Imel v. Travelers Indem. Co., 1271A269

• Decision Date: 04 May 1972
• Docket Number: No. 1271A269,1271A269
• Citation: 281 N.E.2d 919,152 Ind.App. 75
• Parties: Jack IMEL, Plaintiff-Appellant, v. The TRAVELERS INDEMNITY COMPANY, Defendant-Appellee.
• Court: Indiana Appellate Court

Page 919

281 N.E.2d 919

152 Ind.App. 75

Jack IMEL, Plaintiff-Appellant, v. The TRAVELERS INDEMNITY COMPANY, Defendant-Appellee.

No. 1271A269.

Court of Appeals of Indiana, First District.

May 4, 1972.

Ralph M. Koehne, John D. Clouse, Evansville (Bayliff, Harrigan, Cord & Maugans, Kokomo, of counsel), for plaintiff-appellant.

Fred P. Bamberger, Evansville (Bamberger, Foreman, Oswald & Hahn, Evansville, of counsel), for defendant-appellee.

ROBERTSON, Presiding Judge.

Appellant Imel (Imel) filed suit against his insurance company (Travelers) to collect $2000 for medical and hospital bills resulting from an automobile accident in which he was involved. The rhetorical paragraph of the complaint that raises the issue for decision in this appeal reads as follows:

'6. That plaintiff has performed all of the conditions of said policy of insurance to be performed by him except, that with reference to Condition No. 28 of said policy, entitled '28. Subrogation', plaintiff has refused to execute and deliver instruments and papers to secure defendant's right to subrogation, as therein provided, said condition providing for subrogation being a void, illegal, and unenforceable provision of said policy.'

Travelers filed a Motion to Dismiss, based upon a failure to state a claim upon which relief could be granted, which the trial court sustained. Imel refused to plead over with a resulting dismissal of the complaint by the court. His Motion to Correct Errors was then overruled with this appeal resulting.

The subrogation clause of the policy in question reads:

'In the event of any payment under this policy, the company shall be subrogated to all the insured's rights of recovery therefor against any person or organization and, with respect to Part II, all the rights of recovery therefor which the injured person or any one receiving such payment may have against any person or organization. The insured, or with respect to Part II such person, shall execute and deliver instruments and papers, do whatever else is necessary to secure such rights and shall do nothing after loss to prejudice such rights.'

Imel's sole contention urged in his Motion to Correct Errors, is that the above quoted subrogation clause is unlawful for several reasons, in that it amounts to an assignment of a claim for a personal injury. The six reasons assigned, making subrogation unlawful are: (a) statutory and case law forbidding such assignments; (b) unjust enrichment to allow Travelers to collect premiums then take back the benefits purchased by the premiums; (c) the subrogation clause of the policy is unenforceable because it lacks mutuality; (d) indemnity of the medical payment subrogation clause is illegal; (e) splitting of causes of action is not permitted in Indiana; and (f) Indiana courts have favored settlements and looked with disfavor upon multiple litigation involving the same transaction.

Imel's argument treats subrogation and assignment as one and the same. We are of the opinion that this is not the better reasoned rule of law.

The statutory provision upon which Imel relies, is Ind.Ann.Stat. § 2--201 (Burns 1967), which has been since superseded by TR. 17, IC 1971, 34--5--1--1, and reads:

'Every action must be prosecuted in the name of the real party in interest, except as otherwise provided in the next section; but this section shall not be deemed to authorize the assignment of a thing in action not arising out of contract.' (Imel's emphasis).

Imel also quotes at length from Rice v. Stone (1861), 83 Mass. 566, which holds, in accord with the common law, that 'an assignment of a claim for damages for an injury to the person . . . when the assignment was made before judgment in an action for tort' cannot be done.

In well-written briefs, both Imel and Travelers cite numerous authorities from foreign jurisdictions demonstrating the differences between assignment and subrogation or the lack thereof. Imel seeks primary refuge in Harleysville Mut. Ins. Co. v. Lea (1966), 2 Ariz.App. 538, 410 P.2d 495; Peller v. Liberty Mut. Fire Ins. Co. (1963), 220 Cal.App.2d 610, 34 Cal.Rptr. 41; Travelers Indem. Co. v. Chumbley (1965, Mo.App.) 394 S.W.2d 418; Frosthove v. Hardware Dealers Mut. Fire Ins. Co. (1967, Mo.App.), 416 S.W.2d 208; Wrightsman v. Hardware Dealers Mutual Fire Ins. Co. (1966), 113 Ga.App. 306, 147 S.E.2d 860; and Lowder v. Oklahoma Farm Bureau Mutual Ins. Co. (Okl.1967), 436 P.2d 654. For one reason or another, these authorities have held subrogation of claims arising from personal injury illegal. ¹

Travelers seeks shelter under an umbrella of holdings from twenty other jurisdictions which approve subrogation of medical payments. Eleven of these jurisdictions make a difference between subrogation and assignment, five approve subrogation of medical payments without making a distinction between subrogation and assignment, and the remaining four give approval upon the theory their survival statutes so permit.

We agree with the majority of the jurisdictions which make a distinction between an assignment of a claim for personal injuries and subrogation of one's rights arising from a personal injury. A few of the distinctions are: subrogation secures...