Courtney v. Birdsong, 5--4796

• Decision Date: 17 February 1969
• Docket Number: No. 5--4796,5--4796
• Citation: 246 Ark. 162,437 S.W.2d 238
• Parties: . Murphy Duane BIRDSONG and Southern Farm Bureau Casualty Insurance Company, Appellees. Supreme Court of Arkansas
• Court: Arkansas Supreme Court

Page 238

437 S.W.2d 238

246 Ark. 162

Delmar F. COURTNEY, Administrator, Appellant, v. Murphy Duane BIRDSONG and Southern Farm Bureau Casualty Insurance Company, Appellees.

No. 5--4796.

Supreme Court of Arkansas.

Feb. 17, 1969.

Tiner & Henry, Harrisburg, for appellant.

Hodges, Hodges & Hodges, Newport, for appellees.

JONES, Justice.

Farm Bureau Casualty Insurance Company advanced medical expenses to James Franklin Courtney during the pendency of a suit for personal injuries Courtney filed in the Poinsett County Circuit Court. Courtney settled his suit by compromise and Farm Bureau sought reimbursement, out of the proceeds of the settlement, for the full amount it had advanced under a subrogation agreement it entered into with Courtney. Courtney contended that Farm Bureau was not entitled to full reimbursement for the amount it had advanced, but was liable to Courtney in half that amount as its proportionate share of Courtney's attorney's fee. The trial court awarded Farm Bureau the full amount of its advancement and Courtney had appealed.

James Franklin Courtney is now deceased and this appeal is prosecuted in the name of his personal representative. For the sake of clarity, as well as brevity, the word 'appellant,' and the name 'Courtney,' as used herein, refer to James Franklin Courtney who was plaintiff in the trial court. Since the facts of this case are so germane to the problem on appeal, we set them out in some detail.

Courtney sustained personal injuries while riding as a guest in a pickup truck owned and driven by his brother-in-law, Duane Birdsong. Courtney employed an attorney to represent him in a suit for damages for personal injuries, including medical expenses, against Birdsong and agreed to pay his attorney fifty per cent of the amount recovered. The attorney filed suit for Courtney in the Poinsett County Circuit Court on September 19, 1967. Courtney had incurred medical expenses in the amount of $1,797.90 as a result of his injuries and he was covered for medical expenses under an insurance policy issued to his father by Southern Farm Bureau Casualty Insurance Company. On October 30, 1967, Courtney obtained payment of the medical expenses from Southern Farm and signed a 'loan receipt' agreeing to pay, or reimburse, Southern Farm the sum of $1,797.90 out of the net amount he would recover from Birdsong. Courtney further agreed, that he would not settle his claim against Birdsong without Southern Farm's knowledge and approval. Courtney's attorney knew that Courtney had obtained payment for medical expenses from Southern Farm but did not know of the agreement he had signed.

On or about November 28, 1967, Courtney's attorney settled the lawsuit by telephone with the attorney for Birdsong's insurance carrier, for the sum of $5,000.00. During the course of the telephone conversation, Courtney's attorney was advised that Southern Farm claimed a subrogation interest in the recovery against Birdsong to the extent of the $1,797.90. Upon receipt of this information, Courtney's attorney requested that the $5,000.00 be paid in two separate drafts; one payable to Courtney, his attorney and Southern Farm in the amount of $1,797.90, and the other payable to Courtney and his attorney for the remainder of the $5,000.00 settlement. The two drafts, drawn as directed, were received by Courtney's attorney and on November 30, 1967, by an approved order of the circuit court, the suit against Birdsong was dismissed with prejudice.

Upon receipt of the drafts, Courtney's attorney advised Southern Farm of the receipt of the draft for $1,797.90 and sought to secure a proper endorsement in order that the draft could be cashed and the proceeds divided. Shortly thereafter, Courtney's attorney was contracted by an attorney representing Southern Farm, who demanded that Courtney and his attorney endorse the draft and deliver it to Southern Farm's attorney. Courtney and his attorney refused to comply with this request and on December 7, 1967, Southern Farm filed a motion to set aside the order of dismissal with prejudice and to permit it to intervene. This motion was taken up by the court on March 6, 1968, at which time the original motion to set aside the order of dismissal was abandoned and the hearing proceeded on the disposition to be made of the $1,797.90 which had been paid into the registry of the court by agreement. Southern Farm contended that it was entitled to all of the $1,797.90 and Courtney contended that one-half of this amount should be applied to his attorney's fee under the fifty per cent contingent fee contract he had with his attorney. The trial court awarded the entire sum of $1,797.90 to Southern Farm and Courtney has designated the following point he relies on for reversal:

'The trial court erred in refusing to allow an attorney's fee for the collection of appellee's (intervenor's) subrogation claim.'

We do not quite agree with the appellant as to the point at issue on this appeal. The appellant says:

'The only point at issue in this appeal is whether or not the trial court erred in refusing to allow decedent an attorney's fee for collecting the full amount appellee had expended for medical expenses under its insurance policy.'

The actual point at issue, as we see it, does not involve the allowance of appellant's attorney's fee, but does involve who is to pay appellant's attorney's fee. The point at issue involves the question of whether the appellant is required to pay all of his attorney's fee or whether he can require the appellee to pay a part of it under the facts and circumstances of this case.

The appellant relies heavily on our decision in the case of Washington Fire and Marine Ins. Co. v. Hammett, 237 Ark. 954, 377 S.W.2d 811. In the Hammett case the insurance company issued a $50.00 deductible policy of collision insurance to Hammett. Hammett was involved in a collision with Purcell. The insurance company paid Hammett his property damage and took subrogation in Hammett's cause of action against Purcell. After notifying Purcell of its claim and rights under its subrogation agreement, the insurance company threatened suit against Purcell but did nothing more. Hammett, through his own attorney, sued Purcell for the full amount of the damages and upon compromise, the insurance company was required to contribute its proportionate share of Hammett's attorney's fee as a part of the cost of collection under equitable principles of subrogation, citing Webster v. Horton, 188 Ark. 610, 67 S.W.2d 200. In 50 Am.Jur., Subrogation, § 3, page 679, is found the following:

'There are known to the law two kinds of subrogation, one...