Smith v. Travelers Ins. Co.

• Decision Date: 27 April 1977
• Docket Number: No. 76-1046,76-1046
• Citation: 362 N.E.2d 264,50 Ohio St.2d 43
• Parties: , 4 O.O.3d 114 SMITH et al., Appellants, v. TRAVELERS INSURANCE COMPANY, Appellee.
• Court: Ohio Supreme Court

Page 43

50 Ohio St.2d 43

362 N.E.2d 264, 4 O.O.3d 114

SMITH et al., Appellants, v. TRAVELERS INSURANCE COMPANY, Appellee.

No. 76-1046.

Supreme Court of Ohio.

April 27, 1977.

Philip Q. Zauderer, Columbus, for appellants.

McNamara & McNamara, Dennis D. Liston and John L. Miller, Columbus, for appellee.

On August 27, 1970, Irene, T. Smith, co-appellant herein, was involved in an automobile collision with a vehicle operated by George Board. At that time, her vehicle was insured by The Travelers Insurance Company (hereinafter 'Travelers'); the vehicle operated by Board was insured by Globe-American Insurance Company of Cleveland, Ohio (hereinafter 'Globe-American'). Due to the collision, Mrs. Smith sustained injuries, was given medical treatment, and incurred medical expenses in the approximate amount of $1,452.

Within one year of the date of the accident, Mrs. Smith submitted to Travelers proof of the medical expenses incurred, pursuant to the requirements of her insurance policy. The policy provided that Travelers would pay all reasonable expenses (incurred within one year of the date of the accident) for necessary medical services to teh named-insured sustaining injuries, caused by accident, while occupying the automobile. That payment provision is subject to the following policy provision: '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 * * * all the rights of recovery therefor which the injured person or anyone receiving such payment may have against any person or organization. The insured * * * 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.'

On or about June 1, 1971, pursuant to the subrogation provision of her policy, Mrs. Smith executed a subrogation agreement, providing that Travelers be subrogated to the right of recovery of Mrs. Smith, to the extent of the payment made, against any person or organization. Mrs. Smith agreed to do nothing to prejudice such rights.

Mrs. Smith made claim against Board for her medical expenses incurred as a result of the accident. In July 1971, Globe-American paid Mrs. Smith the sum of $4,500 in settlement of her claim, and obtained a release from her. By the terms thereof, Mrs. Smith released Board and Globe-American from any liability arising from the accident. When Travelers became cognizant of the settlement with Globe-American, it refused to pay Mrs. Smith the medical expenses claimed by her, stating that she had prejudiced Travelers' right of subrogation.

On or about June 10, 1975, Mrs. Smith and Walter H. Smith, appellants herein, filed an action against Travelers to recover $1,000 for medical expenses incurred by them as a result of the Board accident. The Common Pleas Court found in favor of appellants in the sum prayed for in their complaint.

The Court of Appeals for Franklin County reversed the judgment of the trial court and remanded the cause for further proceedings. In so doing, the Court of Appeals determined that its judgment was in conflict with the judgment rendered in Nationwide Mut. Ins. Co. v. DeJane (1974), 42 Ohio App.2d 11, 326 N.E.2d 701, and certified the record of this cause to this court for review and final determination. Section 3(B)(4) of Article IV of the Constitution of Ohio.

PER CURIAM.

The specific question certified below is as follows:

'Whether a single cause of action for personal injuries may be divided to the extent that an insurer, subrogated to the medical payments claim assigned by the insured, may prosecute this claim in a separate action against the tortfeasor?'

In the opinion written by Judge Holmes, the Court of Appeals below stated: 'We feel that the latter position as taken by the Hamilton County Court of Appeals, in * * * (Hartford Accident Co. v. Elliott (1972), 32 Ohio App.2d 281, 290 N.E.2d 919), is the more reasonable view, and one which would express the better public policy in regard to an insured assigning his rights in an injury claim for medical expenses, as well as in the instance of assigning to the insurance company subrogee his interests in a property damage situation. We feel that the subrogee, upon such assignment, would become the real party in interest and have the right to maintain an action in the name of the subrogee as against the tort feasor for damages sustained to personal property of the insured, as well as for personal medical expenses as suffered by the insured.' We agree with this conclusion.

This result is consistent with what appears to be the overwhelming majority of cases in those jurisdictions which have determined whether various subrogation agreements are valid and enforceable. See Alabama Farm Bureau Mut. Cas. Ins. Co. v. Anderson (1972), 48 Ala.App. 172, 263 So.2d 149, 154; Shipley v. Northwestern Mut. Ins. Co. (1968), 244 Ark. 1159, 428 S.W.2d 268, 270; Higgins v. Allied Amer, Mut. Fire Ins. Co. (D.C.App.1968), 237 A.2d 471, 472; DeCespedes v. Prudence Mutual Cas. Co. (Fla.App.1966), 193 So.2d 224, 225, approved, Fla., 202 So.2d 561; Rinehart v. Farm Bureau Mut. Ins. Co. (1974), 96 Idaho 115, 524 P.2d...