Case Name: Jerry R. JARAMILLO, Plaintiff and Respondent, v. FARMERS INSURANCE GROUP, a corporation, and State Farm Insurance Co., a corporation, Defendants and Appellant
Court: Utah Supreme Court
Jurisdiction: Utah
Decision Date: 1983-09-01
Citations: 669 P.2d 1231
Docket Number: No. 18019
Parties: Jerry R. JARAMILLO, Plaintiff and Respondent, v. FARMERS INSURANCE GROUP, a corporation, and State Farm Insurance Co., a corporation, Defendants and Appellant.
Judges: OAKS and HOWE, JJ., concur.
Reporter: Pacific Reporter 2d
Volume: 669
Pages: 1231–1236

Head Matter:
Jerry R. JARAMILLO, Plaintiff and Respondent, v. FARMERS INSURANCE GROUP, a corporation, and State Farm Insurance Co., a corporation, Defendants and Appellant.
No. 18019.
Supreme Court of Utah.
Sept. 1, 1983.
Frank G. Noel, Salt Lake City, for defendants and appellants.
L. Charles Evans, Libby, Mont., Daniel Barker, Salt Lake City, for plaintiff and respondent.

Opinion:
HALL, Chief Justice:
Plaintiff brought this action to recover a balance of $2,694.13 claimed due under the terms of a settlement agreement reached in compromise of a personal injury action against C. Dale Sharp, defendant State Farm Insurance Company's insured. On the basis of stipulated facts, the trial court granted summary judgment in favor of plaintiff, and State Farm appeals.
Plaintiff sustained injuries as the result of a collision with a vehicle driven by Sharp. He received personal injury protection (PIP) benefits in the amount of $2,694.13 from his own no-fault insurance carrier, defendant Farmers Insurance Group. Plaintiff dismissed the personal injury action against Sharp when he was successful in negotiating the subject settlement agreement with State Farm.
It was stipulated that plaintiff and his attorney were aware that it was State Farm's intention to compromise the liability to both plaintiff and Farmers by payment of the sum of $12,000, which was to be disbursed as follows: $9,305.87 to plaintiff in full settlement of his claims, and $2,694.13 to Farmers as reimbursement for its payment to plaintiff of PIP benefits. That portion of their stipulation which so provides reads as follows:
5. Plaintiff and plaintiff's attorney, at the time of the settlement on October 20, 1980, because of previous discussions and negotiations with State Farm representatives, and because of the discussions between plaintiff's attorney and State Farm's representative at the time of settlement, knew or had reason to believe and assumed that State Farm intended at the time of the settlement that $9,305.87 would be paid to plaintiff in full settlement of his claims, and that $2,694.13 would go to Farmers as reimbursement to it for its payment to plaintiff of no-fault benefits, the total of the two being the sum of $12,000.00; and further because of said negotiations and discussions, at the time of settlement State Farm believed and assumed that plaintiff also intended the money to be disbursed as described above.
Following the agreement of settlement reached on October 20, 1980, two drafts were issued and mailed to plaintiff's attorney, one in the amount of $9,305.87, payable jointly to plaintiff and his attorney, and the other in the amount of $2,694.13, payable jointly to plaintiff and Farmers. The letter of transmittal, dated October 27, 1980, also recited the terms of settlement:
These drafts are being tendered in full in final settlement of all claims in this case of both your client and Farmer's [sic] Insurance subrogation claim for no-fault benefits.
Plaintiff executed an accompanying release, which recited as consideration therefor payment of the sum of $12,000. He negotiated the $9,305.87 check. He then requested Farmers to endorse the other check over to him. Farmers refused and plaintiff initially brought this action against only Fanners, seeking to recover the amount of the check. However, when State Farm stopped payment on the check, plaintiff joined State Farm as a party defendant. Farmers and State Farm filed separate appeals from the judgment in favor of plaintiff. Farmers has since withdrawn its appeal and is not a party to this proceeding.
On appeal, State Farm focuses on the settlement agreement as evidenced by the stipulation of the parties, and contends that plaintiff is bound by the terms thereof, and thus is not entitled to receive those funds which he knew were intended for the reimbursement of Farmers. Plaintiffs rejoinder is that the ruling of this Court in Allstate Ins. Co. v. Ivie precludes any deductions of no-fault benefits from the overall settlement figure. He further asserts that the release he executed recites, without ambiguity, payment of consideration therefor in the amount of $12,000, and that he is therefore entitled to receive that amount.
The crux of this case is not the ruling in Ivie; rather, it is whether the settlement agreement that compromised both the liability of State Farm's insured and that of its own statutory obligation to reimburse Farmers was valid and binding. We conclude that it was.
Ivie stands for the proposition that the Utah Automobile No-Fault Insurance Act does not confer on a no-fault insurer the right of subrogation to funds received by its insured in a subsequent action against the tortfeasor. There is nothing about the holding in that case which precludes a liability insurer from negotiating a settlement with the tort victim which compromises both its own liability and that of its insured.
It is also to be observed that Ivie arose out of a different set of facts. In that case, the tort victim reached a settlement with the liability insurer, but did so without any understanding or agreement that the settlement figure included funds to be used for the reimbursement of the no-fault insurer, whereas in the instant case, plaintiff admittedly understood that the $12,000 settlement figure included funds intended for the reimbursement of no-fault benefits paid by Farmers.
In light of the stipulation of the parties, it is clear that plaintiff outwardly accepted State Farm's terms of settlement. Any contrary intentions he may have had were left unexpressed and were not otherwise disclosed. It is well established in the law that unexpressed intentions do not affect the validity of a contract. The rule of law is as was stated in Allen v. Bissinger & Co.:
The apparent mutual assent of the parties, essential to the formation of a contract, must be gathered by the language employed by them, and the law imputes to a person an intention corresponding to the reasonable meaning of its words and acts. It judges of his intentions by his outward expressions and excludes all questions in regard to his unexpressed intention. If his words or acts judged by reasonable standard manifests an intention to agree to the matter in question, that agreement is established and it is immaterial what may be the real but unexpressed state of his mind upon the subject.
Furthermore, plaintiff accepted State Farm's tender of the sum of $9,305.87 and negotiated the check drawn in his favor in that amount. It was not until after he had done so that he then laid claim to the further sum of $2,694.13.
Plaintiff's remaining contention that the express terms of the release he executed entitle him to the full amount of the settlement figure also fails. This is so because when the release is contrasted with the stipulation of the parties, it does not reflect their understanding and intentions at the time the settlement agreement was reached. Therefore, the release is irrelevant to the issues presented by this appeal.
The judgment is reversed and the case is remanded for entry of judgment in favor of State Farm. No costs awarded.
OAKS and HOWE, JJ., concur.
. Utah, 606 P.2d 1197 (1980).
. Set forth in U.C.A., 1953, § 31-41-11.
. U.C.A., 1953, § 31-41-1, et seq.
. 62 Utah 226, 219 P. 539, 541-42 (1923).