Section 3.26 Necessity for Good Faith

• Library: Settling Cases 2014

Unlike § 537.060, RSMo 2000, § 537.065, RSMo 2000, contains no explicit requirement that contracts entered into under that section be made in good faith. Nonetheless, good faith is an implied feature of the statute.

Thus, in Kollmeyer v. Willis, 408 S.W.2d 370 (Mo. App. S.D. 1966), the court of appeals held that the trial court did not err in setting aside a default judgment on an insurer’s motion when the insurer was not advised of a settlement under § 537.065. In Butters v. City of Independence, 513 S.W.2d 418 (Mo. 1974), the Supreme Court upheld § 537.065 against a constitutional challenge of deprivation of due process because it found that the statute does not deprive the insurer of its right to a hearing on the question of collusion between the settling parties. Butters, 513 S.W.2d at 426.

Aside from Kollmeyer, 408 S.W.2d 370, the courts have not had much occasion to clarify what constitutes sufficient bad faith or collusion to vitiate settlements under § 537.065. As noted in §3.22 above, a mere failure to present a defense was...