Emmco Ins. Co. v. Beacon Mut. Indem. Co.

• Decision Date: 12 March 1959
• Citation: 204 Tenn. 540,8 McCanless 540,322 S.W.2d 226
• Parties: EMMCO INSURANCE COMPANY v. BEACON MUTUAL INDEMNITY COMPANY and John Ottie Chunn. 8 McCanless 540, 204 Tenn. 540, 322 S.W.2d 226
• Court: Tennessee Supreme Court

Page 226

322 S.W.2d 226

EMMCO INSURANCE COMPANY v. BEACON MUTUAL INDEMNITY COMPANY and John Ottie Chunn.

8 McCanless 540, 204 Tenn. 540, 322 S.W.2d 226

Supreme Court of Tennessee.

March 12, 1959.

MacFarland, Colley & Douglas, Columbia, for plaintiff in error.

J. Shelby Coffey, Jr., Columbia, for defendants in error.

NEIL, Chief Justice.

The plaintiff in error, Emmco Insurance Company, was plaintiff in the court below in which it sued the defendants, The Beacon Mutual Indemnity Company and John Ottie Chunn, for treble damages for wilfully and wrongfully procuring the breach of contract existing between it and one Edward Watkins, who was insured by the plaintiff against loss and damages by collision etc. The wrongs and injuries complained of and for which it sued appears in the plaintiff's declaration, which reads as follows:

'The plaintiff, Emmco Insurance Company, sues the defendants, Beacon Mutual Indemnity Company and John Ottie Chunn for Two Thousand Two Hundred and Fifty ($2,250.00) Dollars damages, and for cause of action says:

'First Court

'That on or about the 30th day of December, 1955, the defendant john Ottie Chunn was the owner and operator of a pickup truck which was involved in a collision near Columbia, Tennessee, with an automobile owned by Edward Watkins and driven by Frank Watkins. Said automobile was a 1954 Ford and was insured under a collision policy by the plaintiff, Emmco Insurance Company. Said policy provided that said plaintiff would reimburse the owner, Edward Watkins, in the amount of damages to said automobile occasioned by any collision, less $100.00 deductible. As a result of said collision, your plaintiff paid to the said Edward Watkins the sum of Seven Hundred and Fifty ($750.00) Dollars, which payment was made under and pursuant to said collision insurance policy. Said payment was made on January 30, 1956, at which time the said Edward Watkins entered into a subrogation agreement with the plaintiff whereby the plaintiff was subrogated to the rights, claims and interests which the said Edward Watkins might have and did have against the defendants John Ottie Chunn and his liability insurance carrier, The Beacon Mutual Indemnity Company. Said subrogation was for the property damage to said Watkins' automobile in the amount of Seven Hundred and Fifty ($750.00) Dollars.

'At the time of said collision the defendant John Ottie Chunn was insured by the defendant The Beacon Mutual Indemnity Company for any liability to third parties resulting from said collision. Under said liability insurance policy said defendant The Beacon Mutual Indemnity Company proceeded to contact the said Edward Watkins and proceeded to attempt to make settlement on behalf of the defendant John Ottie Chunn. The plaintiff was advised that the Beacon Mutual Indemnity Company carried liability on the Chunn truck, and on January 25, 1956, gave notice to the defendants John Ottie Chunn and The Beacon Mutual Indemnity Company that the plaintiff carried collision insurance on said Watkins automobile and was an interested party in the settlement of any claim for damages to said vehicle. Notwithstanding the fact that they had notice of plaintiff's interest, the defendant The Beacon Mutual Indemnity Company proceeded to negotiate with the said Edward Watkins, who at that time was living in the State of Michigan, and on April 14, 1956, induced the said Edward Watkins and the other passengers in his vehicle to execute a covenant not to sue whereby the said Edward Watkins covenanted with the said John Ottie Chunn and the said Beacon Mutual Indemnity Company that he would not sue for any property damages resulting from said accident. The consideration paid the said Edward Watkins and the other passengers in his automobile was $500.00, which was less than the actual damage to the Watkins automobile. A copy of said covenant is attached thereto as Exhibit A. Said covenant was obtained from the said Edward Watkins without notice to or knowledge of the plaintiff, and said covenant was obtained at a time when the defendants and their agents had knowledge of the interest of the plaintiff in said property damage claim.

'Plaintiff avers that the defendants, their agents and representatives, induced the said Edward Watkins to breach said subrogation contract and procured the breach of said contract with full knowledge of the existence of said subrogation agreement and contract and with full knowledge that the plaintiff had paid the said Edward Watkins for collision damage to the Watkins automobile and was therefore subrogated to the rights of Edward Watkins against both defendants. On June 13, 1956, the Plaintiff instituted an action against the defendant John Ottie Chunn for damages to said Watkins automobile resulting from said collision. Said action was instituted in the name of Edward Watkins and was instituted pursuant to said subrogation agreement. The defendant, John Ottie Chunn, through his attorney, which attorney also represented the Beacon Mutual Indemnity Company in said case, filed a plea and cross-declaration setting up said covenant not to sue as a bar to the recovery for any damage to said automobile as a result of said collision. Said plea and cross-declaration is filed hereto as Exhibit B. After said plea and declaration was filed, the plaintiff subsequently moved for and was granted a nonsuit in said cause in the Circuit Court for Maury County. Said covenant not to sue was pleaded by the defendants in an attempt to bar the plaintiff of any recover on his subrogation rights under said subrogation contract and the defendants obtained said covenant not to sue with knowledge, and in breach of, said subrogation contract.

'Wherefore plaintiff avers that said defendants induced and procured the breach of said contract and sues the defendants for $2,250.00 damages.

'Second Count

'Plaintiff adopts all of the words and figures of the First Count of this his declaration and says that at the time that the defendants, their agents and representatives, obtained said covenant not to sue and induced the said Edward Watkins to breach said subrogation contract there was in full force and effect the following statute of the State of Tennessee, as found in Tennessee Code Annotated, Section 47-1706:

"47-1706. Procurement of breach of contracts unlawful--Treble damages. It shall be unlawful for any person, by inducement, persuasion, misrepresentation, or other means, to induce or procure the breach or violation, refusal or failure to perform any lawful contract by any party thereto; and, in every case where a breach or violation of such contract is so procured, the person so procuring or inducing the same shall be liable in treble the amount of damages resulting from or incident to the breach of said contract; and the party injured by such breach may bring his suit for said breach and for such damages.'

Plaintiff avers that the defendants violated the above statute in that they induced and persuaded the said Edward Watkins to breach his subrogation agreement by inducing and persuading him to execute said covenant not to sue for the sum of $500.00 in complete discharge of all personal injury claims and property damage claims resulting from said collision. Plaintiff avers that defendants are liable to plaintiff in treble the amount of damages resulting from said breach of contract.

'Wherefore plaintiff sues the defendants for $2,250.00 damages.'

To the foregoing declaration the defendant, Chunn, and his insurance carrier demurred upon several grounds. The trial judge sustained the demurrer resulting in this appeal. Contention is made in the assignments of error that the trial judge erred in sustaining the several grounds of the demurrer and dismissing plaintiff's suit.

In our view of the case we deem it unnecessary to discuss wherein the trial judge may have been in error in sustaining some of the grounds of the demurrer. The record discloses that the demurrer in its entirety was sustained and without comment.

The principal ground of the demurr...