Miller v. Liberty Mut. Fire Ins. Co.

• Decision Date: 16 November 1965
• Citation: 48 Misc.2d 102,264 N.Y.S.2d 319
• Parties: William S. MILLER, Plaintiff, v. LIBERTY MUTUAL FIRE INSURANCE COMPANY, a Massachusetts mutual insurance company, Defendant.
• Court: New York Supreme Court

Page 319

264 N.Y.S.2d 319

48 Misc.2d 102

William S. MILLER, Plaintiff, v. LIBERTY MUTUAL FIRE INSURANCE COMPANY, a Massachusetts

mutual insurance company, Defendant.

Supreme Court, Special Term, Kings County, Part III.

Nov. 16, 1965.

Harry Dubin, New York City, for plaintiff.

Fogarty & Schreiber, Brooklyn, for defendant; Sol Schreiber, Brooklyn, of counsel.

MEIER STEINBRINK, Special Referee.

Plaintiff brings this declaratory judgment action to declare invalid the 'subrogation' portion of his automobile insurance policy as it applies to medical payments and to declare invalid two trust receipts exacted of him by defendant, his insurance carrier, as a condition to payment of his claim for medical expenses. There is no substantial dispute as to the facts.

On May 27, 1962 plaintiff, a resident of the State of New York, for a premium which he paid, including the premium for medical payments, purchased an automobile owner's insurance policy from defendant Liberty Mutual Fire Insurance Company, hereafter referred to as Liberty. Medical payments' limit of coverage was $2,000. The policy is in evidence as plaintiff's Exhibit 1 and is in the form submitted to the Superintendent of Insurance of the State of New York, pursuant to Section 141 of the Insurance Law and not disapproved by him.

On December 21, 1962, while operating a borrowed automobile covered by the policy in question, plaintiff was in collision with another vehicle and sustained serious personal injuries requiring medical expenses. In March 1963 plaintiff presented to Liberty on its form, a 'Medical Payments Proof of Claim' for $1723.25 (Pltff's Ex. 4) and in September, 1963 one for $325 (Pltff's Ex. 3). He discussed these claims with a representative of Liberty at their office and was told that the claims would not be paid unless he executed the trust receipts (Pltff's Ex. 5). There is no evidence whatever that he registered any protest. When these trust receipts were signed by plaintiff, himself a lawyer of more than thirty years' experience, Liberty paid a total of $2,000, the limit of coverage.

Plaintiff brought an action for personal injuries against the tort feasor claimed responsible for his injuries. That action subsequently was settled. Liberty claimed a lien for the $2,000 paid to plaintiff by it and notified the third party's insurance carrier of its claim but that carrier chose to ignore the claim and paid plaintiff the full settlement. It is plaintiff's contention that his personal injuries were so severe that the settlement obtained was based on the injury and the limited coverage of the third party and not on the medical expenses incurred by him. This declaratory judgment action followed.

The portion of the policy involved reads as follows:

'Subrogation:

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

'In the event of any payment under the Medical Expense Coverage of this policy, the company shall be subrogated to all the rights of recovery therefor which the injured person or anyone receiving such payment may have against any person or organization and such person shall execute and deliver instruments and papers and do whatever else is necessary to secure such rights. Such person shall do nothing after loss to prejudice such rights.'

This is pleaded in paragraph 'Tenth' of the complaint and admitted by Liberty.

Plaintiff contends that this is invalid in New York State as against public policy because he contends it is an assignment of part of a claim for personal injuries (General Obligations Law, § 13-101, formerly Personal Property Law, § 41; General Accident Fire, etc. et al. v. Zerbe Const. Co., 269 N.Y. 227, 199 N.E. 89; City of New York v. Barbato, N.Y.Mun.Ct., 5 N.Y.S.2d 125). Liberty contends that the policy provision is valid and is an equitable lien on any recovery and not an assignment of the claim. It, also, contends that in any event the trust receipts are valid in New York and are merely equitable liens on any recovery, not assignments of the claim. Plaintiff contends that the trust receipts are invalid as assignments of a cause of action for personal injuries and were obtained from him without consideration and under duress. The trust receipt (Pltff's Ex. 5), so far as material, reads:

'I, William S. Miller * * * agree to hold in trust for the benefit of the company all rights of recovery the undersigned shall have against anyone who may be legally liable for the damages from such injuries and agree that the company shall be entitled, to the extent of its payment hereunder, to the proceeds of any settlement or judgment that may result from the exercise of any such rights and agree to do whatever is proper to secure such rights and take, through any representative designated by the company, such action as may be necessary and appropriate to recover the damages suffered by the undersigned in said accident, and that such action may be taken in the name of the undersigned and that, in the event of a recovery, the company shall be reimbursed out of such recovery for expenses, costs and attorneys' fees incurred by it in connection therewith and to execute and deliver to the company such instruments and papers as may be appropriate to...