Hackman v. American Mut. Liability Ins. Co.

• Decision Date: 30 January 1970
• Docket Number: No. 5796,5796
• Citation: 110 N.H. 87,261 A.2d 433
• Parties: Paul L. HACKMAN v. AMERICAN MUTUAL LIABILITY INSURANCE CO. et al.
• Court: New Hampshire Supreme Court

Page 433

261 A.2d 433

110 N.H. 87

Paul L. HACKMAN v. AMERICAN MUTUAL LIABILITY INSURANCE CO. et al.

No. 5796.

Supreme Court of New Hampshire.

Argued Jan. 7, 1970.

Decided Jan. 30, 1970.

James M. Winston, Manchester, for Paul L. Hackman.

Wiggin, Nourie, Sundeen, Nassikas & Pingree and William S. Orcutt, Manchester, for American Mutual Liability Ins. Co.

Devine, Millimet, McDonough, Stahl & Branch and E. Donald Dufresne, Manchester, for State Farm Mutual Automobile Ins. Co.

GRIFFITH, Justice.

The Trial Court (Leahy, C.J.) transferred without ruling six questions involving interpretation of an uninsured motorist's endorsement upon an agreed statement of facts.

Plaintiff Paul L. Hackman was injured on October 4, 1966 in an accident with an uninsured motorist. Hackman was an employee of O. K. Tool Co. acting within the scope of his employment at the time of the accident. American Mutual Liability Insurance Co. had issued to O. K. Tool Co. both a workmen's compensation policy and an automobile liability policy with an uninsured motorist endorsement. The coverage afforded by the uninsured motorist endorsement was in the then statutory minimums of $10,000 for one person's injuries. Hackman was personally insured with State Farm Automobile Insurance Co. with the same limits on an uninsured motorist's endorsement.

American has paid, in accordance with its workmen's compensation coverage medical and hospital bills of Hackman in the amount of $2,191.64 and weekly benefits to Hackman of $934.60 for a total of $3,126.24. Under the arbitration provisions of the uninsured motorist endorsement an arbitrator awarded Hackman $9,092.95 and found American primarily liable and State Farm secondarily liable. American does not contest the ruling that it is primarily liable.

Hackman filed a petition in the Superior Court for judgment pursuant to the arbitrator's report. The dispute first centers around the claim of American that under the terms of its policy it may deduct from the award the $3,126.24 it has paid in workmen's compensation benefits and withhold estimated future medical of Hackman in the amount of $1,425 together with estimated future weekly benefits of $650 all included in the arbitrator's award. Other questions transferred relate to claims of Hackman against State Farm and to interest on the award.

Questions 1 and 2 relate to the same clauses in the uninsured motorist endorsement and are as follows:

'1. Is the American Mutual Liability Insurance Co. entitled to deduct from the arbitrator's award the amount it has paid Hackman in Workmen's Compensation benefits to date, plus the present value of Workmen's Compensation benefits that Hackman may be entitled to in the future, as determined by the arbitrator in his award?

'2. In the event that American Mutual Liability Insurance Co. is entitled to a deduction against the amount of the arbitrator's award for future Workmen's Compensation benefits that may be paid as found by the arbitrator, is the American Mutual Liability Insurance Co. entitled to deduct said amount before actual payment is made to or for the benefit of the employee?'

American's uninsured motorist coverage is limited by the following clause:

'6. Limits of liability

(b) any amount payable under the terms of this endorsement because of bodily injury sustained in an accident by a person who is insured under this coverage shall be reduced by

'(2) the amount paid and the present value of all amounts payable on account of such bodily injury under any workmen's compensation law, disability benefits or any similar law.'

While agreeing that the language above permits a liability carrier to deduct payments made by a workmen's compensation carrier plaintiff argues that the provision is invalid as requgnant to the provisions of the statute requiring uninsured motorist coverage and beyond the authority of the Insurance Commissioner to approve. See Merchants &c. Co. v. Egan, 91 N.H. 368, 20 A.2d 480, 135 A.L.R. 745.

RSA 268:15 in effect on the date of the accident provided that uninsured motorist coverage in an automobile liability policy must be provided 'in amounts or limits prescribed for bodily injury or death for a liability policy under this chapter.' The limits then in effect were $10,000 for bodily injury of one person as a result of one accident. RSA 268:10.

The insurance thus provided 'more closely resembles accident insurance restricted to a limited class of accident, than it does the type of insurance commonly regarded as indemnity insurance.' Kirouac v. Healey, 104 N.H. 157, 160, 181 A.2d 634, 636. 'The design and purpose * * * was to provide protection only up to the minimum statutory limits for bodily injuries caused by financially irresponsible motorists. The statute was not designed to provide the insured with greater insurance protection than would have been available had the insured been injured by an operator with a policy containing minimum statutory limits.' Maryland Cas. Co. v. Howe, 106 N.H. 422, 424, 213 A.2d 420, 422.

In the present case had the plaintiff been able to recover a judgment from the third party tort-feasor it would be reduced by American's lien for the amount it had paid in workmen's compensation benefits. RSA 281:14. Had the insurance carrier of the workmen's compensation been the same as the liability carrier of the third party tort-feasor it could of course deduct its lien from the judgment. In lieu of the lien to the workmen's compensation carrier the clause in the endorsement allows the liability carrier to deduct the amounts paid or payable by the compensation carrier. This clause was properly approved by the insurance commissioner as providing the plaintiff with the coverage contemplated by RSA 268:15. Maryland Cas. Co. v. Howe, ibid.

Essentially any dispute over the right of a liability carrier to thus limit its liability lies between the compensation carrier and the liability carrier and does not involve the plaintiff. See Perspectives on Uninsured Motorists Coverage, Widiss, 62 Northwestern U.L.R. 497, 521; Couch on Insurance, 2d ed. s. 45-650; Jones v. Morrison, D.C., 284 F.Supp. 1016 (W.D.Ark.). The fact that American carries both coverages here and thus is in the same position financially as it would be if it insured the tort-feasor does not reduce Hackman's recovery below the amount he would have recovered if injured by an insured operator. The limitation in the endorsement reducing the award by the amount Hackman has received in compensation benefits is valid against him. Allen v. United States Fid. & Guar. Co. (La.App.), 188 So.2d 741; Ullman v. Wolverine Ins. Co. (Ill.App.), 244 N.E.2d 827. In the Ullman case it is pointed out that Peterson v. State Farm Mutual Automobile Ins. Co., 238 Or. 106, 393 P.2d 651 and Standard Accident Insurance Co. v. Gavin (Fla.App), 184 So.2d 229, 24 A.L.R.3d 1359 relied upon by the plaintiff here involve jurisdictions where the compensation carrier is not entitled to recover all of the compensation benefits paid by it.

Hackman argues that the exclusion clause in the uninsured motorist endorsement providing that it shall not apply so as to inure directly or indirectly to the benefit of any workmen's compensation carrier prevents deduction of the compensation benefits paid by American. This clause merely indicates that the protection of the uninsured motorist coverage is provided for the benefit of the insured only, and not for the benefit of third party compensation carriers as well. Piehler, Uninsured Motorists Claims, 11 Am.Jur. Trials, p. 113. It does not operate to reduce Hackman's recovery below the limits which RSA 268:15 requires American to furnish. It follows therefore, that the answer to the first part of the question is yes and American may deduct from the award the $3,126.24 compensation payments made by it as compensation carrier.

An entirely different question is presented by the claim of American that it may deduct an additional $2,075 from the award on the grounds that the arbitrator included this in his award as estimated future medical and lost wages Hackman would suffer because of the accident. The limitation in the endorsement authorizes the liability carrier to deduct from the award 'The present value of all amounts payable on account of such bodily injury under any...