Southwestern Fire & Cas. Co. v. Atkins

• Decision Date: 18 May 1961
• Docket Number: No. 13701,13701
• Citation: 346 S.W.2d 892
• Parties: SOUTHWESTERN FIRE AND CASUALTY COMPANY, Appellant, v. Gail ATKINS, Appellee.
• Court: Texas Court of Appeals

Page 892

346 S.W.2d 892

SOUTHWESTERN FIRE AND CASUALTY COMPANY, Appellant, v. Gail ATKINS, Appellee.

No. 13701.

Court of Civil Appeals of Texas, Houston.

May 18, 1961.

Rehearing Denied June 8, 1961.

Red, Kemp & Fahey, Pat N. Fahey, Houston, for appellant.

Mayfield & Atkins, Bill Atkins, Fort Worth, for appellee.

WERLEIN, Justice.

This is an appeal by Southwestern Fire and Casualty Company, a general casualty company, from a judgment recovered against it by appellee, Gail Atkins, for $500 medical payments, plus penalty and attorney's fees, on an automobile policy issued by appellant covering two automobiles owned by appellee. The policy provides coverage for: A. Bodily injury liability; B. Property damage liability, and C. Medical payments.

Appellee's minor daughter was seriously injured when struck by an automobile other than the cars insured by appellant. Under the medical payment provision in the policy, appellant made one payment of $500 prior to suit. It admits without question its liability in that amount. It contends, however, that such amount is in full satisfaction of its liability for medical payments under its policy, and that there can be no additional recovery, although the medical and hospitalization expenses incurred by appellee exceed $1,000. The principal question to be decided is whether under the terms of the policy $500 is the limit of recovery although the policy provides coverage on two automobiles with premiums allocated to each separately.

Subsection C. of item 3 of the policy reads under the following headings:

Limits of

"Coverage Liability Car 1 Premiums Car 2

---------- ------------ ----------------------

C. Medical $500.00 each $8.00 $7.00"

payments person

Under Part II--Expenses for Medical Services, the policy contains the following pertinent provisions:

'Coverage C Medical Payments

'To pay all reasonable expenses incurred within one year from the date of accident for necessary medical, surgical, X-ray and dental service, including prosthetic devices, and necessary ambulance, hospital, professional nursing and funeral services:

'Division 1. To or for the named insured and each relative who sustains bodily injury, sickness or disease, including death resulting therefrom, hereinafter called 'bodily injury,' caused by accident, while occupying or through being struck by an automobile;'

Part II also contains the following:

'Limit of Liability: The limit of liability for medical payments stated in the declarations as applicable to 'each person' is the limit of the company's liability for all expenses incurred by or on behalf of each person who sustains bodily injury as the result of any one accident.'

It is appellant's contention that the language above quoted limits the medical payments to the sum of $500 although two cars are insured under the policy and premiums are charged for medical payments on each car separately. Appellant refers to certain rules and regulations of the State Board of Insurance of Texas, and particularly to a footnote under the title 'Medical Payments Insurance,' in the Texas Automobile Casualty Manual, which reads: 'The inclusion of more than one automobile under the policy shall not operate to increase the limits of the company's liability for the coverage under Division II.'

Division II as set out in such regulations appears to be Division I in the policy (being the division we are construing herein) and applies to medical payments applicable to a suit such as this where a relative of the insured sustains bodily injury through being struck by an automobile.

It is our view that the rules and regulations issued and promulgated by the State Board of Insurance are for regulating and controlling insurance companies and those engaged in the insurance business, and that such rules and regulations are not binding upon a policyholder unless contained in his policy or contract of insurance. General Lloyds Fire & Casualty Co. v. Bailey, Tex.Civ.App., 253 S.W.2d 1017, writ ref. The foregoing provision relied upon by appellant is not contained in the policy issued to appellee and forms no part thereof.

Appellee contends that the situation here is no different than it would be if appellant had issued two separate policies of insurance, one providing medical payments for Car 1 and the other covering Car 2. He relies upon the provision in the policy under the title 'Conditions' as follows:

'4. Two or more automobiles: When two or more automobiles are insured hereunder, the terms of this policy shall apply separately to each * * *.'

This provision is made applicable to all parts of the policy and in effect provides that the policy of insurance shall apply separately to each car. If it does apply separately to each car, then it would seem that the policy is in effect two policies of insurance in one. This view is supported by the fact that separate premiums are charged for each car; the medical payment premium being $8 on Car 1 and $7 on Car 2. There could be no question that if separate policies had been written by appellant the insured could recover $500 medical payments on each car since the total medical expenses exceed $1,000. If one of the policies had been written in one company and the other policy in another company, the same thing would be true. We think it is equally clear that if the insured had taken out medical payments on only one car, he could recover the sum of $500, being the amount paid him by appellant. In other words, if he can collect only $500, he is no better off for having taken out medical payments on both cars than on one car, since he could recover the same amount had he taken out medical payments on only the one car. Hence there is no consideration for the payment of the premium on the second car, if we accept appellant's construction of the contract.

The rules of construction to be observed in construing an insurance policy are well stated in Kelley v. American Insurance Company, Tex.Civ.App., 316 S.W.2d 452, 455, affirmed Tex.Sup.1959, 325 S.W.2d 370, as follows:

'(1) An insurance policy will be construed strictly against the insurer; (2) when the terms of an insurance contract are capable of two or more constructions and under one a recovery is allowable and under the other it is denied, the construction which permits recovery will be given the policy; (3) forfeitures of insurance coverage is not favored; and (4) if a fair and reasonable construction of an insurance contract will permit, a meaning will be given to its language that effectuates a contract of insurance rather than defeats it. See 24-B Tex.Jur., Insurance, Secs. 26, 27, 28, 29, 30, 31 and 32, pp. 86-109, and authorities there listed.'

In applying these rules to the policy in question, it is our opinion that the policy must be treated as two separate contracts in one policy. Such construction effectuates a contract of insurance separately as to each car insured, as provided in Condition No. 4, and permits recovery rather than forfeiture of a benefit for which appellee has paid.

We have neither found nor been cited to any case directly in point. It has been held, however, that there may be a double recovery for medical expenses, one in tort and the other in contract, where separate premiums are paid for liability coverage and medical payment coverage. Severson v. Milwaukee Auto. Ins. Co., 1953, 265 Wis. 488, 61 N.W.2d 872, 42 A.L.R.2d 976. In Distefano v. Delta Fire & Casualty Company, La.App. 98 So.2d 310, the court held in effect that a liability clause in an automobile policy constituted an insurance agreement entirely separate from that afforded by a medical payment clause in such policy, and that recovery could be had under the liability clause for medical expenses of a passenger in the assured's truck, even though payment for such expenses had been previously made by the insurer under the medical payments clause of the policy.

In the instant case we do not have a claim based on the liability feature of the policy which would constitute a tort claim, but a claim based on medical payments sounding in contract on two separate cars for which separate premiums were paid, and under a policy expressly providing that the terms of the policy shall apply separately to each of the automobiles insured. The provision in the policy relied upon by appellant, to the effect that the...