Stahly Cartage Co. v. State Farm Mut. Auto. Ins. Co.

• Citation: 475 S.W.2d 438
• Decision Date: 28 December 1971
• Docket Number: No. 34090,34090
• Parties: STAHLY CARTAGE COMPANY, a Corporation, Plaintiff-Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, a Corporation, Defendant-Respondent. . Missouri
• Court: Court of Appeal of Missouri (US)

Page 438

475 S.W.2d 438

STAHLY CARTAGE COMPANY, a Corporation, Plaintiff-Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, a Corporation, Defendant-Respondent.

No. 34090.

St. Louis Court of Appeals. Missouri.

Dec. 28, 1971.

Motion for Rehearing or to Transfer to Supreme Court Denied

Jan. 18, 1972.

Application to Transfer Denied Feb. 22, 1972.

Holtkamp & Amelung, Robert A. Wulff, St. Louis, for plaintiff-appellant.

Carter, Fitzsimmons & Brinker, Paul E. Fitzsimmons, George L. Fitzsimmons, Fitzsimmons & Fitzsimmons, Clayton, for defendant-respondent.

DOERNER, Commissioner.

Plaintiff appeals from a judgment in an action at law submitted to the court on what was tantamount to an agreed statement of facts. The decisive issue presented is whether an insurer which agreed to pay a claimant the sum of $10,000 at the consideration for a release executed by the claimant may lawfully refuse to pay, upon discovering that it had made a mistake as to the limits of its policy.

In its petition plaintiff alleged that defendant had issued a policy of liability insurance to Raymond Riegel; that on April 26, 1968, Dennis Riegal, while driving an automobile owned by Raymond Riegel, was involved in an accident near Washington, Missouri, with an International tractor owned by plaintiff, which tractor was thereby damaged; that Dennis Riegel was entitled to the benefits of the policy issued by the defendant to Raymond Riegel; that on July 11, 1968, plaintiff and defendant, acting through defendant's agent, Clinton J. Thurston, made an agreement for the settlement of all claims plaintiff had arising out of said accident for the sum of $10,000; that on that day plaintiff executed and delivered to defendant a release, the consideration for which was $10,000, and defendant issued and delivered to plaintiff a draft in the amount of $10,000; and that at a later date defendant stopped payment on the draft and refused to pay plaintiff the sum of $10,000, although demand therefor was made upon defendant.

No answer or other responsive pleading was filed by defendant. The next entries in the transcript are a 'Statement of Facts' filed by defendant, followed by a similar 'Statement of Facts' filed by plaintiff. Those, in turn, are followed by a memorandum signed by both parties which reads: "By consent, cause submitted upon statements of facts filed with request for Court to make findings of fact and conclusions of law.' * * *'

The gist of the statements of fact is that defendant issued its policy of liability insurance to Raymond B. Riegel, of Washington, Missouri, on June 1, 1965, renewed and in effect until May 14, 1968, which provided an applicable maximum coverage of $5,000; that the accident occurred on April 26, 1968, as pleaded, with extensive damage to plaintiff's tractor in excess of $10,000; that on April 10, 1968, defendant's regional office in Columbia sent a notice of renewal premium to Raymond B. Riegel, in which it advised that the property damage coverage for the period after May 14, 1968, would be increased to $10,000; that that information was programmed into defendant's computer located in Columbia; that the task of defendant of negotiating a settlement with plaintiff was transferred to the Edwardsville claims office of defendant, the site of plaintiff's home office; that Superintendent John Finch of defendant's Edwardsville office wired defendant's regional office for confirmation of the property damage coverage on Riegel's automobile, which information was supplied to him electronically; that because the inquiry had been made within 34 days of the renewal date of the policy, the computer erroneously supplied the information that the property damage coverage that would be in force after May 14, 1968, would be $10,000, provided the renewal premium was paid; that Finch thereupon authorized his adjuster, Clinton Thurston, to negotiate a settlement with the plaintiff; that on July 11, 1968, defendant, through Thurston, advised plaintiff that defendant's coverage was limited to $10,000, and that defendant had authorized him to offer that amount to plaintiff in settlement of its cause of action; that plaintiff accepted defendant's offer on that date and executed and delivered its release to defendant, and defendant, through Thurston, concurrently issued and delivered the settlement draft in the amount of $10,000 to plaintiff; and that the defendant later learned of its error as to the limit of its coverage, stopped payment on the draft, and subsequently offered plaintiff $5,000 in settlement, which offer plaintiff refused.

The respective Statement of Fact are silent as to the retention by defendant of plaintiff's release, but during oral argument defendant's counsel conceded that defendant had never offered to return the release to plaintiff and that defendant still retained it. The record does show that on March 27, 1969, prior to the filing of the stipulation of submission, the defendant filed an offer of judgment for $5,000, pursuant to Civil Rule 77.25, V.A.M.R., which the plaintiff refused to accept.

In its conclusions of law the trial court ruled that '* * * The settlement made with plaintiff by the adjuster clearly resulted from a mistake on defendant's part as to the extent of coverage. An adjuster has no power, in the absence of evidence to the contrary, to alter the contract of insurance or waive any of its essential conditions. Also, the adjuster does not have authority to impose liability on the Company for damages not covered by the policy, and, in fact, which are clearly in excess of the Policy. Booker vs. Motors Ins. Corporation, 228 S.W.2d 694. * * *' Presumably taking into account the defendant's offer of settlement, the court entered a judgment for $5,000 in favor of plaintiff and against defendant, together with all costs up to and including March 27, 1969, and assessed all costs after that date against plaintiff. Plaintiff's appeal followed.

Whatever may ultimately be the correct answer to the decisive question here presented, it is readily apparent that the judgment in favor of plaintiff for $5,000 cannot stand. For the practical effect of it is to permit the insured under the policy as well as the defendant insurer to have their cake and to also eat it. The damages to plaintiff's tractor were in excess of $10,000. Plaintiff's action is one at law, to recover the sum of $10,000, the sum defendant had agreed to pay plaintiff as the consideration for the release it executed. Defendant sought no equitable relief by way of rescission or reformation, and it continues to retain the release executed by plaintiff. Hence if the settlement agreement is valid and binding on defendant, plaintif...