Members Mut. Ins. Co. v. Blissett

• Decision Date: 09 April 1973
• Docket Number: No. 5--6186,5--6186
• Citation: 254 Ark. 211,492 S.W.2d 429
• Parties: MEMBERS UMTUAL INSURANCE COMPANY, Appellant, v. Thomas BLISSETT, Appellee.
• Court: Arkansas Supreme Court

Page 429

492 S.W.2d 429

254 Ark. 211

MEMBERS UMTUAL INSURANCE COMPANY, Appellant, v. Thomas BLISSETT, Appellee.

No. 5--6186.

Supreme Court of Arkansas.

April 9, 1973.

Barber, Henry, Thurman, McCaskill & Amsler, Little Rock, for appellant.

Brown, Compton & Prewett, El Dorado, for appellee.

JONES, Justice.

This is an appeal by Members Mutual Insurance Company, hereinafter called Mutual from a circuit court judgment rendered on a jury verdict in favor of Thomas Blissett in a suit brought by Blissett to recover the excess of a judgment rendered against him in a suit for personal injuries instituted by Mr. and Mrs. Frisby.

The background facts are these: Mr. and Mrs. Frisby brought suit against Mr. Blissett for personal injuries growing out of an automobile collision and obtained a judgment on a jury verdict against Blissett in the amount of $21,418 and the judgment was affirmed on appeal to this court. Blissett v. Frisby, 249 Ark. 235, 458 S.W.2d 735. Blissett carried his liability insurance with Mutual under a policy with $10,000 limit for each person. Under the terms of the policy Mutual agreed to defend any suit against the insured alleging bodily injury or property damage and seeking damages payable under the terms of the policy. Among other things the policy provided as follows:

'. . . the company may make such investigation and settlement of any claim or suit as it deems expedient. * * *

The insured shall cooperate with the company and upon the company's request, assist in making settlements, in the conduct of suits and in enforcing any right of contribution or indemnity against any person or organization who may be liable to the insured because of bodily injury, property damage or loss with respect to which insurance is afforded under this policy; and the insured shall attend hearings and trials and assist in securing and giving evidence and obtaining the attendance of witnesses. The insured shall not, except at his own cost, voluntarily make any payment, assume any obligation or incur any expense other than for such immediate medical and surgical relief to others as shall be imperative at the time of accident.'

Mr. Blissett filed the present suit against Mutual alleging that he was sued for $40,350 by the Frisbys; that Mutual furnished and paid for a defense to that lawsuit but that during the pendency of the lawsuit and prior to the trial thereof, the Frisbys made frequent demands for a settlement of their claims for sums less than the limits under Mutual's policy, but that Mutual's highest offer in settlement was the sum of $4,000 which was so meager as to constitute bad faith and negligence on the part of Mutual. Mr. Blissett prayed damages in the amount of $21,776 together with 12% penalty, reasonable attorney's fee and 6% interest from December 16, 1969, until paid.

In Mutual's answer it denied that it was guilty of negligence or bad faith in its negotiations for a settlement with the Frisbys. A jury trial resulted in a judgment for Mr. Blissett in the amount of $11,418 still owed on the Frisby judgment together with all interest accumulated thereon, said amounts to be paid into the registry of the court for the satisfaction of the judgment in favor of the Frisbys against Blissett. The policy limits of $10,000 had already been paid by Mutual.

On appeal to this court Mutual contends that its motion for directed verdict should have been granted by the trial court and that the trial court erred in ordering the payment of interest on the Frisby-Blissett judgment accruing prior to the entry of judgment in the case at bar.

In the argument in support of its contention that the court erred in not directing a verdict in its favor, Mutual narrows the issues to two points stated as follows:

'First we submit that the law in this State is that if the insurance company is to be held liable for a negligent failure to settle, there must have been a demand by the insured that the company settle the case within the policy limits.

Secondly, . . . there was no evidence submitted on which it could be concluded that the defendant was guilty in failing to settle.'

In support of its contention that a demand must be made by the insured before liability attaches for failure to settle, the appellant cites Southern Farm Bureau v. Parker, 232 Ark. 841, 341 S.W.2d 36, and argues that even though the necessity of a demand was not discussed in the opinion in that case, that we should now declare such to be the law. The Parker case was decided in 1960. In State Farm Mutual Automobile Ins. Co. v. Jackson, 346 F.2d 484 (1965), the Eighth Circuit Court of Appeals stated:

'As to the matter of a demand to settle: Although the Arkansas court in Southern Farm Bureau Insurance Company v. Parker, supra, approved a set of instructions, including, inter alia, one requiring a demand for settlement by the insured, that specific point was not discussed or specifically ruled by the Court in that case. No case has been cited, and we find none, in which the Arkansas Supreme Court has affirmatively decided the above question.'

The Eighth Circuit Court of Appeals affirmed the District Court in holding that a demand to compromise was not necessary to liability and it was pointed out in the Jackson decision that under the terms of the policy contract the company was given the power to determine whether an offer of compromise should be accepted or rejected within its coverage limits.

We do not deem it advisable to lay down a strict rule of law in this case that would require the insured to make demands upon the company that the claim be settled within the policy limits regardless of the provisions of the agreed contract. As already pointed out, in the case at bar, Mutual reserved the right to make such investigation and settlement of any claim or suit as it deemed expedient and the contract provided that the insured 'shall not, except at his own cost, voluntarily make any payment, assume any obligation or incur any expense other than such immediate medical or surgical relief to others as shall be imperative at the time of the accident.' As a matter of fact, the policy contract provides that 'the insured shall cooperate with the company and upon the company's request, assist in making settlement. . . .' (Emphasis added). There is no suggestion in the case at bar that Mr. Blissett, the insured, failed to cooperate with Mutual.

We now come to the question of whether there was sufficient evidence of negligence on the part of Mutual to take the case to the jury and we conclude that there was. In Huffman Wholesale Supply Co. v. Terry, 240 Ark. 399, 399 S.W.2d 658, in dealing with a directed verdict, we said:

'. . . this court has said on numerous occasions that, in determining the correctness of the trial court's action in directing a verdict for either party, we must take that view of the evidence which is most favorable to the party against whom the verdict is directed, and, if there is any substantial evidence tending to establish an issue in favor of the party against whom the verdict is directed, it is error for the court to take the case from the jury. See Barrentine v. Henry Wrape Company, 120 Ark. 206, 179 S.W. 328, and cases cited therein. Also, in Smith v. McEachin, 186 Ark. 1132, 57 S.W.2d 1043, we said:

'. . . In testing whether or not there is any substantial evidence in a given case, the evidence and all reasonble inferences deducible therefrom should be viewed in the light most favorable to the party against whom the verdict is directed, and, if there is any conflict in the evidence, or where the evidence is not in dispute but is in such a state that fairminded men might draw different conclusions therefrom, it is error to direct a verdict."

See also Home Mut. Fire Ins. Co. v. Cartmell, 245 Ark. 45, 430 S.W.2d 849.

It is clear, therefore, in the case at bar that the trial court did not err in refusing to direct a verdict in favor of Mutual if there was evidence upon which fair-minded men might draw different conclusions therefrom. It is well established in this state that an insurer is liable to its insured for any judgment in excess of the insured's policy limits if the insurer's failure to settle the claim was due to fraud, bad faith or negligence. Tri-State Ins. Co. v. Busby, 251 Ark. 568, 473 S.W.2d 893.

We now examine the evidence in the light of the above rules. The facts surrounding the collision out of which the original lawsuit arose are set out in Blissett v. Frisby, supra. There was the usual conflict in that evidence; Mrs. Frisby contending that she had gradually slowed her automobile and was in the process of driving it to the shoulder of the highway when she was suddenly struck from the rear by the Blissett automobile. Mr. Blissett testified that he observed Mrs. Frisby having difficulty with her small child in the seat with her and he contended that she suddenly stopped her automobile in the highway ahead of him and he could not avoid striking her automobile.

Mrs. Frisby underwent thoracic surgery after several months medical treatment as a result of injuries she sustained in the collision and the sufficiency of the evidence to sustain the amount of the judgment for her injuries is not questioned. We now consider the evidence as it relates to Mutual's alleged negligence in its failure to settle the Frisby claim against Blissett within the policy limits.

Mr. John M. Shackleford, Jr., an attorney in El Dorado, represented Mr. and Mrs. Frisby in their suit against Mr. Blissett and he testified at length as to the efforts made to settle the Frisby claim. The substance of his testimony was to the effect that both prior and subsequent to his employment, the Frisbys offered to settle for $5,000 and Mutual offered $3,000. He said that after the issues were joined in litigation with attorney Richard H. Mays representing Mutual and Mr. Blissett, a first trial of the case resulted in a mistrial because of the...