Alabama Farm Bureau Mut. Cas. Ins. Co. v. Humphrey

• Decision Date: 12 February 1975
• Parties: ALABAMA FARM BUREAU MUTUAL CASUALTY INSURANCE COMPANY v. Edward HUMPHREY, as Administrator of the Estate of Annie O. Humphrey, Deceased. Civ. 464.
• Court: Alabama Court of Civil Appeals

Page 255

308 So.2d 255

54 Ala.App. 343

ALABAMA FARM BUREAU MUTUAL CASUALTY INSURANCE COMPANY v. Edward HUMPHREY, as Administrator of the Estate of Annie O. Humphrey, Deceased.

Civ. 464.

Court of Civil Appeals of Alabama.

Feb. 12, 1975.

Dixon, Wooten, Boyett & McCrary, Talladega, for appellant.

Lewis H. Hamner, Jr., Roanoke, for appellee.

WRIGHT, Presiding Judge.

This is an appeal from a judgment in favor of an insured suing his insurer upon the uninsured motorist coverage of his policy.

The applicable facts are as follows: Plaintiff's intestate, defendant's insured, was killed in an automobile accident involving three automobiles. The deceased was riding in an uninsured automobile. One of the other automobiles was uninsured and the other as insured. Prior to the present suit, plaintiff, the personal representative of the estate of the deceased, executed a pro tanto settlement with the insured motorist in the amount of $17,500.00. Suit was then brought against Farm Bureau, appellant here, alleging that deceased was an insured of Farm Bureau under a policy issued to her father; that deceased was killed by the concurring wanton or negligent acts of the two uninsured motorists; that plaintiff is entitled to recover under the uninsured motorist coverage and under the medical payments coverage of the policy.

Farm Bureau filed defenses of (1) the general issue, (2) contributory negligence, (3) provisions of the policy excluding coverage where settlement is made with a person who might be legally liable for the injury without the written consent of the insurer, (4) trust agreement or subrogation provisions of the policy which entitled insurer to recover from insured any proceeds of a settlement made with any person, legally liable for the injury, (5) satisfaction of claim because of the $17,500.00 settlement, (6) recovery of medical expenses could not be had because full recovery had been made by plaintiff from the settlement and plaintiff had violated insurer's subrogation rights by making the settlement without the consent of the insurer, (7) action was barred because all damages had been paid by the settlement with a third party.

Insurer's defenses 3, 4, 5 and 6 were struck upon motion of plaintiff. Summary judgment of $1,000.00 was granted plaintiff as a count two of the complaint claiming medical payments. Count one was tried to a jury and verdict and judgment entered granting plaintiff $9,000.00 damages.

Motions for judgment notwithstanding the verdict and for new trial were denied. Defendant appealed.

Though there were 51 assignments of error, defendant in brief argues only four. They will be discussed in the order argued and are as follows:

(1) The validity of the exclusionary clause in the uninsured motorist coverage. (2) The enforceability of the insurer's subrogation right against proceeds of a settlement made with tort-feasors other than the uninsured motorists. (3) Whether payments under the medical payments clause of the policy may be set off against claim under the uninsured motorist coverage. (4) Improper argument of counsel to the jury.

The argument as to assignment one is admitted to have been answered by this court in our case of Alabama Farm Bureau Casualty Insurance Company v. Clem, 49 Ala.App. 457, 273 So.2d 218. Defendant insists our decision in Clem was erroneous and asks that we reverse it. We decline to do so.

In Clem, supra we pointed out that the Alabama uninsured motorist statute contained no provision as to rights of subrogation, as do the statutes in some other states. We further pointed out the principle enunciated by our Supreme Court in other cases. That principle is, the uninsured motorist statute is to be construed so as to assure a person injured by an uninsured motorist that he will be able to recover, from whatever source available, up to the total amount of his damages. The insurer will not be permitted to insert any provision in its policy limiting such recovery by the insured. Safeco Ins. Co. of America v. Jones, 286 Ala. 606, 243 So.2d 736; State Farm Mutual Auto Ins. Co. v. Cahoon, 287 Ala. 462, 252 So.2d 619; Employers Liability Assurance Corp., Ltd., v. Jckson, 289 Ala. 673, 270 So.2d 806; Great Central Insurance Co., v. Edge, Ala., 298 So.2d 607.

It was determined by the jury in this case, after instructions by the court to consider the fact that plaintiff had already received payment of $17,500.00, that plaintiff was entitled to receive an additional $9,000.00 in damages. Thus, the total damage of plaintiff was found to be $26,500.00. To give validity to the trust agreement contained in the policy would prevent an insured from recovering under his uninsured motorist coverage if he settled with an insured tort-feasor for a sum more than $10,000.00, even though, as in this case, his total damages were not fully recovered in the settlement.

The trust agreement would condition the uninsured motorist coverage upon the surrender by the insured of any right to settle with or to recover from an insured tort-feasor. Further, if insured settled or recovered, such settlement or recovery could be set off against any sum due from the insurer because of damages caused by an uninsured joint tort-feasor, total damages of insured notwithstanding. Thus, the liability of the insurer would be limited by recovery or settlement from others than the uninsured motorist, though total damages had not been recovered. There can be no liability-limiting clause restricting an insured from recovering actual damages suffered within the limits of the policy of uninsured motorist insurance. Preferred Risk Mutual Ins. Co. v. Holmes, 287 Ala. 251, 251 So.2d 213.

We hold that the trust agreement or subrogation clause, when applied to settlement with or recovery from tort-feasors other than the uninsured motorist is invalid and contrary to the intent of the uninsured motorist statute. We point out that an insured may not recovery if he has been fully compensated for his damages by any tort-feasor. The question not being before us, we do not decide whether a subrogation provision is applicable to a claim against the uninsured motorist. We adhere to our decision in Clem, supra.

We consider that we have answered defendant's second contention as to enforceability of a right of subrogation against the proceeds of the pro tanto settlement. We hold such subrogation under the facts of this case invalid.

Defendant charges further error in the striking of its defense number 6 which presented the right to set-off amounts paid or due to be paid under the medical payments...