National Union Fire Insurance Company v. Grimes

• Court: Minnesota Supreme Court
• Writing for the Court: SHERAN
• Citation: National Union Fire Insurance Company v. Grimes, 278 Minn. 45, 153 N.W.2d 152 (Minn. 1967)
• Decision Date: 08 September 1967
• Docket Number: No. 40413,40413
• Parties: NATIONAL UNION FIRE INSURANCE COMPANY, Appellant, v. Gordon E. GRIMES, Respondent.

Page 152

153 N.W.2d 152

278 Minn. 45

NATIONAL UNION FIRE INSURANCE COMPANY, Appellant, v. Gordon E. GRIMES, Respondent.

No. 40413.

Supreme Court of Minnesota.

Sept. 8, 1967.

Syllabus by the Court

An insured who makes a settlement of a claim for personal injuries and executes an unrestricted general release is obligated to repay his insurer sums previously received for medical expenses because of a form of medical-pay coverage subrogating the insurer to the insured's rights of recovery therefor against the tortfeasor.

Mordaunt, Walstad, Cousineau & McGuire, Minneapolis, for appellant.

Hoppe & Healy, Rodney G. Grimes, Minneapolis, for respondent.

OPINION

SHERAN, Justice.

The appeal is from a judgment of the municipal court of Hennepin County.

Action was started by the National Union Fire Insurance Company to recover from defendant $970.20 because:

(a) It paid this amount to defendant, its insured under a policy of insurance affording 'medical expense coverage.'

(b) Defendant thereafter received $3,500 in settlement of his claim against the person who caused the injuries making necessary the medical payment.

(c) The policy pursuant to which the medical expense was paid entitles plaintiff to reimbursement by defendant from the proceeds of the settlement.

Defendant, by answer, asserts that no part of the $3,500 received by him was on account of the medical expense and, in any event, the provision of plaintiff's policy relied upon by it is contrary to the public policy of the State of Minnesota. In addition, defendant pleads that any claim plaintiff might otherwise have as against defendant was compromised and released prior to the commencement of this action.

The case was submitted to the trial judge for decision upon this stipulation of facts:

In May 1960 plaintiff issued to defendant a policy of automobile insurance effective for the period from May 23, 1960, to November 23, 1960, which included medical-expense coverage obligating plaintiff to pay to defendant medical expenses caused by accident involving the automobile. The policy contains these provisions now significant:

'Subrogation * * *: In the event of any payment * * * 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.'

The next provision:

'Assistance and cooperation of the insured:

'The insured shall cooperate with the company and upon the company's request, assist in making settlements in the conduct of suit and enforcing any right of contribution or indemnity against any person or organization who may be liable to the insured because of bodily injury and property damage with respect to which the insurance is afforded under this policy; and the insured shall attend hearings and trials and assist in securing and giving evidence and obtaining the attendance of witnesses. The insured shall not, except at his own cost, voluntarily make any payments, assume any obligation or incur any expense other than for first aid to others at the time of the accident.'

On September 1, 1960, defendant had an accident involving the vehicle covered by his policy and another automobile driven by one Sig Stanek. As a result, defendant sustained personal injuries and incurred medical and hospital expense. The bills for these expenses, totaling $970.20, were submitted to plaintiff for payment in accordance with the policy issued by it. Defendant executed plaintiff's form captioned 'Medical Payment Receipt and Release.' It is dated December 2, 1960, and provides in part:

'* * * I hereby release and discharge the National Union Fire Insurance Company from any and all liability, to date of this release only, whatsoever under the Medical Payments Section of Policy No. SX 41838, issued to Gordon E. Grimes by the National Union Fire Insurance Company, on account of an accident occurring on or about 1st day of September, 1960 resulting in injuries to my person.'

On December 12, 1960, plaintiff issued its draft to defendant in the amount of $970.20.

On January 31, 1961, plaintiff advised defendant that it was claiming subrogation rights under its policy and requested him to execute a subrogation agreement and receipt. Defendant refused to sign the subrogation agreement upon advice of counsel and informed plaintiff that defendant would not reimburse plaintiff out of any settlement or verdict obtained from the insurance carried by Stanek.

By letters dated January 27, 1961, and March 1, 1961, plaintiff notified the Miller Mutual Insurance Company, liability carrier for Stanek, of its alleged interest and of its intention to assert its subrogation claim.

On or about October 31, 1962, defendant settled his liability claim against Stanek for the sum of $3,500 paid to him by the Miller Mutual Insurance Company and executed and signed an unrestricted general release providing in part as follows:

'* * * I Gordon Grimes * * * do hereby release, acquit and discharge the said Sigmund J. Stanek from all claims and demands, actions and causes of action, damages, cost, loss of service, expenses and compensation on account of, or in any way growing out of bodily injuries and property damage resulting or to result from accident that occurred on or about the 1st day of September, 1960, * * * and do hereby * * * covenant * * * to indemnify and save harmless the said Sigmund J. Stanek from all claims and demands for damages, costs, loss of service, expenses, or compensation on account of, or in any way growing out of said accident or its results, both to person or property.'

Defendant received and negotiated the Miller Mutual Insurance Company draft in the amount of $3,500. He has refused to reimburse plaintiff and still refuses despite numerous requests for payment.

The parties also stipulate that the subrogation clause concerning medical payments as it appears in the insurance policy here in issue was approved by the office of the insurance commissioner when it was filed by the Minnesota Rating Bureau on behalf of National Union and other companies in 1959.

The trial court made findings of fact and conclusions of law and ordered that judgment be entered for defendant upon the ground that the...