Berlinski v. Ovellette

• Decision Date: 21 March 1973
• Citation: 164 Conn. 482,325 A.2d 239
• Court: Connecticut Supreme Court
• Parties: Frank S. BERLINSKI et al. v. Maurice OVELLETTE et al.

Page 239

325 A.2d 239

164 Conn. 482

Frank S. BERLINSKI et al. v. Maurice OVELLETTE et al.

Supreme Court of Connecticut.

March 21, 1973.

Michael H. Heneghan, Rocky Hill, with whom, on the brief, was William D. Graham, Hartford, ¹ for the appellants (defendants).

Richard A. Walsh, Hartford, with whom, on the brief, was Joseph F. Skelley, Jr., Hartford, for the appellees (plaintiffs).

Before HOUSE, C.J., and SHAPIRO, LOISELLE, MacDONALD and BOGDANSKI, JJ.

HOUSE, Chief Justice.

This is an appeal from a judgment for the plaintiffs rendered following a trial to the court of an automobile negligence action. The judgment awarded damages to the named plaintiff for personal injuries and to his father for property damage to the latter's automobile. The parties stipulated to the facts and confined the sole issue on the appeal to the validity and effect of a so-called trust agreement entered into between Frank S. Berlinski, hereinafter referred to as the plaintiff, and Allstate Insurance Company, hereinafter referred to as Allstate.

The stipulated facts may be briefly summarized. As a result of a collision between two automobiles, admittedly caused by the negligence of the named defendant while operating a family car owned by the defendant Tessie Ovellette, the plaintiff, who was operating an automobile owned by his father, sustained personal injuries. At the time of the accident, neither defendant was insured under any insurance policy which would compensate or indemify the plaintiff. The plaintiff's father, however, carried insurance with Allstate which not only insured him as the owner of the car but also insured operators of and passengers in the car against injuries suffered by them as the result of a collision with an uninsured car. In accordance with the provisions of the policy, Allstate paid $1000 to the plaintiff to compensate him for the personal injuries he sustained in the accident. It is agreed that that sum was reasonable compensation for those injuries.

As required by Allstate, the plaintiff, as an insured operator of the car, on receiving the $1000 payment from Allstate executed a 'Trust Agreement.' He agreed as 'trustee' to hold for Allstate as 'beneficiary' all rights, claims and causes of action he might have against any other party because of the claim he had made against Allstate and as trustee to take, through any representative designated by Allstate, such action as might be necessary or appropriate to recover the damages paid to the trustee, such action to be taken in the name of the trustee but with all costs and expense in connection therewith to be paid by Allstate. The agreement also provided that any money recovered by the trustee as the result of such action would be held in trust and paid to Allstate, provided, however, that any sum recovered in excess of the total amount paid by Allstate to the trustee should be retained by the trustee for his own use and benefit.

To the complaint filed against the defendants in the plaintiff's name, the defendants, although acknowledging liability for any property damage, interposed a special defense to the plaintiff's claim for damages for personal injuries, alleging that (1) the plaintiff is not the real party in interest but is suing on behalf of his insurer which, having reimbursed the plaintiff, is seeking recoupment by virtue of the subrogation clause; (2) the provisions of the trust agreement, whereby the plaintiff agreed to take, through a representative designated by the insurance company, such action as was necessary to recover the damages paid the plaintiff and to hold and pay over to the insurer any moneys he recovered, and whereby the insurer would pay the costs and expenses in connection with that suit, are against the public policy of the state of Connecticut; (3) the subrogation agreement as it relates to claimed personal injuries is the assignment of a personal injury claim; and (4) the plaintiff had already been compensated for his injuries. The trial court concluded that the trust agreement was not contrary to public policy and was 'legally enforceable' against the defendants and rendered judgment accordingly. As we have noted, the only claim of error pressed on this appeal is the conclusion of the court that the trust agreement was not contrary to public policy but was 'legally enforceable' against the defendants.

Under common law a cause of action for personal injuries cannot be assigned, and in the absence of a statutory provision to the contrary a right of action for personal injuries resulting from negligence is not assignable before judgment. 6 Am.Jur.2d 220, Assignments, § 37. The rule is succinctly stated in the Restatement, 2 Contracts § 547(1)(d): 'An assignment of a claim against a third person or a bargain to assign such a claim is illegal and ineffective if the claim is for . . . (d) damages for an injury the gist of which is to the person rather than to property, unless the claim has been reduced to judgment.' The annotation, 'Assignability of claim for personal injury or death,' 40 A.L.R.2d 500, 502 § 3, has noted: 'It seems that few legal principles are as well settled, and as universally agreed upon, as the rule that the common law does not permit assignments of causes of action to recover for personal injuries.' See cases therein cited. The rule was early recognized in Connecticut. See Whitaker v. Gavit, 18 Conn. 522, 526. The reasons underlying the rule have been variously stated: unscrupulous interlopers and litigious persons were to be discouraged from purchasing claims for pain and suffering and prosecuting them in court as assignees; actions for injuries that in the absence of statute did not survive the death of the victim were deemed too personal in nature to be assignable; a tort-feasor was not to be held liable to a party unharmed by him; and excessive litigation was thought to be reduced. Robins Dry Dock & Repair Co. v. Flint,275 U.S. 303, 48 S.Ct. 134, 72 L.Ed. 290; Rice v. Stone, 83 Mass. (1 Allen) 566; note, 40 A.L.R.2d 500. The more modern cases suggest that such an assignment directly or indirectly serves to prejudice the ultimate ability of the injured person to be compensated fully. See Harleysville Mutual Ins. Co. v. Lea, 2 Ariz.App. 538, 410 P.2d 495; Fifield Manor v. Finston, 54 Cal.2d 632, 7 Cal.Rptr. 377, 354 P.2d 1073; Forsthove v. Hardware Dealers Mutual Fire Ins. Co., 416 S.W.2d 208, 215-218 (Mo.App.).

If the General Assembly has not modified the common-law rule, it enjoys continuing validity. The plaintiff contends that the common-law rule is not applicable in the circumstances of this case for, basically two reasons. First, he contends that the trust agreement between himself as the injured plaintiff and the insurance company which insured occupants of his father's automobile did not constitute an assignment of a personal injury claim. Second, he asserts that the public policy against the assignment of a personal injury claim has been modified in this state by a regulation of the insurance commissioner authorizing such a trust agreement as was used in this case, such authorization having been granted to the commissioner by statute. General Statutes § 38-175a; Regs.Conn. State Agencies § 38-175a-6(e).

I

Regardless of form and the protective coloration employed by use of the term 'trust agreement,' it is an inescapable conclusion that the trust agreement purported to transfer from the plaintiff to Allstate the right to pursue at Allstate's own expense and by its own choice of counsel, and in the name of the plaintiff, the plaintiff's cause of action against the defendants to recover for itself damages for all his personal injuries and retain for itself any damages it recovered to the extent of its payment to the plaintiff. By whatever name the parties chose to call the agreement ² and the transfer of the cause of action, it was in essence an assignment of a cause of action for personal injuries and, in the absence of legislative change in the common-law rule against such an assignment is contrary to public policy and impermissible.

With the more recent development of insurance provisions for hospital and medical expenses, medical payments, and protection against uninsured motorists, many cases have arisen in other jurisdictions. There has been a wide diversity of opinion and the results have been far from uniform. Some courts have strictly adhered to the rule that the common law does not permit such assignments. See, e.g., Harleysville Mutual Ins. Co. v. Lea, supra; Forsthove v. Hardware Dealers Mutual Fire Ins. Co., supra; City of Richmond v. Hanes, 203 Va. 102, 122 S.E.2d 895. Other courts, while recognizing the common-law rule, have concluded that the rule no longer prevails in their jurisdictions. See Davenport v. State Farm Mutual Automobile Ins. Co., 81 Nev. 361, 404 P.2d 10; Smith v. Motor Club of America Ins. Co., 54 N.J.Super. 37, 148 A.2: 37; Hospital Service Corporation v. Pennsylvania Ins. Co., 101 R.I. 708, 227 A.2d 105. Some courts have concluded that in the cases before them the policy provisions provide only for permissible subrogation and do not constitute an assignment. See Higgins v. Allied American Mutual Fire Ins. Co., 237 A.2d 471 (D.C.App.); Hardware Dealers Mutual Fire Ins. Co. v. Ross, 129 Ill.App.2d 217, 262 N.E.2d 618; City of New York Ins. Co. v. Tice, 159 Kan. 176, 152 P.2d 836; Travelers Indemnity Co. v. Rader, 152 W.Va. 699, 166 S.E.2d 157. Some have concluded that the policy provisions before them merely created an equitable lien against any damages the injured insured might recover. See Bernardini v. Home & Automobile Ins. Co., 64 Ill.App.2d 465, 212 N.E.2d 499; Davenport v. State Farm Mutual Automobile Ins. Co., supra; Miller v. Liberty Mutual Fire Ins. Co., 48 Misc.2d 102, 264 N.Y.S.2d 319. The Supreme Court of Rhode Island has indicated that in that state the public policy against assignment of actions for personal injuries has been...