Schaeffer v. American Motorists Ins. Co.

• Decision Date: 31 July 1998
• Docket Number: No. 73472,73472
• Citation: Schaeffer v. American Motorists Ins. Co., 973 S.W.2d 180 (Mo. App. 1998)
• Parties: Joanne SCHAEFFER, et al., Plaintiffs-Appellants, v. AMERICAN MOTORISTS INSURANCE COMPANY, Defendant-Respondent,
• Court: Missouri Court of Appeals

Page 180

973 S.W.2d 180

Joanne SCHAEFFER, et al., Plaintiffs-Appellants, v. AMERICAN MOTORISTS INSURANCE COMPANY, Defendant-Respondent,

No. 73472.

Missouri Court of Appeals,

Eastern District,

Division Five.

July 31, 1998.

Blair Drazic, Creve Coeur, for plaintiffs-appellants.

Eugene K. Buckley, St. Louis, for defendant-respondent.

CHARLES B. BLACKMAR, Senior Judge.

The mother of the five plaintiffs was killed in an accident with an uninsured motorist. They made claim for her wrongful death under two insurance policies with uninsured motorist coverage aggregating $200,000. After negotiations which were not always smooth the plaintiffs and the insurer entered into an executory contract obliging the insurer to pay the plaintiffs $200,000.

The insurer then insisted on, as a condition of payment, the execution of a release containing the following provision:

... For the consideration aforesaid, and to the extent of any payment thereunder, the undersigned agrees to hold in trust for the benefit of the [insurance] company all rights of recovery which we shall have against any person or organization legally liable for such bodily injuries ...

The preceding paragraph of the document identified the time and place of the fatal accident which was the occasion for the plaintiffs' claim.

The five plaintiffs were unwilling to sign the tendered release. Their particular objection was that they were considering a suit against Ford Motor Company because of vehicle defects which might have caused or contributed to the accident and were concerned lest the language of the release be construed as giving the insurer the right to the first $200,000 of any recovery in that suit. The plaintiffs at the time were represented by a layperson, who expressed agreement with their decision. The tendered release was not signed and the agreed settlement money was not paid.

The plaintiffs then filed suit in two counts. Count II was dismissed and the dismissal was affirmed by this court. Koehrer v. American Motorists Insurance Co., 931 S.W.2d 898 (Mo.App.1996), so it need not concern us further. Count I contained a claim for the agreed settlement amount plus interest, and also for penalties and attorneys' fees for vexatious refusal to pay as authorized by section 375.200 RSMo 1994.

The trial court sustained the insurer's motion for summary judgment, directing payment of the $200,000 settlement on receipt of a release from the plaintiffs in the form tendered by the insurer, and denying all other relief. The court overruled the plaintiffs' motion for partial summary judgment seeking recovery of the settlement figure plus interest. For the reasons which we now state, we reverse and remand.

The plaintiffs argue that they are entitled to the settlement amount without the need for any formal release. We do not accept this argument in toto. The insurer is entitled to a document which makes it clear that the insured will make no further claim against it for uninsured motorist coverage relating to the fatal accident. Once the insurer satisfies its liability for uninsured motorist coverage its right of subrogation to any personal recovery against the uninsured motorist is established by the governing statute, section 379.203.4 RSMo 1994, which reads in pertinent part as follows:

4. In the event of a 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 payments 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 payment is made ...

The insurer needs no authorization from the insured to exercise its subrogation rights. Although the statutory language is far from crystal clear, the case law...