White v. Goodville Mut. Cas. Co., 49690

• Decision Date: 14 July 1979
• Docket Number: No. 49690,49690
• Citation: 596 P.2d 1229,226 Kan. 191
• Parties: Marvin C. WHITE, Appellant, v. GOODVILLE MUTUAL CASUALTY COMPANY, Appellee.
• Court: Kansas Supreme Court

Page 1229

596 P.2d 1229

226 Kan. 191

Marvin C. WHITE, Appellant, v. GOODVILLE MUTUAL CASUALTY COMPANY, Appellee.

No. 49690.

Supreme Court of Kansas.

July 14, 1979.

Syllabus by the Court

1. The general rule, unless otherwise provided by statute or the insurance policy itself,

is that an automobile insurance company may not be made an original party to a lawsuit against its insured.

2. The Kansas Automobile Injury Reparations Act, K.S.A.1978 Supp. 40-3101, Et seq., does not authorize a direct action against an insurance company for injuries or damages caused by the negligence of its insured motorist.

3. In an action against an automobile insurance company for damages caused by the alleged negligence of its insured motorist the record is examined and it is Held the

trial court did not commit error in dismissing plaintiff's petition for failing to state a claim upon which relief could be granted.

Harry L. Najim, Wichita, argued the cause and was on the brief for appellant.

William Tinker, Jr., of McDonald, Tinker, Skaer, Quinn & Herrington, Wichita, argued the cause and Stanley J. Riney, Wichita, was with him on the brief for appellee.

M. Ralph Baehr, of Render & Kamas, Wichita, filed a brief amicus curiae for The Kansas Trial Lawyers Ass'n.

HOLMES, Justice:

This is an appeal by Marvin C. White from an order of the district court dismissing his case on the grounds the petition failed to state a claim upon which relief could be granted.

The facts are simple. Appellant's automobile and an automobile owned and driven by Joe Ackah-Yensu collided on January 7, 1977. Appellee, Goodville Mutual Casualty Company, was the insurance carrier for Mr. Ackah-Yensu, and a policy of liability insurance was effective on the collision date.

Appellant filed suit on July 11, 1977, in the district court of Sedgwick County, Kansas, seeking to recover $1,239.00 in damages from Joe Ackah-Yensu. Mr. Ackah-Yensu had moved in the meantime and appellant was unable to obtain personal service on him or ascertain his whereabouts. Appellant then instituted this action on August 26, 1977, against the insurance carrier for recovery of property damages, attorney fees and costs.

Appellee filed a motion to dismiss this latter action upon the grounds it failed to state a claim upon which relief could be granted. The district court of Sedgwick County, Kansas, sustained the motion concluding that Kansas law did not permit an injured party to maintain a direct action against the insurer of a negligent motorist. Appellant appeals from this dismissal requesting this court to adopt a direct action policy and readily concedes that no such action has heretofore been recognized in Kansas.

The sole issue on appeal is whether an injured party may maintain a direct action against the insurer of an alleged negligent motorist.

The prevailing general rule is that, unless provided by statute or the insurance contract itself, an automobile insurance company may not be made an original party to a lawsuit against its insured. 7 Am.Jur.2d, Automobile Insurance § 210.

The long-standing rule in Kansas is that the mere mention of defendant's insurance in an automobile collision case is reversible error. Smith v. Blakey, Administrator, 213 Kan. 91, 515 P.2d 1062 (1973); Bott v. Wendler, 203 Kan. 212, 453 P.2d 100 (1969). Kansas, by statute, does allow for disclosure of insurance during discovery; however, the statute specifically provides that even though discoverable the information so obtained is not thereby made admissible in evidence. K.S.A. 60-226(B )(2).

The question of a direct action against an insurer either by way of joinder with the insured as a defendant or by action against the insurer alone has been the subject of much writing and speculation. See generally, Porter, Compulsory Motor Vehicle Liability Insurance: Joinder of Insurers as Defendants in Actions Arising Out of Automobile Accidents, 14 Wake Forest L.Rev. 200 (1978); Note, Direct Actions Against Insurance Companies: Should They Join the Party?, 59 Cal.L.Rev. 525 (1971); Rudser, Direct Actions Against Insurance Companies, 45 N.D.L.Rev. 483 (1969); Schwab, The Louisiana Direct Action Statute, 22 La.L.Rev. 243 (1961); Degnan, Semi-Direct Action Against Liability Insurers, Current Problems, 13 Vand.L.Rev. 871 (1960); Note, Permissive Joinder as a Substitute for Excluding Evidence that Defendant is Insured, 59 Yale L.J. 1160 (1950); Appleman, Joinder of Policyholder and Insurer as Parties Defendant, 22 Marq.L.Rev. 75 (1938).

Appellant's principal argument is that the Kansas Automobile Injury Reparations Act, K.S.A.1978 Supp. 40-3101, Et seq., should be interpreted to permit the right of direct action. Liability insurance coverage is now mandatory under this Act as a condition precedent to the registration and operation of a motor vehicle in Kansas. This requirement is the basis of appellant's contention that a direct action against the insurer is permissible. Appellant attempts to support his argument by previous decisions of this court authorizing a direct action against insurers of public motor carriers under K.S.A.1978 Supp. 66-1,128. Sterling v. Hartenstein, 185 Kan. 50, 341 P.2d 90 (1959); Fitzgerald v. Thompson, 167 Kan. 87, 204 P.2d 756 (1949); Twichell v. Hetzel, 145 Kan. 139, 64 P.2d 557 (1937); Dunn v. Jones, 143 Kan. 218, 53 P.2d 918 (1936).

This argument requires a comparison and analysis of K.S.A.1978 Supp. 40-3107(B ) and K.S.A.1978 Supp. 66-1,128 including the judicial construction of the latter. The pertinent parts of the statutes are set out below:

K.S.A.1978 Supp. 40-3107:

"Every policy of motor vehicle liability insurance issued by an insurer to an owner residing in this state shall:

"(b) Insure the person named therein and any other person, as insured, using any such vehicle with the expressed or implied consent of such named insured, Against loss from the liability imposed by law for damages arising out of the ownership, maintenance or use of any such vehicle within the United States of America or the Dominion of Canada, subject to the limits stated in such policy;" (Emphasis supplied.)

K.S.A.1978 Supp. 66-1,128:

"(a) Except as provided in subsection (b), no certificate, permit, or license shall be issued by the state corporation commission to any 'public motor carrier of property,' 'public motor carrier of passengers,' 'contract motor carrier of property or passengers,' or 'private motor carrier of property,' until and after such applicant shall have filed with, and the same has been approved by the state corporation commission, a liability insurance policy, in such reasonable sum as the commission may deem necessary to adequately protect the interest of the public with due regard to the number of persons and amount of property involved, but in no event shall such sum be less than five thousand dollars ($5,000) for loss to property of others in any one accident, twenty-five thousand dollars ($25,000) for personal injury or death to any one person in any one accident, and fifty thousand dollars ($50,000) for injury or death to two or more persons in any one accident, Which liability insurance shall bind the obligors thereunder to pay compensation for injuries to persons and loss of or damage to property resulting from the negligent operation of such carrier." (Emphasis supplied.)

K.S.A.1978 Supp. 40-3107(B ) mandates coverage "against loss from the liability imposed by law," whereas K.S.A.1978 Supp. 66-1,128 mandates coverage which shall bind the carrier to "pay compensation for injuries . . . and . . . damage . . . resulting from the negligent operation of such carrier."

Our decisions which allow a direct action against the insurance carrier under 66-1,128 were based upon the intent of the legislature as determined from the statute. As we have no statute specifically allowing such direct actions, any such determination under 40-3107 must also be found to have been the intent of the legislature.

While liability insurance policies and indemnity insurance policies are both referred to as liability policies, the terms liability and indemnity are often confused and at times ignored. The distinction between the terms, however, is necessary in reviewing our prior decisions and in determining the legislative intent behind the...