Harleysville Mut. Ins. Co. v. Lea

• Decision Date: 03 February 1966
• Docket Number: CA-CIV
• Citation: 410 P.2d 495,2 Ariz.App. 538
• Parties: HARLEYSVILLE MUTUAL INSURANCE COMPANY, a Pennsylvania corporation, Appellant, v. Henry LEA, Appellee. 1117.
• Court: Arizona Court of Appeals

Page 495

410 P.2d 495

2 Ariz.App. 538

HARLEYSVILLE MUTUAL INSURANCE COMPANY, a Pennsylvania corporation, Appellant, v. Henry LEA, Appellee.

1 CA-CIV 117.

Court of Appeals of Arizona.

Feb. 3, 1966.

Rehearing Denied Feb. 28, 1966.

Review Denied March 22, 1966.

McKesson, Renaud, Cook & Miller, by Arthur E. Ross, Phoenix, for appellant.

Langerman, Begam & Lewis, by Samuel Langerman and Robert D. Myers, Phoenix, for appellee.

CAMERON, Judge.

This is an appeal by the plaintiff, Harleysville Mutual Insurance Company, hereinafter referred to as the insurance company, from an order of the court below granting the defendant Henry Lea's motion to dismiss.

We are called upon to determine the subrogation rights of an insurance company which has made payments to an insured under the medical-pay provisions of the insurance policy. Stated differently, we are called upon to determine whether the Arizona survivors' statute, 14-477 A.R.S., allows an injured party to assign a portion of his recovery for personal injury to reimburse his insurance carrier for payments made to him under the provisions of the medical-pay portion of his insurance policy.

The facts as are necessary for a determination of this matter on appeal are as follows: On 27 May, 1963, defendant Lea was involved in an automobile accident in which he sustained personal injuries necessitating medical treatment. The plaintiff insurance company paid the sum of $620.98 under the medical payment benefits provision of the insurance company's insurance policy. Said insurance policy contained the following clause:

'Medical Expense Coverage. The company will pay, on behalf on the insured, all reasonable medical expenses incurred within one year from the date of accident for bodily injury caused by accident and sustained by, 1. the name insured or a relative * * *

'provided that no such payment shall be made unless the person to or for whom such payment is made shall have executed a written agreement that the amount of such payment shall be applied towards the settlement of any claim, or the satisfaction of any judgment for damages entered in his favor, against any insured because of bodily injury arising out of any accident to which the liability coverage applies.'

Upon receipt of the amount of $620.98, pursuant to the provision of the insurance company's policy, defendant Lea signed the following 'receipt and release under medical expense coverage', which in part provides:

'In consideration of the payment to me (us), or on my (our) behalf of the sum of six hundred and twenty and ninety-eight one-hundredths dollars ($620.98) by the HARLEYSVILLE MUTUAL CASUALTY COMPANY and/or HARLEYSVILLE MUTUAL INSURANCE COMPANY, hereinafter called COMPANY, as their interest may appear, the receipt of which is hereby acknowledged and the undersigned hereby fully and forever releases and discharges COMPANY and successors and assigns from any and all liability claim and demand whatsoever under the medical expense coverage of policy number HA 1 37 32 issued to HENRY LEA and COMPANY arising out of an accident which occurred on or about May 27, 1963, resulting in injuries to Henry Lea * * *.

'In further consideration of the aforesaid payment, the undersigned hereby assigns and transfers to COMPANY its successors and assigns, any and all claims and demands against any other person, persons, property or corporation arising from or in any manner connected with such loss or damage and COMPANY is hereby subrogated in the place of and to the claim and demands of the undersigned against such persons, property or corporation, to the extent of such medical payment above named.'

Defendant Lea then entered into settlement with the other party to the accident, and refused to reimburse the insurance company to the extent of the medical benefits previously paid to the defendant Lea. The insurance company then brought suit for the amount of the medical payments under the subrogation clause of the insurance policy and under the Receipt and Release signed by the defendant Lea. After a request for admission of facts by the plaintiff, the defendant moved to dismiss pursuant to Rule 12(b)(6) of the Arizona Rules of Civil Procedure, 16 A.R.S., which was granted and plaintiff appeals.

Subrogation has been defined as:

'The substitution of one person in the place of another with reference to a lawful claim, demand or right, Whyel v. Smith, 101 Fla. 971, 134 S[o]. 552, 554; so that he who is substituted succeeds to the rights of the other in relation to the debt or claim, and its rights, remedies, or securities. Home Owners' Loan Corporation v. Baker, 299 Mass. 158, 12 N.E.2d 199.' Black's Law Dictionary, 4th Edition.

Any rights that the insurance company may have as a subrogee in the instant case, either by virtue of the insurance contract or the receipt and release signed by the defendant Lea, must be based upon the ability in law of the defendant Lea to assign in whole or in part, his cause of action for personal injuries to the insurance company. If the defendant Lea may not in law assign his cause of action to the plaintiff either in whole or in part, then his cause of action may not be subrogated.

Prior to the enactment by the Arizona state legislature of Section 14-477, A.R.S., the Arizona courts adhered to the generally accepted rule that rights of action for torts causing injuries which are strictly personal do not survive, and may not be assigned prior to the verdict or judgment. Employers Casualty Company v. Moore, 60 Ariz. 544, 142 P.2d 414 (1943), Deatsch v. Fairfield, 27 Ariz. 387, 233 P. 887, 38 A.L.R. 651 (1925), United Verde Extension Mining Company v. Ralston, 37 Ariz. 554, 296 P. 262 (1931). And our court stated that unless the legislature should enact a survival statute that the right of action died with the tort-feasor. Rodriquez v. Terry, 79 Ariz. 348, 290 P.2d 248 (1955).

In 1955, the Arizona state legislature passed the following statute, Section 14-477, titled:

'Action by or against personal representative; survival of causes of action:

'Every cause of action, except a cause of action for damages for breach of promise to marry, seduction, libel, slander, separate maintenance, alimony, loss of consortium or invasion of the right of privacy, shall survive the death of the person entitled thereto or liable therefor, and may be asserted by or against the personal representative of such person, provided that upon the death of the person injured, damages for pain and suffering of such injured person shall not be allowed.'

It is readily seen that while liability for pain and suffering survives the death of the person causing injury that a cause of action for pain and suffering in favor of the person injured does not survive the death of the injured person.

At common law, a chose in action for personal injuries could not be assigned and would not survive. Most writers objected to the assignability because they felt that unscrupulous people would purchase causes of action and thereby traffic in law suits for pain and suffering. Rice v. Stone, 83 Mass. 566 (1861). Down to the present day, in the absence of statutes to the contrary, tort actions for personal injuries do not survive and are not assignable. Ishmael v. City Electric of Anchorage, 91 F.Supp. 688, 12 Alaska 721 (1950). While there may have been other reasons for frowning upon the assignability of personal injury claims, a vast majority of the early rulings based the non-assignability of a claim for personal injury upon the grounds that at common law such claims did not survive the death of the injured person. It is not then surprising to note that when statutory provisions providing for the survival of a cause of action for personal injuries have been enacted, that the courts have generally followed the rule that the claim is...