text:
    Dr. H. C. ALLISON, Appellant, v. Norman Wayne DOUGLAS, Appellee.
    No. 5498.
    Court of Civil Appeals of Texas, Waco.
    Dec. 18, 1975.

      Rogers & Hammond, Michael J. Rogers, Cleburne, for appellant.
    Rex Henger, Dallas, for appellee.
   OPINION

McDONALD, Chief Justice.

This is an appeal by defendant Dr. Allison from judgment of $5,223.09 for breach of 4 contracts, foreclosure of constitutional and/or mechanics lien on real estate, plus attorneys’ fees, in favor of plaintiff Douglas.

Defendant Dr. Allison owns a tract of land in Johnson County called Klondike Estates, which he was developing. Defendant entered 3 written contracts with plaintiff Douglas, an architect-engineer for architectural services in designing and planning a resthome, a condominium apartment complex, and a chapel-library-museum-tomb project, on defendant’s land. Defendant orally contracted with plaintiff to produce brochures relative to the projects. The res-thome, condominium, and chapel-library-museum-tomb projects were never built. The brochures were produced and delivered to defendant. Plaintiff billed defendant for $5,223.09 for services and expenses under the 3 written contracts and the oral contract. Defendant did not pay and plaintiff sued for the $5,223.09 assertedly due under the 4 contracts; in the alternative for quantum meruit; for foreclosure of a constitutional and/or mechanics lien on defendant’s real estate; and for attorneys’ fees. Defendant defended on the basis of fraud. Trial was to a jury, pertinent of whose findings are summarized as follows:

1) Douglas and Dr. Allison entered into an agreement whereby Douglas would design and prepare a brochure for Klondike Estates and Dr. Allison would pay him for his time and expenses.
2) Douglas substantially performed that agreement.
2A) Dr. Allison failed to perform such agreement.
3) Douglas was damaged $1564.73 by Dr. Allison’s failure to pay for the brochures.
4) thru 12) find for Douglas on quantum meruit for preparing the brochure.
13) The agreements between Douglas and Dr. Allison for architectural services for Klondike Estates terminated due to the fault of others than Douglas.
14) 15) The building projects for Klondike Estates were abandoned; and suspended for more than 3 months.
16) $3,658.36 is reasonable compensation due Douglas for services performed for Dr. Allison on the building projects.
17) and 18) find for Douglas on quantum meruit for architectural services performed.
19) $3,500. is a reasonable attorneys’ fee for plaintiff’s attorney in the trial court.
20) $2,000. is a reasonable attorneys’ fee for plaintiff’s attorney in the Court of Civil Appeals.
21) $1,500. is a reasonable attorneys’ fee for plaintiff’s attorney in the Supreme Court.
22) 31) and 32) find against defendant’s defenses.

The trial court rendered judgment on the verdict for plaintiff for $5,223.09; ordered foreclosure of constitutional and/or mechanics’ lien for same against defendant’s land; plus $3,500. attorneys’ fees in the trial court, $2,000. additional attorneys’ fees if the case be appealed to the Court of Civil Appeals, and $1,500. additional if the case be appealed to the Supreme Court.

Defendant appeals on 10 points contending:

1) The trial court erred in submitting to the jury inconsistent, irreconcilable theories of recovery to wit: 1) breach of valid express contracts, and 2) quantum meruit, without making one theory of recovery conditional upon the other, because by law a recovery in quantum meruit is inconsistent with a recovery for breach of contract.
2) The trial court erred in submitting issues on attorneys’ fees (Issues 19, 20 & 21) because attorneys’ fees were not provided for by the contracts and not authorized by Article 2226 VATS.
3) The trial court erred in rendering judgment foreclosing a constitutional and/or mechanics lien on defendant’s real estate because there was no lien agreed upon by the parties, nor was there a lien provided for in the contracts.

Contention 1 complains of the trial court submitting issues both on the breach of contracts, and upon quantum meruit. Plaintiff’s suit against defendant was for breach of 4 contracts, and in the alternative on quantum meruit.

The trial court was authorized to submit both theories to the jury. Rule 48 TRCP. If the jury finds for the plaintiff on express contract, as in the case at bar, the judgment is limited to damages found for breach of contract. Musick v. Pogue, Tex.Civ.App., NRE, 330 S.W.2d 696; Phoenix Lumber Co. v. Houston Water Co., 94 Tex. 456, 61 S.W. 707. Here the trial court rendered judgment for the amount of damages found for the breach of the 4 contracts.

Moreover the point is not properly before us on this appeal. Defendant on December 9, 1975, filed a supplemental transcript which contains his objections to the court charge. It reflects that the trial court signed order overruling such objections December 8,1975, some 3 months after the case was on appeal in this court, and after the trial court lost jurisdiction of the case. Defendant has thus waived this point. Evans Young Wyatt, Inc., v. Hood & Hall, Tex.Civ.App. (Waco) NRE, 517 S.W.2d 313; Southland Capital Corp. v. Clark & Clark, Tex.Civ.App. (Waco) NWH, 526 S.W.2d 278.

Contention 2 complains of the trial court’s submitting issues on attorneys’ fees because attorneys’ fees were not provided for by the contracts, and not authorized by Article 2226 VATS.

Attorneys’ fees in this case are authorized by Article 2226 VATS, as amended in 1971. Such article provides in part: “Any person * * * having a valid claim against a person * * * for services rendered, labor done, material furnished * * may if represented by an attorney, also recover, in addition to his claim and costs, a reasonable amount as attorney’s fees * * * Such is applicable to a claim for services rendered by an architect. Brown v. Cox, Tex.Civ.App. (14), NRE, 459 S.W.2d 471. Such case holds “An architect’s direct services to an owner are such ‘personal services’ as are contemplated by Article 2226 * * * And the foregoing is applicable to plaintiff’s services in designing and furnishing the brochures.

And if a party is entitled to attorneys’ fees under Article 2226 VATS in the trial court he is also entitled "'ttorneys’ fees on appeal. Int. Sec. Life Ins. Co. v. Spray, Tex., 468 S.W.2d 347.

Contention 3 complains of the trial court’s judgment foreclosing a constitutional and/or mechanics’ lien on defendant’s land.

Defendant has failed to preserve and waived this asserted error by failing to complain of same in his Amended Motion for New Trial. Rule 324 TRCP. Central Freight Lines, Inc., v. Cletex Trucking, Inc., Tex.Civ.App. (Waco) 469 S.W.2d 593; Turnbow Pet. Corp., v. Fulton, 145 Tex. 56, 194 S.W.2d 256; Darryl v. Ford Mtr. Co., Tex., 440 S.W.2d 630.

All of defendant’s points and contentions have been considered and are overruled.

Affirmed.


source: Caselaw Access Project

author: DIES, Chief Justice. KEITH, Justice STEPHENSON, Justice

license: Public Domain

text:
    Freeman D. ROYER et al., Appellants, v. Ken RITTER et al., Appellees.
    No. 7755.
    Court of Civil Appeals of Texas, Beaumont.
    Dec. 18, 1975.
    Rehearing Denied Jan. 8, 1976.

      Kammerman, Yeakel, Hineman & Trickey, Earl L. Yeakel, III, Austin, for appellants.
    V. Lane Nichols, Beaumont, for appellees.
   DIES, Chief Justice.

By ordinance dated April 1,1975, the City Council of the City of Beaumont prohibited package stores within the city limits from engaging in business on four days (New Year’s Day, July 4th, Labor Day, and Thanksgiving Day) when, under the Texas Liquor Control Act, they would be authorized to operate; and on other days the ordinance requires that package stores close at 8 P.M. when the Texas Liquor Control Act permits them to remain open until 9 P.M.

Suit was filed below by various individuals to declare the ordinance void. The relief sought was denied and now the plaintiffs below seek review of such judgment.

Five distinct provisions in the Texas Liquor Control Act grant cities regulatory power over alcoholic beverages:

a. Tex.Penal Aux.Laws Ann. art. 666-15 (1974) authorizes counties as well as cities to collect from permit holders a fee equal to one-half of the state fee for the particular permit involved.

b. Tex.Penal Aux.Laws Ann. art. 666-24 (1974) authorizes a city to prohibit the sale of liquor in a residential section or any part thereof.

c. Tex.Penal Aux.Laws Ann. art. 666-25a (1974) authorizes counties and cities to prohibit the sale of alcoholic beverages within 300 feet of any church, public school, or public hospital.

d. Tex.Penal Aux.Laws Ann. art. 667-10½ (1974) authorizes incorporated cities and towns to regulate the sale of beer within the corporate limits of the cities by charter amendment or by ordinance.

e. Tex.Penal Aux.Laws Ann. art. 666— 25(d) (1974) authorizes counties with a population under 300,000 and cities in counties with a population under 300,000 to adopt the hours of sale for mixed beverages authorized for counties with a population of 300,000 or more.

It is a familiar rule of statutory interpretation that an “exception” makes plain the intent that the statute should apply in all cases not excepted. Federal Crude Oil Co. v. Yount-Lee Oil Co., 122 Tex. 21, 52 S.W.2d 56, 60 (1932). This may be also stated as the rule expressio unius est exclusio alterius — the inclusion of the specific limitation excludes all others. Harris County v. Crooker, 112 Tex. 450, 248 S.W. 652, 655 (1923); State v. Mauritz-Wells Co., 141 Tex. 634, 175 S.W.2d 238, 241 (1943); Amdel Pipeline, Inc. v. State of Texas, 530 S.W.2d 647 (Tex.Civ.App.—Beaumont 1975, writ pending).

The Legislature, by granting to the cities power of control in the five instances above set forth, has, under these authorities, denied this power in any instance not specified. There is no authority in the Texas Liquor Control Act for the Ordinance under review.

Furthermore, this Ordinance is inconsistent with the Act. It is true that the Legislature stated when package stores are not to be open, rather than the converse. But this is merely one way of stating when they may be open. When the Beaumont Ordinance adds to the times they must be closed, the Ordinance is inconsistent with the statute. Any other reasoning would strain the plain credulity of language.

No ordinance can be legally enacted by the governing body of a city which conflicts or is inconsistent with the statute. Zachry v. City of San Antonio, 157 Tex. 551, 305 S.W.2d 558, 561 (1957); Berry v. City of Fort Worth, 132 Tex. 599, 124 S.W.2d 842 (1939); City of Corpus Christi v. Unitarian Church, 436 S.W.2d 923, 927 (Tex.Civ.App., Corpus Christi 1968, writ ref’d n. r. e.); Tex.Const. art. XI, § 5; Tex.Rev.Civ.Stat. Ann. art. 1165 (1963).

See also: Prescott v. City of Borger, 158 S.W.2d 578, 581 (Tex.Civ.App., Amarillo 1942, writ ref’d); City of Fort Worth v. McDonald, 293 S.W.2d 256 (Tex.Civ.App., Fort Worth 1956, writ ref’d n. r. e.); Combined American Ins. Co. v. City of Hillsboro, 421 S.W.2d 488 (Tex.Civ.App., Waco 1967, writ ref’d n. r. e.).

Railroad Commission of Texas v. Miller, 434 S.W.2d 670, 672 (Tex.1968), tells us to “take statutes as [we] find them.” That we should search for the intendment of a statute, finding “its intent in its language, and not elsewhere. They [the courts] are not the law-making body. They are not responsible for omissions in legislation. They are responsible for a true and fair interpretation of written law. It must be an interpretation which expresses only the will of the makers of the law, not forced nor strained, but simply such as the words of the law in their plain sense fairly sanction and will clearly sustain.”

If the Legislature had intended for the City Council to have the authority to extend the time of closing or opening of package stores from the state provision, it could have said so. Having failed to do so, we believe they (the Legislature) intended the provision for closing in the act to be statewide and exclusive. See Munoz v. City of San Antonio, 318 S.W.2d 741 (Tex.Civ.App., San Antonio 1958), writ dism. w. o. j., 159 Tex. 436, 321 S.W.2d 573 (1959). See also Davis v. Coffee City, Texas, 356 F.Supp. 550 (E.D.Tex.1972).

The judgment of the trial court is reversed and the cause rendered. The Ordinance of the City Council of Beaumont herein referred to is declared to be void and of no force and effect.

Reversed and rendered.

KEITH, Justice

(concurring).

I concur in the disposition of the cause upon the basis of the authorities and reasoning set out by Chief Justice Dies in the majority opinion.

Under our uncontradicted record, appellants have valid licenses authorizing the legal sale of alcoholic beverages upon the premises described in their respective licenses. Thus, they may lawfully do that which is forbidden to unlicensed persons, i. e., sell alcoholic beverages. This personal privilege granted to them by the State of Texas under the terms of the Act, may be exercised lawfully at any time when not forbidden by the Act itself. The Legislature having specified the days and hours when such beverages may not be sold lawfully, Beaumont’s attempt to make unlawful that which is lawful under the Act is therefore inconsistent with and contrary to a general law of the State and invalid. Tex.Const. art. XI, § 5; Home Rule Act, art. 1165, Tex.Rev.Civ.Stat.Ann. (1963).

I do not find it necessary to discuss other points of error brought forward by appellants. However, one of such points, that the State has pre-empted the field governing opening and closing days and hours of licensed dealers in alcoholic beverages, appears to have merit. See and compare, Prescott v. City of Borger, 158 S.W.2d 578 (Tex.Civ.App., Amarillo 1942, writ ref’d).

STEPHENSON, Justice

(dissenting).

I respectfully dissent. I would affirm the judgment of the trial court.

The City of Beaumont is a home rule city, and it is conceded by everyone that a home rule city now has all of the power not denied to it by the Constitution and statutes. Therefore, the question before this court is not whether the City of Beaumont had been granted the specific power to limit the number of hours a package store may remain open, but whether or not that specific power has been denied to the City of Beaumont.

The majority opinion gives two grounds for arriving at the conclusion that such specific power has been denied the City. First, the majority find the City has been denied that authority through the negative conclusion that certain statutes quoted authorize the City to exercise certain control and the authority to limit the hours is not expressed. In view of the established law in this,State that a home rule city is authorized to do anything not specifically denied to it, the rule expressio unius est exclusio alterius cannot be used. No case in Texas that has been cited to us, or that I have found, has ever used that rule to detract from the authority of a home rule city.

The second ground, given by the majority for finding the City has been denied the specific power to limit the hours a package store can remain open, is that the City Ordinance conflicts with or is inconsistent with the statute. I find no such conflict or inconsistency. The statute says, in effect, that no person may sell or deliver alcoholic beverages during certain hours of the day. The City Ordinance does not say that a person in the City of Beaumont may sell or deliver alcoholic beverages during those prohibited hours. If it did, then there would be a conflict and inconsistency. For the majority to arrive at a conflict, it first has to find that a statute saying a person cannot sell or deliver during certain hours means that sales or deliveries can be made at all other hours. I do not find that to be a reasonable construction. If the Legislature had intended to give persons with this license the direct authority to remain open for specific hours, then it would have been a simple matter to say so.

I am convinced the City of Beaumont is in the best position to determine when and how it can enforce the laws relating to the use of alcoholic beverages, and set the hours a package store may remain open. That power has not been denied to the City by the statutes in question.


author: McCLOUD, Chief Justice.

text:
    A. P. SIMONS COMPANY, Appellant, v. John E. JULIAN et al., Appellees.
    No. 4812.
    Court of Civil Appeals of Texas, Eastland.
    Dec. 19, 1975.

      H. T. Bowyer, Bowyer, Thomas & Sweet, Dallas, for appellant.
    John Fox Holt, Holt & Hirseh, E. Taylor Armstrong, Storey, Armstrong & Steger, Dallas, for appellees.
   McCLOUD, Chief Justice.

Plaintiff, A. P. Simons Company, sued John E. Julian, Mildred Julian Christie, Rose Ann Julian Smith, John E. Julian, Jr., and Julian Enterprises, Inc., seeking to establish a right of “first refusal” to purchase approximately 100 acres of land. The trial court granted defendants’ motion for instructed verdict and plaintiff has appealed. We dismiss the cause for want of jurisdiction because there is no justiciable controversy.

Plaintiff entered into a lease agreement with Julian Enterprises dated January 1, 1966, for a term of 15 years, covering 3.659 acres of land. The lease provided:

“17th. It is understood and agreed Lessor may cancel this lease in case of sale of the property provided:
A. Lessor pays to Lessee the unamor-tized cost of repairs and improvements which would have been amortized during the remaining term of the lease, and
B. Lessee has right of first refusal to purchase the demised premises, and/or the approximately 100 acres of land in the G. W. Fisher Survey situated at the northwest corner of Belt Line Road and Noel Road in the City of Addison, Dallas County, Texas, such property fronting on Belt Line and Noel Roads. Lessor will tender Lessee a written bona fide offer by any third party for purchase of the acreage, and Lessee will have ten (10) days thereafter to tender written exercise of his option to purchase on the same terms and conditions.”

John E. Julian signed the lease as president of Julian Enterprises, Inc., a family corporation, which is owned by John E. Julian and his three children, Mildred Julian Christie, Rose Ann Julian Smith, and John E. Julian, Jr. Julian Enterprises, Inc., owned on January 1, 1966, the 3.659 acres described in the lease, but it did not own any interest in the “approximately 100 acres” mentioned in paragraph 17 copied above. This property was owned individually by John E. Julian and his three children. In a deed dated January 6, 1969, John E. Julian gave his interest in this property to his children.

A. P. Simons testified he first learned in 1970 that the children claimed ownership of the 100 acres and he filed the instant suit to protect his interests.

Plaintiff alleged a statutory trespass to try title suit, various equitable remedies, and alternatively sought a declaratory judgment. Although a trespass to try title suit was alleged, Simons does not claim a present right of possession of the 100 acres, nor does plaintiff claim a present absolute right to purchase the property.

Plaintiffs first supplemental petition states plaintiff’s position as follows:

“ . . . Simons stands ready and willing to purchase said 100 acres on the same terms and conditions of any written bona fide offer by any third party for the purchase of said acreage within ten days after receiving written notice thereof or lose his right of refusal, as provided for in said lease. That Plaintiff does not desire nor does he assert any right to purchase said 100 acres for less than the Defendants Julian can sell it to any other prospective bona fide purchaser.”

It is clear from the entire record Simons is seeking a determination that plaintiff has a right of first refusal.

In discussing a right of “first refusal” this Court in Henderson v. Nitschke, 470 S.W.2d 410 (Tex.Civ.App.—Eastland 1971, writ ref. n. r. e.), approved the following language:

“ . . .So under a lease provision for a first option to purchase the premises at such price as might be agreed on between the lessor and any bona fide purchaser, prior to the making of an actual agreement as to price between the lessor and a prospective purchaser, the lessee has no accrued right of purchase, but only a promise thereof which for fruition is wholly dependent on a future event which might never occur.” (Emphasis added)

The court in De Vitt v. Kaufman County, 27 Tex.Civ.App. 332, 66 S.W. 224 (1901, writ ref.), said:

“ . . . The structure of the entire contract, and especially of the second clause, indicates that it was the intention of the parties to give to De Vitt & Schar-bauer a prior right to purchase only in case the county determined to sell, and by the sale shorten the term of the lease, and force the lessees to yield possession before the full term had expired.”

See also: Draper v. Gochman, 400 S.W.2d 545 (Tex.1966), 34 A.L.R.2d 1153.

In the instant case plaintiff relies on the January 1, 1966 lease. The lease is in full force and effect, there has been no sale of the property, and plaintiff is in possession of the leased premises.

There must be a justiciable controversy between the parties before a declaratory judgment action will lie. California Products, Inc. v. Puretex Lemon Juice, Inc., 160 Tex. 586, 334 S.W.2d 780 (1960); Firemen’s Insurance Company of Newark, New Jersey v. Burch, 442 S.W.2d 331 (Tex.1968).

In Reuter v. Cordes-Hendreks Coiffures, Inc., 422 S.W.2d 193 (Tex.Civ.App.—Houston (14th Dist.) 1967, no writ), the parties had entered into a settlement agreement whereby appellants were not to engage in the practice of cosmetology within a certain area. The appellants brought suit to declare the agreement void under the Texas anti-trust statutes and, in the alternative, sought reformation of the agreement. The court noted:

“. . . Nowhere, however, does the record reflect a present or prospective intention on the part of the appellants to engage in the practice of cosmetology in the prohibited area. The record does not indicate the imminence of litigation between the parties unless the contractual uncertainties were judicially declared.”

In holding there was no justiciable controversy, the court said:

“We are of the opinion that the plaintiffs’ proof in this record presents no ‘actual, genuine, live, controversy.’ A declaratory judgment in this instance would be in the nature of an advisory opinion that might or might not affect the future relations of the parties, that might or might not afford ‘specific relief,’ that might or might not affect the ‘legal relations’ of the parties. Whether or not it did so, in each instance, would have to be later determined by what, if any, subsequent action the parties took. ‘The court will not declare rights on facts which have not arisen or adjudicate matters which are contingent, uncertain, or rest in the future. A future right or interest which is dependent on a contingency or event which may never happen is not the proper subject of a declaratory judgment.’ 26 C.J.S. Declaratory Judgments, § 28, p. 104.”

See also: Orange Independent School District v. West Orange Independent School District, 390 S.W.2d 81 (Tex.Civ.App.—Beaumont 1965, writ ref. n. r. e.); Laborers’ International Union of North America, Construction, etc. v. Blackwell, 482 S.W.2d 327 (Tex.Civ.App.—Amarillo 1972, no writ).

The court in Firemen’s Insurance Company of Newark, New Jersey v. Burch, 442 S.W.2d 331 (Tex.1968), said:

“ . . . the Declaratory Judgments Act gives the court no power to pass upon hypothetical or contingent situations, or determine questions not then essential to the decision of an actual controversy, although such questions may in the future require adjudication.”

Plaintiff seeks the answer to a hypothetical or contingent situation. Plaintiff is given certain rights under paragraph 17, if the lease is cancelled and the property sold. These contingent conditions have not occurred and may never occur.

Plaintiff failed to prove a justiciable controversy. The cause is dismissed for want of jurisdiction.


author: CURTISS BROWN, Justice.

text:
    Fred F. BOYSEN, Sr., dba Bissonnet Roofing Co., Appellant, v. SECURITY LUMBER COMPANY, INC., Appellee.
    No. 1252.
    Court of Civil Appeals of Texas, Houston (14th Dist.).
    Dec. 24, 1975.
    Rehearing Denied Jan. 14, 1976.

      Anthony L. Vetrano, Jr., Houston, for appellant.
    William Fred Hagans, Bracewell & Patterson, Houston, for appellee.
   CURTISS BROWN, Justice.

This is a suit on a sworn account.

Security Lumber Company, Inc. (Security or appellee) filed suit against Fred Boysen, Sr., individually and dba Bissonnet Roofing Company (Boysen or appellant) for money owed to it on an account under which it had furnished to Boysen various goods, merchandise, materials and/or services. Security’s petition was properly verified so as to constitute prima facie evidence of the justness of the claim as provided by Tex.R. Civ.P. 185. Boysen’s unsworn answer was accompanied by a sworn affidavit which stated that the “cause of action, account and claim against him and in favor of SECURITY LUMBER COMPANY, INC., is not a just and due amount and that all just and lawful offsets, payments and credits have not been allowed.” After a non-jury trial, the trial court entered judgment for Security. Boysen has perfected this appeal.

Appellant presents eight points of error. The second and third points assert that appellant’s verified denial destroyed the probative force of the itemized account, and that appellee did not adequately prove the elements of a suit on a sworn account. Appellant’s verified pleading, set out above, was insufficient to deny the account. See Solar v. Petersson, 481 S.W.2d 212 (Tex.Civ.App.-Houston [14th Dist.] 1972, no writ); Duncan v. Butterowe, Inc., 474 S.W.2d 619 (Tex.Civ.App.-Houston [14th Dist.] 1971, no writ); Youngblood v. Central Soya Co., 522 S.W.2d 277 (Tex.Civ.App.-Fort Worth 1975, writ ref’d n. r. e.); Tex.R.Civ.P. 185, 93(k). Therefore it was not necessary for appellee to prove by further evidence the elements of a suit on a sworn account. Appellant’s points two and three are overruled.

Appellant’s fourth point asserts that the prima faeie effect of Rule 185 should not apply to him, inasmuch as he, as an individual was actually a third party. It is well established that the rule which makes a verified account prima facie evidence in the absence of a written denial under oath does not apply to transactions between third parties or parties who were strangers to the transaction. McCamant v. Batsell, 59 Tex. 363 (1883); Hassler v. Texas Gypsum Co., 525 S.W.2d 53 (Tex.Civ.App.-Dallas 1975, no writ). However, this exception has been applied where the plaintiff’s own pleadings—or the invoices or other evidence exhibited as the basis of the obligation—reflected that the defendant was not a party to the original transaction. See McCamant v. Batsell, supra; Hassler v. Texas Gypsum Co., supra; Dean v. K-C Fuel Co., 524 S.W.2d 805 (Tex.Civ.App.-Austin 1975, no writ); Compression, Inc. v. James & Dilda, 481 S.W.2d 458 (Tex.Civ.App.-Houston [1st Dist.] 1972, no writ); Sampson v. Apeo Oil Corp., 476 S.W.2d 430 (Tex.Civ.App.-Amarillo 1972, no writ); Starlight Supply Co. v. Feris, 462 S.W.2d 608 (Tex.Civ.App.-Austin 1970, no writ); Copeland v. Hunt, 434 S.W.2d 156 (Tex.Civ.App.-Corpus Christi 1968, writ ref’d n. r. e.); Robertson v. Rexall Drug & Chemical Co., 410 S.W.2d 200 (Tex.Civ.App.-Fort Worth 1966, no writ); McCollum v. May, 396 S.W.2d 170 (Tex.Civ.App.-Dallas 1965, no writ); Eng v. Wheeler, 302 S.W.2d 263 (Tex.Civ.App.-San Antonio 1957, writ dism’d); National Surety Corp. v. Dabney, 282 S.W.2d 70 (Tex.Civ.App.-Waco 1955, no writ); Duree v. Aetna Ins. Co., 66 S.W.2d 764 (Tex.Civ.App.-Amarillo 1933, no writ); cf. Meaders v. Biskamp, 159 Tex. 79, 316 S.W.2d 75 (1958); Hilton v. Musebeck Shoe Co., 505 S.W.2d 341 (Tex.Civ.App.-Austin 1974, writ ref’d n. r. e.); Nichols v. Acers Co., 415 S.W.2d 683 (Tex.Civ.App.-Austin 1967, writ ref’d n. r. e.).

In the instant case, the appellee’s pleadings alleged that goods, merchandise, materials and services were “sold, delivered and furnished to and/or for the Defendant.” Further, the statement and invoices attached to the petition and represented as the basis of the obligation are all addressed to “Fred Boysen, Bissonnet Roofing Co.”. Therefore, this case does not fall within the “stranger to the transaction” exception. Appellant’s fourth point of error is overruled.

Appellant’s first point of error asserts that the trial court erred in not dismissing the suit as to him in view of the unsworn allegations in his answer that he was merely an officer of the corporation that owed the debt, and therefore was not liable for the account in his individual capacity. In the absence of a proper sworn denial, the defense that the account was wrongfully charged against the defendant, and that he did not owe it, may not be proved. First National Bank v. Sheffield, 475 S.W.2d 820, 821 (Tex.Civ.App.-Austin 1972, no writ); Collins v. Kent-Goffey Manufacturing Co., 380 S.W.2d 59 (Tex.Civ.App.-Eastland 1964, writ ref’d); Yelton v. Bird Lime & Cement Co., 161 S.W.2d 353, 355 (Tex.Civ.App.-San Antonio 1942, writ ref’d w. o. m.). Since appellant’s sworn affidavit was inadequate, he could not deny that he owed the debt. The first point of error is overruled.

Appellant’s fifth point of error asserts that the trial court erred in awarding attorney’s fees because there was no evidence of presentment and failure to pay for thirty days. In order to recover reasonable attorney’s fees under Tex.Rev.Civ.Stat.Ann. art. 2226 (1971), the burden is on the plaintiff to plead and prove presentment of the claim to the debtor and failure to pay for thirty days thereafter. El Paso Moulding & Manufacturing Co. v. Southwest Forest Industries, Inc., 492 S.W.2d 331 (Tex.Civ.App.-El Paso 1973, writ ref’d n. r. e.). Plaintiff’s Exhibit # 26, admitted into evidence, is a letter from appellee’s credit manager to appellant. The letter, dated October 1, 1973, begins, “This is a demand for payment.” It then states the total amount outstanding to be $3,632.48. This letter constitutes a sufficient presentment to allow the recovery of attorney’s fees. See Huff v. Fidelity Union Life Insurance Co., 158 Tex. 433, 312 S.W.2d 493 (1958). As for proof of non-payment, the record shows that on April 30, 1975, during the course of the trial of this cause, appellee’s president testified that appellant had not yet paid the account. Appellant’s fifth point of error is overruled.

Appellant’s sixth point of error asserts that there was no evidence to support the award of $1,000 for attorney’s fees, and that such amount is unreasonable in this case. Appellee’s attorney testified that he was personally familiar with the work that had been done on this case; that he was personally familiar with the amount customarily charged by attorneys in similar cases; that approximately twenty to twenty-five hours of work were generally required for such cases; that his charge of $45 per hour was the usual and customary charge by attorneys; and that based on the usual amount of work required and the customary charge, $1,000 was a reasonable fee. Appellant offered no evidence in rebuttal of this testimony. The evidence outlined above was sufficient to support the award. Appellant’s sixth point of error is overruled.

Appellant’s seventh point of error is too general to be considered on appeal. See Pine v. Gibraltar Savings Association, 519 S.W.2d 238, 244 (Tex.Civ.App.-Houston [1st Dist.] 1974, writ ref’d n. r. e.); Slayton v. White, 487 S.W.2d 204, 205 (Tex.Civ.App.-Tyler 1972, writ ref’d n. r. e.). In any event, point seven has been examined and found to be without merit; it is accordingly overruled.

Appellant’s eighth point of error is likewise without merit and is overruled.

The judgment of the trial court is affirmed.

Affirmed.


author: JAMES, Justice.

text:
    HOUSTON GENERAL INSURANCE COMPANY, Appellant, v. Robert TEAGUE, Appellee.
    No. 5512.
    Court of Civil Appeals of Texas, Waco.
    Dec. 30, 1975.
    Rehearing Denied Jan. 15, 1976.
    Flahive & Ogden, R. M. Ogden, Austin, for appellant.
    John L. Hill, Atty. Gen., Harry C. Green, Asst. Atty. Gen., Byrd, Davis, Eisenberg & Clark, Jack C. Eisenberg, Terry L. Weldon, Austin, for appellee.
   OPINION

JAMES, Justice.

This is a workmen’s compensation case wherein the Second Injury Fund is a Third Party Cross-Defendant, and involves interpretation of Article 8306, Sections 12c and 12c-l, as amended in 1971. Appellant Houston General Insurance Co. raises these two specific questions:

(1) Whether a carrier is entitled to an offset for prior compensable disabilities; and

(2) In the alternative, whether a carrier has the right to proceed against the Second Injury Fund in general injury cases. We answer both questions in the negative and affirm the trial court’s judgment.

The injured workman, Robert Teague, and the carrier, Houston General, entered into certain fact stipulations hereinafter set out, to which the Second Injury Fund was not a party, which stipulations were incorporated into the trial court’s judgment, pertinent portions of which are as follows:

(1)Teague suffered a general injury to his back on December 10, 1973, while in the course and scope of his employment with Austin Road Company. (This is the immediate injury occasioning the litigation at bar).

(3) Teague suffered total and permanent incapacity as a result of the foregoing injury, and Houston General was the insurance carrier thereof.

(4) Teague suffered a prior compensable general injury on August 26, 1971, while employed by Tom Johnson Trading Post for which disc surgery was required and furnished.

(5) Teague suffered a prior compensable general injury on November 30,1972, while employed by Blume System Tree Experts for which additional disc surgery was required and furnished.

(6)Teague suffered a total of 30% permanent disability to his body as a result of the two prior compensable general injuries of August 26, 1971, and November 30,1972.

Based upon the foregoing fact findings, the trial court entered judgment:

(1) Awarding total and permanent benefits to Plaintiff Teague against Houston General;

(2) That Defendant Houston General is not entitled to 30% credit on the judgment for Teague’s two prior compensable general injuries; and

(3) That as a matter of law, reimbursement from the Second Injury Trust Fund applies only to specific injuries (as opposed to general injuries), and therefore Houston General was denied recovery from the Second Injury Fund. In this connection, Second Injury Fund had filed a Plea in abatement to Houston General’s Third Party Cross-Action against said Fund, which plea was sustained by the trial court. We affirm the trial court’s judgment.

Defendant-Appellant Houston General asserts error of the trial court in:

(1) Finding that Appellant was not entitled to 30% credit on Teague’s judgment against Appellant for Teague’s stipulated prior compensable general disabilities; and

(2) In the alternative, for refusing to permit Appellant’s action against the Second Injury Fund and in holding as a matter of law that reimbursement from the Second Injury Trust Fund applies only in specific injury cases.

We revert to Appellant’s first point.

Effective September 1,1971, Article 8306, Section 12c was amended. The amended section is as follows:

“If an employee who has suffered a previous injury shall suffer a subsequent injury which results in a condition of incapacity to which both injuries or their effects have contributed, the association shall be liable for all compensation provided by this Act, but said association shall be reimbursed from the ‘Second Injury Fund’ as hereinafter described, to the extent that the previous injury contributes to the combined incapacity.”

Prior to the amendment, the Statute provided for a diminution of the recovery because of a previous compensable injury. Transport Insurance Co. v. Mabra (Tex.1972) 487 S.W.2d 704.

However, under the amended Section 12c, hereinabove quoted, it has been held that proof of a prior compensable injury will no longer reduce the recovery of a workman because of such prior injury. Texas Employers’ Insurance Association v. Creswell (Eastland, Tex.Civ.App.1974) 511 S.W.2d 68, NRE; Texas Employers’ Insurance Association v. Haunschild (Amarillo, Tex.Civ.App.1975) 527 S.W.2d 270, no writ history as yet. Appellant’s first point is overruled.

As stated, Appellant’s second point asserts the trial court’s error in refusing to permit Appellant Houston General’s action against the Second Injury Fund and in holding as a matter of law that reimbursement from the Second Injury Fund applies only in specific injury cases. We overrule this point, because the two prior compensa-ble injuries that Plaintiff Teague suffered in the case at bar were admittedly general injuries.

Our Supreme Court held, in Second Injury Fund v. Keaton (1961) 162 Tex. 250, 345 S.W.2d 711, that the restrictive provisions of Section 12c-l, Article 8306, limit the liability of the Second Injury Trust Fund to situations involving a combination of specific injuries resulting in total and permanent incapacity. In Keaton it was further expressly held that combinations of general injuries are not compensable from the Second Injury Fund. In other words, for us to sustain Appellant’s second point of error would violate the Supreme Court’s holding in Keaton.

We have carefully reviewed all of Appellant’s contentions and hereby overrule same as being without merit.

Judgment of the trial court is accordingly affirmed.

Affirmed.


text:
    Ray BAMBURG, Appellant, v. Sally H. RAGAN et vir., Appellees.
    No. 5497.
    Court of Civil Appeals of Texas, Waco.
    Dec. 31, 1975.

      Jimmy Morris, Corsicana, for appellant.
    Dawson, Dawson, Smith & Sodd, Leigh-ton B. Dawson, Corsicana, for appellees.
   OPINION

JAMES, Justice.

This is a suit for title and possession of a 1970 Chevrolet Impala automobile and for actual and exemplary damages arising from the alleged wrongful taking and detention of said automobile. After jury trial, and pursuant to the jury verdict, the trial court awarded judgment in favor of Plaintiff-Ap-pellees Sally H. Ragan, et vir., Ricky Ragan against Defendant-Appellant Ray Bamburg for title and possession of the automobile, and for $650.00 actual and $1250.00 exemplary damages, from which judgment Defendant-Appellant Bamburg appeals. We affirm.

The jury findings in answer to special issues are as follows:

(1) That on or about June 1, 1974, the Plaintiffs Ragan were the owners of the automobile in question;

(2) The jury failed to find that on or about the last-named date Plaintiffs abandoned said automobile;

(3) That on or about June 1, 1974, the Defendant Bamburg took the automobile without the consent of Plaintiffs Ragan; and

(4) Thereafter, Defendant Bamburg wrongfully withheld possession of said automobile from Plaintiffs Ragan;

(5) That the cash value of the automobile in Navarro County, Texas, was $850.00 at the time Defendant Bamburg took possession of it;

(6) The automobile was damaged by Defendant Bamburg during the time it was in his possession;

(7) That the cash value of the car in Navarro County was decreased by the damage it received during the time it was in the possession of the Defendant Bamburg in the amount of $650.00;

(8) That Plaintiffs Ragan are entitled to recover exemplary damages from the Defendant Bamburg, as the term “exemplary damages” was therein defined by the trial court,

(9) In the amount of $1250.00.

In accordance with the jury verdict, the trial court awarded Plaintiffs Ragan judgment against the Defendant Bamburg for title and possession of the automobile plus $1900.00 damages.

Appellant’s first point asserts error of the trial court in submitting special issue Number 7, which asked the jury how much the cash value of the automobile “was decreased by the damage it received during the time that it was in the possession of the Defendant Ray Bamburg.” Appellant contends that the proper method of submission of the damage issue would have been to ask the jury to find the values immediately before the taking and immediately after the return of the automobile. Appellant further asserts that the issue permits the jury to speculate on improper matters in arriving at such “decrease in value.” We overrule this point.

We agree with Appellant that it would have been proper for the trial court to have submitted issues to the jury concerning the cash value of the car immediately before the taking and immediately after the car left Defendant’s possession; however, we believe that by the trial court’s submission of Special Issues Numbers 5, 6, and 7, the court in effect accomplished this result. As stated, by the answer to No. 5 the jury found the cash value of the car to be $850.00 at the time the Defendant took possession of it; by No. 6 the jury found that the car was damaged by Defendant during the time it was in his possession; and by No. 7 the jury found that the cash value of the car “was decreased in the amount of $650.00 by the damage it received during the time it was in the possession of the Defendant Ray Bamburg.” (emphasis supplied). These issues as submitted do not permit the jury to improperly speculate, because their consideration is limited in No. 7 to the decrease in value occasioned by the damage it received while in Defendant’s possession. In effect, the jury found the car to have had a cash value of $850.00 immediately before the taking, and a cash value of $200.00 at the time it left Defendant’s possession. This being so, we find no error in the trial court’s submission of Issues Numbers 5, 6, and 7 and accordingly we overrule Appellant’s first point.

By points 2 and 3 Appellant contends there is no evidence, and insufficient evidence to support the jury’s findings regarding exemplary damages. We overrule these points. As heretofore stated, the jury found that Plaintiffs were entitled to recover exemplary damages from Defendant in the amount of $1250.00.

Plaintiff-Appellees the Ragans rented a house on West Seventh Avenue in Corsica-na, Texas, on May 1, 1974. The house was owned by Tom Murphy, Sr., but the rental of it was handled by Tom Murphy, Jr., who worked for his father and lived next door to the property. About the middle of May the Ragans were notified by Tom Murphy, Jr., that they would have to move, because the house had been sold; whereupon the Ra-gans secured another place to live and moved out of the house on Friday, May 31, 1974. At the time they moved out Ricky Ragan asked Tom Murphy, Jr., if it would be all right for them to leave their stove and car there over the weekend and he told them it would be agreeable for them to do so.

Ricky Ragan testified that on Monday, June 3, 1974, (which was the Monday following the Ragans’ moving out of the house the preceding Friday May 31,1974), that he and his wife went back to get their car (the 1970 Chevrolet in question) and stove. The stove was still there but the car was gone. Tom Murphy, Jr., was not around, because he was on a trip out of the state, to Colorado.

Defendant Ray Bamburg testified that on Saturday, June 1,1974, he had a conversation with Tom Murphy, Sr., on West Seventh Street in Corsicana relative to the 1970 Chevrolet in question. In this connection Bamburg testified: “Well, I had hauled an old backhoe over there for him, and he asked me_‘How much do I owe you?’ I told him, ‘Oh, $25.00 will be all right.’ And he had this old Chevrolet setting out in front of the house, and at this particular time they had been pushing trees and everything in there, you know, cleaning the lot off. And I just saw the old car setting there, and I said, ‘What will you take for the old car?’ He told me, ‘Well, take the car for the $25.00 on hauling the backhoe over there.’ So I took the car out to my place of business.”

Tom Murphy, Sr., disputed Ricky Ragan’s testimony by testifying that the car had sat there by the house (where the Ragans had left it) about three weeks before Bamburg moved the car to his place of business.

Ricky Ragan testified that on Monday, June 3, 1974, he started looking for his car, and found out that Bamburg had taken it. Bamburg operated a salvage business in Corsicana, Texas. Ragan went to Bam-burg’s place of business and asked him about his car. Bamburg told him that Tom Murphy, Sr., gave him the car. Ragan asked him, “Did you get any papers or title or anything with the car?”, to which Bam-burg said, “No.” Bamburg told Ragan the car was his (Bamburg’s). Ragan then contacted Tom Murphy, Sr., who told him that he did not give Bamburg the car, and that he would straighten the matter out. Ragan then contacted Bamburg who told him he could have the car back. When he went to get the car, he found that it had been damaged considerably.

The testimony was conflicting concerning the amount of damage which was done to the car while it was in Bamburg’s possession. Without detailing the damage testified to by Ragan and Bamburg, suffice it to say that there is ample evidence to support the jury’s finding of $650.00 “decrease in value” of the car occasioned by the damage done to it while in Defendant’s possession. Bamburg used a winch truck with “A-frames” on it to haul the car to his place of business. He tied on to the two “hangers that hold the back bumpers on”, and lifted the car completely off the ground, and hauled it in this manner to his place of business. Bamburg admitted that he damaged the car some in hauling it. Apparently the car was permitted to swing freely from the A-frame while in route to Defendant’s place of business. The car remained at Bamburg’s salvage yard until sometime in February 1975, at which time the First National Bank of Corsicana, Texas, (who had a lien against the car) took possession of it.

The evidence offered by the Ragans as to the value of the car at the time Bamburg took possession of it ranged from $1300.00 down to $850.00. Evidence from witnesses offered by both sides concerning the value of the car after Bamburg got possession of it ranged from $200.00 down to “salvage value of $5.00 to $10.00 to $20.00.”

The trial court charged the jury that “Exemplary damages” are in the nature of a penalty assessed against a Defendant “by reason of the wilful, wanton or malicious commission of an act or acts which caused the actual damages, if any.”

We believe the evidence is legally and factually sufficient to support the jury’s findings of Plaintiffs’ entitlement to exemplary damages and the amount of $1250.00 assessed therefor.

Appellant has asserted other points and contentions. We have carefully considered all of same and have determined that none show reversible error.

Judgment of the trial court is accordingly affirmed.

Affirmed.


author: CULLEN, Commissioner.

text:
    Myrtle BROWN, Appellant, v. BANKERS LIFE AND CASUALTY COMPANY, Appellee.
    Court of Appeals of Kentucky.
    Sept. 19, 1975.
    G. E. Reams, Harlan, for appellant.
    Gayle G. Huff, Rice & Huff, Harlan, for appellee.
   CULLEN, Commissioner.

This appeal is from a judgment on the pleadings by the circuit court in favor of the appellee, Bankers Life and Casualty Company, in an action by the appellant, Myrtle Brown, as the named beneficiary of a $10,000 personal accident policy of insurance issued by the appellee to George Brown, the appellant’s husband, who was fatally injured while operating a pick-up truck. The salient issue on appeal is whether the language “any private passenger automobile of pleasure design” as used within the policy excludes a “pick-up truck” from policy coverage. Our conclusion is that it does.

The rules regarding the interpretation of an insurance policy in this state have long included one that allows phrases or words that are ambiguous, doubtful, or equivocal to be construed “most strongly against the insurer and most liberally in favor of the insured, so that the purpose for which the insurance was obtained may be effectuated. General Accident Fire and Life Assurance Corp. Limited v. Louisville Home Telephone Co., 175 Ky. 96,193 S.W. 1031, L.R.A.1917D, 682, 952 (1917). On the other hand, this court has held repeatedly that the language of an insurance contract which is clear and unambiguous cannot be construed or interpreted most strongly against the insurer, disregarding a plain, easily understood clause exempting the insurer from liability. Interstate Business Men’s Acc. Ass’n of Des Moines, Iowa v. Atkinson, 165 Ky. 532, 177 S.W. 254, L.R.A.1915E, 656 (1915). Another rule of interpretation frequently applied to words in an insurance policy is that they should be given their “ordinary and usual” meaning. Buckingham Life Insurance Company v. Winstead, Ky., 454 S.W.2d 696, 697 (1970).

In construing the language of the policy in the instant case we have given consideration to the decisions of courts of other states, some of which are annotated in 38 A.L.R.2d at pages 867 to 886, involving wording substantially similar to that here in question and similar fact situations. Those cases, and the policy language, are as hereinafter noted. Lloyd v. Columbus Mutual Life, 200 N.C. 722, 158 S.E. 386 (1931) “private automobile of the pleasure car type”; Dirst v. Aetna Life Insurance Co., 232 Iowa 910, 5 N.W.2d 185 (1942) “passenger automobile of the pleasure car type”; Spence v. Washington National Insurance, 320 Ill.App. 149, 50 N.E.2d 128 (1943) “private passenger type automobile of the exclusively pleasure type”; Pennell v. United Insurance Co., 150 Tex. 541, 243 S.W.2d 572 (1951) “private passenger automobile exclusively of the pleasure car type”; La Fon v. Continental Casualty Co., 241 Mo.App. 802, 259 S.W.2d 425 (1953) “private pleasure type automobile”; Marshall v. Washington National Insurance Co., 246 N.C. 447, 98 S.E.2d 345 (1957) “private passenger automobile of the pleasure type”; Gray v. North American Company for Life, Accident and Health Insurance, La.App., 128 So.2d 223 (1961) “private automobile of exclusively pleasure type”; Laraway v. Heart of America Life Insurance Co., 153 W.Va. 70, 167 S.E.2d 749 (1969) “private automobile of the private passenger design designed primarily for transporting persons.”

Among these cases there seems to be a general agreement that the phrase “private passenger automobile” when further modified by words such as “pleasure type or design” is not ambiguous and clearly excludes a pick-up truck.

We find only one case where the court construed the words “private passenger automobile of the pleasure car type” to include a pick-up truck. Aetna Life Insurance Company of Hartford, Connecticut v. Bidwell, 192 Tenn. 627, 241 S.W.2d 595 (1951). In that case the Supreme Court of Tennessee took judicial notice that pick-up trucks are commonly used in that state as passenger vehicles for pleasure purposes, and looked to such use of the vehicle in its interpretation of the policy language. We feel, however, that the word “design” in the instant policy clearly has reference to form or structure of the vehicle as opposed to its use. This restriction as to “design” plainly excludes a truck which is made as a work vehicle in a work design and not as a pleasure vehicle in a pleasure design.

Our construction of the policy in the instant case is consistent with Senn’s Administratrix v. Michigan Mutual Liability Co., Ky., 267 S.W.2d 526 (1954) where the words “automobile of the private passenger type” were held not to include a sedan with no rear seats that was used as a delivery vehicle and was commercially owned, although the vehicle might have been used occasionally to haul passengers. There is no conflict with Life and Casualty Insurance Company of Tennessee v. Metcalf, 240 Ky. 628, 42 S.W.2d 909 (1931), or with Buckingham Life Insurance Co. v. Winstead, Ky., 454 S.W.2d 696 (1970), because in those cases the word “automobile” and the words “private motor driven automobile,” held to include a truck, were not qualified by further words restrictive as to type or design.

The judgment is affirmed.

All concur except LUKOWSKY, J., who did not sit.


author: JONES, Justice.

text:
    Michael NEWCOMB, Appellant, v. COMMONWEALTH of Kentucky, Appellee.
    Court of Appeals of Kentucky.
    Sept. 19, 1975.

      Jack E. Farley, Public Defender, Paul F. Isaacs and Kathleen McCabe, Asst. Public Defenders, Frankfort, for appellant.
    Ed W. Hancock, Atty. Gen., Mark F. Armstrong, Asst. Atty. Gen., Frankfort, for appellee.
   JONES, Justice.

Newcomb was convicted of aiding and abetting armed robbery (KRS 433.120), and of being an habitual offender (KRS 431.-190). He was sentenced to two years in the penitentiary on the aiding and abetting armed robbery conviction and to twenty years on the habitual-criminal conviction. Judgment was entered on both convictions on October 21, 1974.

Newcomb alleges error in the judgment in imposing sentence for the principal offense in addition to the habitual-criminal sentence. That contention is correct. The rule is that if the jury finds the defendant guilty of the principal offense and of the previous convictions, only the penalty prescribed by the habitual-criminal statute shall be imposed. The error does not require reversal of the judgment. It is sufficient that the judgment be modified to eliminate the penalty for the principal offense. See Covington v. Commonwealth, Ky., 481 S.W.2d 62 (1972).

There is no merit to Newcomb’s other contentions of error.

It is the opinion of the court that the judgment should be and it is affirmed as to the habitual-offender conviction. The trial court is directed to modify the judgment by eliminating the penalty for the principal offense of aiding and abetting armed robbery.

REED, C. J., and CLAYTON, JONES, PALMORE, STEPHENSON and STERN-BERG, JJ., sitting.

All concur.


author: PALMORE, Justice.

text:
    M. Lee LESTER, Appellant, v. CITY OF FORT THOMAS, Kentucky, et al., Appellees.
    Court of Appeals of Kentucky.
    Sept. 19, 1975.

      Russell L. Howard, Newport, for appellant.
    Louis E. Arnold, Cincinnati, Ohio, Norbert J. Bischoff, Newport, for appellees.
   PALMORE, Justice.

The dollar-value principle of Matthews v. Allen, Ky., 360 S.W.2d 135 (1962); Commonwealth v. Hesch, Ky., 395 S.W.2d 362 (1965), and Sarakatsannis v. Baker, Ky., 488 S.W.2d 683 (1972), applies to the $6500 limit of the homestead exemption allowed to persons 65 years of age or older by Const. Sec. 170. Hence the amendments to KRS 132.810(1) and (2)(c) as enacted by Ch. 314, Acts of 1974, are valid and the judgment of the trial court to the contrary is in error.

There also is no reason why this action should not be permitted to proceed as a class action for the benefit of those taxpayers who are similarly affected.

The judgment is reversed with directions that a new judgment be entered consistent with this opinion.

All concur except LUKOWSKY, J., not sitting.


author: VANCE, Commissioner.

text:
    PUBLIC SERVICE COMMISSION OF KENTUCKY, Appellant, v. KENTUCKY WEST VIRGINIA GAS COMPANY and the Equitable Gas Company, Appellees.
    Court of Appeals of Kentucky.
    Sept. 19, 1975.
    Rehearing Denied Feb. 6, 1976.

      Morris E. Burton, Robert T. Harrod, Frankfort, for appellant.
    Clifford E. Smith, Jr., Frankfort, for ap-pellees.
   VANCE, Commissioner.

KRS 278.485 requires gas pipeline companies obtaining gas from producing wells located in Kentucky to furnish gas service upon request to the owner of property on or over which any producing well or gas-gathering pipeline is located or to the owners of real estate whose property and point of service is located within one-half mile of the producing well or gas-gathering pipeline.

The appellees are gas companies which have been furnishing gas to persons entitled thereto under this statute. The appellees served notice upon their customers that gas service to them would be discontinued because the gas in the gathering pipelines contained an excessive quantity of hydrogen sulfide, a harmful impurity which increases corrosiveness and which, in sufficient concentration, is lethal. A copy of the notice of discontinuance of service was filed with the appellant Public Service Commission.

The commission conducted a hearing upon the proposed discontinuance of service and ordered the service to continue. Its order was based upon the premise that the duty to furnish gas was imposed by a statute which made no provision for the commission to regulate the quality of the gas furnished thereunder. It concluded that it was without statutory authority to allow the proposed discontinuance of service.

It is clear that the requirement of KRS 278.485 applies only to gas from producing wells and gathering pipelines. KRS 278.485(5) provides that gas companies are not required to furnish gas from lines established on the discharge side of a compressor station or from lines connecting with storage areas.

KRS 278.485(2) requires the applicants for service under the statute to construct and maintain their own service lines and gas regulators and pay the entire cost thereof. KRS 278.485(4) relieves the gas companies from the necessity of maintaining any fixed or specified gas pressure and exonerates them from liability for any accident or damage which may result from any defect or failure of any automatic gas regulator or for any leakage or other defect or failure of any service line installed or constructed by the applicant.

The statute is applicable only to the gas as it exists in the gathering lines and, read literally, the statute requires gas companies to make that gas available (in whatever condition it is) to a special classification of customers if they want to avail themselves of it.

The Public Service Commission is empowered to enforce the provisions of the statute (KRS 278.040), and is further empowered to fix rates and minimal monthly charges (KRS 278.485(1)), to supervise the construction of the service lines and installation of gas regulators and meters and the connection thereof with the producing well or pipeline (KRS 278.485(3)), and to provide rules and regulations for the discontinuance of service for failure to pay the charges therefor. KRS 278.485(7).

No provision is made by the statute for the commission to regulate or prescribe the quality of the gas furnished and even if permitted compliance with any such regulation would be extremely difficult because the gas is furnished directly from the producing wells or gathering pipelines before it reaches the facilities of the company for cleansing impurities.

We conclude therefore the commission correctly decided that by virtue of KRS 278.485 it was without power to regulate or control the quality of the gas furnished under the statute. The conclusion of the trial court to the contrary was erroneous and the judgment herein is reversed with directions that a new judgment be entered sustaining the order of the commission.

Although there is no authority under the statute for the Public Service Commission to regulate the quality of the gas furnished pursuant to the statute and no authority under the statute to permit discontinuance of service except for nonpayment of charges, there is present in this controversy a purely legal question which has not been addressed by either the Public Service Commission or the trial court. That question is whether or not the statute is applicable under the facts of this case. It seems to us that any sensible interpretation of the statute would limit its application to gas that is commercially usable and not unreasonably dangerous to the health and safety of the user.

Evidence was introduced at the hearing before the commission that the gas in question contained potentially dangerous quantities of hydrogen sulfide. There was countervailing evidence that some of the customers had used gas from these wells in question for as long as twenty years without harmful results.

No determination was made by the commission as to whether the gas in question was unreasonably dangerous, and if so, whether the statute has any applicability.

We sustain the holding of the commission that it was without authority to regulate the quality of gas furnished pursuant to the provisions of KRS 278.485, but this decision does not foreclose further litigation seeking judicial determination as to the applicability of the statute.

The judgment is reversed with directions that a new judgment be entered sustaining the order of the commission.

REED, C. J., and STEPHENSON, JONES, PALMORE and CLAYTON, JJ, concur.


author: STEPHENSON, Justice. CLAYTON, Justice

text:
    MANCHESTER INSURANCE & INDEMNITY COMPANY, Appellant, v. Anthony GRUNDY et al., Appellees.
    Court of Appeals of Kentucky.
    Sept. 19, 1975.
    Rehearing Denied Feb. 6, 1976.

      James Levin, Levin & Yussman, Louisville, for appellant.
    Joe G. Leibson, Louisville, for appellees.
   STEPHENSON, Justice.

A Jefferson Circuit Court jury returned a verdict against Manchester Insurance & Indemnity Company based on “bad faith” in failing to settle a claim against its insured. Manchester appeals; we reverse.

Manchester issued an automobile insurance policy to Carl Weaver. The policy provided bodily injury coverage limited to $10,000 for one person. The accident which brought about this litigation occurred when an automobile operated by Weaver on a street in the city of Louisville struck the rear of an automobile being operated by a Richard Humphrey. The Humphrey automobile struck Grundy, a pedestrian, who was standing on a sidewalk. Grundy filed suit against Weaver, who filed a third-party complaint against Humphrey. Weaver stated that the Humphrey car gave no signal by lights or otherwise; that the automobile was stopping or turning; and that the impact when he struck the Humphrey car was not of sufficient force to propel the Humphrey car against Grundy.

The injury sustained by Grundy consisted of multiple-compound fractures of the left leg. Some seven months later, Grundy resumed his full-work activities with no permanent disability or impairment although still suffering from some pain and swelling in the leg. One month later, a surgical procedure for the removal of a Lotte’s nail, which was used in reduction of the fracture, was successfully performed necessitating a brief hospital stay. The total medical expense was $1,286.45 with lost earnings of $1,907.20.

The trial court directed a verdict against Weaver, submitting to the jury the issue of whether Humphrey contributed to the accident by his negligence. The jury returned a verdict of $20,000 against Weaver. Later Grundy brought suit against Manchester to recover the excess alleging that Manchester was guilty of “bad faith” in failing to settle Grundy’s claim, pleading an assignment from Weaver of Weaver’s rights against Manchester. Grundy v. Manchester Insurance & Indemnity Co., Ky., 425 S.W.2d 735 (1968), upheld the validity of the assignment from Weaver to Grundy with directions to hear evidence and try on the merits.

From the evidence introduced at the trial on the issue of “bad faith” in refusing to settle within the policy limits, it appears that Manchester sent Weaver a standard letter advising that Grundy’s claim exceeded the limits of the policy and advising that he could employ counsel to defend the excess over the policy limits. Weaver consulted an attorney but did not employ him to defend. In preparation for trial of the damage suit, Weaver and a representative of Manchester visited the scene of the accident; and the record does not disclose that Weaver ever expressed any dissatisfaction with the manner in which the case was handled by Manchester. There is a conflict in the evidence as to whether Weaver was kept advised of the negotiations for settlement. Weaver did not make a demand that Manchester settle the claim within policy limits. As to negotiations for a settlement of the claim, some months after the accident suit was filed against Weaver, Grundy’s attorney forwarded a curious letter to Manchester’s representative demanding that Manchester settle for the policy limits and reciting that “refusal upon the part of your company to settle within policy limits would be tantamount to an act of bad faith against my client as well as Weaver, the insured” and that if a judgment was obtained in excess of the policy limits, “will make every effort to collect the full judgment against the insurance company based upon their bad faith in not accepting this settlement proposal.”

Manchester later made an offer of $5,000 to settle, but it was refused with a statement that only the policy limits would settle the case. On the morning of the second day of the trial after the testimony was completed, the jury instructed, and before the closing argument, Manchester offered to settle the case for $7,500. This offer was refused with a counter offer of settlement for $9,500 which was not accepted.

The evidence shows that while the jury was deliberating there was a conversation between Grundy’s lawyers and Manchester’s lawyer and representative to the effect that Manchester declined to offer more than $7,500 in settlement since that was all the case was worth and because of the state of Kentucky case law on the subject Grundy could never collect more from Manchester. Grundy presented two witnesses. One witness, a claims representative for another insurance company, testified that he would value the injuries for settlement purposes at approximately $25,000 because of the extent of the injuries, the absolute liability of Weaver, and the circumstances of the accident. The other witness for Grundy, a lawyer for a Louisville utility, testified that for settlement purposes he would value the ease at $18,500 to $25,000 and would have settled because of the directed verdict.

Manchester introduced a witness, a lawyer for a public utility and another insurance company, who testified that he would value the case for settlement purposes from $8,000 to $12,000 and further testified that in his opinion it would not be reasonably certain that a jury in Louisville would return a verdict in excess of $10,000.

The jury found a verdict for Grundy under the following instruction given by the trial court:

“(1) If the jury believe from the evidence that the conduct of Manchester Insurance and Indemnity Co., referred to hereafter as Manchester, in negotiating about and failing to settle the claim of Anthony Grundy in March of 1965 for the amount of the policy limit was of such arbitrary and reprehensible nature as to constitute bad faith, meaning conscious doing of a wrong or breaching of a known duty for some motive of interest or ill will, and if the jury shall further believe from the evidence that the facts and circumstances of the accident known to Manchester, or which should have been known by Manchester in the exercise of due diligence on its part, were such as to cause the defendant, Manchester, reasonably to conclude and believe that a verdict against Carl Weaver on a trial of the issue of liability was probable and that a verdict and judgment would probably be returned against Weaver exceeding the policy limit of $10,-000.00, you will find for plaintiffs against the defendant, Manchester, but, unless you so believe or if you believe as set out in Instruction No. 2, you will find for the defendant.” (Emphasis ours)

This appeal brings us to a consideration of the proper application of a test to determine “bad faith” on the part of an insurance company in failing to settle a claim. The perplexity of the problem and the confusion that abounds in this area among the several jurisdictions are illustrated by 44 Am.Jur.2d, Insurance, § 1530:

“Liability or indemnity insurance policies ordinarily reserve to the insurer the decision whether an offer to compromise a claim against the insured should be accepted. It is apparent, therefore, that a conflict in the interests of the insurer and the insured may arise where there is an action or claim against the insured for an amount in excess of the policy coverage and an offer to compromise this claim for the policy limit or a figure slightly below such limit. While a number of the earlier cases apparently support the rule that a liability insurer is under no duty to consider the insured’s interest in accepting or rejecting a compromise offer, and, on the other hand, it has occasionally been contended that such an insurer has an absolute duty to accept any offer to settle for an amount within the policy coverage, and rejects such an offer at its own risk, the vast majority of the courts have held, and it is probably the accepted rule in most if not all jurisdictions at this time, that the insurer is bound to give some consideration to the insured’s interest in such a situation. But though the courts are now thus agreed, there is a pronounced split in the decisions upon the question whether the insurer’s obligation is only to act in ‘good faith’ to the insured in considering such an offer, or whether it is required to exercise ‘due care’ and is liable for a negligent rejection of the compromise. In the great majority of the cases passing upon the question, the courts have held that a liability insurer, having assumed control of the right of settlement of claims against the insured, may become liable in excess of its undertaking under the policy provisions if it fails to exercise ‘good faith’ in considering offers to compromise the claim for an amount within the policy limits. However, a number of courts considering the liability of an insurer for rejecting an offer to compromise a claim against its insured for an amount within the limits of the policy coverage have rejected the rule that the insurer’s duty is limited to the exercise of good faith toward the insured, and have held that there might be liability for negligence in rejecting a reasonable compromise offer. “No single satisfactory test has been formulated as to just what degree of consideration for the insured’s interest is entailed by the requirement of ‘good faith’ as adopted in the majority of jurisdictions. Some of the courts have indicated that in the absence of actual fraud or misrepresentation the insurer is entitled to regard its own interests as paramount; others have said that the insured’s interest must be given equal consideration, while at least one court has said that in the event of a conflict of interests the insured’s interest must be given priority. Similarly, under the ‘negligence test,’ while the courts which have expressly adopted this rule are in substantial agreement that the insurer’s ‘due care’ in the circumstances is to be measured by that of a reasonably prudent man in the conduct of his own affairs, questions have arisen whether the test should be the conduct of this hypothetical man in an insured or an uninsured status. Also, in a large number of the more recent cases the two tests of ‘good faith’ and ‘negligence’ have tended to coalesce with many of the courts which have in terms rejected the ‘negligence’ test agreeing, nonetheless, that negligence is a relevant consideration in determining whether or not an insurer exercised the requisite good faith.”

Kentucky has adhered to the rule adopted by the majority of jurisdictions in requiring a finding of bad faith to create liability for the excess of the policy limits, rejecting the concept of negligence. “Although some jurisdictions have extended liability in cases of this type so as to permit recovery for negligent failure to settle within the policy limits, we are not persuaded as to the soundness of such a doctrine. In our view there must be a showing of ‘bad faith.’ ” Harvin v. United States Fidelity & Guaranty Co., Ky., 428 S.W.2d 213, 215 (1968).

American Surety Co. of N. Y. v. J. F. Schneider & Son, Ky., 307 S.W.2d 192, 195 (1957), states the rule followed in Kentucky:

“There is no liability on the insurer for failure to settle claims against the insured in excess of the policy limit in the absence of bad faith. It is the duty of the insurer to exercise the utmost good faith. Mere errors of judgment are not sufficient to constitute bad faith. Acting in bad faith or the failure to exercise good faith is sufficient to create liability on the part of the insurer for the excess of the policy limit.”

At the time of the trial on the issue of liability, there had never been a recovery by the insured or his assignee upheld by this court. Before the trial on the issue of bad faith, this court delivered an opinion in State Farm Mutual Automobile Ins. Co. v. Marcum, Ky., 420 S.W.2d 113 (1967), affirming a recovery for bad faith in failing to settle. The trial court here instructed the jury according to Marcum, and the pros- and-cons of Marcum are argued at length in counsels’ briefs. For this reason, mindful of the uncertainties and lack of a satisfactory test to determine good or bad faith in this jurisdiction and others, we will address ourselves first to an evaluation of Marcum.

That portion of the opinion in Marcum which outlines the procedure by which the injured party sought to obtain the excess over the policy limits should be clarified. There Marcum, after a judgment was entered in excess of the policy limits and an execution was returned “no property found,” filed an amended and supplemental complaint against State Farm and the insured. This pleading was based on KRS 426.381, the “garnishment statute,” which provides as recited in the opinion that after the return of an execution by the proper officer, showing that no property was found to satisfy the execution, the execution plaintiff “may by an amended and supplemental petition filed in the action have the same redocketed and join with the execution defendant or defendants any person believed to be indebted to him or them, or to hold money or other property in which he or they have an interest, or to hold evidences or securities for the same.” The statute also authorizes that the property be “subjected to the satisfaction of the judgment.”

The supplemental pleading set out that State Farm had not acted in good faith; that it knew any judgment rendered would be far in excess of policy coverage; that the insurance company was indebted to the policy holder; and that Marcum was subrogat-ed, as the real party in interest, to the rights of the insured to require the insurance company to make full payment of the judgment.

The insured then filed an answer which admitted the allegations of Marcum’s pleading and demanded that judgment be granted against State Farm. The action then proceeded to trial over the objections of State Farm, resulting in a jury verdict for Marcum.

The opinion recites “[wjhether the amended complaint stated a cause of action on behalf of Marcum against State Farm, we need not decide because the action was pending when the insured asserted a valid cause of action based on ‘bad faith’.” ■

We should have decided then and do now hold that the proceedings outlined in the Marcum opinion are not permissible.

The rule of law creating liability on the part of the insurer for acting in bad faith has its roots in the terms of the insurance contract. “ * * * [W]hile the specific language will not be found in the contract it is there by operation of law.” Terrell v. Western Casualty & Surety Company, Ky., 427 S.W.2d 825, 827 (1968). “There is an implied covenant in the insurance policy * * * of good faith and fair dealing. This implied covenant was a contractual duty to exercise good faith to protect the insured from the risk of having a judgment rendered against him greatly in excess of the limits of the policy. Under the terms of the policy, the insurer alone had the right and power to settle. 3 Williston Contracts, § 670, 1926 (rev. ed. 1936).” Grundy, supra, at page 737.

Grundy’s lawyer, as evinced by the first offer of settlement quoted above, is under the misapprehension that somehow the claimant is the beneficiary of the rule as to “bad faith.” This is not so. There is no privity of contract between the insurer and the claimant, so the insurer is never guilty of “bad faith” to the claimant. The claimant can look only to the insured for satisfaction of the judgment unless the insured makes an assignment to the claimant as approved in Terrell, supra, and as was done here. Grundy, supra. On the part of the insured, he may proceed directly against the insurer if he so desires.

'Aside from the procedure outlined in Marcum, the opinion recites factors indicating “bad faith” to be probability of recovery; there was a directed verdict against Bell, the insured, and the extent of injuries which the opinion recites makes it obvious that the recovery would be far in excess of the policy limits and the negotiations with respect to settlement.

Marcum illustrates the problem, not answered in any jurisdiction, of formulating a satisfactory standard for submitting the issue of “bad faith” to a jury. This problem is portrayed by the lengthy quote from 44 Am.Jur.2d, supra.

California is apparently preparing to finesse the problem of formulating a satisfactory test.

In Crisci v. Security Insurance Co. of New Haven, Conn., 66 Cal.2d 425, 58 Cal. Rptr. 13, 426 P.2d 173 (1967), where the court held the insurer liable for the excess over the policy limits, it was argued that whenever the insurer receives an offer to settle within the policy limits and rejects it, the insurer should be liable in every case for the amount of any final judgment whether or not within the policy limits. In the course of the discussion of this argument, the court stated:

“The proposed rule is a simple one to apply and avoids the burden of a determination whether a settlement offer within the policy limits was reasonable. The proposed rule would also eliminate the danger that an insurer, faced with a settlement offer at or near the policy limits, will reject it and gamble with the insured’s money to further its own interests. * * *.
“Finally, and most importantly, there is more than a small amount of elementary justice in a rule that would require that, in this situation where the insurer’s and insured’s interest necessarily conflict, the insurer, which may reap the benefits of its determination not to settle, should also suffer the detriments of its decision.
“We need not, however, here determine whether there might be some countervailing considerations precluding adoption of the proposed rule * * ⅜.”

This indicates a disposition to impose strict liability.

University of Florida Law Review, 23:201, Fall ’70, “Strict Liability for Insurance Companies in Excess Judgment Suits,” states at page 205 that Florida may be moving toward a strict liability in this situation:

“A rule of strict liability eliminates the danger that an insurer, who is offered a settlement at or near the policy limits, will refuse it, in effect, gambling with the policyholder’s money to further its own interests. Adoption of this doctrine will also end the confusion over the bad faith and negligence standards and thus eliminate a troublesome, or even impossible, question for the jury.”

The advantage of strict liability is in its simplicity. The objection in our view is that it reforms the insurance contract. Both Crisci and the University of Florida Law Review article reflect the frustration resulting from a search for a satisfactory test to fairly submit the issue to a jury. The key to the frustration is pointed out in the article in that the issues of bad faith and negligence are “troublesome, or even impossible, question^s] for the jury.”

Probability of recovery and that the recovery would be in excess of the policy limits are the factors of primary importance set out in Marcum. They must be evaluated together. As the probability of recovery moves toward a certainty, so does the burden on the insurer to settle, considered together with the extent of the injuries, translated into an evaluation of the probable amount of a jury verdict in excess of the policy limits. To the extent this probable amount increases beyond the policy limits, so does the burden on the insurer to settle.

The negotiations with respect to settlement are a factor to be considered. American Surety Co. of N.Y., supra, at page 196 states:

“There is no merit to appellee’s argument that the insurer is compelled to offer or make a settlement of its full liability. The inducement to an insurer to settle is that it can do so for less than the policy limit. There is no such inducement if the insurer is compelled to offer the full policy amount in settlement. It may as well try the case in the hope for a jury verdict for less than its full liability.”

This language, we believe, led the plaintiff’s lawyer in Harrod v. Meridian Mutual Insurance Co., Ky., 389 S.W.2d 74 (1964), to make an offer of settlement for $9,999 where the policy limits were $10,000. This, in our view, is hair-splitting, and this proposition in American Surety Co. of N.Y. is overruled.

It is, of course, a factor to be taken into consideration if the plaintiff offers to settle for less than the policy limits to the extent that the offer is less. This factor should be evaluated together with the other factors set out herein. That is not to say that the insurer is relieved of “bad faith” if only the policy limits are offered as a basis of settlement. An offer to settle for the policy limits must also be evaluated in the circumstances of probability of recovery and probability of a jury verdict to the extent that it would exceed policy limits. We observe that last-minute offers of settlement, as in Harvin, supra, which do not give the insurer adequate opportunity to evaluate are entitled to less consideration.

Another factor we believe should be considered is whether the insured made a demand for settlement on the insurer. This factor is a subject of the dissent in Marcum. We are of the opinion that this demand, or lack of it, is not controlling but should be given the weight that is warranted in the circumstances of a given case.

We realize, of course, that we cannot visualize all the circumstances arising in future situations, so that there may be other factors peculiar to a set of facts that should also be weighed and evaluated together with those enumerated above. It appears to us that these factors represent, if properly weighed and evaluated together in the circumstances of a particular case, a fair test of good or bad faith both to the insurer and the insured.

The difficulty in applying the test rests in the ability of the fact-finder to apply it. As suggested in the University of Florida Law Review article, this presents a troublesome or even impossible question for the jury. Ordinarily a jury is unsurpassed as a fact-finding body for disputed facts. However, if we assign to the jury tasks which it cannot perform intelligently, we are destroying the efficacy of the propounded test.

This is pointed out in an article entitled “Duty of Liability Insurer to Compromise Litigation,” 26 Ky.LJ. 100, Jan. 1938. The article discusses the tests of “negligence” and “bad faith” and goes on to say “[h]ere we have two tests enunciated by the courts. Each has been bitterly attacked by writers and by judges. There is little distinction to be found in some decisions which apparently regard both tests to have the same essential elements. The one real point of vulnerability is existent under both—that is consideration of the question as a jury issue. No jury whatsoever is competent to consider such an issue whenever attorneys, experts in the fields of personal injury and insurance law, might well differ upon the questions of due care by or good faith of the insurer in such a situation. A group of laymen, casually assembled, is absolutely incompetent to apply either test accurately * * *.” We are of the opinion that a jury is just not equipped to evaluate the probable chances of recovery in a given case; nor is it equipped to properly weigh and evaluate this factor together with the other factors enumerated above. The issue of “bad faith” should be decided by the trial court. Only the trial court has the training and experience to properly apply these factors to a set of facts. We thus overrule Marcum, American Surety Co. of N. Y. and Harrod, supra, to the extent that they approve submitting the issue to the jury, and other cases that leave this question to the jury.

Looking toward a workable definition of “bad faith,” we find in the various jurisdictions, including this one, a wide variety of definitions. In the trial of this case, the test used in the instruction taken from Marcum was whether the failure to settle “was of such arbitrary and reprehensible nature as to constitute bad faith, meaning conscious doing of a wrong or breaching of a known duty for some motive of interest or ill will.” We are of the opinion that a definition such as this is more rhetorical than practical in application. We are of the opinion that taking into consideration all the factors enumerated above and in weighing and evaluating such factors according to the circumstances of a given case, the test should be: Did the insurer’s failure to settle expose the insured to an unreasonable risk of having a judgment rendered against him in excess of the policy limits? If the question is answered “yes” by the trial court after weighing and evaluating the various factors, then the insurer is guilty of “bad faith.”

We note that in the trial of this case the two expert witnesses introduced by Grundy testified as to what amount they would consider the case worth for settlement purposes. This is irrelevant. The test of this factor is what in the opinion of the expert a jury in the same community probably would have awarded at the time of the trial on liability. In weighing this factor, the trial court is better able to comprehend and evaluate the testimony of experts should they be presented.

Here also there is the fact that although a verdict was directed against Weaver, the issue of Humphrey’s negligence in contributing to the accident was submitted to the jury. The record sheds little light on the strength of this defense. There is no question here of the strength of Grundy’s cause of action. Either Weaver or Humphrey or both would be liable for damages. We leave a resolution of this question for the trial court on retrial.

We do not by this opinion fault the trial court in its handling of this case. The trial judge did the best he could with the tools at hand.

The judgment is reversed with directions to grant a new trial consistent with this opinion.

REED, C. J., and JONES, LUKOWSKY, PALMORE and STERNBERG, JJ., concur.

CLAYTON, J., dissents.

CLAYTON, Justice

(dissenting).

I respectfully dissent from the majority opinion. Simply stated, I cannot agree that a trial judge, even though trained in legal principles, is better qualified than a jury of twelve properly instructed individuals in (1) resolving issues of fact, (2) gauging the actions of an insurance company, and (3) answering the ultimate question of whether bad faith is present. Admittedly, many of the factual situations would appear to be interwoven beyond separation, but it is the well-settled practice in a majority of the various jurisdictions to submit a wide range of issues of varying complexity to the jury for resolution. For cases illustrating this proposition see Atlantic Mut Ins. Co. v. Cooney, 303 F.2d 253 (9th Cir. 1962); Tennessee Farmers Mut. Ins. Co. v. Wood, 277 F.2d 21 (6th Cir. 1960); Hamilton v. State Farm Ins. Co., 83 Wash.2d 787, 523 P.2d 193 (1974).

Further, I cannot accept that part of the majority opinion which overrules the proceedings in State Farm Mutual Automobile Ins. Co. v. Marcum, Ky., 420 S.W.2d 113 (1967); American Surety Co. of N. Y. v. J. F. Schneider & Son, Ky., 307 S.W.2d 192 (1957); and Harrod v. Meridian Mutual Insurance Co., Ky., 389 S.W.2d 74 (1964). Such an unsettling of existing law is perplexing to the trial bar and judge. See Campbell v. Government Employees’ Ins. Co., Fla., 306 So.2d 525 (1974). The majority opinion should, at least, be made prospective.

Today juries are sufficiently sophisticated in the field of insurance to adequately find from the facts if an insurance company has acted in bad faith. In Highway Insurance Underwriters v. Lufkin-Beaumont Motor Coaches, Inc. (Texas Civ.App.) 215 S.W.2d 904 (1948), the court said, at page 928:

“Whether Insurer breached the applicable standard of conduct is not easy to determine; determination of such an issue requires an exceedingly precise evaluation of evidence.”

Recognizing the difficulties attendant in the task of sifting through the evidence, not to mention answering the questions surrounding “due care,” “good faith,” and “conflicts of interest” on the part of the insurer, the court in Highway Insurance Underwriters, supra, went on to say, at page 928:

“Under the circumstances, then, we shall be justified in requiring of Insurer a strict compliance with the burden of proof. However, we can make no greater demand of Insured for, as we have stated, the fact that room for a difference of opinion exists eventually makes the question one for the jury, not for this court.” (emphasis added)

I could more easily accept the majority opinion if the litigant were given an option between the judge and the jury.


text:
    ACTUARIAL SERVICES, INC., Appellant, v. Harold B. McGUFFEY, Commissioner of Insurance, Commonwealth of Kentucky, Appellee. Charles W. KLAYER, Appellant, v. Harold B. McGUFFEY, Commissioner of Insurance, Commonwealth of Kentucky, Appellee.
    Court of Appeals of Kentucky.
    Sept. 19, 1975.

      Dan Marshall, Louisville, for appellants.
    Edward L. Fossett, G. Lee Langston, Dept, of Ins., Frankfort, for appellee.
   CULLEN, Commissioner.

The Kentucky Commissioner of Insurance revoked the insurance agent’s license of Charles W. Klayer upon a finding after an evidentiary hearing that Klayer had conducted himself in an untrustworthy manner by falsely testifying under oath, on a prior hearing, that Kentucky Central Life Insurance Company had issued life insurance policies on the lives of five named persons, and a further finding that Klayer had issued or caused to be issued fraudulent or bogus policies on the lives of the persons in question. The Commissioner simultaneously suspended the agent’s license of Actuarial Services, Inc., a corporation solely owned by Klayer, the suspension to continue “until such time after application and a hearing thereon it is shown to the satisfaction of the Commissioner or his successor that the said Charles W. Klayer has relinquished all his ownership and interest of whatever kind in the said Actuarial Services, Inc.”

On appeal by Klayer and Actuarial Services to the Franklin Circuit Court judgment was entered upholding the Commissioner’s orders. Klayer and Actuarial Services are appealing here from that judgment.

This court finds no merit in Klayer’s claims of error as to the revocation of his license, and finds no need to discuss them. However, the court is convinced that there was error in the suspension of the license of Actuarial Services.

At no time were any charges preferred against Actuarial Services, or any hint made that its license was in jeopardy. No notice of hearing was given to Actuarial Services and no hearing was held addressed to the suspension of its license. The only argument advanced by the Commissioner on this appeal, why such seemingly flagrant lack of due process should not be considered fatal to the validity of the order suspending Actuarial Services’ license, is that the license of the corporation and of its agent, in a situation of this kind, are so interrelated that revocation of the license of the corporate agent automatically revokes or suspends the license of the corporation.

The Commissioner refers to KRS 304.9-130(1) which authorizes the issuance of an insurance agent’s license to a corporation and provides that “each individual to act for the corporation under the license, shall be named in or registered with the commissioner as to the license, and shall qualify as though an individual licensee.” He also refers to KRS 304.9-440(2), which provides that the license of a corporation may be suspended or revoked “for any of such causes as relates to an individual designated in or registered as to the license to exercise its powers.”

Perhaps KRS 304.9-130(1) makes the corporate representative’s license authority so dependent upon the continued existence of the corporation’s license that a revocation of the corporation’s license automatically will end the representative’s license authority. But we do not construe the statute as making the validity of the corporation’s license (as distinguished from the usability of the license at any particular point in time) dependent upon the continued existence of valid representative’s endorsements on that license. If the Commissioner’s argument were valid, the mere resignation of a corporation’s licensed representative would terminate the corporation’s license.

Actually, the course of action followed by the Commissioner of Insurance in the instant case was not consistent with the statutory interpretation he now advocates. He did not automatically revoke the corporation’s license by virtue of the revocation of Klayer’s license. Rather, he suspended the corporation’s license until it disassociated itself from Klayer, apparently on a determination that a corporation owned by a person whose license had been revoked should not itself have a license. We think such a determination could not be made without according the corporation procedural due process.

The provision of KRS 304.9-440(2) that the corporation’s license may be suspended or revoked “for any of such causes as relates to an individual designated in or registered as to the license to exercise its powers” cannot reasonably be construed, in our opinion, to mean that the corporation’s license can be revoked or suspended without notice or hearing. The statute deals only with causes for revocation, not with procedures. It falls far short of saying that revocation of the corporate representative’s license authority automatically revokes the corporation’s license.

On Klayer’s appeal, the judgment is affirmed. On the appeal of Actuarial Services, Inc., the judgment is reversed with directions to enter judgment setting aside the order of the Commissioner of Insurance suspending the license of Actuarial Services, Inc.

All concur except LUKOWSKY, J., who did not sit.