Porter v. Georgia Cas. & Sur. Co., 35097

• Decision Date: 19 February 1974
• Docket Number: No. 35097,35097
• Citation: Porter v. Georgia Cas. & Sur. Co., 508 S.W.2d 27 (Mo. App. 1974)
• Parties: Joseph PORTER and James Chatman, Plaintiffs-Respondents, v. GEORGIA CASUALTY & SURETY COMPANY, Defendant-Appellant. . Louis District, Division One
• Court: Missouri Court of Appeals

Page 27

508 S.W.2d 27

Joseph PORTER and James Chatman, Plaintiffs-Respondents, v. GEORGIA CASUALTY & SURETY COMPANY, Defendant-Appellant.

No. 35097.

Missouri Court of Appeals, St. Louis District, Division One.

Feb. 19, 1974.

Motion for Rehearing or Transfer Denied March 8, 1974.

Application to Transfer Denied May 13, 1974.

Murphy, Kortenhof & Ely, Frank E. Strzelec, St. Louis, for defendant-appellant.

Walter S. Berkman, Eugene B. Weisman, Clayton, for plaintiffs-respondents.

SIMEONE, Judge.

This is an appeal by defendant-appellant, Georgia Casualty and Surety Company from a judgment of the circuit court of the City of St. Louis entered on December 19, 1972, granting summary judgment in favor of the plaintiffs-respondents, Joseph Porter and James Chatman, declaring that the plaintiffs have 'uninsured motorist coverage under the defendant's policy' issued to James Porter on June 20, 1969.

The issue is a narrow one and the facts are not in dispute.

On June 20, 1969, Georgia Casualty and Surety Company (hereinafter Georgia Casualty) issued its combination automobile policy to plaintiff, Joseph Porter. The policy provided for uninsured motorist coverage and was in effect on December 20, 1969. On that date, Porter's vehicle, with James Chatman as a passenger, collided with a vehicle driven by Clinton Ray. Ray had a policy of insurance with an Illinois insurer, LaSalle National Insurance Company.

On March 23, 1971, the Illinois Department of Insurance commenced an examination of the books, records and affairs of LaSalle to ascertain the true financial condition of the company as of December 31, 1970. On October 7, 1971, the Illinois Director of Insurance and the Attorney General filed a complaint for liquidation and other relief in the circuit court of Cook County, alleging that LaSalle had a deficit in surplus as regards policyholders and was thus insolvent in a certain amount. On the same date, the circuit court of Cook County entered an order finding that the Director of Insurance had made a prima facie case of insolvency against LaSalle and enjoined it from the further transaction of business.

On October 20, 1971, the circuit court of Cook County ordered Arthur Andersen & Company to examine the books and records and to submit a report as to the financial status of LaSalle. Andersen made an evaluation of LaSalle's condition as of December 31, 1970, and delivered it to the court on November 24, 1971. On December 28, 1971, the court issued its order of liquidation, stating that 'as a result of the examination by the Department of Insurance of the State of Illinois, by Arthur Andersen & Co., and from the evidence presented, this Court finds the Defendant, LA SALLE NATIONAL INSURANCE COMPANY to be insolvent, and that its further transaction of business would be hazardous to its policyholders, its creditors, or to the general public.' The court ordered the liquidation of the business.

As a result of the automobile collision on December 20, 1969, Porter and Chatman filed, on June 2, 1972, a petition against Georgia Casualty for declaratory judgment praying the court to declare that LaSalle became insolvent within two years after the accident. ¹ Plaintiffs alleged that Georgia denied coverage under the uninsured motorist clause because the order of liquidation was entered December 28, 1971, more than two years after the accident, and which under our statute would relieve Georgia of its contractual liability.

After motion to dismiss filed by Georgia was overruled and answer filed, Porter and Chatman filed their motion for summary judgment pursuant to Rule 74.04, V.A.M.R., praying the court to enter its summary declaratory judgment that LaSalle 'became insolvent on or before October 7, 1971, because the pleadings, admissions on file, together with the affidavit and report . . . show that there is no genuine issue as to any material fact. . . .'

On December 19, 1972 the trial court entered its findings of fact, conclusions of law and decree. The court found that Ray, on December 20, 1969 was protected by a policy issued by LaSalle, that LaSalle was insolvent on October 20, 1971, that LaSalle 'became insolvent within two years after plaintiffs' accident . . .' that pursuant to § 379.203, RSMo, V.A.M.S., plaintiffs are entitled to uninsured motorist protection and ordered defendant to comply with its contractual obligations.

Georgia Casualty appealed. Its sole contention is that the court erred in granting the summary judgment because plaintiffs failed to show that LaSalle became insolvent within two years of the date of the accident, December 20, 1969. In effect Georgia maintains that LaSalle did not become insolvent within two years from the date of the accident as required by § 379.203(3).

The issue therefore to be determined in this proceeding is whether LaSalle became insolvent within two years after the accident. Georgia Casualty contends that LaSalle did not become insolvent until so declared by the circuit court of Cook County by its order of liquidation entered December 28, 1971, 8 days after two years from the date of the accident.

The construction of the phrase 'becomes insolvent' urged upon us by Georgia Casualty would set the date of insolvency, for purposes of § 379.203(3) at the date of the final and formal declaration of insolvency by order of the circuit court of Cook County ordering liquidation.

The basic policy of uninsured motorist coverage 'is designed to close a gap in the protection afforded the public under existing financial responsibility laws and, within fixed limits, to provide recompense to innocent persons injured by motorists who lack financial responsibility.' Webb v. State Farm Mutual Automobile Ins. Co., 479 S.W.2d 148, 151 (Mo.App.1972). The statutes are to be 'liberally construed to accomplish their highly remedial purpose.' Webb, supra at 151. ²

While at first the policies provided for the definition of an uninsured automobile and the time of coverage, eventually the majority of the state legislatures required uninsured motorist coverage for a certain period of time after an accident in the event of a tortfeasor's insurer's insolvency. Our statute was enacted in 1967 and provides that uninsured motorist coverage is effective where the liability insurer of the tortfeasor becomes insolvent within two years after the accident.

Counsel's research and our own reveal no prior decision in this state which would be determinative of the issue presented; hence this cause is one of first impression.

Georgia Casualty relies on Fredel v. Southern General Insurance Company, 233 So.2d 451 (Fla.App.1970). There one Adele Fredel was involved in an accident with a third party on January 25, 1967. The third party was insured by a Tennessee insurance company authorized to do business in Florida. Her claim was unsuccessful and she sought recovery under the uninsured motorists coverage provided by the policy with her insurer, Southern General Insurance Company. Southern denied coverage and eventually sought declaratory relief. Florida's statute is similar to § 379.203(3) except that coverage is in effect where the liability insurer of the tortfeasor becomes insolvent within one year after the accident. The carrier for the third party had been adjudicated insolvent by a Tennessee court a year and a half after the accident, and by a Florida court at about the same time. Both adjudications were more than one year after the accident. The insured, Fredel, relied on the 'position' taken by the Department of Insurance of Tennessee that the Tennessee company was insolvent as of December 31, 1967 (within one year of the accident.)

The Florida District Court of Appeals agreed that the language of the statute might be more specific, but held that, under these facts, where two adjudications of the insolvency of the carrier had been made more than one year after the accident by courts of competent jurisdiction, and there was only an affidavit that the insurance department of Tennessee 'took the position' that the insurer was insolvent within one year, and which did not state that the carrier was, the affidavit was insufficient to withstand the insurer's motion for summary judgment.

We do not believe that Fredel, supra, is dispositive of the issues presented.

In a later decision, Bartholomew v. Glens Falls Insurance Group, 241 So.2d 698 (Fla.App.1970), Glens Falls sought a declaration of its rights in conjunction with its uninsured motorist insurance contract with the defendant Bartholomew. The trial court granted summary judgment to the insurer on the basis that the tortfeasor's insurance...