Case Name: Dreyfus v. St. Paul Fire & Marine Ins. Co.
Court: Arkansas Supreme Court
Jurisdiction: Arkansas
Decision Date: 1964-11-30
Citations: 238 Ark. 724
Docket Number: 5-3350
Parties: Dreyfus v. St. Paul Fire & Marine Ins. Co.
Judges: Bobinson and Johnson, JJ., dissent.
Reporter: Arkansas Reports
Volume: 238
Pages: 724–734

Head Matter:
Dreyfus v. St. Paul Fire & Marine Ins. Co.
5-3350
384 S. W. 2d 245
Opinion delivered November 30, 1964.
Spitzberg, Bonner, Mitchell & Says, for appellant.
Wright, Lindsey, Jennings, Lester $ Shults, for appellee.

Opinion:
Paul Ward, Associate Justice.
This particular litigation began when Martin Dreyfus (hereafter referred to as appellant) sued the St. Paul Fire and Marine Insurance Company (hereafter at all times referred to as appellee) for $1,700 which is the amount Dreyfus paid to settle a former law suit filed against him. Appellee filed a motion for a summary judgment which was submitted to the trial court upon certain affidavits and exhibits, and later granted. Appellant now prosecutes this appeal. To understand tlie former law suit referred to, and to understand the issues presented on this appeal, it is necessary to set out in some detail the factual background.
Appellant who lives in this state is the owner of a large trucking company. He is protected by a liability policy issued by appellee, with a $25,000 liability limitation. In October 1959 one of appellant's employees, Roseoe Jackson, was driving a company truck in- the State of Mississippi (near Greenville) when it collided with an automobile occupied by Mrs. Tom Uzzle who was severely injured. Mrs. Uzzle filed suit in the U. S. District Court of Mississippi against appellant and Jackson, seeking $250,000 in damages for the alleged injuries. Appellant promptly notified appellee of the suit and he also hired an attorney in Greenville to protect him against a possible judgment in excess of $25,000. Appellee's attorney started negotiations for a settlement of the Uzzle claim on the basis of $15,000 but this offer was refused. Then appellant's attorney entered into negotiations with Uzzle's attorney in an effort to reach a settlement. This resulted in an offer by Uzzle's attorney to take $21,700 in full satisfaction. This offer of settlement was recommended by appellant's attorney to appellee's attorney. In response, appellee indicated it was unwilling to pay more than $20,000. Thereupon appellant told Uzzle's attorney he would accept the offer and pay $21,700. The settlement was consummated by appellee paying Uzzle $20,000 and by appellant paying her $1,700. Mrs. Uzzle gave separate releases to appellant and appellee at the request of appellant.
We have concluded after a careful study of the record and the able argument presented by both sides, that the trial court must be sustained in entering a summary judgment in favor of appellee. In considering this case it must be kept in mind that we are not dealing with a demurrer by appellee to appellant's complaint. Appellee's motion for a summary judgment was made pursuant to Ark. Stat. Ann. § 29-211 (Repl. 1962). The only point relied on for a reversal is that "The trial court erred in granting the motion of appellee for a summary judgment. ' '
* We are not convinced by appellant's principal argument. That argument, in essence, is: Under the decisions of this Court the crucial issue here is the good faith (or lack of negligence) on the part of appellee in refusing to pay all of the $21,700, and that said issue was (under the testimony presented) a question fox the jury and not for the trial court.
Appellant relies heavily on three decisions of this Court: Home Indemnity Company v. Snowden, 223 Ark. 64, 264, S.W. 2d 642; Southern Farm Bureau Casualty Ins. Co. v. Parker, 232 Ark. 841, 341 S.W. 2d 36; Southern Farm Bureau Casualty Ins. Co. v. Hardin, 233 Ark. 1011, 351 S.W. 2d 153. The decisions in the above cited cases are not decisive or controlling in the case here because those decisions were based on fact situations different from those of this case. In the Snowden case the insurer refused to pay anything on the $83,950 claim against the insured (Snowden). Thereupon Snow-den negotiated a settlement with the claimant (the injured party) for $8,000. The insurer (whose limit of liability was $5,000) again refused to pay anything. After the insured paid the $8,000 he sued insurer for all the money back, and received a judgment for that amount. On appeal we said, in effect, that under the circumstances the insurer acted in had - faith and must pay the limit of its policy. The Parker decision in principle was similar to the Snoivden decision. The injured party sued the insured and recovered a judgment for $12,500. The insurer's limit of liability was $5,000 and the judgment was settled for $6,500, the insurer paying $5,000 while Parker paid $1,500. The insured (Parker) sued and recovered judgment against the insurer for $1,500. On appeal we affirmed the judgment. The record showed the insurer could have settled the claim for $4,000, and we held, in effect, the insurer was "negligent" in failing to do so. In doing so we also approved the "had faith" rule — -holding in effect that the insurer acted in "had faith". Likewise, in the Hardin case there was evidence the insurer could have settled a $15,000 claim against the insured for $5,000 (the policy limit) but negligently or in bad faith failed to do so. The result was that to settle it cost over $13,000 of which amount the insurer paid $5,000. On appeal we approved a judgment for $8,810 which the insured recovered in the trial court against the insurer.
Under the undisputed factual situation in the case before us, we are unable to see how the question of bad faith or negligence on the part of appellee becomes an issue as-it did in the previously cited cases. All parties (the insurer, the insured, and the claimants) were represented by attorneys who are conceded to he experienced and competent. All parties and their attorneys knew all the pertinent facts. They knew appellee's limit of liability was $25,000; they knew appellant would be liable for any judgment in excess of $25,000; they knew Mrs. Uzzle had sued for $250,000; and, they knew more than we could possibly know here from the record about the nature of the injuries and about the evidence of negligence, or the lack thereof, on the part of Jackson.
It was under the above circumstances that appellant (through his attorney) initiated negotiations with the Uzzles to settle the law suit, even though the policy contains the following clause: ". . . the Company may make such, investigation, negotiation, and settlement of any claim or suit as it deems expedient." As a result of his own initiative appellant received an offer of settlement for $21,700 from-Mr. and Mrs. Uzzle. This offer, as previously stated, was communicated to appellee's attorney who informed appellant that his company would not be willing to pay more than $20,000 to settle the case. Without further consulting or advising with appellee, appellant accepted Uzzles' offer. The suit was then settled by appellant's paying $1,700 and appellee's paying $20,000. At no time did appellant indicate that he expected appellee to reimburse him for the $1,700 or that he himself was paying the amount under protest.
Under the facts and circumstances outlined above we must conclude that appellant paid the $1,700 voluntarily under the personal belief and legal advice that it was to his own best interest to do so. Accordingly to the only testimony on the point, if appellant had told appellee he was paying $1,700 under protest (or with the expectation of being reimbursed) appellee would not have paid the $20,000. The record, in our opinion, contains no evidence from which a jury could have found any bad faith or negligence on the part of appellee.
The exact issue here raised seems never to have been before this Court, but it has been decided adversely to appellant's contention in other jurisdictions. See St. Joseph Transfer & Storage Company v. Employer's Indemnity Corporation, 224 Mo. App. 221, 23 S.W. 2d 215 (K.C. Ct. of App.— Mo.—1930); Levin v. New England, Casualty Company, 101 Misc. Rep. 402, 166 N.Y.S. 1055 (Sup. Ct. of N.Y.—App. Term—1917); and Pickett v. Fidelity & Casualty Company of New York, 60 S.C. 477, 38 S.E. 160 (Sup. Ct. of So. Car.—1901). In the first case cited there is language which we adopt as applicable here: "Both parties had a right to enter into a contract of settlement, which would be in accord and satisfaction of the original contract of insurance." Likewise we approve as applicable here language found in the Levin caso:
"The defendant was under no duty to settle the claim. The policy gave it the option of contesting it, if it saw fit to do so. It had the right to await the decision of the court as to the claimant's demand, or to pay such sum in settlement as it saw fit. The plaintiff apparently believed that it was to his interest to settle, rather than face the uncertainty of a trial and a possible verdict against him, part of which he might have to pay. ' '
It is our conclusion therefore that the judgment of the trial court must be affirmed.
Affirmed.
Bobinson and Johnson, JJ., dissent.