Horne v. Superior Life Ins. Co.

• Decision Date: 15 January 1962
• Docket Number: No. 5364,5364
• Citation: 123 S.E.2d 401,203 Va. 282
• Parties: ELLIS E. HORNE v. SUPERIOR LIFE INSURANCE COMPANY. Record
• Court: Virginia Supreme Court

Page 401

123 S.E.2d 401

203 Va. 282

ELLIS E. HORNE v. SUPERIOR LIFE INSURANCE COMPANY.

Record No. 5364.

Supreme Court of Appeals of Virginia

January 15, 1962.

Allan S. Reynolds and Stanley E. Sacks (Sam W. Nathan; White, Ryan & Reynolds; Sacks, Sacks & Kendall, on brief), for the appellant.

Spencer Gill (Rixey & Rixey, on brief), for the appellee.

JUDGE: SNEAD

SNEAD, J., delivered the opinion of the court.

This appeal resulted from an award made on April 21, 1961, by the Industrial Commission in which Ellis E. Horne, Appellant, was denied his claim for compensation against his employer, Superior Life Insurance Company, appellee, under the Workmen's Compensation Act, and his case was dismissed.

The facts are not in dispute. Horne was employed by Superior as an agent in Norfolk. On September 28, 1959, he was a passenger in his wife's car which was being operated by his son. The vehicle became involved in a collision with another operated by James T. Washington, who was an uninsured motorist. Horne received injuries which later necessitated the amputation of his right leg. There was in force and effect at the time of the collision a liability insurance policy issued to Mrs. Horne by Aetna Insurance Company covering her automobile. Horne was an insured under the terms of it. This policy contained an uninsured motorist coverage provision as required by § 38.1-381(B) , CODE 1950¹, as amended. On the day following the accident Horne notified the supervisor of Superior's Norfolk office of his injuries. It is conceded by Superior that the accident which caused Horne's injuries arose out of and in the course of his employment.

On January 12, 1960, Horne instituted an action at law for damages in the sum of $50,000 against Washington, giving the required statutory notice to his insurer, Aetna. Before trial of the case a settlement of $13,000 was reached between Horne and Aetna, without the knowledge and consent of Superior. Upon payment of this amount, Horne executed a 'Policy Holder's Release and Trust Agreement.' By this instrument, dated May 23, 1960, Horne released and discharged Aetna 'of and from any and all claims, demands, actions and causes of actions which said Trustee [Horne] now has, or hereafter may have' against Aetna under the uninsured motorist coverage of its policy issued to Mrs. Horne by reason of the accident in question. It was further provided that Horne would hold for the benefit of Aetna all rights, claims and causes of action he has, or may have, 'against any person or persons, organization, association or corporation,' other than Aetna because of bodily injury, etc., which was the subject of the claim made against Aetna.

It was further provided that Horne would take such action in his name as deemed necessary or appropriate by Aetna to recover damages suffered by him from any one other than Aetna who may be legally liable therefor, and that any sum recovered not in excess of the amount paid Horne by Aetna in the settlement would be held in trust by Horne and paid to Aetna. There was also a provision that the release and agreement did not apply to any compensation benefits received by Horne as those benefits were dealt with in a separate agreement of the same date between the parties. That agreement provided that Horne 'shall make claim for any and all workmen's compensation benefits' to which he was entitled or that Aetna believed he was entitled, and that any benefits received would be divided equally between them after deducting attorneys' fees, if awarded.

In accordance with the latter agreement Horne filed a claim against Superior for compensation benefits with the Industrial Commission for the injuries he sustained. His claim was denied by the Commission because Horne had voluntarily executed a release of his claim against Aetna and thus destroyed his employer's (Superior's) right of subrogation against Aetna, and because he had enjoyed one full recovery within the meaning of the Act.

Section 65-38, Code 1950, as amended, reads in part:

'The making of a lawful claim against an employer for compensation under this Act [Workmen's Compensation] for the injury or death of his employee shall operate as an assignment to the employer of any right to recover damages which the injured employee or his personal representative or other person may have against any other party for such injury or death, and such employer shall be subrogated to any such right and may enforce, in his own name or in the name of the injured employee or his personal representative, the legal liability of such other party. * * *'

Section 38.1-381(f), Code 1950, as amended, provides in part:

'Any insurer paying a claim under the endorsement or provisions required by paragraph (b) [uninsured motor vehicle] of this section shall be subrogated to the rights of the insured to whom such claim was paid against the person causing such injury, death or damage to the extent that payment was made; * * *.'

In the former section (65-38) the employer, under the Workmen's Compensation Act, is unquestionably given subrogation to the rights of the employee against a negligent third party to the extent of the payments made. In the latter section the insurer is likewise given subrogation to the rights of the insured against a negligent third party to the extent of payments made. The question arises as to whether the right of subrogation 'against any other party' given the employer in the former section includes the rights that the employee has against the insurer under the uninsured motorist provision of a liability policy which is required by statute.

The precise issue is one of first impression. It is not the purpose of the uninsured motorist law to provide coverage for the uninsured vehicle, but its object is to afford the insured additional protection in event of an accident. Here, Aetna does not stand in the shoes of Washington, the uninsured motorist. Its policy does not insure Washington against liability. It insures Mrs. Horne and others protected under the policy against inadequate compensation. Aetna's liability to its insured is contractual, even though it is based upon the contingency of a third party's tort liability, and Horne's employer, Superior, does not become a third party beneficiary under the insurance contract. In fact, the policy specifically provided that it was not to inure directly or indirectly to the benefit of any workmen's compensation carrier or self-insurer under the Act. Mrs. Horne chose to provide, at her expense, additional protection under the uninsured motorist provision for herself and others protected thereby and not for Superior or its compensation carrier. Neither Superior nor its compensation carrier acquired any more rights under Mrs. Horne's automobile liability policy than they would have acquired under a policy issued the insured providing for health and accident benefits. Certainly the Workmen's Compensation Act does not contemplate that the employer can be subrogated to the rights of the insured in such a policy. See Commissioners of the State Insurance Fund v. Miller, 4 App.Div.2d 481, 482, 483, 166 N.Y.S.2d 777, 779.

Moreover, the uninsured motorist law (§ 38.1-381) was first enacted by the General Assembly in 1958, years after the enactment of the Workmen's Compensation Act....