dissenting: Disagreement with the opinion of the court prompts the following explanation. The decision as written will place an intolerable burden on counsel for insurance companies who attempt in good faith to protect both the interest of the company and the insured against claims of third parties. This court for the first time indicates that a company has a duty to initiate a “reasonable” offer of settlement when its insured is about to be sued by an injured third party. In addition the thrust of the opinion seems to impose upon counsel for the company the impossible task of forecasting at his peril the future amount of a jury verdict while engaged in the trial of the lawsuit.
You must look beyond the syllabus of the court in this case to understand what the case holds. Innocently enough every paragraph of the syllabus indicates, by the use of parenthesis, that the holding finds support in our prior case of Bollinger v. Nuss, supra. But an examination of Bolinger indicates two very surprising things. The facts in Bollinger make a much stronger case to establish negligence or bad faith yet the company was not held responsible for an excess. For instance the company refused an offer of settlement made by the injured third party of $23,500.00. The offer was made before trial and the policy limit was $25,000.00. The verdict of the jury was $30,483.84. Thus the company gambled $1,500.00 and its insured had to pay $5,483.84 as a result of the gamble.
The second thing which should be noted about Bollinger is that the rules of law stated are based upon the supposition that the injured third party has intiated an offer of settlement. The opinion in the present case is a distinct departure from the holding in Bollinger and from our prior case law in this area.
*243Previously we have held that there may be a conflict of interest between the insurer and the insured. Out of this possible conflict of interest arises a duty to the insured. Failure to fulfill that duty creates a liability which, may extend beyond the limits of the policy. In Bollinger where the offer was $23,500.00 with a policy limit of $25,000.00 this court noted that the question of liability beyond the policy limit ‘becomes particularly acute where there is an offer of settlement approximating policy limits.” (202 Kan. p. 336.) This court in denying liability for the excess verdict in Bollinger says:
“. . . [W]e are inclined to the view that the insurer may properly give consideration to its own interests, but it must also give at least equal consideration to the interests of the insured.” (202 Kan. p. 336.)
Assuming that this is a valid premise, what unequal consideration appears in the present case? The company lost $4,000.00 by refusing the offer of settlement during trial and the insured should have lost $2,500.00 which is the excess over policy limits
The opinion in the present case attaches considerable significance to the amount of reserves established by the company to take care of possible future liability. This is not a proper criterion. If such is proper a conservative company which wishes to adequately protect against all possible losses will be penalized. Internal policies of the company have little or nothing to do with negligence or bad faith in considering offers of settlement in the field. Could it be argued that the establishment of a small reserve by the company indicates less liability and less duty to consider a reasonable offer of settlement made in good faith? I think not.
Some weight is given in the opinion to evidence that the company initiated an offer of settlement before trial of only $1,000.00, when the ultimate liability established by the verdict was $12,500.00. It should be noted in this regard that the offer was refused and the injured party made no counter offer prior to trial.
As I read Bollinger and the other cases cited in the court’s opinion the obligation of the company arises when it receives an offer of settlement from the injured third party. This is confirmed by reading paragraphs 2, 3 and 4 of the syllabus which are lifted from Bollinger. These paragraphs refer to considering (¶ 2), rejecting (¶ 3) or refusing (¶ 4) offers of settlement initiated by the injured third party. This important fact is overlooked in the majority opinion, and as a result the opinion as written will *244impose a duty on a company to initiate an offer of settlement not required by its contract of insurance and prior case law. This duty to initiate an offer of settlement is not recognized in any of our prior cases.
Again may I point out the company did make an offer of $1,000.00 to settle the case before trial. The injured party did not respond to that offer until after the trial had begun in court. During the heat of the trial the injured party offered to settle for $6,000.00 and at that time, as shown by the stipulation of the parties, the company made a counter offer of $3,000.00. Whether this counter offer came from a claims agent or the company attorney seems immaterial. This counter offer was entirely in line with the attorney’s previous evaluation of liability.
The trial court erroneously found that the company refused to discuss the offer made at the trial or to make a counter offer other than the bona fide offer of $1,000.00. The parties stipulated otherwise as shown on page 235 (p. 8) of the majority opinion.
The $3,000.00 counter offer was ignored by the plaintiff. In addition it should be remembered that while plaintiff’s offer was $6,000.00 the policy limit was $10,000.00 and contained a seemingly adequate cushion to protect the insured. From hindsight we can say the $6,000.00 offer should have been accepted by the company. In view of the verdict returned it is now easy to see that both the company and the insured would have benefited by an acceptance. But hindsight cannot be used to arrive at a proper decision in these cases. In Bollinger it is said:
“. . . The strength of plaintiff’s case must be gauged as it appeared at the time the offer was refused. As all can now see through hindsight, it would have been better for both the insured and the insurer to have accepted the offer. . . . The value of an unlitigated claim must be determined on its own apparent merits, or lack of them, the possibility of liability being established, and on the injuries and their extent being proven. . . .” (202 pp. 340, 341.)
Again we wish to note, it is the refusal of an offer made by the injured third party which imposes a duty on the company. When the offer is made the company must then consider the possible consequences both to itself and to its insured. When the offer was made in the present case a trial was in progress. There should be no question that at this time it was doubtful recovery would exceed the policy limit of $10,000.00. The plaintiff’s own evaluation of his case was $4,000.00 under this policy limit. In *245evaluating the $6,000.00 offer under the circumstances the possibility of an excess verdict was questionable at best.
It is not contended in this case that the company was negligent in the quality of the defense given the insured, as was the situation in Anderson v. Surety Co., supra. Here there was no failure to present every possible defense to the action. The insured was fully advised of his possible liability. He rejected the company’s suggestion to hire his own attorney. He never asked the company to negotiate a settlement within the policy limits. In addition it is not contended that the company was guilty of the type of bad faith charged but not established in Bennett v. Conrady, supra. There was no evidence the company acted without an adequate investigation of the facts of the case.
In Bollinger we say:
“. . . Where the insurance company acts honestly and in good faith upon adequate information, it should not be held liable because it failed to prophesy the result. [Citation omitted.] Something more than mere error of judgment is necessary to constitute bad faith. The company cannot be required to predict with exactitude the results of a trial; nor does the company act in bad faith where it honestly believes, and has cause to believe, that any probable liability will be less than policy limits. [Citations omitted.] Good faith on the part of the insurer implies honesty, fair dealing and adequate information. [Citation omitted.]” (202 p. 341.)
Now in the present case what was the apparent extent of liability for plaintiff’s injuries prior to the trial?
Plaintiff’s car had been hit in the left rear portion and had been knocked sidewise. Plaintiff got out of her car unassisted and walked across the street to telephone her employer. She had a bump on her forehead which left no permanent scar. She returned to the accident scene and remained for 30 minutes, then went to work. She remained at work all day. She lost no wages nor was she hospitalized following the accident. She was examined by several doctors in connection with subjective complaints of pain in her back. X-rays disclosed no objective injury. Her injuries were described as amounting to a minimal type of muscle strain and as a sprain of the cervical spine. One doctor stated that after physiotherapy and muscle education sessions covering a five month period she was discharged with marked improvement. The expense for all treatments totaled $655.72.
In addition to these facts the company was advised that plaintiff had been in a subsequent rear-end collision. It was entirely pos*246sible that her subjective complaints may have partially resulted from this unrelated accident.
The present garnishment action was tried to the court without a jury. The trial court found negligence and bad faith. We are well aware of the rule that whether an insurer in defending a claim and refusing an offer of settlement within policy limits was negligent or acted in bad faith is a question for the trier of fact in each case. (Bollinger v. Nuss, supra, p. 341.) The facts upon which the trial court rendered its decision were disclosed by depositions, exhibits and stipulations set forth in the record. This court is in as favorable a position to consider this evidence as the trial court. (North River Ins. Co. v. Aetna Finance Co., 186 Kan. 758, Syl. ¶1, 352 P. 2d 1060.)
In the present case the trial court’s findings are contrary to the facts stipulated by the parties. A counter offer of $3,000.00 was made by the company in response to the $6,000.00 offer. The attorneys for the injured party refused to consider the $3,000.00 counter offer. Furthermore the trial court erroneously construed our holding in Bollinger v. Nuss, supra, to require the company to initiate offers of settlement. The company’s liability for excess in these cases arises only in case of a breach of duty. A breach of duty occurs only when the company refuses to fairly consider and discuss, or rejects a settlement offer originating with the injured party. In the present case there was no evidence which would amount to negligence or bad faith. At most a mere error of judgment was shown. The majority opinion in affirming the trial court goes beyond our previous decisions and will require an insurance company to initiate an offer of settlement which can be considered reasonable in light of any subsequent verdict. This is an unjust and intolerable burden, even for an insurance company.
The company has paid the amount of its policy limits. The additional judgment against the company for $2,500.00 should be reversed.
Fontron and Owsley, J. J., join in the foregoing dissenting opinion.