Central Nat. Ins. Co. v. Horne

• Decision Date: 27 March 1959
• Citation: 326 S.W.2d 141,45 Tenn.App. 711
• Parties: CENTRAL NATIONAL INSURANCE CO. v. Ernest C. HORNE. 45 Tenn.App. 711, 326 S.W.2d 141
• Court: Tennessee Court of Appeals

Page 141

326 S.W.2d 141

CENTRAL NATIONAL INSURANCE CO. v. Ernest C. HORNE.

45 Tenn.App. 711, 326 S.W.2d 141

Court of Appeals of Tennessee, Middle Section.

March 27, 1959.

Certiorari Denied by Supreme Court June 5, 1959.

[45 TENNAPP 712] Gracey, Buck, Maddin & Cowan, Nashville, for plaintiff in error.

Ward DeWitt, Jr., Nashville, for defendant in error.

SHRIVER, Judge.

I.

The Case.

This is a suit by an insurance company against its own insured seeking recovery of the amount paid by it under a policy of automobile collision insurance. The theory of plaintiff is that it suffered damages in the amount sued for because the defendant failed to cooperate in the prosecution of a suit brought in his name for the company's benefit to recover from a third party the amount paid by the company to repair the defendant's car.

[45 TENNAPP 713] The case was tried in the General Sessions Court where plaintiff's suit was dismissed. On appeal to the Circuit Court there was a like result, whereupon, the plaintiff, Insurance Company, prayed and perfected its appeal to this Court and has assigned errors.

II.

The Facts.

The bill of exceptions is in narrative form and shows the following essential facts:

In the Summer of 1955, the defendant, Ernest C. Horne, was involved in an automobile accident in Glasgow, Kentucky, when his car collided with another belonging to one Robert Bunch.

His automobile was covered by a collision insurance policy issued by the plaintiff, Central National Insurance Company of Omaha. The policy, among other things, provided that the company would 'Pay for direct and accidental loss of or damage to the automobile ..... caused by its collision with another object .....'

Horne filed a claim against the insurance company for damage to his car, and in due course the company paid $896.72 which was the cost of repairs, less $100 deductible. In this connection Horne signed a 'Proof of Loss', 'Loan Receipt' and 'Subrogation Agreement'.

Under the aforesaid subrogation agreement the insurance company in September 1955 instituted suit in Horne's name, in Glasgow, Kentucky, against Bobby Gene Bunch and Robert Bunch, the driver and owenr, respectively, of the other car involved with defendant in [45 TENNAPP 714] the collision. The owner, Robert Bunch, filed a counter-suit against Horne for $450 damages.

At the time the subrogation suit was brought, defendant was living in Glasgow, Kentucky, but before the case was set for trial he was transferred to Nashville, Tennessee, and before leaving Glasgow he advised plaintiff's attorney, Mr. Garnett, of his Nashville address.

According to the defendant's testimony this was the only time he ever saw Mr. Garnett during the pendency of the subrogation case.

As to what occurred thereafter there is some conflict in the evidence. According to Mr. Garnett the subrogation case was set for trial on five different occasions. He testified that the first three times it was set for trial, to-wit, Jan., April, and September, 1956, he wrote letters to defendant at his Glasgow address, advising him to be present in court. Horne did not appear for trial and denies that he received these letters.

The case was set for trial again on January 17, 1957 and was continued to April 8, 1957 when it was dismissed for want of prosecution.

The testimony is that on each of these two latter instances Horne was called by representatives of the insurance company five days and three days, respectively, before the trial dates and told to be present. Horne testified that the reason he did not attend trial on January 17, 1957 and April 8, 1957 was that he had made prior business commitments; that, as a debit man with the National Life and Accident Insurance Company he was required to set up his appointments with the prospective [45 TENNAPP 715] customers in advance, and that he had made these commitments before he was notified of the dates of trial last above mentioned.

He stated that he was ready and willing to attend trial upon proper notice.

It is shown that no effort was made to take Horne's deposition nor was any subpoena ever issued for him.

Following the dismissal of the subrogation case in April 1957 the company filed the instant suit against Horne seeking to recover from him the sum of money paid out by it for the repair of his automobile, which, as hereinabove stated, amounted to $896.72, and, in addition, plaintiff seeks recovery of $61.75 paid in court costs in the subrogation suit, or a total of $958.47.

As stated at the outset, the cause was dismissed in General Sessions Court and in the Circuit Court where the trial Judge filed a memorandum opinion which was ordered made a part of the record.

III.

Assignments of Error.

Plaintiff has assigned the following error:

'The plaintiff assigns as error the failure on the part of the trial Court to find damages in favor of the plaintiff in view of the fact that the Court has found, and there is no appeal therefrom, that the defendant did breach the contract between the plaintiff and defendant.'

Although the defendant did not appeal, he has assigned error as follows:

[45 TENNAPP 716] 'Defendant assigns as error the finding of the trial Judge that the defendant failed as a matter of fact to cooperate in the prosecution of the suit filed in his name by the plaintiff to recover damages to his car.'

IV.

The learned trial Judge filed the following memorandum opinion which is made a part of the record:

'Item 1--The Court finds that although the evidence is in conflict, the preponderance of all the evidence sustains plaintiff's contention that the defendant failed as a matter of fact to cooperate in the prosecution of the suit filed in his name by the plaintiff to recover damages to his car.

'Item 2--The finding of fact as indicated under Item 1, however, does not in this particular case render the defendant liable at law for damages for alleged breach of contract under the Loan Receipt D. Ex. 2, because----

'a. The Loan Receipt was not a part of the original insurance policy or clearly incorporated by reference as a condition precedent to the issuance of the policy. (Ex. 1.)

'b. There was no legal or valid consideration for the execution of the said Loan Receipt.

'c. There was no proof that the insured knew or should have known that the payment of a claim under the policy would be in the nature of a loan.

'Item 3--The finding of fact in Item 1 does not render the defendant liable for a breach of contract [45 TENNAPP 717] under the original policy--Condition 7, Ex. 1, because----

'a. It has failed to prove damages as required by the law of the case.

'b. The policy is silent as to any damages liquidated or unliquidated, for any alleged breach 'c. In the absence of any provision for liquidated damages in the policy for an alleged breach, the burden is on the plaintiff to prove them. This the Court finds the plaintiff has failed to do and the award of any damages would be based on speculation. The Loan Receipt provided that the loan is to be repaid only in the event and to the extent of any recovery (See Ex. 2). There was no recovery.

'While there was evidence that the defendant Horne might have recovered in his suit, there was also evidence that a cross-action was filed against him.

'd. It will be noted from the proof that if the Court should render judgment as insisted by the plaintiff, the damages would exactly equal the amount paid by the company on the claim under the proof of loss and the insurance company would also keep possession of the premium paid under the policy, there being no tender of the amount so paid. As the Court sees it, the legal effect of this would be to write into the insurance policy that in event Condition 7 was breached, the liquidated damages would be the amount paid on any claim. This same result would be accomplished if the loan receipt served as a basis for recovery. The Court can not so hold and [45 TENNAPP 718] it would be contrary to public policy. It is obvious if such unauthorized procedure is not followed in this case, then the award of any damages otherwise would be, under the proof in this case, highly speculative and should not be allowed.

'For the foregoing reasons, the plaintiff's suit should be dismissed with costs against it.

'Byrd Douglas /s/

BYRD DOUGLAS, JUDGE

'Sept. 9, 1958'

The specimen policy attached to the bill of exceptions as being identical with the original contains the following pertinent provisions:

'Coverage B--Collision or Upset.

'To pay for direct and accidental loss of or damages to the automobile, hereinafter called loss, caused by collision of the automobile with another object or by upset of the automobile.

* * *

'8. Assistance and Cooperation of the insured.

'The insured shall cooperate with the company and, upon the company's request, shall attend hearings and trials and shall assist in effecting settlements, securing and giving evidence, obtaining the attendance of witnesses and in the conduct of suits. The insured shall not, except at his own cost, voluntarily make any payment, assume any obligation or incur any expense.

[45 TENNAPP 719] '9. Subrogation.

'In the event of any payment under this policy, the company shall be subrogated to all the insured's rights or recovery therefor against any person or organization and the insured shall execute and deliver instruments and papers and do whatever else is necessary to secure such rights. The insured shall do nothing after loss to prejudice such rights.'

The 'Proof and Release' document, which is separate from the policy, provides on the first page thereof, under the title 'Automobile Proof of Loss', that in further consideration of the payment of the above stated amount ($896.72) by the insurance company the undersigned agrees that the company shall be vested with all the rights and causes of action the undersigned has against any person whomsoever for damages to the injured property. And further provides that the...