Reese v. Preferred Risk Mut. Ins. Co.

Decision Date12 June 1970
Docket NumberNo. 33646,33646
Citation457 S.W.2d 205
PartiesOwen REESE and Frances Reese, Plaintiffs-Appellants, v. PREFERRED RISK MUTUAL INSURANCE COMPANY, Defendant-Respondent.
CourtMissouri Court of Appeals

James F. Koester, Norman A. Selner, St. Louis, for plaintiffs-appellants.

Moser, Marsalek, Carpenter, Cleary & Jaeckel, Paul S. Brown, St. Louis, for defendant-respondent.

DOWD, Judge.

This is a suit on the uninsured motorist clause of an automobile insurance policy issued by defendant-respondent, Preferred Risk Mutual Insurance Company (hereinafter Preferred) to plaintiffs-appellants, Owen Reese and his wife, Frances Reese. The plaintiffs' son, Michael, age 14, a pedestrian, died immediately when struck by an auto operated by Dennis O'Toole on April 2, 1965 on Interstate 270. On September 23, 1965 suit was instituted against O'Toole. In early 1969, the plaintiffs learned that O'Toole was uninsured and also learned that their policy provided for uninsured motorist coverage which covered their son as a pedestrian. 1 They then immediately joined the defendant Preferred on February 14, 1969. The trial was three months later. The action against Preferred is in Count II of the Amended Petition. During voir dire plaintiffs dismissed with prejudice as to defendant O'Toole. When plaintiffs' attorney dismissed as to O'Toole, he explained that the plaintiffs were going to proceed against the insurance company on the basis of the uninsured motorist clause of their policy. Plaintiffs' attorney then asked the veniremen: 'Would any of you have any feeling or be influenced by the fact that we are not involving, financially, the driver of the car?' Defendant Preferred's attorney objected and made a motion for a mistrial on the ground that defendant Preferred was prejudiced by plaintiffs' dismissal of O'Toole and by the statement that O'Toole would not then be involved financially. The objection and motion for mistrial were overruled. Plaintiffs submitted their case against Preferred based on the humanitarian doctrine on O'Toole's failure to slacken speed and swerve and asked for judgment against Preferred in the amount of $5,000 which was the extent of Preferred's coverage.

The jury returned a verdict in plaintiffs' favor against defendant Preferred for $3,500.

However, the trial court sustained defendant's motion for judgment in accordance with its motion for a directed verdict on two grounds: (1) By dismissing with prejudice against O'Toole (uninsured motorist) plaintiffs are not legally entitled to recover against O'Toole and therefore cannot recover against the defendant Preferred. (2) Plaintiffs breached the policy provision by preventing defendant from pursuing any right of subrogation against O'Toole by dismissing with prejudice and violated the Trust Agreement of the policy. The court entered judgment in favor of Preferred. Plaintiffs appealed.

Did the trial court err?

The following policy provisions are pertinent to this opinion. The uninsured motorist coverage involved here is contained in Part IV of the policy under a heading: PROTECTION AGAINST UNINSURED MOTORISTS.

'Coverage U--Bodily Injury Benefit:

'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, sickness or disease, including death resulting therefrom, hereinafter called 'bodily injury', sustained by the insured, caused by accident and arising out of the ownership, maintenance or use of such uninsured automobile; * * *.'

Also under the uninsured motorist coverage an 'uninsured automobile' is defined to include 'a hit and run automobile.'

'Notice of Legal Action

'If, before the company makes payment of loss hereunder, the insured or his legal representative shall institute any legel action for bodily injury against any person or organization legally responsible for the use of an automobile involved in the accident, a copy of the summons and complaint or other process served in connection with such legal action shall be forwarded immediately to the company by the insured or his legal representative.

'Proof of Claim; Medical Reports

'As soon as practicable, the insured or other person making claim shall give to the company written proof of claim, under oath if required, including full particulars of the nature and extent of the injuries, treatment, and other details entering into the determination of the amount payable hereunder. * * *

'Exclusions

'This part does not apply:

'(1) to bodily injury to an insured, or care or loss of services recoverable by an insured, with respect to which such insured, his legal representative or any person entitled to payment under this part shall, without written consent of the company, make any settlement with or prosecute to judgment any action against any person or organization who may be legally liable therefor; * * *.'

In interpreting insurance contracts it is the intent expressed therein which is to control, and if the contract is reasonably susceptible of two or more interpretations that one which will sustain the insured's claim must be adopted, since the language used in the policy is that of the insurer. A court is not permitted to rewrite or alter a written contract under the guise of judicial construction. Hill v Seaboard Fire & Marine Ins. Co., Mo.App., 374 S.W.2d 606(8).

Did plaintiffs' dismissal with prejudice against the uninsured motorist so that plaintiffs were barred from recovering from the uninsured motorist, preclude the insured from recovering from the insurer? Defendant contends that one is not 'legally entitled to recover' agaisnt another if he dismissed the basis for such legal entitlement with prejudice.

It is necessary for us to interpret the uninsured motorist coverage which requires the insurer: 'To pay all sums which the insured * * * shall be legally entitled to recover as damages from the owner or operator of an uninsured automobile because of bodily injury, * * * including death resulting therefrom, * * * sustained by the insured, caused by accident and arising out of the ownership, maintenance or use of such uninsured automobile: * * *.' (Emphasis ours).

This very phrase 'legally entitled to recover' was discussed in Hill v. Seaboard Fire & Marine Ins. Co., supra, which was also a suit on the uninsured motorist clause. The court held that this type suit is a contract action based upon a policy contract with the insurance company and the insured is entitled to directly sue the insurer without being required to show an unsatisfied judgment as a condition precedent to recovery. In Hill the court pointed out that the uninsured motorist coverage included, like here, 'hit and run automobiles' where a judgment is not obtainable because the owner or operator is unknown. The court stated in Hill, supra, l.c. 611: '* * * For decades insurance companies have been writing unsatisfied judgment policies and are knowledgeable in the art of specifically requiring an unsatisfied judgment as a condition precedent to their liability and to a suit directly against the insurer, if that is the insurer's intent. * * * ' The court then in Hill stated that there is no language (nor is there in this case) that requires an unsatisfied judgment to establish the legal liability, or the amount thereof, of the owner of operator of the uninsured automobile.

If the insured then is not required to join the uninsured motorist, may the insured dismiss with prejudice as to the uninsured motorist if he is joined in a suit against the insurer. We hold that the insured may dismiss with prejudice without jeopardizing his cause of action against the insurer.

This phrase 'legally entitled to recover' was discussed in Booth v. Fireman's Fund Ins. Co., 253 La. 521, 218 So.2d 580, 583 where the court stated: '* * * We interpret the words 'legally entitled to recover' to mean simply that the plaintiff must be able to establish fault on the part of the uninsured motorist which gives rise to damages and prove the extent of those damages. * * *'

Also in Sahloff v. Western Casualty & Surety Company, Wis., 171 N.W.2d 914, 917 the court agreed with the Louisiana court's interpretation of this phrase in stating: '* * * We think the phrase (legally entitled to recover) was used only to keep the fault principle as a basis for recovery against the insurer and deals with the question of whether the negligence of the uninsured motorist and the absence of contributory negligence is such as to allow the insured to recover. * * *'

Again in DeLuca v. Motor Vehicle Acc. Indem. Corp., 17 N.Y.2d 76, 268 N.Y.S.2d 289, 215 N.E.2d 482 the court stated that the language in question 'legally entitled to recover' simply means and denotes fault on the part of the uninsured motorist. We agree with the interpretation placed on this phrase by these courts and hold that this phrase refers to fault on the part of the uninsured motorist. The phrase involves the causal negligence on the part of the uninsured motorist (and the absence of contributory negligence where submitted) and the resulting damages to the insured. Also we believe this phrase is ambiguous and as such must be construed in favor of the insured.

Also pertinent to the issue of the dismissal as to O'Toole is Denny v. Mathieu, Mo., 452 S.W.2d 114 a recent en banc decision which was decided after this case was argued on appeal. In Denny, the plaintiff was a passenger in her husband's auto which collided with an unlighted truck. Suit was filed against the owner of the truck, Mathieu, and the driver, Rhodes. Plaintiff's attorney during final argument dismissed as to the driver with prejudice. The court concluded that this dismissal actually adjudicated nothing and stated: (l.c. 119)

'We hold that the dismissal with prejudice by ...

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