Terry v. Aetna Cas. & Sur. Co.

Citation510 S.W.2d 509
PartiesLona Norine TERRY, Appellant, v. AETNA CASUALTY AND SURETY COMPANY, Appellee.
Decision Date04 March 1974
CourtSupreme Court of Tennessee

James W. Justice, Knoxville, for appellant.

Robert R. Campbell, Knoxville, for appellee; Hodges, Doughty & Carson, Knoxville, of counsel.


DYER, Chief Justice.

This case involves the construction of our Uninsured Motorist Statutes enacted by Chapter 371, Public Acts of 1967, now carried in Tennessee Code Annotated as §§ 56--1148 through 56--1153. The issue more particularly is the legislative purpose in including T.C.A. § 56--1152 as a section of our Uninsured Motorist Statutes. The facts being stipulated, jurisdiction is properly in this Court.

On February 1, 1972, Vernon Lee Terry, an employee of Vasey Heating Company, was operating a motor vehicle owned by his employer when he was involved in an accident with a motor vehicle operated by one Carl Reed Yearwood, which accident resulted in the death of Vernon Lee Terry. The Vasey vehicle was insured by appellee, Aetna Casualty and Surety Company, which policy contained uninsured motorist coverage in accord with our statutes. At the time of this accident Vernon Lee Terry was an insured under the terms of the Aetna policy. Carl Reed Yearwood was an uninsured motorist within the meaning of our Uninsured Motorist Statutes. As a result of Terry's death, workmen's compensation benefits have been paid or allowed in the amount of $10,080.26.

As a result of this accident appellant, Lona Norine Terry, the widow of Vernon Lee Terry, has recovered a judgment against Carl Reed Yearwood in the amount of $100,000.00. Appellee in accord with T.C.A. § 56--1153 was timely notified of this suit.

On October 30, 1972, appellant brought the action sub judice to recover under the provisions of the uninsured motorist coverage contained in appellee's policy, the amount applicable in this case being the sum of $10,000.00. Appellee defended relying on the following provision in its policy:


(Regardless of the number of insureds under this policy, the company's liability is limited as follows:

(b) Any amount payable under the terms of this insurance because of bodily injury sustained in an accident by a person who is an insured under this coverage shall be reduced by (2) the amount paid and the present value of all amounts payable on account of subh bodily injury under any workmen's compensation law, disability benefits law or any similar law.

The trial judge held the above provision of the policy valid and applicable under the facts of this case; that is, since workmen's compensation benefits in excess of $10,000.00 had been paid or allowed, appellee had no liability under the uninsured motorist provisions of its policy.

T.C.A. § 56--1152, as enacted by the Legislature, reads as follows:

SECTION 5. Be it further enacted, That nothing contained in this Act shall be construed as requiring the forms of coverage provided pursuant to this Act, whether alone or in combination with similar coverage afforded under other automobile liability policies, to afford limits in excess of those that would be afforded had the insured thereunder been involved in an accident with a motorist who was insured under a policy of liability insurance with the minimum limits described in Section 59--1206, Tennessee Code Annotated. Such forms of coverage may include such terms, exclusions, limitations, conditions, and offsets, which are designed to avoid duplication of insurance and other benefits. Chapter 371, Public Acts of 1967.

The first case directly discussing T.C.A. § 56--1152 is the unreported case of Judy Kinnear Jenkins, Administratrix v. State Farm Mutual Automobile Insurance Company, Davidson Equity, released August 3, 1970.

In the Jenkins case, Kinnear and his wife were killed in an accident involving an uninsured motorist. Kinnear had a policy with State Farm providing uninsured motorist coverage with limits of $20,000.00, and State Farm paid the Administratrix the sum of $20,000.00. The policy also provided coverage for medical and burial expenses and the Administratrix brought suit to recover under this coverage. State Farm defended relying on a provision in its policy to the effect the uninsured motorist coverage would be reduced by any amount paid under medical and burial coverage, which provision as applied to the facts of this case would limit State Farm's total liability to $20,000.00. The Administratrix took the position this limiting provision was invalid as being against public policy as a stated premium had been paid for this coverage.

This Court in Jenkins rejected this argument, holding the limiting provision valid relying upon T.C.A. § 56--1148, which requires such policies be filed and approved by the Commissioner of Insurance and also upon the last sentence of T.C.A. § 56--1152, copied above in this opinion. The Court noted the approval of the policy by the Commissioner of Insurance, inter alia, relates directly to the rate charged; that is the rate charged takes into consideration any limitations of liability in the policy.

The next case discussing T.C.A. § 56--1152 is State Farm Mutual Automobile Insurance Co. v. Barnette, Tenn., 485 S.W.2d 545 (1972). This case involved one Barnette, an insured under a State Farm policy, who was injured while riding on a motorcycle driven by one Noel, when said motorcycle collided with an automobile driven by one Dickenson. Barnette sued Noel and Dickenson, obtaining from Dickenson a settlement in the amount of $9,500.00, and against Noel, an uninsured motorist, a judgment in the amount of $170,000.00.

Barnette used to recover under the uninsured motorist provision of the State Farm policy, having coverage in the amount of $10,000.00. State Farm admitted liability for $500.00, but denied further liability on a provision of its policy providing for an offset against coverage for any amount received by its insured from a person jointly and severally liable.

In Barnette, as applied to the facts, we held this limiting provision was invalid as being in derogation of the legislative purpose as expressed in T.C.A. § 56--1152, especially the last sentence thereof. In Barnette we said:

. . . the use of the word 'duplication' in the last sentence of T.C.A. § 56--1152, intended policies could contain provisions . . . which would prohibit an insured from receiving payment under the uninsured motorist coverage where such payment, when added to the other payments received by insured, whether received from 'insurance or other benefits' would exceed the amount of insured's actual damage and, therefore, be in effect a duplication. 485 S.W.2d at 547.

It is here in the case, sub judice, argued that Barnette is authority for the proposition it was the intention...

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