State Farm Fire & Cas. Co. v. Rossini

• Citation: 14 Ariz.App. 235,482 P.2d 484
• Decision Date: 18 March 1971
• Docket Number: No. 2,CA-CIV,2
• Parties: STATE FARM FIRE AND CASUALTY COMPANY, Appellant and Cross-Appellee, v. Frank G. ROSSINI and Bertha Rossini, husband and wife, Appellees and Cross-Appellants. 889.
• Court: Court of Appeals of Arizona

Page 484

482 P.2d 484

14 Ariz.App. 235

STATE FARM FIRE AND CASUALTY COMPANY, Appellant and Cross-Appellee, v. Frank G. ROSSINI and Bertha Rossini, husband and wife, Appellees and Cross-Appellants.

No. 2 CA-CIV 889.

Court of Appeals of Arizona, Division 2.

March 18, 1971.

Rehearing Denied April 9, 1971.

Review Granted May 11, 1971.

Chandler, Tullar, Udall & Richmond, by D. B. Udall, Tucson, for appellant and cross-appellee

Somers & Arnold, by Jack T. Arnold, Tucson, for appellees and cross-appellants.

HOWARD, Judge.

Mr. and Mrs. Rossini, plaintiffs in the trial court, filed a complaint naming State Farm and one Darlene Dixon, as defendants. Two claims were asserted: (1) Against Dixon for damages incurred as the result of her alleged negligence in operating a motor vehicle which resulted in injury to the plaintiff-husband, and (2) Against State Farm for breach of contract, i.e., refusal to pay coverage benefits of a policy issued by it to the plaintiff-husband. State Farm filed a responsive pleading to Count Two, alleging inter alia that the plaintiff had executed fair and binding releases which barred their claim against State Farm. ¹

Pursuant to stipulation of counsel, Count Two of the complaint with respect to coverage was tried to the court, sitting without a jury, prior to trial on Count One. The pretrial order designates several issues to be tried, including whether the plaintiff had uninsured motorist coverage under the State Farm policy and if so, whether State Farm was entitled to have the issues of liability and the amount of damages arbitrated pursuant to the terms of the policy. The trial court ruled that there was uninsured motorist coverage and that the plaintiffs' claim pursuant thereto was subject to arbitration. Both parties have appealed from the judgment, State Farm as to the coverage determination and plaintiff as to the ruling with respect to arbitration and also that the limit of plaintiffs' recovery was $10,000. ²

The facts are as follows: The plaintiff-husband was a passenger in a vehicle operated by his son when it was involved in a collision with a vehicle operated by Darlene Dixon. Neither the son nor Miss Dixon had liability insurance. Plaintiff was the named insured under a valid automobile liability insurance policy with State Farm which included uninsured motorist coverage.

After the accident, the son's driving privileges were revoked because of his failure to carry liability coverage. In need of his license for purposes of employment, he obtained release forms from the Motor Vehicle Division, and exchanged releases with Miss Dixon, giving her one signed by himself and another signed by his father. His driving privileges were subsequently restored after he procured liability insurance.

State Farm denied coverage on the grounds that the plaintiff had violated the policy provisions by signing a release of an uninsured tort-feasor without first obtaining written approval of the insurer. The exclusions provision of the subject insurance policy provides:

'This insurance does not apply under:

(n) coverage U 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 of any person entitled to payment under this coverage 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; * * *'

One of the policy conditions is that in the event of payment to any person under the uninsured motorist coverage, the company At trial, a release signed by plaintiff was admitted into evidence. The pertinent part of the release is as follows:

would be entitled, to the extent of such payments, to the proceeds of any settlement or judgment that might result from the exercise of any rights of recovery of such person against any person or organization legally responsible for the bodily injury because of which the payment had been made.

'ARIZONA HIGHWAY DEPARTMENT MOTOR VEHICLE DIVISION

RELEASE OF LIABILITY

TO: MOTOR VEHICLE DIVISION

Financial Responsibility Service

2324 N. 20th Ave.

Phoenix, Arizona 85009

F.R. Case No. 8117060

Accident Date

(I) (We) the undersigned, for good and valuable consideration, do hereby release

DARLENE EVAN DIXON

(Name of Party being released)

2309 North Ralph

(Complete Address)

of and from any and all claims and liability for/or on account of a motor vehicle accident occurring on or about the 11 day of August 1967 in which the undersigned were involved

FRANK G. ROSSINI SR.

(Signature of party giving release)

933 W. Drexel Rd.

(Address)

The plaintiff, when questioned about the execution of this release, testified:

'Q. After the accident occurred did your son ask you to sign a piece of paper for him so he could get his driver's license?

A. Yes.

Q. Do you remember when that took place, how long after the accident, do you remember, how long after the accident it was?

A. About a month, I guess. He just took the paper out to the house and told me to sign here. I didn't read the paper. I didn't know what I was writing.

Q. Let me get you to look at what is marked State's Exhibit A which purports to be a Xerox copy. Is that your signature?

A. That is my signature right there but I didn't read the paper.

Q. Is this the piece of paper your son asked you to sign?

A. Right.

Q. You can read it, right?

A. Right.

Q. You didn't read it because your son just told you, 'Please sign this, Dad. I need this to get my driver's license.'?

A. That is all. That is all.

Q. Did you receive any money or anything like that because of your signing this release?

A. No, sir, I didn't.

Q. Miss Dixon, the girl that was driving the other car, did she ever bring any paper around and ask you to sign it at all?

A. No, sir.

Q. Did you have anything to do with giving the release or did your son do that to get this piece of paper; did you go down and get it?

A. No. He just took it to my house. He took it to my house and just told me to sign here because he wanted his driver's license.

* * *

* * *

Q. Other than your name which you have indicated is your signature, the address 933 W. Drexel Road, that is your home address?

A. Yes.

Q. Is that in your writing also?

A. That's right.'

Although the document appeared to be notarized, the plaintiff denied he had signed it before a notary public. Plaintiff also testified that he signed the document because his son asked him to so that he could get his driving privileges restored to him and that, although he didn't read it, he intended him to use it for just that purpose. When questioned about his dealings with Miss Dixon, plaintiff testified that she and her father had come to his home and asked him to sign a release but he did not do so. Also he denied ever discussing the document bearing his signature with Miss Dixon or having made any bargain or agreement with her.

The son testified that he had asked his father to sign the release because 'I wanted to get my license and needed more money since I was in financial trouble.' He also testified that after his father had signed the release, he took it to a notary public and obtained the requisite notarization. He identified his father's signature on the release and stated that the name 'Darlene Evan Dixon' was inserted on the release form when he had it notarized.

The purpose of a provision excluding liability of the insurer under the policy where the insured makes a settlement with the person liable for his injuries without the consent of the insurer, has been stated by a number of courts to be for protection of the insurer's subrogation rights against the uninsured motorist and assurance that no judgment or settlement will be obtained in which the rights of the insurer are inadequately protected. Volkswagen Insurance Company v. Taylor, 201 So.2d 624 (Fla.App.1967); Mills v. Farmers Insurance Exchange, 231 Cal.App.2d 124, 41 Cal.Rptr. 650 (1964); Allstate Insurance Company v. Charneski, 16 Wis.2d 325, 114 N.W.2d 489 (1962). No question has been raised with respect to the validity of this provision. ³ It has been held that a release, for purposes of allowing the uninsured motorist to meet the requirements of the Financial Responsibility Law constitutes a 'settlement' and operates to absolve an insurer of liability under the uninsured motorist coverage, notwithstanding the motives prompting execution of the release. American Fidelity Fire Insurance Company v. Richardson, 189 So.2d 486 (Fla.App.1966); Coles v. Johns, 377 S.W.2d 587 (Ky.App.1964); Haley v. Badon, 98 So.2d 109 (La.App.1957).

Mr. Rossini was able to read and when he signed the release without reading it, he was charged with the knowledge of its contents. He was precluded from attacking it on the grounds that he did not know its import, since the failure to read the release was not due to some artifice or fraud of, nor was chargeable to, the party released. Cowart v. Honeycutt, 257 N.C. 136, 125 S.E.2d 382 (1962); Corbett v. Bonney, 202 Va. 933, 121 S.E.2d 476 (1961); Morris v. Millers Mutual Fire Insurance Company of Texas, 343 S.W.2d 269 (Tex.Civ.App.1964); 76 C.J.S. Release § 25(b).

Consequently, when State Farm introduced into evidence the release, admittedly executed by Mr. Rossini, it sustained its burden of proving a policy defense. Mr. Rossini's position, however, was that the release was invalid for lack of consideration. Since he was seeking to avoid the operation of the release, his was the burden of proving its invalidity. Wagoner v. Mountain Savings and Loan Assoc., 311 F.2d 403 (10th Cir. 1962); Dawes v. Elliston, 369 S.W.2d 285 (Mo.App.1963); Hudson v. Thies, 35 Ill.App.2d 189, 182 N.E.2d 760 (1962).

The trial court, in deciding the question of coverage in favor of the plaintiffs, apparently found that the release was not binding. A release must be supported by consideration. Sloan v. Burrows, 258 N.E.2d 303 (Mass.1970); ...