author: PATRICIA BRECKENRIDGE, Judge.

text:
    Edith C. DECK, Appellant, v. Delmar TEASLEY, Respondent.
    No. SC 90628.
    Supreme Court of Missouri, En Banc.
    Oct. 26, 2010.

      Jeff Bauer and Steven Garner, Strong-Garner-Bauer PC, James E. Corbett, David T. Tunnell, Matthew W. Corbett, Daniel P. Molloy, Corbett Law Firm PC, Springfield, for Appellant.
    M. Sean McGinnis, Jason Coatney, Keck & Austin LLC, Springfield, for Respondent.
   PATRICIA BRECKENRIDGE, Judge.

Edith Deck appeals a jury verdict entered in her favor and against Delmar Teasley in a negligence action arising out of an automobile collision. On appeal, Ms. Deck argues the trial court erred in limiting evidence of the value of the medical treatment she received to the amount actually paid for the treatment, rather than the amount she was billed. She argues her evidence, that the value of her medical treatment was the amount billed by her health care providers, was sufficient to rebut the presumption in section 490.715 that the dollar amount necessary to satisfy the obligation to her health care providers constituted the value of her medical treatment. She also claims that if section 490.715 permits the trial court to make factual determinations as to damages, the statute violates her right to trial by jury guaranteed by the Missouri Constitution. Ms. Deck further claims the trial court erred by excluding expert testimony regarding the costs of possible future medical treatment on the basis that such costs were speculative. Because the trial court misapplied the law in finding that Ms. Deck did not rebut the statutory presumption and in ruling inadmissible her evidence that the value of the medical treatment she received was the amount she was billed by her health care providers, the portion of the trial court’s judgment assessing the amount of Ms. Deck’s damages is reversed. Accordingly, the cause is remanded for a new trial on the issue of damages only. In all other respects, the judgment is affirmed.

Factual and Procedural Background

In May 2003, Delmar Teasley drove his vehicle into the back of a line of vehicles stopped at a traffic signal, causing the vehicle behind Edith Deck to collide with her vehicle. Ms. Deck sustained injuries in the collision and underwent surgery, physical therapy and follow-up care. Ms. Deck was billed $27,991.30 for her treatment. The amount actually paid for the treatment after adjustments was $9,904.28. Payments were made by Medicare, supplemental insurance and Ms. Deck, with most of the expenses being paid by Medicare.

Ms. Deck filed the present suit against Mr. Teasley, alleging that he was negligent in causing the collision and her resulting injuries. In her petition, Ms. Deck sought damages for past medical expenses. Before trial, Mr. Teasley filed a motion to determine the value of medical treatment rendered pursuant to section 490.715.5. The motion asserted that the dollar amount necessary to satisfy Ms. Deck’s obligations to her health care providers was the amount actually paid to those providers.

The legislature amended section 490.715.5 in 2005 to limit the evidence litigants could introduce regarding the value of medical treatment rendered to an injured party. The legislation created a re-buttable presumption that the dollar amount necessary to satisfy a plaintiffs financial obligation to his or her health care provider constituted the value of the medical treatment rendered. Section 490.715.5(1). The amendment also created a non-exclusive list of factors to be considered in determining the value of medical treatment rendered. Section 490.715.5(2)(a)-(c). In response to Mr. Teasley’s motion, Ms. Deck filed suggestions in opposition arguing, inter alia, that the amount charged in her medical bills represented the value of her medical treatment.

At a hearing on the motion, three witnesses testified concerning the value of Ms. Deck’s treatment. The testimony included an offer of proof by Ms. Deck that the amount billed by a health care provider is a better indicator of the value of the medical treatment rendered than the amount reimbursed by Medicare. At the conclusion of the offer of proof and after hearing the arguments of counsel, the trial court found that the presumption in section 490.715 was not rebutted and determined that the value of medical treatment rendered to Ms. Deck was the amount actually paid for Ms. Deck’s medical treatment, together with any amount she still was obligated to pay.

At the jury trial of Ms. Deck’s negligence claim, the court precluded Ms. Deck from presenting evidence of unpaid medical expenses she was not obligated to pay and limited her to presenting evidence of her medical expenses that actually were paid or that she still was obligated to pay. During trial, Ms. Deck made an offer of proof regarding the value of her medical expenses, again attempting to rebut the presumption of value under section 490.715. At the conclusion of this offer of proof, the trial court again ruled that Ms. Deck could not present evidence to the jury of her medical bills that had not been paid by her or on her behalf.

At the close of all the evidence, the jury rendered a verdict in favor of Ms. Deck and assessed damages in the amount of $42,500. Ms. Deck appeals. This Court has exclusive jurisdiction of her appeal because she challenges the validity of section 490.715. Mo. Const, art. V, sec. 3.

Statutory Presumption Rebutted

On appeal, Ms. Deck first asserts that the trial court erred in ruling her claim for past medical expenses was limited to the amount actually paid for the treatment she received. She claims she rebutted the presumption in section 490.715.5 — that the dollar amount necessary to satisfy the financial obligation to her health care providers constituted the value of her medical treatment — by presenting evidence that the value of her medical treatment was the amount billed rather than the amount paid. Ms. Deck argues that on rebutting the presumption, she was entitled to introduce evidence to the jury of her total medical bills.

The statute at issue in this case, section 490.715, codifies the common law collateral source rule and modifies it in certain respects. The common law collateral source rule is an exception to the rule that tort damages are only compensatory. Smith v. Shaw, 159 S.W.3d 830, 832 (Mo. banc 2005). Specifically, the rule prevents a tortfeasor from reducing his or her liability to a plaintiff by proving that payments were made to the plaintiff by a collateral source. Id. Subsection 2 of section 490.715 permits a defendant who personally has, or by an insurer or representative, paid all or any part of a plaintiffs special damages to introduce evidence that someone other than the plaintiff paid the amount, but the defendant cannot identify any source of the payment. Section 490.715.2. A defendant who elects to introduce such evidence waives the right to a credit against a judgment as authorized by section 490.710. Section 490.715.3.

Subsection 5 of section 490.715, newly enacted in 2005, governs the admissibility of evidence regarding a specific type of damages, the value of medical treatment rendered to a party. It provides that evidence of the dollar amount necessary to satisfy the financial obligation to health care providers is admissible at trial and creates the rebuttable presumption that such amount represents the value of the medical treatment rendered. On the motion of any party, the court may determine whether other evidence of value is admissible at trial and delineates that the other evidence may include, but is not limited to: the medical bills incurred; the amount actually paid for the medical treatment; or the amount or estimate of the amount not paid that such party is obligated to pay in the event of a recovery. Finally, subsection 5 provides that, no matter what evidence is admissible at trial, that evidence shall not identify any person who paid for the medical treatment. Subsection 5 reads:

(1) Parties may introduce evidence of the value of the medical treatment rendered to a party that was reasonable, necessary, and a proximate result of the negligence of any party.
(2) In determining the value of the medical treatment rendered, there shall be a rebuttable presumption that the dollar amount necessary to satisfy the financial obligation to the health care provider represents the value of the medical treatment rendered. Upon motion of any party, the court may determine, outside the hearing of the jury, the value of the medical treatment rendered based upon additional evidence, including but not limited to:
(a)The medical bills incurred by a party;
(b) The amount actually paid for medical treatment rendered to a party;
(c) The amount or estimate of the amount of medical bills not paid which such party is obligated to pay to any entity in the event of a recovery.
Notwithstanding the foregoing, no evidence of collateral sources shall be made known to the jury in presenting the evidence of the value of the medical treatment rendered.

Section 490.715.

The rebuttable presumption created by section 490.715.5 is that the dollar amount paid to satisfy the financial obligation to the health care providers is the value of the medical treatment rendered. The effect of that presumption is governed by the general law of presumptions. A presumption places the burden of producing substantial evidence to rebut the presumed fact on the party against whom the presumption operates. Terminal Warehouses of St. Joseph, Inc. v. Reiners, 371 S.W.2d 311, 316 (Mo.1963). When substantial evidence is produced rebutting the presumed fact, the ease is decided on the basis of the evidence as if no presumption existed. Duff v. St. Louis Mining & Milling Corp., 363 Mo. 944, 255 S.W.2d 792, 793-94 (1953). In other words, when a presumption is rebutted, it disappears from the case and the fact-finder receives the issue free from any presumption. Reiners, 371 S.W.2d at 316. However, the facts that gave rise to the presumption remain in the case and along with the facts to the contrary, are considered by the fact-finder like any other evidence. Id. at 316-17 (citing Michler v. Krey Packing Co., 363 Mo. 707, 253 S.W.2d 136, 140 (1952)).

To decide whether a presumption is rebutted, “[t]he trial judge need only determine that the evidence introduced in rebuttal is sufficient to support a finding contrary to the presumed fact.” 2 McCormick on Evidence § 344 (Kenneth S. Broun et al. eds., 6th ed.2006). In Missouri, the quantum of proof generally required to rebut a presumption is “substantial evidence.” See Reiners, 371 S.W.2d at 316; see also Wills v. Townes Cadillac-Oldsmobile, 490 S.W.2d 257, 260 (Mo.1973). In the context of presumptions, this Court has held that “substantial evidence” is “ ‘evidence which, if true, has probative force upon the issues, i.e., evidence favoring facts which are such that reasonable men may differ as to whether it establishes them....”’ Reiners, 371 S.W.2d at 317 (internal citations omitted).

The rebuttable presumption in section 490.715.5 requires the trial court to determine if the party seeking to rebut the presumption has presented substantial evidence that the value of medical treatment rendered is an amount different from the dollar amount necessary to satisfy the financial obligations to health care providers. If such substantial evidence is proffered, the statutory presumption is rebutted. When the presumption is rebutted, the party’s other evidence of value, as well as the amount necessary to satisfy the financial obligations, is admitted at trial as if no presumption exists. If the presumption is not rebutted, then the only evidence of the value of medical treatment rendered is the dollar amount necessary to satisfy the financial obligation to the health care providers.

In the pretrial hearing on Mr. Teasley’s motion to determine the value of medical treatment rendered to Ms. Deck, Christopher Bell, a customer care supervisor for St. John’s Health Care System (SJHCS), and Janie Mitchell, a reimbursement specialist for St. John’s Physicians and Clinics (SJPC), were called as witnesses. Mr. Bell testified that the amounts billed by SJHCS for the medical services provided to Ms. Deck were customary and reasonable. He further testified that when SJHCS attempts to collect an outstanding bill it seeks the full amount of the bill. Finally, he testified that the amount billed by SJHCS is what it considers its services to be worth. Ms. Mitchell similarly testified that the total amount billed by SJPC for health care services provided to Ms. Deck was customary, fair and reasonable. Ms. Mitchell also stated that when SJPC attempts to collect an outstanding bill, it seeks the full amount of the bill rather than the amount reimbursed by Medicare. Ms. Mitchell also testified that the face value of its medical bills is what SJPC considers its services to be worth.

Ms. Deck also presented the testimony of Gary Smith, a health care consultant. Prior to consulting, he worked as executive vice president at Cox Hospital for approximately 25 years and in executive roles for other hospitals and clinics. Mr. Smith testified that the amount reimbursed by Medicare for a patient’s medical bill usually does not cover the health care provider’s cost of business. Because the amount paid by Medicare is less than the cost of the medical services, Mr. Smith testified that, in his opinion, the amount reimbursed by Medicare does not represent the value of the medical services provided by the health care provider. Mr. Smith further testified that the amount reimbursed by Medicare does not take into account the amount of time the health care provider spends with a patient, the number of staff members attending a patient or the hospital’s costs. Finally, Mr. Smith stated that the face value of Ms. Deck’s bills were fair and reasonable.

At trial, Ms. Deck made an offer of proof regarding the value of her medical expenses, again attempting to rebut the presumption of value under section 490.715. She called as a witness Dr. Shane Bennoch, a physician and former emergency department director at Cox Hospital, who testified that the dollar amount necessary to satisfy the financial obligation to the health care providers did not represent the value of the services provided to Ms. Deck and, specifically, that Medicare does not maintain that its reimbursement rates represent the value of medical services. He further testified that the amount billed by a health care provider is a better indicator of the value of the goods and services than the amount that Medicare reimburses.

Ms. Deck’s evidence presented at the pretrial hearing and the offer of proof that the amount she was billed is the value of the medical treatment rendered to her is substantial evidence that, if true, has probative force upon the issue of the value of the medical treatment rendered such that reasonable persons may differ as to whether it establishes the value. Reiners, 371 S.W.2d at 317. In light of such substantial evidence, the trial court misapplied the law in ruling that the statutory presumption in section 490.715.5 was not rebutted and in precluding Ms. Deck from presenting evidence of the amount of the medical bills she incurred to the jury at trial.

Mr. Teasley argues that allowing Ms. Deck to rebut the presumption under section 490.715 and present evidence of the unpaid portions of her medical bills to the jury would result in her receiving a windfall. He argues the legislature amended section 490.715 to prevent such windfalls. Mr. Teaslejfs policy argument overlooks the language of section 490.715 creating a “rebuttable presumption that the dollar amount necessary to satisfy the financial obligation to the health care provider represents the value of the medical treatment rendered.” Section 490.715.5(2) (emphasis added). The legislature’s use of a “rebut-table presumption” is consistent with its recognition that the item of damage for which recovery is sought is the value of services rendered, not a reimbursement of amounts paid by a collateral source. Therefore, the legislature permitted a party to introduce evidence that a figure other than the amount actually paid represented the value of the services rendered in the particular case.

The trial court further erred in the present case because the court did not limit its role to determining whether the presumption was rebutted by substantial evidence. Instead, the trial court weighed the competing evidence presented by both parties concerning the value of medical treatment and determined that the value of medical treatment rendered to Ms. Deck was the amount actually paid for Ms. Deck’s medical treatment, together with any amount she was still obligated to pay. The language in section 490.715.5(2) that “the court may determine ... the value of the medical treatment rendered” could be read, as the trial court did in this case, to indicate that the trial court makes the final determination of the value of medical treatment, rather than submitting the issue to the jury for adjudication. However, such an interpretation is not supported by a full reading of section 490.715.5 because the creation of the rebuttable presumption indicates that, if the presumption is rebutted, the jury would be presented evidence as though no presumption existed. Additionally, the final sentence of section 490.715.5 — “[n]otwithstanding the foregoing, no evidence of collateral sources shall be made known to the jury in presenting the evidence of the value of the medical treatment rendered” — clearly contemplates that evidence regarding the value of medical treatment will be presented to the jury.

Having determined that the trial court erred in excluding Ms. Deck’s evidence of the value of her medical treatment, the Court must determine whether that error was sufficiently prejudicial such to justify reversal. An error is prejudicial if it appears from the record that the error “materially affected the merits of the action.” Newton v. Ford Motor Co., 282 S.W.3d 825, 831 (Mo. banc 2009) (citing Rule 84.13(b)).

In the present case, Ms. Deck proffered evidence that the value of the medical treatment rendered to her was $27,991.30. However, due to the trial court’s exclusion of that evidence, the jury only was permitted to hear evidence that the value of her medical treatment was $9,904.28, the amount that Ms. Deck, Medicare and supplemental insurance actually paid for the treatment after adjustments. The exclusion of evidence of the additional $18,087.02 in potential damages the jury should have been allowed to consider materially affected the merits of the action. See Accomac Realty Co. v. City of St. Louis, 347 Mo. 1224, 152 S.W.2d 100, 103 (1941). Accordingly, the trial court’s exclusion of Ms. Deck’s evidence of the value of medical treatment was prejudicial. Ms. Deck is entitled to a new trial on the issue of damages.

Expert Testimony Regarding the Cost of Future Medical Treatment

In her final point, Ms. Deck claims the trial court erred in excluding Dr. Ben-noch’s testimony regarding the costs of her possible future medical treatment. Specifically, Ms. Deck asserts that “[t]he trial court erred in excluding expert testimony pertaining to appellant’s possible future medical condition and treatment because such evidence is clearly admissible under Missouri law, in that it assists the trier of fact in evaluating the nature and extent of appellant’s injuries.” Because the case is remanded, the Court need not decide whether the trial court’s exclusion of Dr. Bennoch’s testimony constituted reversible error. Nevertheless, because the issue may arise on remand, it will be discussed briefly.

The facts that give rise to this point revolve around Dr. Bennoch’s testimony regarding Ms. Deck’s possible need for surgery on her injured shoulder. Specifically, Dr. Bennoch testified he would recommend a repeat MRI of Ms. Deck’s shoulder; if the MRI showed further deterioration, then a more extensive arthroscopic surgery would be required. When Dr. Bennoch was questioned about the cost of such surgery, Mr. Teasley’s attorney objected on the basis that the question called for speculation. In response, Ms. Deck’s attorney argued that future medical treatment conditioned on the outcome of care is admissible. Ultimately, the trial court sustained Mr. Teasley’s objection and disallowed evidence of the cost of Ms. Deck’s possible future surgery as speculative because Dr. Bennoch did not testify to a reasonable degree of medical certainty that surgery would be needed.

In an offer of proof, Dr. Bennoch estimated that future surgery would cost between $15,000 and $20,000 and that physical therapy would cost several thousand additional dollars. On cross-examination, Dr. Bennoch confirmed his earlier testimony that Ms. Deck’s need for future medical treatment was dependent on the results of a future MRI; therefore, surgery was only a possibility and future treatment was speculative. At the end of the offer of proof, Ms. Deck again sought admission of Dr. Bennoch’s testimony regarding the cost of her future care, which the trial court denied.

Because of the passage of time since trial, the circumstances surrounding Ms. Deck’s need for future medical treatment may have evolved. For example, Ms. Deck’s condition may have changed or she may have had intermittent MRI scans, which could alter Dr. Bennoch’s testimony regarding the possibility of future treatment. In the event Ms. Deck offers the same testimony from Dr. Bennoch on remand, the trial court’s decision to admit or deny such evidence should be informed by this Court’s decision in Swartz v. Gale Webb Transp. Co., 215 S.W.3d 127 (Mo. banc 2007).

Swartz involved the testimony of two physicians regarding the possibility of a plaintiffs need for future surgery. Id. at 129. While each physician testified the plaintiff had an increased risk of surgery, neither could testify to a reasonable degree of medical certainty that surgery would be needed. Id. at 130. In fact, one of the physicians testified that the need for future surgery was “speculation.” Id. Nevertheless, the Court held the testimony of both physicians, which included an estimate of the cost of the future surgery, was admissible for the purpose of establishing the nature and extent of the plaintiffs present injuries. Id. at 133.

In reaching its holding, the Court distinguished between present injuries and future consequences. The Court noted that a plaintiff only is entitled to recover for an injury not yet occurring if the injury is reasonably certain to occur in the future. Id. at 130. However, the Court noted that expert testimony regarding a plaintiffs increased risk of future consequences is admissible to aid the jury in assessing the extent and value of the plaintiffs present injuries “even if those future consequences are not reasonably certain to occur.” Id. at 131. The Court noted that other Missouri cases have admitted expert testimony regarding the possibility of future surgery and the potential costs of such treatment, despite the fact that such treatment was not reasonably certain to occur. Id.

On remand, the trial court should consider the effect of Swartz and the cases cited therein to determine the admissibility of evidence regarding Ms. Deck’s possible future medical treatment.

Conclusion

Because Ms. Deck presented substantial evidence that her total medical bills represented the value of her medical treatment, she rebutted the presumption under section 490.715 that the dollar amount necessary to satisfy the obligation to her health care providers constituted the value of her medical treatment. Therefore, Ms. Deck should have been allowed to present evidence of the total amount of her medical bills to the jury. The trial court misapplied the law by refusing to admit evidence of the amount of Ms. Deck’s medical bills, and Ms. Deck was prejudiced by the trial court’s error. Accordingly, the portion of the judgment of the trial court awarding Ms. Deck damages is reversed and the case is remanded for a new trial on the issue of damages only. In all other respects, the judgment is affirmed.

All concur.

      . Unless otherwise noted, all statutory refer-enees are to RSMo Supp.2009.

      . The legislative history of the bill indicates an unsuccessful attempt was made to prohibit the introduction of unpaid medical bills. HB 393, as originally introduced, would have amended section 490.715.5 to read:
      Parties may introduce evidence of the amount actually paid for medical treatment rendered to a party that was reasonable, necessary, and the proximate result of the negligence of any party. No party may introduce evidence of billing for an amount in excess of the amount actually paid for said medical treatment for which payment was made, and if no payment was made, then a party may only introduce evidence of the amount necessary to satisfy the financial obligation remaining to the health care provider.
      Section 490.715.5 of HB 393, 93rd Gen. As-semb., 1st Reg. Sess. (Mo.2005) (unenacted).

      . Of particular significance is the Court's discussion of Breeding v. Dodson Trailer Repair, Inc., 679 S.W.2d 281, 283-84 (Mo. banc 1984) (testimony regarding cost of possible future surgery was admissible despite fact that expert testified that surgery was conditioned on failure of other treatment and was not reasonably certain).


source: Caselaw Access Project

author: DANIEL E. SCOTT, Chief Judge.

license: Public Domain

text:
    Elane JOHNSON, Respondent, v. Rosalyn SADDLER, Defendant, and Brian K. Saddler, Appellant.
    No. SD 29815.
    Missouri Court of Appeals, Southern District, Division Two.
    April 7, 2010.
    Motion for Rehearing and/or Transfer to Supreme Court Denied April 29, 2010.
    Richard L. Schnake, Neale & Newman, LLP, Springfield, for Appellant.
    Brian E. Hamburg, Martin Chmielik, Hamburg & Lyons, LLC, Springfield, for Respondent.
   DANIEL E. SCOTT, Chief Judge.

Brian Saddler challenges an adverse money judgment relating to forged deeds of trust. We must affirm unless the judgment is not supported by substantial evidence, is against the weight of the evidence, or erroneously declares or applies the law. Our primary concern is the correctness of the result. Thus, we will affirm if we can do so on any reasonable theory, even if different from that expressed by the trial court. See Kiesling v. Andrews, 273 S.W.3d 67, 69-70 (Mo.App.2008).

The trial court proceedings involved many parties, facts, claims, and issues immaterial to this appeal. We limit our opinion accordingly.

Background

Brian’s mother, Rosalyn Saddler, and her sister, Elane Johnson, jointly inherited real estate in Springfield, Missouri in early 2001. Rosalyn and Brian wanted to mortgage the property to help them get a business loan. Elane, who lived in Colorado, refused to sign a deed of trust.

Brian was irate. He caused Elane’s signature to be forged to the necessary instruments and got an acquaintance to notarize them. Brian and Rosalyn used these forgeries to borrow $239,000 from a Springfield bank, which recorded the forged deeds of trust in October 2001, all without Elane’s knowledge or consent.

Months later, Elane found out and filed an eight-count petition against Brian and others. Brian did not appear, in person or by counsel, at the bench trial of the fraud count now challenged. A $155,629 judgment was entered against him.

Issues and Analysis

Brian’s appeal hinges on his claims that Elane did not prove the elements of fraudulent misrepresentation (Point I) or fraudulent concealment (Point II) against him, and thus “has not proven all of the elements of fraud required to sustain her claim.” He essentially argues that unless the judgment can be affirmed on a fraudulent misrepresentation or fraudulent concealment theory, it cannot stand.

In contrast, Elane maintained at trial that “there’s more kinds of fraud than just fraudulent representations,” and that “we’re not really necessarily saying that Brian ... is fraudulently representing anything by forging a document. That’s not what we have to do.” Indeed, she did not plead “fraudulent misrepresentation” or “fraudulent concealment” as such, or the elements of either theory. Her “Fraud” count incorporated the petition’s other allegations, then asserted that Brian presented forged deeds of trust to the bank, resulting in damage to Elane equal to half the property’s fair market value, which the trial court ultimately found.

Neither party cites our opinion in Memco, Inc. v. Chronister, 27 S.W.3d 871 (Mo.App.2000), yet we find it instructive. While employed as Plaintiffs office manager, Defendant surreptitiously embezzled large sums by, inter alia, writing false checks and filing false IRS reports. Id. at 873-74. After learning of Defendant’s schemes, Plaintiff sued in two counts:

Paragraphs one through eight of Plaintiffs petition contained general allegations claiming, among other things, Defendant acquired money from Plaintiff by “false pretenses” and “actual fraud.” Count I of the petition, entitled “Conversion,” incorporated all general allegations, then alleged (a) Plaintiff owned the missing funds, (b) Plaintiff was entitled to possession thereof, and (c) Plaintiff demanded Defendant return the money, but she refused to do so. Also within this count, Plaintiff specifically realleged the funds were obtained by “false pretenses ... and ... actual fraud” which commenced “as early as January of 1992,” and Plaintiff incurred various expenses in uncovering the “wrongfully appropriated” money.

Id. at 874. Plaintiff dismissed its Count II for punitive damages prior to a non-jury trial at which Plaintiff was granted a $167,574 judgment. Id.

Defendant sought reversal on appeal, arguing that since conversion lies only for specific chattels, Plaintiff had pleaded and obtained judgment on an unavailable remedy. Id. at 875. We affirmed the judgment despite our agreement that “an action for conversion does not lie upon these facts.” Id. at 875 n. 2.

In arguing this point, Defendant assumes the trial court entered judgment based on “conversion” principles. Such assumption ignores other relevant parts of the record, including allegations in Plaintiffs petition which are broad enough to state an action for either money had and received or an action for fraud. Also, Defendant’s argument disregards evidence in the record which supports recovery on theories other than conversion.

While it is axiomatic one cannot recover for a cause of action not pleaded, Browning-Ferris v. Landmark Systems, 822 S.W.2d 569, 571[1] (Mo.App.1992), it is also true a party can plead alternative causes of action in a petition and may do so in one count. Rule 55.10; Browning-Ferris at 571 [2]. “‘The character of a cause of action must ... be determined from the facts stated in the petition and not by the prayer or the name given the action.’ ” McKinnon v. McKinnon, 896 S.W.2d 90, 91 (Mo.App.1995) (quoting McMenamy v. Main, 686 S.W.2d 874, 876 (Mo.App.1985)). It is the facts stated in the petition, along with the relief sought, which under our system of code pleading are to be looked at to determine the cause of action, rather than the form of the petition. Alarcon v. Dickerson, 719 S.W.2d 458, 461[2] (Mo.App.1986).

Although Plaintiffs Count I was entitled “Conversion,” the facts stated therein referred to and supported multiple causes of action. Plaintiff realleged its general allegations within this count. Among these were claims Defendant obtained money owned by Plaintiff by means of “false pretenses” and “actual fraud.” Plaintiff specifically stated the manner Defendant used to accomplish her subterfuge, which supported claims for money had and received and fraud. Also within Count I, Plaintiff claimed Defendant “intentionally ... appropriated and converted” funds, obtained the funds “by false pretenses ... and engaged in actual fraud,” and Plaintiff “demanded a return of the funds wrongfully taken.”

“Fraud is defined as an instance or act of trickery or deceit especially when involving misrepresentation; an act of deluding.” Smile v. Lawson, 435 S.W.2d 325, 328 (Mo.banc 1968). “ ‘Fraud’ is a malfeasance. That is, ‘fraud’ is a positive act resulting from a willful intent to deceive.” Harris v. Penninger, 613 S.W.2d 211, 214[2] (Mo.App.1981).

The claims asserted in the petition are broad enough to state a cause of action for fraud. The purpose of a pleading is to limit and define the issues to be tried in a case and put the adversary on notice thereof. See Luethans v. Washington University, 894 S.W.2d 169 (Mo. banc 1995). “A petition is sufficient if it invokes principles of substantive law which entitle the plaintiff to relief and informs the defendant of what the plaintiff will attempt to establish at trial.” Empiregas, Inc. of Rolla v. Whitson, 902 S.W.2d 347, 348[4] (Mo.App.1995). Plaintiff repeatedly used the term “fraud” throughout the petition. Furthermore, Plaintiff described the acts which constituted the fraud.

Id. at 875 (footnotes omitted). Defendant could not complain that she was unaware of what Plaintiff intended to prove at trial. The petition was broad enough to state an action for fraud, and Defendant had notice of this claim. Id. at 875-76. The evidence also supported a fraud case since “Defendant’s misconduct was uncontradicted.” Id. at 876. The judgment “referred to Plaintiff as ‘the defrauded party’ and found ‘[t]he Defendant hid the results of her fraud and covered it up by her actions.’ In that same writing, the trial judge cited cases grounded in fraud. The necessary conclusion is the judgment was based on fraud.” Id.

We are guided also by Tongay v. Franklin County Mercantile Bank, 735 S.W.2d 766 (Mo.App.1987). The Tongays sought damages from the bank for slandering title to their property by recording a deed of trust that the bank knew was forged. Id. at 767-69. The opinion discusses slander of title’s three elements: (1) false words; (2) maliciously published; (3) causing pecuniary loss or injury to the plaintiff. Id. at 770.

As to the first element, the Tongays “clearly averred that the deed of trust recorded was forged, i.e., the words were false.” Id. Recordation of a false instrument states a claim under slander of title. Id. The second element, malicious publication, means the representation not only was without legal justification or excuse, but was known to be false (i.e., not innocently or ignorantly made). Id. The third element was not at issue, since “Missouri does not require proof of special damages.” Id. Even if the Tongays suffered no substantial actual damages, they “would be entitled on proof of such charges to recover an award of nominal actual damages.” Id.

Such reasoning supports the judgment here. The forged deeds of trust were false words. Brian maliciously published them by presenting them to the bank, knowing they were forged, without legal justification or excuse. He has not challenged Elane’s damages or causation on appeal.

Conclusion

Memco and Tongay convince us that Brian’s appeal lacks merit. Memco proves that actionable fraud is not confined to the misrepresentation/concealment theories and scenarios urged by Brian. In conjunction with Tongay and the trial court’s findings, Memco also supports affirmance here on slander of title grounds. Elane pleaded and proved facts supporting an action in damages; we are not bound by the label or name she ascribed to the action. Goe v. City of Mexico, 64 S.W.3d 836, 840 (Mo.App.2001); Memco, 27 S.W.3d at 875. See also Euge v. Golden, 551 S.W.2d 928, 932 (Mo.App.1977)(fraud allegation, although unclear, stated such a cause of action and also stated a claim for damages for slander of title).

Brian’s arguments for reversal fail. The judgment is supportable on multiple grounds. We affirm.

LYNCH, P.J., and RAHMEYER, J., concur.

      1. Our supreme court recently abrogated Luethans on other grounds. See Keveney v. Missouri Military Academy, 304 S.W.3d 98 (Mo. banc 2010).

        . Brian's "ancillary” point cites a judgment typo which, given our foregoing analysis, is not prejudicial. See Heritage Warranty Ins., RRG, Inc. v. Swiney, 244 S.W.3d 290, 294 (Mo.App.2008)(appellate review is for prejudice, not mere error).


author: ROY L. RICHTER, Judge.

text:
    The BUSINESS BANK OF SAINT LOUIS, Appellant, v. OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY, Respondent.
    No. ED 93569.
    Missouri Court of Appeals, Eastern District, Division Five.
    May 4, 2010.
    Motion for Rehearing and/or Transfer to Supreme Court Denied June 8, 2010.
    Application for Transfer Denied Aug. 31, 2010.

      Steven Schwartz, Matthew G. Koehker, Brown & James, P.C., St. Louis, MO, for Appellant.
    Robert D. Blitz, Ellen Dunne, Colleen C. Jones, Douglas A. Stockenberg, St. Louis, MO, for Respondent.
   ROY L. RICHTER, Judge.

The Business Bank of St. Louis (“Bank”) appeals the trial court’s judgment granting Old Republic National Title Insurance Company’s (“Old Republic”) motion for summary judgment. Finding no error, we affirm.

I. BACKGROUND

This case concerns the scope of an agency agreement between two title companies, Old Republic and Hillsboro Title Company (“Hillsboro”). Old Republic is a Minnesota corporation with offices in Clayton, Missouri, and Hillsboro is a Missouri corporation with its principal place of business in Hillsboro, Missouri. Both companies are in the business of issuing title commitments and title insurance policies. Old Republic issues commitments and policies for real estate in several states, including Missouri. On January 28, 1994, Old Republic and Hillsboro entered into an agency agreement titled “Agreement for Appointment of Policy Issuing Agent for Old Republic National Title Insurance Company” (“Agency Agreement”). The Agency Agreement appointed Hillsboro as a title policy-issuing agent for Old Republic.

The disagreement at issue stems from a different agreement between Hillsboro and three other parties, including Bank, titled “Construction and Disbursing Escrow Agreement” (“Construction Escrow Agreement”). The Construction Escrow Agreement relates to the construction of a subdivision on property for which Hillsboro, as Old Republic’s agent, issued a title insurance commitment. Bank ultimately sued Old Republic and Hillsboro for Hillsboro’s acts in connection with the Construction Escrow Agreement on the theory that Hillsboro was acting as Old Republic’s express and/or apparent agent when it committed the acts in question.

Since this case concerns the scope of the Agency Agreement between Old Republic and Hillsboro, we first set forth some terms of that Agreement. Section I of Hillsboro’s and Old Republic’s Agency Agreement is titled “Appointment of Agent,” and provides as follows:

[Old Republic] appoints [Hillsboro] a policy issuing agent for [Old Republic] for the purpose of signing, countersigning and issuing commitments, binders, title reports, certificates, guarantees, title insurance policies, endorsements and other agreements under which [Old Republic] assumes liability for the condition of title ... covering real estate located in the following county or counties: Franklin, Jefferson, Ste. Genevieve, Washington & St. Francois in the state of Missouri.

Section III is titled “Duties of Agent” and provides, in pertinent part, that Hills-boro shall:

A. Receive and process applications for title insurance and issue policies in a timely, prudent and ethical manner with due regard to recognized title insurance underwriting practices and in accordance with the rules and instructions of [Old Republic], as well as in conformity with state and local laws and practice;
B. Maintain and preserve, in a separate file on each order for title insurance placed with [Hillsboro], a copy of the title insurance forms issued in that transaction, and all supporting documents on which the determination of insurability is made, including, but not limited to, affidavits, lien waivers, survey plats, searches, examinations and work sheets;
C. Maintain an accurate register of title insurance forms;
D. Assume full responsibility for the collection of all premiums, fees and charges attributable to the issuance of title insurance forms hereunder;
E. Keep safely in an account separate from [Hillsboro’s] operating accounts all funds received by [Hills-boro] from any source in connection with transactions which [Old Republic’s] policy is involved, disburse said funds only for the purposes for which the same were entrusted, and reconcile all such accounts not less frequently than monthly....

Section VII, titled “Responsibility for Loss,” provides that Hillsboro shall be responsible, in part, for:

D. The improper closing or attempted closing by [Hillsboro] including but not limited to ... (2) failure to disburse properly or close in accordance with escrow or closing instructions, and/or (3) misappropriation of escrow or closing funds by [Hillsboro], its officers or employees ....

In addition to the Agency Agreement, Old Republic provided its policy-issuing agents — including Hillsboro — a document titled “Escrow, Closing and Settlement Services.” The document stated, in part, that “[e]scrow services as used in this article refers to a wide variety of services which are related to closing real estate transactions ... and disbursing construction loan proceeds.” It goes on to state that:

Providing escrow services can be a significant benefit to the title insurance agency business, however, it can expose the agent and the Company to significant losses, both within and beyond the coverage of the title insurance policy. Agents are therefore not authorized to close transactions on behalf of the Company without specific authorization to do so.... Any losses suffered by the Company as a result of any negligent or unauthorized closing services will be the responsibility of the Agent.

On September 8, 2004, Hillsboro entered into the Construction Escrow Agreement that is the source of this litigation. Pursuant to the Construction Escrow Agreement, Hillsboro agreed to act as escrowee with respect to a construction project (“the Project”). The letterhead on the Construction Escrow Agreement displayed only Hillsboro’s name and address. The other parties to the Agreement were Beaker LLC, the Project’s owner, Lawless Homes, Inc. the contractor, and Bank, the mortgagee and financier. Bank deposited approximately $4.2 million with Hillsboro, about $2.4 million of which was allocated for construction costs. The contract provided that Hillsboro would receive $12,430 for its disbursing fee. Old Republic was not a signatory to the Construction Escrow Agreement.

Hillsboro also issued a title insurance commitment for the Project on September 13, 2004, five days after it entered into the Construction Escrow Agreement. The commitment displayed Hillsboro’s name and address at the top and also stated: “Agent for: Old Republic National Title Insurance Company.” Hillsboro ultimately did not issue a title insurance policy on the Project because the construction disbursing process, the subject of the Construction Escrow Agreement, was never completed.

On July 5, 2007, Bank filed a four-count petition against Hillsboro and Old Republic based on Hillsboro’s performance of its duties under the Construction Escrow Agreement. The petition alleged that Hillsboro had disbursed funds in violation of the Construction Escrow Agreement, and that as a result Lawless Homes and others were paid for work that was not performed. Consequently, Bank alleged that its collateral was worth less than its construction loans. Bank charged Hills-boro and Old Republic with negligence, breach of fiduciary duty, breach of contract, and suit on a note.

The petition premised Old Republic’s liability on an agency theory, both express and apparent. Bank alleged that Hills-boro had express authority to disburse escrow funds, and that Old Republic knowingly caused or permitted Hillsboro to hold itself out to the public as Old Republic’s agent in the construction loan disbursal capacity. Old Republic filed a motion for summary judgment and alleged that Hills-boro was neither its express nor apparent agent with respect to the Construction Escrow Agreement.

The trial court granted Old Republic’s motion for summary judgment. It held that Hillsboro was Old Republic’s agent “for the limited purpose of issuing title insurance commitments and policies under which Old Republic ‘assumes liability for the condition of title [to real estate].’ ” To the extent that the Agency Agreement permitted Hillsboro to engage in escrow services, the trial court found them limited to those “necessary and incidental to the issuance of title commitments and policies.” Bank appeals.

II. DISCUSSION

Appellate review of summary judgment is de novo. ITT Commercial Fin. Corp. v. Mid-Am. Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993). We review the record in the light most favorable to the party against whom judgment has been entered. Id. “Summary judgment is appropriate where there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law.” Schwab v. Nat’l Dealers Warranty, Inc., 298 S.W.3d 87, 89 (Mo.App. E.D.2009).

For ease of analysis, we address the Bank’s first two points together. In its first and second points on appeal, the Bank argues that the trial court erred in entering summary judgment because there is a genuine issue of material fact as to whether an express or an implied agency relationship existed between Old Republic and Hillsboro. We disagree.

Whether a principal-agent relationship exists is generally a question of fact. Ritter v. BJC Barnes Jewish Christian Health Sys., 987 S.W.2d 377, 384 (Mo.App. E.D.1999). “However, this relationship is a question of law for the court to determine when the material facts are not in dispute, and ‘only one reasonable conclusion can be drawn from the material facts.’ ” Id. (quoting Johnson v. Bi-State Dev. Agency, 793 S.W.2d 864, 867 (Mo. banc 1990)).

There are three requisites to establishing an agency relationship: (1) the agent holds the power to alter legal relations between the principal and third parties; (2) the agent is a fiduciary with respect to matters within the scope of agency; and (3) the principal has the right to control the conduct of the agent with respect to matters entrusted to the agent. State ex rel. Ford Motor Co. v. Bacon, 63 S.W.3d 641, 642 (Mo. banc 2002); Bluehaven Funding, LLC v. First Am. Title Ins. Co., No. 4:06CV1425SNLJ, 2009 WL 1421207, at *7 (E.D.Mo. May 20, 2009).

Old Republic and Hillsboro both acknowledge that Hillsboro is Old Republic’s agent for the purpose of issuing title insurance commitments and policies. As Hillsboro’s principal, Old Republic is responsible for Hillsboro’s acts and agreements that are within Hillsboro’s actual or apparent authority. Nichols v. Prudential Ins. Co. of Am., 851 S.W.2d 657, 661 (Mo.App. E.D.1993). Actual authority may be express or implied. Id. Express authority exists when the principal explicitly tells the agent what to do. Id.

The Agency Agreement appointed Hillsboro as a policy issuing agent specifically “for the purpose of signing, countersigning and issuing commitments, binders, title reports, certificates, guarantees, title insurance policies, endorsements and other agreements under which [Old Republic] assumes liability for the condition of title.... ” There is no evidence in the record that Old Republic explicitly told or authorized Hillsboro to act as escrowee pursuant to the Construction Escrow Agreement. Moreover, Construction loan disbursal is not related to the condition of title, and therefore is outside the scope of the Agency Agreement.

The Bank then cites the fact that Old Republic expressly authorized Hillsboro to perform escrow services in connection with transactions where Hillsboro issued title insurance commitments on behalf of Old Republic. Further, the Bank asserts that the Construction Escrow Agreement was intimately linked to a transaction where Hillsboro issued a title insurance commitment for Old Republic. Therefore, Bank asserts that Hillsboro was acting as Old Republic’s express agent with respect to the Construction Disbursal Agreement.

The Bank is correct in that Old Republic granted Hillsboro the authority to conduct escrow services in connection with its issuance of title insurance commitments. Section E. under “Duties of Agent” states that Hillsboro shall “[k]eep safely in an account ... all funds received by [Hillsboro] from any source in connection with transactions which [Old Republic’s] policy is involved .... ” The Bank fails to recognize, however, that performing escrow duties in connection with issuing title insurance commitments is separate and distinct from acting as an escrowee pursuant to a construction loan disbursal.

A recent decision from the Eastern District of Missouri illustrates this point. In Bluehaven Funding, LLC v. First Am. Title Ins. Co., First American Title and Capital Title entered into an agency agreement in 1999 whereby First American appointed Capital Title as its agent for the limited purpose of issuing title insurance policies. 2009 WL 1421207, at *2, 3. In 2002, several plaintiffs placed $2.4 million in a construction loan escrow account with Capital Title. Id. at *4. When the funds were misappropriated, the plaintiffs attempted to hold First American Title liable on the theory that Capital Title had acted as First American Title’s agent in misappropriating the funds. Id. The District Court rejected the plaintiffs’ agency theory. It stated that:

Ultimately, the transactions that are the subject of plaintiffs’ complaint cannot be said to be within the scope of authority granted by [First American Title] to Capital Title, whether actual or apparent, because none of the transactions involved the procurement or issuance of title insurance from [First American Title]. Although Capital Title was indeed the agent for [First American Title], the transactions here were “on the side.”

Id. at *9.

Like Capital Title’s acts in Bluehaven, Hillsboro’s transactions and duties under the Construction Escrow Agreement were “on the side.” Old Republic was not a party to the Construction Escrow Agreement and did not have the right to control Hillsboro’s actions with respect to that Agreement. Also as in Bluehaven, the Agency Agreement between Hillsboro and Old Republic expressly states that Hills-boro is Old Republic’s agent for the limited purpose of issuing title commitments and policies.

Bank again attempts to argue that the parties’ course of conduct shows that escrow services are a necessary and incidental aspect of carrying out Hillsboro’s express authority to issue title commitments and policies. As already discussed, the Agency Agreement permitted Hillsboro to perform only escrow services that related to issuing title insurance commitments and policies. The Construction Escrow Agreement, in contrast, governs the disbursal of funds for a construction project and clearly is not related to title insurance.

Bank also points to Old Republic’s ability to audit Hillsboro’s escrow records, including construction disbursement escrows, as proof that Hillsboro acted as Old Republic’s express agent. Section XL A. of the Agency Agreement states that “[Hillsboro] does hereby grant [Old Republic] the right at any reasonable time or times to audit all financial and business records relating to any escrow closing or settlement functions conducted by [Hills-boro].” The record also contains evidence that Old Republic audited Hillsboro’s escrow records, including several construction disbursement files, and issued Hills-boro “comments and recommendations” based on the auditor’s findings.

We do not believe that Old Republic’s periodic audits establish the requisite control for an agency relationship. A full reading of Section XI of the Agency Agreement, which provides for the periodic audits, is instructive on this issue:

[Hillsboro] hereby agrees and authorizes [Old Republic] to conduct, at [Hills-boro’s] option:
Periodic audits of [Hillsboro’s] policy inventory, title insurance files and any material, files, records or accounts, including financial and business records, relating to the issuance of title insurance forms. In addition, although it is agreed that any escrow or settlement business responsibility is strictly that of [Hillsboro], it is recognized that because [Old Republic] issues insured closing services letters which cause [Old Republic] to indemnify third parties against loss resulting from [Hillsboro’s] errors, omissions or misconduct (and for which [Hillsboro] acknowledges total liability ), [Hillsboro] does hereby grant [Old Republic] the right at any reasonable time or times to audit all financial and business records relating to any escrow closing or settlement functions conducted by [Hillsboro].

(emphasis added).

Primarily, this section explicitly states that Hillsboro assumes responsibility for any escrow or settlement business. Further, it recognizes that Hillsboro provides escrow services that are separate and distinct from those it conducts on Old Republic’s behalf in conjunction with issuing its title insurance commitments. In acknowledging these separate escrow services, the Agreement affords Old Republic a limited right to audit them in order to protect its interests in issuing closing services letters. This limited right to audit all of Hillsboro’s escrow files in no way equals the requisite level of control for an agency relationship.

Finally, it is undisputed that Old Republic was not a party to the Construction Escrow Agreement. Unlike the title insurance commitment that Hillsboro issued for the Property, the Construction Escrow Agreement does not designate Hillsboro as Old Republic’s agent. Moreover, Old Republic did not receive a fee or any portion of a fee for Hillsboro’s services under the Construction Escrow Agreement. For all of these reasons, Old Republic did not grant Hillsboro express authority to act as escrowee pursuant to the Construction Escrow Agreement.

Similar to its argument regarding express agency, Bank offers a litany of reasons that Hillsboro had implied authority to act as Old Republic’s agent with respect to the Construction Escrow Agreement. Among other things, Bank argues that Hillsboro’s and Old Republic’s course of conduct demonstrates that Old Republic planned for Hillsboro to perform escrow services, and that Old Republic acquiesced to Hillsboro’s performing its duties pursuant to the Construction Escrow Agreement. Bank relies on many of the same theories in support of its implied agency argument as in its express agency one.

“Implied authority consists of those powers incidental and necessary to carry out the express authority.” Hardcore Concrete, LLC v. Fortner Ins. Servs., Inc., 220 S.W.3d 350, 355 (Mo.App. S.D.2007) (quoting Nichols v. Prudential Ins. Co. of America, 851 S.W.2d 657, 661 (Mo.App. E.D.1993)). “Implied powers, like any powers, must be bottomed on some act or acquiescence of the principal, express or implied.” Dudley v. Dumont, 526 S.W.2d 839, 844 (Mo.App. E.D.1975).

Hillsboro has not produced any evidence from which a reasonable juror could conclude that its escrow duties under the Construction Escrow Agreement were necessary and incidental to carrying out its express authority to sell title insurance commitments. See Bluehaven, 594 F.3d at 1059. We have already discussed why Hillsboro’s duties as escrowee for a construction loan disbursal constitute side duties, and are not necessary or incidental to the issuance of title insurance commitments. See Bluehaven, 2009 WL 1421207, at *9; see also Nat’l Mortgage Warehouse, LLC v. Bankers First Mortgage Co., Inc., 190 F.Supp.2d 774, 779 (D.Md.2002) (stating that a title-issuing agent may wear “two hats,” one as an agent to issue title insurance policies and another to conduct closing services; in such cases, “the title insurer is responsible only for the title insurance issued; it cannot be held liable for the agent’s participation in related closings or provision of escrow services.”).

Again, Hillsboro had express authority only to issue title insurance commitments and policies. Issuing title insurance policies necessitated Hillsboro’s performing certain escrow services; for instance, holding a buyer’s down payment pending closing. Issuing the title policies did not, however, necessitate Hillsboro’s acting as an escrowee pursuant to a construction loan disbursal agreement.

Most importantly, the Bank cannot argue that Hillsboro had express or implied authority to perform services which the “Escrow, Closing and Settlement Services” document expressly excluded from the agency relationship. The document — issued by Old Republic to Hillsboro and all of its title-issuing agents — states as follows:

Escrow, closing and settlement services (“escrow services”) are service lines which may be offered in conjunction with title insurance orders or separately. Escrow services as used in this article refers to a wide variety of services which are related to real estate transactions ... and disbursing construction loan proceeds.... [Providing escrow services can be a significant benefit to the title insurance agency business, however, it can expose the agent and the Company to significant losses, both within and beyond the coverage of the title insurance policy. Agents are therefore not authorized, to close transactions on behalf of the Company without specific authorization to do so ....

(emphasis added). Hillsboro has pointed to no specific authorization from Old Republic to perform construction loan dis-bursals.

Because Old Republic did not expressly grant Hillsboro the authority to enter into the Construction Escrow Agreement, and because the duties under the Agreement were not necessary and incidental to carrying out its express authority, the Bank’s points one and two are denied.

In its third point on appeal, the Bank argues that the trial court erred in entering summary judgment because there was a genuine issue of material fact as to whether an apparent authority relationship existed between Old Republic and Hills-boro.

“Apparent authority exists where a principal’s manifestations to a third party have created a reasonable belief in the third party that an agent is acting for the principal, or where the principal is fully aware that another is acting as his agent but does nothing to correct the misconception.” The Bar Plan v. Cooper, 290 S.W.3d 788, 792 (Mo.App. E.D.2009).

The Bank asserts that Old Republic created an impression of apparent authority because Old Republic, through Hillsboro, issued a title commitment to the Bank as part of the same construction loan transaction. The Bank also argues that Old Republic created apparent authority simply by allowing Hillsboro to act as its title agent. Hillsboro asserts that it is customary for title agents to perform escrow services, and that Old Republic knew Hillsboro’s customers expected Hillsboro to perform them.

On September 13, 2004, Hills-boro issued the Bank a title commitment that clearly indicated it was acting as Old Republic’s agent. The Bank, however, received the title commitment five days after it had entered into the Construction Escrow Agreement with Hillsboro. In determining the existence and scope of apparent agency, the focus is on a third person. The Bar Plan, 290 S.W.3d at 792 (quoting Barton v. Snellson, 735 S.W.2d 160, 162 (Mo.App. E.D.1987)). Since Old Republic’s name had not come to the Bank’s attention when it signed the Construction Escrow Agreement, it could not have believed Hillsboro was acting on Old Republic’s behalf at that time. Moreover, “apparent authority is created by the conduct of the principal which causes a third person reasonably to believe that another has the authority to act for the principal.” Nichols, 851 S.W.2d at 661. With respect to the Construction Escrow Agreement, Old Republic did nothing to convey the impression to the Bank that Hillsboro had authority to act on its behalf. Finally, we have already explained that Hillsboro’s permitted escrow services — those conducted in connection with issuing title insurance policies — were separate and distinct from the construction loan escrow services. Point three is denied.

KENNETH M. ROMINES, C.J., and WILLIAM L. SYLER, Sp. J., concur.

      . As will be discussed, no title insurance policy was issued on the property.

      . On appeal to the Eighth Circuit, that Court affirmed the District Court's “ultimate conclusion that Capital Title lacked such authority.” Bluehaven Funding, LLC v. First American Title Ins. Co., 594 F.3d 1055, 1059 (8th Cir.2010).


author: PAUL McGHEE, Senior Judge.

text:
    Virginia GLASS, Appellant, v. TRANSAMERICA LIFE INS. CO., Third-Party Plaintiff, v. Patricia Webb, Respondent.
    No. SD 29793.
    Missouri Court of Appeals, Southern District, Division Two.
    June 4, 2010.
    Motion for Rehearing or Transfer to Supreme Court Denied June 24, 2010.

      W. Edward Reeves, Caruthersville, for Appellant.
    Andrew C. Bullard, Kennett, for Respondent.
   PAUL McGHEE, Senior Judge.

In 2004, Mrs. Bertha N. Threet (Dixie) obtained a policy of insurance on her life from Transamerica Life Insurance Company (Transamerica) in the amount of $25,000, which she later increased to $50,000. She designated Albert Coleman Threet (Coleman), her husband, as the primary beneficiary, and Patricia Webb (Pat), a sister, as the contingent beneficiary. Coleman died on September 21, 2006, and Dixie died on December 11, 2007.

On February 21, 2007, Dixie signed a Transamerica form requesting a change of beneficiaries which Transamerica received on March 6, 2007. In the request, she named Gena Glass (who is Virginia Glass), a niece, as the primary beneficiary and Nancy Haynes (Nancy), a sister-in-law, as the contingent beneficiary. On March 16, 2007, Transamerica wrote a letter to Dixie stating that it had received the form, but that her signature must be witnessed by a disinterested party. The letter also stated, “Please sign the enclosed form where indicated by the red (X) and return in the envelope provided. Once the completed form is received, we will update the policy records.” Transamerica had no record of the form being returned to it.

In late September 2007, Dixie was diagnosed with cancer. On October 28, 2007, she executed a power of attorney appointing Gena as her attorney in fact, with Nancy as an alternate; and on December 5, 2007, she executed a will leaving all of her property to Gena and naming her as the personal representative of her estate. After Dixie died, Gena applied to Trans-america for the death benefit, as did Pat. When Transamerica did not pay her, Gena filed suit for the death benefit. In response, Transamerica filed an interpleader action as a stakeholder, joining Pat as a third-party defendant, and praying that Gena and Pat be required to litigate their claims for the death benefit among themselves. Pat, in turn, filed a counterclaim for the benefit. Transamerica paid $50,000 and the accrued interest into court, and the court discharged it from further liability on the policy.

The claims of Gena and Pat were tried to the court without a jury. The court rendered judgment in favor of Pat and ordered the clerk to pay her the funds deposited by Transamerica. Gena appeals from the judgment, and she claims in three points that the trial court erred in finding that Pat is entitled to the proceeds of the policy.

As her first point, Gena asserts that the trial court erred as a matter of law in finding that Dixie’s attempt to change the beneficiaries was ineffective. She argues that because Transamerica filed an inter-pleader action, it waived the policy requirements for the change, so that the change was effective as Dixie substantially complied with Transameriea’s requirements by signing and sending the required form to Transamerica.

The policy contains this provision for changing beneficiaries:

How to Change a Beneficiary — The owner may change the beneficiary by filing a satisfactory written notice with us. A change of beneficiary will not be effective until recorded by us at our Administrative Office. When recorded, even if you are not then living, the change will take effect on the date the notice was signed, except that any benefits paid before we record a change of beneficiary will not be subject to the change. An irrevocable beneficiary may not be changed without the written consent of that beneficiary.

In Persons v. Prudential Ins. Co. of America, 233 S.W.2d 729 (Mo.1950), the issue was whether the insured made an effective change of beneficiary. Prudential paid the amount of the policy into court, and the mother and the widow of the insured litigated between themselves their entitlement to the proceeds of the policy. In 1943, the insured had made his mother the primary beneficiary, and she claimed under that endorsement. On June 10, 1948, the home office of Prudential received from the insured a form furnished by it to him requesting a change of beneficiary to his wife. On June 18, two days after the insured’s death, the home office, without knowledge of the insured’s death, endorsed the change of beneficiary on the policy. The court held that a change of beneficiary can be accomplished without a strict or complete compliance with the conditions of the policy regarding the endorsement of the insurer, stating the general proposition that a substantial compliance with the conditions respecting a change of beneficiary is sufficient. Id. at 731. The court further held that when the insured had done all within his power to exercise his right to change the beneficiary, the change became effective before his death as the insurer waived its method of recording the change. Id. at 733. The court affirmed the trial court judgment for the widow.

In Gnekow v. Metropolitan Life Ins. Co., 108 S.W.2d 621 (Mo.App.1937), Metropolitan had issued its policy upon the life of E.L. Griffin, who named his then wife as the beneficiary. Although he and his wife were later divorced, her name was never removed from the policy and remained on the policy when Mr. Griffin died. The court observed that an insurance company waives a provision in the policy as to a change of beneficiary if it files a bill of interpleader, deposits the money in court, and pleads a willingness to pay the insurance fund to whichever one of the rival claimants the court may decide to be the rightful owner thereof. Id. at 625. The court also stated that the waiver was for the benefit of the insurer, and did not benefit the claimant not named as the beneficiary in the policy. Id. The court held that there was no competent evidence showing a change of beneficiary, and that the proceeds would go to the divorced wife.

Bell v. Garcia, 639 S.W.2d 185, 190 (Mo.App.1982), stands for the proposition that the provisions of an insurance policy governing the manner in which the beneficiary shall be changed are primarily for the benefit of the insurance company and are waived when the insurer interpleads the death benefit proceeds. The court states that the benefit to the insurer is that it is protected against multiple liabilities where two or more conflicting claimants appear.

In Provident Life and Accident Ins. Co. v. Buerge, 703 S.W.2d 590 (Mo.App.1986), the insured had designated his wife as the beneficiary. While he was in a hospital, a son brought a designation of beneficiary form to him which he signed designating his three sons as beneficiaries. The form was delivered to a general agent for Provident before the insured’s death, but the agent was unsure whether he had forwarded the form to Provident. When the insured died, Provident’s records continued to show the wife as the beneficiary. The court stated that the terms regulating the manner of changing the beneficiary are primarily for the protection of the insurer to protect it against multiple liabilities where two or more conflicting claimants appear, and they may be waived by it. Id. at 593. The court held that the insured had done everything that he was requested to do, and that since the general agent expressed no dissatisfaction after receiving the form, the wife had no cause for complaint that the strict requirements for the change may not have been strictly adhered to. Id. at 594.

In Capitol Life Ins. Co. v. Porter, 719 S.W.2d 908 (Mo.App.1986), the insured had named his wife as the beneficiary of his life insurance policy. He and his wife separated in December 1982, after she had filed an action for dissolution of their marriage. That month he executed a change of beneficiary form on which he designated his mother as the new beneficiary. He told his mother and the witness to his signature that he was changing the beneficiary because of the pending dissolution action. He also told them he was going to mail the form to the insurer, but he never did as it was found among his stored personal effects after he died. A short time after he signed the form, he was diagnosed with cancer, and his condition deteriorated rapidly. He went to live with his parents where he was confined to a wheel chair and needed assistance in performing all of the basic bodily functions. His wife did not help care for him, she was not with him when he died, and she did not attend his funeral.

Capitol Life brought an interpleader action, and the trial court awarded the proceeds of the policy to the mother. The court of appeals noted that the insurer waived strict compliance with the method of recording notice of the change upon the policy and its books and records, but the waiver was simply a waiver as to itself and did not confer rights as between the claimants. Id. at 910. The court reiterated that the equitable doctrine of substantial compliance prevails in Missouri, and if the insured has done all within his power to exercise his right to change the beneficiary, the irregular or incomplete change is effective as against the original beneficiary. The doctrine of substantial compliance simply carries out the intent of the insured; however, the insured’s intention must be established beyond question; and the insured must have done everything possible under the circumstances to effectuate his intent. Id. The court affirmed the judgment for the mother, saying that given the unique circumstances of the case, the insured had done everything reasonably within his power to effectuate the change. Id. at 911.

Anglen v. Heimburger, 803 S.W.2d 109 (Mo.App.1990), was an interpleader action between the former husband and the parents of a deceased insured who all claimed to be entitled to the proceeds of an insurance policy on the insured’s life. The trial court ruled in favor of the parents, although the insured had designated her husband as the beneficiary during their marriage. She became gravely ill and requested a change of beneficiary form which was delivered to her, together with a pre-addressed envelope and written instructions. She told people that she had changed her beneficiary from the former husband to her parents. After she died, the envelope in which the documents were sent to her was found among her personal papers, but the change of beneficiary form and pre-addressed envelope could not be located. The insurer had no evidence of having received the form. The court of appeals acknowledged that Missouri recognizes the equitable doctrine of substantial compliance, and affirmed the trial court judgment because her intent to change the beneficiary was clear, and the evidence indicated that there were unusual circumstances preventing the insurer from receiving the form, which supported the trial court’s application of the doctrine. Id. at 113.

In Prudential Ins. Co. of America v. Kamrath, 475 F.3d 920 (8th Cir.2007), Prudential brought an interpleader action against the insured’s ex-wife and his estate as to who should receive the proceeds of a life insurance policy. The District Court granted judgment for the ex-wife as she was the beneficiary named on the policy, and the estate appealed. The opinion recites the efforts made by the insured in his apparent attempt to change the beneficiary, and states that under Missouri law a court may apply the equitable doctrine of substantial compliance to carry out the insured’s intent where the insured has not strictly complied with the policy terms prescribing how to change a beneficiary. Id. at 924. The court stated that, as a general rule, this doctrine makes an incomplete change of beneficiary effective against the original beneficiary, citing Anglen, supra. However, in order to apply the doctrine, the insured’s intent must be established beyond question, and the insured must have done everything possible under the circumstances to effectuate his intent to change the beneficiary. Id. (citing Capitol Life v. Porter, supra, and Metropolitan Life Ins. Co. v. Barnes, 770 F.Supp. 1393, 1397 (E.D.Mo.1991)).

The court further observed that the intent of the insured is a question of fact, and whether the insured had taken steps to effectuate the change is also a question of fact. Id. at 925. The court affirmed the judgment of the trial court, which determined that the insured’s efforts did not meet the requirements of the substantial compliance doctrine, stating that what constitutes compliance will vary with the circumstances of each case. The court distinguished Porter and Anglen where severe illness prevented the decedents from doing more. Id.

A change of beneficiaries could have been accomplished without strict or complete compliance with the conditions of the policy regarding change, and the equitable doctrine of substantial compliance could have been applied where Dixie did not strictly comply with the method provided in the policy. Generally, her substantial compliance with the conditions of the policy would have been sufficient as Transameriea waived the lack of compliance by filing the interpleader action and paying the policy proceeds into court. However, the waiver was for the benefit of Transameriea; it did not confer rights between Gena and Pat. The substantial compliance doctrine would have carried out the intent of Dixie, had her intent been established beyond question, and had it been established that she did everything possible under the circumstances to effectuate the change.

The trial court found that Dixie attempted to change the beneficiaries by signing the Transameriea form without the signature of a witness; that she sent the form to Transameriea; that Transameriea returned it to her; and that Transameriea did not receive it back from her. It is undisputed that Pat was the beneficiary designated on Transamerica’s records when Dixie died.

For Gena to have prevailed in the trial court on her claim that she is entitled to the proceeds of the policy, she must have proved beyond question that Dixie intended to change the primary beneficiary to her; and she must have proved that Dixie had done everything possible under the circumstances to effectuate her intent to change the beneficiaries. The mere fact that she signed the change of beneficiary form and sent it to Transamerica, without more, did not change the beneficiaries. Point I is denied.

In her related Point III, Gena claims that the trial court finding that Pat was entitled to the proceeds of the policy was not supported by substantial evidence and was contrary to the great weight of the evidence. The trial court judgment must be affirmed if there is substantial evidence to support it, it is not against the weight of the evidence, and it neither erroneously declares nor erroneously applies the law. Rule 73.01(c); Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976).

The party having the burden of proof is required to prove to the trier of fact the facts upon which the case depends by a preponderance or greater weight of the credible evidence. Dills v. Dills, 304 S.W.3d 738, 744 n. 5 (Mo.App.2010)(quoting Lampe v. Franklin Am. Trust Co., 339 Mo. 361, 96 S.W.2d 710, 723 (1936)). The trial court is entitled to believe all, part, or none of the testimony of any witness, and this court defers to the trial court on issues of witness credibility. Id. at 741. "Where the trial court does not include findings of fact in its judgment, the factual issues are assumed to have been found in accordance with the result reached. “ ‘The trial court judgment is presumed correct” and this Court affirms the judgment of the trial court “under any reasonable theory supported by the evidence.’ ” Id. (quoting GMAC v. Crawford, 58 S.W.3d 529, 532 (Mo.App.2001)). This court assumes that the trial court found the facts in accordance with the judgment.

Gena testified at trial of her close relationship with Dixie and her efforts to assist her. She stated that Dixie spoke to her on several occasions about the policy, and told her that she was the primary beneficiary and Nancy was the contingent beneficiary. Dixie explained her reasons for the designation and told her what to do with the money from the policy. She recalled no conversation with Dixie about the return of the beneficiary form by Trans-america or any problems with the beneficiary designation. She did not see the Transamerica letter until after Dixie’s death, when she discovered it sealed in the envelope among Dixie’s personal papers. The envelope, the original letter, and the original form were not presented to the trial court.

Courtney Haynes, a first cousin of Gena, testified that Dixie talked to her twice about the policy and told her that she was going to change the beneficiaries from Coleman and Pat to Gena and Nancy. She further testified that Dixie explained her reasons for the change.

Pat also testified about her close relationship with Dixie, having grown up together in their parents’ home with five siblings. She lived in Dixie’s home from September 2003 until six months after Dixie died, and she told of how she helped take care of Coleman and assist Dixie. She said that her mail and Dixie’s mail were kept separate, and that Dixie’s mail would be on the kitchen table when she came in from work. Dixie would open her mail while they were at the kitchen table, and Dixie never got any mail that “she just threw by the way side,” or mail that she didn’t open, yet kept. Gena came to the house after Dixie’s death and took Dixie’s papers, but Pat knew nothing about a change of beneficiaries.

The credibility of the witnesses was for the trial court to determine, and it was free to believe the testimony of Pat and not believe the testimony of Gena and her witness. The trial court was not required to believe that the letter from Trans-america was still in Dixie’s possession unopened when she died; and it could have believed that Dixie always opened her mail and never put it aside unopened. The trial court could also have believed that Dixie may have changed her mind, or that she became uncertain as to her intent to change the beneficiaries.

The trial court found that between February 21, 2007, and October 1, 2007, Dixie was fully capable of conducting her business affairs, and the court made no finding of any circumstances preventing her from effectuating a change of beneficiaries. It was not shown beyond question that it was Dixie’s intent to change the beneficiaries, or that she had done everything possible under the circumstances to effectuate a change of beneficiaries. The trial court judgment was supported by substantial evidence; it was not contrary to the weight of the evidence; and it is presumed to be correct.

It is also asserted in Point III that the basis stated by Transamerica for refusing to accept the change of beneficiary form was pretextual. There is nothing in the record to support this assertion as Transamerica, upon returning the form, instructed Dixie how to complete the form and enclosed a return envelope for her use. In addition, Transamerica acted merely as a stakeholder and willingly paid the death benefit into court for payment to whoever was entitled to receive it. Point III is denied.

Gena also asserts that the trial court erred as a matter of law in finding that the attempt to change the beneficiaries was ineffective because ambiguity existed in the policy regarding change of beneficiary designations, in the change of beneficiary form, and in Transamerica’s letter, as it was not clearly and unambiguously required that the signature of an insured be witnessed in order to change a beneficiary designation.

The policy provides, in part, that the “owner may change the beneficiary by filing a satisfactory written notice with us. A change of beneficiary will not be effective until recorded by us at our Administrative Office.” The instructions for completing the Request for Policy Service state, “EACH SIGNATURE MUST BE WITNESSED BY A DISINTERESTED PARTY.” Transamerica’s letter told Dixie that a disinterested party must witness each signature and to “[p]lease sign the enclosed form where indicated by the red (X) and return in the envelope provided. Once the completed form is received, we will update the policy records.”

“ ‘An ambiguity exists when there is duplicity, indistinctness, or uncertainty in the meaning of the language in the policy. Language is ambiguous if it is reasonably open to different constructions.’ ” Burns v. Smith, 308 S.W.3d 505, 509 (Mo. banc 2010)(eiting Seeck v. Geico General Ins. Co., 212 S.W.3d 129, 132 (Mo. banc 2007)). In construing the terms of an insurance policy, the meaning applied is that which would be attached by an ordinary person of average understanding purchasing insurance. Id.

The policy provides that the beneficiary may be changed by filing a “satisfactory written notice,” and that the change will be effective when recorded by the insurer. The request form instructs that all signatures must be witnessed, and the letter states that the signature must be witnessed. There is no duplicity, indistinctness, or uncertainty in the policy provision, and the request form and letter would mean to an ordinary insured of average understanding that the change of beneficiaries would become effective when the form was returned with the signature of a witness. There is no ambiguity. This point is denied.

The judgment of the trial court is affirmed.

SCOTT, C.J., and LYNCH, P.J., concur.

      . For clarity, and not from lack of respect, the court uses the names of the persons involved in the case, who were all related to each other, that the witnesses used at trial in referring to their relatives.