Travelers Indem. Co. v. Rader

• Decision Date: 04 March 1969
• Docket Number: No. 12762,12762
• Citation: 166 S.E.2d 157,152 W.Va. 699
• Court: West Virginia Supreme Court
• Parties: The TRAVELERS INDEMNITY COMPANY, a Corporation v. Evelyn RADER et al., and Nationwide Mutual Insurance Company, a Corporation.

Page 157

166 S.E.2d 157

152 W.Va. 699

The TRAVELERS INDEMNITY COMPANY, a Corporation v. Evelyn RADER et al., and Nationwide Mutual Insurance

Company, a Corporation.

No. 12762.

Supreme Court of Appeals of West Virginia.

Submitted Jan. 14, 1969.

Decided March 4, 1969.

Syllabus by the Court

A provision in an insurance policy providing for the subrogation of the insurer to the rights of the insured to the extent that medical payments are advanced to such insured by the insurer is distinct from an assignment of a tort claim and is not invalid as against the public policy of this State.

Jenkins, Schaub & Fenstermaker, C. Robert Schaub, Huntington, Myles & Myles, T. E. Myles, Fayetteville, for appellant.

Mahan, Higgins, Thrift & Graney, R. J. Thrift, Jr., Fayetteville, for appellees.

BROWNING, Judge:

The Travelers Indemnity Company, a corporation, hereinafter referred to as plaintiff, instituted this declaratory judgment proceeding in the Circuit Court of Fayette County, West Virginia, against the defendants praying for a declaration of the rights, duties and liabilities of the parties under a subrogation agreement contained in a policy of insurance issued by plaintiff and for coercive relief. The facts have been stipulated by counsel and are not in dispute.

The defendant Gravelys were the insureds under a policy of insurance issued by the plaintiff which provided in part:

'Coverage B * * * Medical Payments

'To pay all reasonable medical expense incurred within one year from the date of accident:

'DIVISION 1: To or for the named insured and each relative who sustains bodily injury, caused by accident, while occupying or through being struck by an automobile;

'18. SUBROGATION. In the event of any payment under this policy, the company shall be subrogated to all the insured's rights of recovery therefore against any person or organization and, with respect to Coverage B, all the rights of recovery therefore which the insured person or any one receiving such payment may have against any person or organization. The insured, or with respect to Coverage B such person, 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 February 1, 1965, the defendant Gravelys were injured as a result of the negligent operation of an automobile by the defendant Evelyn Rader, which automobile was covered by a policy of liability insurance issued by the defendant Nationwide Mutual Insurance Company. The defendant Hobart Thomas is an employee and adjuster of the defendant Nationwide Mutual Insurance Company.

As a result of the collision, the Gravelys incurred medical expenses totalling $1,249.94 and made claims against the plaintiff under the medical payment provision of their policy. Plaintiff recognized its obligation to the Gravelys under its policy and corresponded with plaintiffs in regard thereto during the months of March, May and September of 1965. In all of this correspondence the plaintiff made reference to the subrogation provision of its policy and sent copies of the correspondence to the attorneys representing the Gravelys and to Hobart Thomas as representative of Nationwide Mutual Insurance Company. On October 1, 1965, plaintiff paid the amounts due the Gravelys on the basis of statements of claim made by them individually. These statements, filed with the complaint as plaintiff's exhibits No. 1 and 2, contained the following provision:

'For the consideration of the above payment the undersigned agrees that:

'2. The Company is subrogated to the right of recovery of the undersigned to the extent of the payment made against any person or organization and warrants that he shall do nothing and has not done anything to prejudice such rights. * * *'

Thereafter on November 10, 1965, the defendant Nationwide paid to the Gravelys $5,000 in satisfaction of all liability which might have existed in their favor against Nationwide's insured in return for which the Gravelys executed an unconditional release. It is not denied by Mr. Thomas that he was aware of the plaintiff's claim of subrogation but he states that such claim was not honored because his company entertained serious doubts as to the validity of such claims in West Virginia. It is also undisputed that Nationwide received no consideration from the plaintiff in regard to the matter.

The trial court on January 24, 1968, on motion of the defendants dismissed the complaint as against all defendants to which action this Court granted an appeal on September 9, 1968. No reason is assigned by the trial court for such action but it is contended in plaintiff's brief that such was done on the grounds of public policy. Errors assigned in this Court relate to (1) the dismissal of the action as against the Gravelys, (2) the dismissal of the action as against Thomas and Nationwide, (3) the dismissal of the action as against the Raders, and (4) in holding that the subrogation agreement is not enforceable because it is contrary to the public policy of West Virginia.

This Court perceives no error in the trial court's ruling wherein the action was dismissed as to the Raders. This appeal was granted for the purpose of deciding whether upon the facts of this case the action by the plaintiff would lie against the Gravelys. A decision of that question requires a determination of whether the subrogation provision of the policy was valid with regard to the medical expenses for which the Gravelys had been paid prior to the time they settled their claims against Nationwide, their claims being settled for the sum of $5,000 which included unconditional releases as to hospital and medical expenses and property damage as well as personal injuries received in the collision. The language of the subrogation provision of this policy is clear and unambiguous. The agreement embodied in it between the plaintiff and the Gravelys is without ambiguity and there is no question raised as to fraud or deception being practiced upon the insured parties. Unless such a provision in an insurance policy, as it relates to medical and hospital expenses constitutes an assignment of an unassignable tort claim or is otherwise against the 'public policy' of this State then it must stand. ...