Kroeker v. State Farm Mut. Auto. Ins. Co.
| Decision Date | 05 April 1971 |
| Docket Number | No. 25464,25464 |
| Citation | 466 S.W.2d 105 |
| Parties | Alvin KROEKER and Anna Mae Kroeker, Plaintiffs, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant-Appellant, Walter S. Goodhue, Defendant-Respondent. |
| Court | Missouri Court of Appeals |
Lester J. Vandever, Deacy & Deacy, Kansas City, for defendant-appellant.
Gerald Kiser, North Kansas City, for defendant-respondent.
The essential question in this case is whether an uninsured motorist insurance carrier has a right to maintain a separate action against an uninsured motorist to recover proceeds of a settlement made with its own insureds, who had suffered personal injuries as a result of the uninsured motorist's negligence.
The facts involved, as extracted from the pleadings, are here summarized. On May 10, 1968, plaintiffs, Alvin Kroeker and Anna Mae Kroeker, husband and wife, sustained personal injuries when an automobile operated by plaintiff Alvin Kroeker, and in which plaintiff Anna Mae Kroeker was riding as a passenger, was struck in the rear end by a motor vehicle operated by defendant Walter S. Goodhue. At that time plaintiffs were covered by a policy of automobile liability insurance, purchased from and issued by defendant State Farm Mutual Automobile Insurance Company. The policy provisions included the standard uninsured motorist clause, Coverage U of Insuring Agreement III of the policy, which obligated the insurer 'To pay all sums which the insured or his legal representative shall be legally entitled to recover as damages from the owner or operator of an uninsured automobile because of bodily injury sustained by the insured, caused by accident and arising out of the ownership, maintenance or use of such uninsured automobile; * * *.' It is admitted that defendant Walter S. Goodhue is an uninsured motorist within the meaning of the policy terms.
On October 29, 1968, seeking recovery of their damages, plaintiffs instituted this action against defendant Walter S. Goodhue, charging in four separate counts that their injuries and loss were the result of his negligence, and, in two separate counts, against defendant State Farm, claiming recovery under the uninsured motorist coverage provided by the policy. On November 29, 1968, defendant State Farm filed answer to plaintiffs' petition, generally denying its averments and charging plaintiffs with contributory negligence; also a separate cross-claim against defendant Walter S. Goodhue, alleging cross-claimant's entitlement to be indemnified by him for all sums which plaintiffs are found entitled to recover from cross-claimant under the uninsured motorist provision.
Thereafter, State Farm filed motions for a separate trial of its cross-claim against defendant Goodhue and for leave to intervene in plaintiffs' causes of action against defendant Goodhue set up in Counts I, II, III and IV of their petition. Both motions were sustained. As intervenor, State Farm filed answers to Counts, I, II, III and IV of plaintiffs' petition, which pleaded plaintiffs' claims against defendant Goodhue. Those answers contained averments again generally denying plaintiffs' allegations that Walter S. Goodhue was an uninsured motorist and that he was guilty of negligence, and affirmatively charging plaintiffs with contributory negligence as the cause of their injuries sustained.
On October 7, 1969, State Farm made a compromise settlement with plaintiffs by paying plaintiff Alvin Kroeker the sum of $910.00 and plaintiff Anna Mae Kroeker the sum of $6,500.00, all as reflected by separate 'Release(s) and Trust Agreement(s)' executed by plaintiffs. On October 14th, defendant State Farm amended its cross-claim against defendant Goodhue by alleging it had made such settlement with plaintiffs, pursuant to the uninsured motorist coverage of its policy, and that under the terms and provisions of Section 379.203, paragraph 4, of the Missouri Revised Statutes, it is entitled to recover of defendant Goodhue the aggregate of the sums paid plaintiffs, to-wit: '7,410.00. Copies of the releases and trust agreements were attached to the cross-claim amendment.
On October 20, 1969, pursuant to stipulation and agreement on behalf of plaintiffs and State Farm, the trial court entered an order dismissing plaintiffs' cause only as to State Farm Mutual. The order further recited 'That this cause as to defendant Walter Goodhue remains pending on the active trial docket of this court for further proceedings and orders.'
On October 27, 1969, defendant Goodhue filed an amended Motion to Dismiss State Farm's amended cross-claim on grounds (1) that the releases and trust agreements executed by plaintiffs are 'purported assignments of claims or causes of action involving personal injury', and (2) that the cross-claim fails to state a claim against defendant Goodhue 'upon which relief can be granted.' That motion was sustained and the court entered judgment of dismissal of State Farm's cross-claim as prayed. The court specifically designated the dismissal as 'a final judgment for the purpose of appeal under Supreme Court Rule 82.06, V.A.M.R.' State Farm has appealed.
It is State Farm's posture in this case that paragraph 4 of Section 379.203 V.A.M.S. (a statute enacted in 1967 requiring that all automobile liability policies include uninsured motorist coverage, subject to rejection by the insured) affords a remedy whereby State Farm may recover the sums paid to plaintiffs in settlement of the claim and suit against State Farm. To that end, State Farm urges that the trial court's judgment dismissing its cross-petition against defendant Goodhue be reversed and its cross-claim be reinstated 'so as plaintiffs may bring their case against respondent to a conclusion or, so as appellant may present evidence as to liability of the uninsured motorist, respondent herein, and as to the nature and extent of the injuries of the plaintiffs.' According to its brief, State Farm 'would then attempt to recover from whatever judgment might be returned against respondent.' State Farm is unsure of the terminology of its right to recover provided for by Section 379.203; but alternatively ternatively speaks of it as 'the right of 'subrogation' or 'indemnity".
Defendant Goodhue counter-contends that Section 379.203(4) does not provide for a cause of action by the insurer against an uninsured motorist, that to permit maintenance of separate causes of action by plaintiffs and State Farm presenting identical issues would amount to 'a splitting of a cause of action, which is prohibited under Missouri law', and that State Farm's attempted action on its cross-petition is based on either an assignment of a part of a personal injury claim before judgment or an 'alleged' subrogation right, neither of which (so Goodhue asserts) is sanctioned by Missouri law. Goodhue concedes that Section 379.203(4) authorizes recovery by State Farm from proceeds of settlements he might make with plaintiffs or judgments rendered in their favor.
The ultimate question for our resolution thus presented, as we have heretofore stated, is whether State Farm is entitled to maintain a separate action, concurrently with plaintiffs' actions, against the uninsured motorist to recover the settlement sums it had paid plaintiffs.
Paragraph 4 of Section 379.203, upon which State Farm relies, reads as follows:
'In the event of payment to any person under the coverage required by this section, and subject to the terms and conditions of such coverage, the insurer making such payment shall, to the extent thereof, be entitled to the proceeds of any settlement or judgment resulting from the exercise of any rights of recovery of such person against any person or organization legally responsible for the bodily injury for which such payments is made, including the proceeds recoverable from the assets of the insolvent insurer.' (Emphasis supplied.)
Also bearing on the question at hand is the following quoted 'Trust Agreement' 1 set out in the policy as one of the 'Conditions' of the uninsured motorist coverage:
'16. Trust Agreement. In the event of payment to any person under this coverage:
(a) the company shall be entitled to the extent of such payment to the proceeds of any settlement or judgment that may result from the exercise of any rights or recovery of such person against any person or organization legally responsible for the bodily injury because of which such payment is made;
(b) such person shall hold in trust for the benefit of the company all rights of recovery which he shall have against such other person or organization because of the damages which are the subject of claim made under this coverage;
(c) such person shall do whatever is proper to secure and shall do nothing after loss to prejudice such rights;
(d) if requested in writing by the company, such person shall take, through any representative designated by the company, such action as may be necessary or appropriate to recover such payment as damages from such other person or organization, such action to be taken in the name of such person; in the event of a recovery, the company shall be reimbursed out of such recovery for expenses, costs and attorneys' fees incurred by it in connection therewith;
(e) Such person shall execute and deliver to the company such instruments and papers as may be appropriate to secure the rights and obligations of such person and the company established by this provision.'
Upon comparison, it is apparent that Section 379.203(4) is essentially the counterpart of Condition 16(a) of the policy Trust Agreement. By enacting the statute, the legislature has reiterated, as law, what the parties had agreed to by formal contract. It is expressly provided by the Trust Agreement and necessarily implied from the statute that plaintiffs are constituted trustees who covenant that they shall hold in trust, for State Farm's benefit, 'all rights of recovery' incident to their bodily injuries, and that ...
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