Schleif v. Hardware Dealer's Mut. Fire Ins. Co.

• Decision Date: 08 June 1966
• Citation: 22 McCanless 489,404 S.W.2d 490,218 Tenn. 489
• Parties: , 218 Tenn. 489 Edward R. SCHLEIF, Plaintiff in Error, v. HARDWARE DEALER'S MUTUAL FIRE INSURANCE COMPANY, Defendant in Error. Addie R. SCHLEIF, Plaintiff in Error, v. HARDWARE DEALER'S MUTUAL FIRE INSURANCE COMPANY, Defendant in Error.
• Court: Tennessee Supreme Court

Page 490

404 S.W.2d 490

22 McCanless 489, 218 Tenn. 489

Edward R. SCHLEIF, Plaintiff in Error, v. HARDWARE DEALER'S MUTUAL FIRE INSURANCE COMPANY, Defendant in Error.

Addie R. SCHLEIF, Plaintiff in Error, v. HARDWARE DEALER'S MUTUAL FIRE INSURANCE COMPANY, Defendant in Error.

Supreme Court of Tennessee.

June 8, 1966.

William R. Weeks, II, Chattanooga, Wagner, Weeks & Nelson, Chattanooga, of counsel, for plaintiff in error.

Harry Weill, Chattanooga, Roberts, Weill & Ellis, Chattanooga, of counsel, for defendant in error.

OPINION.

WHITE, Justice.

This case presents for determination a procedural dispute under the Uninsured Motorist Coverage of an automobile insurance policy. The question is whether the tort action statute of limitations of one year or the contract action statute of limitations of six years applies in a suit by the insured against his insuror for injuries suffered in an accident with an uninsured hit-and-run motorist.

The question is before this Court on an appeal from the trial court's sustaining of a demurrer to the declarations of the insured parties.

According to the declarations, the two plaintiffs were injured in an automobile accident on April 7, 1964, when their car was struck by a hit-and-run driver. Plaintiff Edward R. Schleif was driving; his wife, plaintiff Addie R. Schleif, was a passenger. Plaintiffs made prompt claims with defendant insurance company and co-operated with defendant's adjuster-agent in the investigation of the case. On January 14, 1965, Plaintiffs' attorneys notified the adjuster that he was taking too much time and that they should settle the case. On January 15, the adjuster orally agreed to pay medical and disability benefits under another clause in the policy, but stated that the insurance company was denying liability under the Uninsured Motorist Coverage clause. This suit was then instituted on May 26, 1965, over a year after the accident occurred.

Under the Uninsured Motorist Coverage of the policy in question, the insuror agrees:

To pay all sums which the insured or his legal representative shall be legally entitled to recover as damages from the owner or operator of an uninsured automobile because of bodily injury sustained by the insured, caused by accident and arising out of the ownership, maintenance or use of such uninsured automobile; provided, for the purposes of this coverage, determination as to whether the insured or such representative is legally entitled to recover such damages, and if so the amount thereof, shall be made by agreement between the insured or such representative and the company, or, if they fail to agree, by arbitration.

An 'uninsured automobile' also includes a 'hit-and-run automobile.'

The ground for demurrer is that plaintiffs' cause of action is essentially in tort and is barred by the tort statute of limitations of one year.

Provisions regarding coverage for injuries sustained in accidents with uninsured motorists are of relative recent origin in insurance policies. The provision of the instant case is apparently standard with many companies. There is, however, no provision as to what statute of limitations will be applied in actions to recover under this provision. No case in this State, and very few in any other state, have spoken to the point. Nevertheless, from our investigation of the law and the peculiar facts of this case, we are persuaded that the plaintiffs' cause of action is on the insurance contract and thus governed by the six-year statute of limitations in this State. T.C.A. § 28--309.

It has been held that in the ordinary case where an uninsured motorist, identifiable and accessible, injuries the insured in an automobile accident, the six-year contract statute of limitations applies as to when the insured can demand arbitration proceedings under the Uninsured Motorist Clause. In re Motor Vehicle Indemn. Corp., 40 Misc.2d 970, 244 N.Y.S.2d 154 (1963); Application of Travelers Indemn. Co., 226 N.Y.S.2d 16 (N.Y.S.Ct.1962). In Hill v. Seaboard Fire & Marine Ins. Co., 374 S.W.2d 606 (Mo.App.1963), it was stated that a suit to recover under this provision is not a tort action

* * * merely because the insured under the terms of the contract sued on must show he is entitled to recover damages from the owner or operator of an uninsured automobile, * * *

but it is rather action on the contract.

It has indeed been argued that where arbitration is demanded after the period of limitations for action against the uninsured motorist has lapsed, that arbitration is barred because plaintiff's rights under the insurance contract clause are based on such sums as could legally be asserted against the uninsured motorist. Kuvin, 'The Effect on Uninsured Motorist Proceedings of: Statute of Limitations, etc.,' 29 Ins. Counsel J. 127 (1962). However, plaintiffs' tort rights against the uninsured motorist, while theoretically available, would in reality be without an accompanying remedy were it not for the contract with defendant.

Defendant cites a number of Tennessee cases involving what was claimed to be a suit on a contract, but which was essentially a suit to recover from the tort-feasor for tortious injury. Bodne v. Austin, 156 Tenn. 353, 2 S.W.2d 100, 62 A.L.R. 1410 (1928), and Bland v. Smith, 197 Tenn. 683, 277 S.W.2d 377, 49 A.L.R.2d 1212 (1955), were malpractice suits in which plaintiff tried to change the 'theory' of his cause of action from one of tort to one of breach of the contract of employment. In State ex rel. v. Head, 194...