State Farm Mut. Auto. Ins. Co. v. Marcum

• Decision Date: 31 March 1967
• Citation: State Farm Mut. Auto. Ins. Co. v. Marcum, 420 S.W.2d 113 (Ky. 1967)
• Parties: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellant, v. Gay MARCUM, etc., et al., Appellees.
• Court: Supreme Court of Kentucky

Page 113

420 S.W.2d 113

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellant, v. Gay MARCUM, etc., et al., Appellees.

Court of Appeals of Kentucky.

March 31, 1967.

Henry V. B. Denzer, Henry A. Triplett, Hogan, Taylor, Denzer & Bennett, Louisville, for appellant.

B. C. Green, Green & Connor, Clarence Bartlett, Woodward, Bartlett & McCarroll, Owensboro, Kenneth Ragland, Calhoun, John D. Miller, Owensboro, for appellees.

STEINFELD, Judge.

Gay Marcum, individually and as administrator of the estate of Ada B. Marcum, his deceased wife, and as administrator of the estate of Stevie Marcum, his deceased son, recovered judgments totaling $54,389.22 in an action against Ernest Earl Bell. State Farm Mutual Automobile Insurance Company, the appellant, was the liability insurance carrier of Bell but the maximum limit of the policy was $20,000.00. After the above judgments were rendered, State Farm paid $20,000.00 into Court. Marcum individually, and in the capacities mentioned, sued State Farm to recover the difference between the amount paid and the total amount of the judgments, on the claim that the insurance company was guilty of bad faith in failing to settle these claims when it had an opportunity to do so. Upon a verdict of a jury, the lower court found in favor of the appellees for the full amount. State Farm appeals.

The original judgments for Marcum were awarded after a determination that Bell was wholly at fault in negligently operating his truck at the time it collided with the automobile owned and operated by Marcum. Riding with Marcum were his wife, Ada, and their infant son, Stevie, both of whom were killed. Other passengers in the car were Teresa Marcum, Dale Henry Marcum and Randy Marcum, young children of Gay Marcum. Teresa was cut on the head and fourteen stitches were required to close the wound. Dale Henry lost three teeth and Randy was 'banged up.' No action for the three surviving children had been filed at the time this suit was tried. Marcum was injured seriously.

State Farm claims that it was entitled to a directed verdict. It asserts that it acted in good faith; that Marcum and 'Bell presented no claim against State Farm' and that they did not prove any act of bad faith on the part of State Farm. The appellant argues that the action was brought under the garnishment statute, KRS 426.381, and that Marcum had no right to proceed under that statute. It also contends that Marcum, in his various capacities, is not an 'implied assignee' of Bell, the assured. State Farm argues that even if Marcum had a cause of action it is in tort and that it was incumbent upon him to prove the damages which each claimant sustained and that none were proved.

State Farm also alleges that many prejudicial errors were committed during the trial, among which were improper admission of certain evidence, misconduct of counsel and that erroneous instructions were given.

The first suit was filed in the Federal Court by Marcum in his various capacities against the United States of America under the Federal Tort Claims Act on the theory that Bell, at the time of the accident, was acting as an agent of the United States. The United States filed a third party complaint against State Farm alleging that it insured Bell. The district court dismissed upon a finding that Bell was not acting as agent for the government. Marcum, et al. v. United States of America, (D.C.Ky.) 208 F.Supp. 929. That decision was affirmed. Marcum, et al. v. United States of America, (CA 6) 324 F.2d 787, 789.

The second action was in the Ohio Circuit Court wherein Marcum, individually and as administrator of the estate of his wife and son, demanded damages in the amount of $15,000.00 for himself, $200,000.00 for his wife's estate and $70,000.00 for his son's estate. State Farm notified Bell that the claims exceeded the policy limits and that he should employ his own attorney if he desired to do so. Bell did not employ his own attorney until after Marcum sued State Farm. Bell, through the attorney supplied by State Farm, answered denying that he was negligent and alleging that the accident resulted from the sole or contributory negligence of Marcum and he counterclaimed for the damage to his truck. At the conclusion of the evidence, but over Bell's objection, the court directed that the jury enter verdicts against him for Marcum in his various capacities. It found for Marcum individually $10,000.00, for the estate of Ada Marcum $31,075.00 and for the estate of Stevie Marcum $13,314.22, a total of $54,389.22. The court did not submit to the jury the claim for punitive damages. A motion for a new trial was filed but was overruled. Judgments were entered pursuant to that verdict but no appeal was taken.

State Farm paid into the registry of the circuit court $20,000.00 and moved that an order be entered 'adjudging that it has complied with the terms of its insurance policy covering * * * Bell, and that it is now released from any and all liability by the payment into Court of the sum of $20,000.00'. Executions were issued to the sheriff, who promptly returned each one with the notation 'no property found.' Marcum filed an 'Amended and Supplemental Complaint, and Response to Motion of State Farm * * *'. An order of distribution was entered directing that the $20,000.00 be distributed to apply on the adjudged claims but that it be without prejudice to the rights of Marcum to seek recovery from State Farm and its insured, Bell, the balance of the judgments rendered and without prejudice to State Farm to contest any further liability. State Farm claims that its liability has been satisfied.

The proceedings came to trial on the amended and supplemental complaint and the other pleading which we will discuss. After hearing evidence on the issues presented the jury found against State Farm in the amount of $34,389.22.

State Farm moved for a judgment notwithstanding the verdict or alternatively for a new trial. These motions were not sustained. The court entered judgment that Marcum individually, and as administrator of the two estates and Bell recover from State Farm $34,389.22, interest and costs.

One of the contentions for reversal is that Marcum, in his various capacities as a judgment creditor of Bell who was insured by State Farm, had no right to bring this action under KRS 426.381. Marcum's theory is that as a creditor of Bell he is attempting to subject an indebtedness owing from State Farm to Bell. That statute provides that after the return of an execution by the proper officer, showing that no property was found to satisfy the execution, the execution plaintiff, 'may by an amended and supplemental petition filed in the action have the same re-docketed and join with the execution defendant or defendants any person believed to be indebted to him or them, or to hold money or other property in which he or they have any interest, or to hold evidences or securities for the same.' The statute also authorizes that the property be 'subjected to the satisfaction of the judgment.'

Marcum's amended and supplemental complaint followed a form of pleading long outmoded. He completely ignored CR 8.01 which directs that 'A pleading which sets forth a claim for relief, whether an original claim, counterclaim, cross-claim or third-party claim, shall contain (1) a short and plain statement of the claim showing that the pleader is entitled to relief and (2) a demand for judgment for the relief to which he deems himself entitled.' The pleading Marcum filed is subject to that rule. Fact after fact was stated until 10 1/2 pages of typing had been used to charge that the insurance company had not acted in good faith and was indebted to Bell and Marcum. This type of pleading has been condemned. Capdevielle v. American Commercial Alcohol Corp., D.C.N.Y., 1 F.R.D. 365; 6 Kentucky Practice, Clay 127, 132.

CR 41.02 provides that 'for failure of the plaintiff * * * to comply with these rules * * * a defendant may move for dismissal of an action or of any claim against him.' Bell and State Farm jointly moved to dismiss but restricted that motion to the alleged failure of Marcum to state a claim against the defendant; therefore, the violation of CR 8.01 was not raised.

Among other things Marcum alleged:

'* * * defendant insurance company contracted and agreed to defend said Ernest Earl Bell from all claims and demands arising out of the operation of a pickup truck involved in said accident, and providing that it, the insurance company, would have exclusive control of the handling of any claim that might arise under said policy and prohibiting said Bell from making settlement or otherwise compromise or adjust any claims that should be made against him for any act done or omitted to be done in the purview of said policy of liability insurance issued as aforesaid.'

'Said insurance company refused to settle said claims or to negotiate a reasonable settlement thereof at a time when it knew that should judgments be rendered in said action that they probably would be far in excess of said policy coverage and, therefore, violated the terms and provisions of said policy of insurance, in that it gave no consideration to the welfare of its insured, Ernest Earl Bell, but took into account its own selfish interest in failing and refusing to thus settle said claims as it could have done as aforesaid and, therefore, failed to act in good faith as the insurer of said Ernest Earl Bell, which resulted in said verdict and judgment against said Ernest Earl Bell far in excess of said insurance coverage provided in said policy, and said loss to said Bell was a direct and proximate result of said acts and conduct of bad faith of and on the part of the defendant, State Farm Mutual Automobile Insurance Company, * * *'

'Thus * * * insurance company is * * * indebted to Bell in * * * amount of $54,389.22, an indebtedness * * * within the meaning * * * of KRS 426.381.'

'* * * as such third pa...