continuing to do the acts of which they were accused in Count III.

Defendants' suit for damages and injunctive relief against plaintiff herein was dismissed without prejudice by defendants on October 16, 1970.Thereafter, on December 23, 1970, this suit was filed.

Before Kinder was fired in August 1968he shared an office with defendants' local claim adjuster and a secretary employed by defendants.Neither of these people knew the contents of the agreements between defendants and Kinder, and the claim adjuster acknowledged that he was under the impression that it was proper for Kinder, under certain circumstances, to place business through another company if defendants did not want it.The adjuster and secretary knew Kinder was selling life insurance for another company, and were aware that Kinder discussed casualty insurance placement with agents other than plaintiff.The assumption by defendants in filing suit that plaintiff necessarily knew of the limitations on Kinder's authority because he worked for a direct-writing company was inconsistent with these beliefs and impressions of their own employees in the office with Kinder.

Plaintiff testified in this trial that although he knew Kinder's employers (defendants) were direct-writing companies, he was never informed of and was unaware of Kinder's contractual obligations to defendants, that he did not know that Kinder was violating his contract in dealing with plaintiff or other agents and brokers and that he did not know that Kinder was not permitted by defendants to become an agent for other insurance companies.There was considerable emphasis in the testimony of the open, nonsecretive dealings that Kinder had with plaintiff and with several other agencies.

Plaintiff also testified that in August 1968 Kinder told him that he(Kinder) was no longer associated with defendants because defendants had not lived up to their agreement and objected to Kinder holding licenses with other companies.Kinder indicated he would open his own agency and continue to sell life insurance through another company and casualty insurance through plaintiff.At Kinder's request, plaintiff gave him permission to give his prospects plaintiff's telephone number and to use plaintiff's office stationery as he had allowed other agents to do in similar circumstances.As a temporary measure, Kinder was given the use of a work table near plaintiff's desk...