Wilson v. Tennessee Farmers Mut. Ins. Co.

• Decision Date: 14 December 1966
• Citation: 23 McCanless 560,411 S.W.2d 699,219 Tenn. 560
• Parties: , 219 Tenn. 560 John Oscar WILSON, Plaintiff-Error, v. TENNESSEE FARMERS MUTUAL INSURANCE COMPANY, Defendant-in-Error.
• Court: Tennessee Supreme Court

Page 699

411 S.W.2d 699

23 McCanless 560, 219 Tenn. 560

John Oscar WILSON, Plaintiff-Error, v. TENNESSEE FARMERS MUTUAL INSURANCE COMPANY, Defendant-in-Error.

Supreme Court of Tennessee.

Dec. 14, 1966.

Rehearing Denied Feb. 15, 1967.

Paul T. Gillenwater, Knoxville, for plaintiff in error.

Kramer, Dye, Greenwood, Johnson & Rayson, Knoxville, Andrew Johnson, Knoxville, of counsel, for defenant in error.

OPINION

CHATTIN, Justice.

Plaintiff-in-error, John Oscar Wilson, hereinafter referred to as petitioner, filed the petition in this cause against Tennessee Farmers Mutual Insurance Company, hereinafter referred to as the defendant, under the Declaratory Judgments Act. The defendant filed an answer to the petition. The matter was tried upon a stipulation of facts.

The facts are that defendant issued an automobile liability insurance policy to petitioner. The policy was in force on May 16, 1964, at which time petitioner was involved in an automobile accident resulting in personal injuries. As a consequence of his injuries, petitioner was required to be hospitalized and to incur medical expenses in excess of $1,000.00.

The insurance policy provided, among other coverages, for payment of medical expenses to or for persons injured while riding in petitioner's automobile to a limit of $1,000.00. Upon demand of the petitioner, the defendant paid him the sum of $1,000.00. Petitioner executed a release and subrogation agreement in which he released all claims under the medical payment coverage of the policy and expressly subrogated defendant to the extent of the payment made to all petitioner's rights against any third party that may be liable for the loss.

The subrogation agreement provides, in part:

'In consideration of and to the extent of said payment the undersigned hereby subrogates said Company, to all of the rights, claims and interests to the extent of the Company's payment under coverage 'C' which the undersigned may have against any party, person or persons, property or corporation liable for the loss mentioned above, and authorizes the said Company to sue, compromise, or settle in the undersigned's name or otherwise all such claims and to execute and sign releases and acquittances and endorse checks or drafts given in settlement of such claims, in the name of the undersigned with the same force and effect as if the undersigned executed or endorsed them.'

The policy of insurance contains a section entitled, 'Policy Conditions.' Under this section it is stated: 'The policy conditions apply to all coverages unless otherwise noted.' Paragraph 4 of this Section provides:

'Upon payment under this policy, the Company shall be subrogated to all the insured's rights of recovery therefor and the insured shall do whatever is necessary to secure such right and do nothing to prejudice them.'

As a result of the automobile accident on May 16, 1964, petitioner brought suit against the operator of the other automobile involved in the accident to recover damages for his personal injuries, losses and medical expenses. This litigation was pending at the time the petition in this cause was filed.

There have been negotiations for a settlement of the litigation and petitioner has been tendered a sum of money in settlement of his claim for personal injuries, losses and expenses.

It was the petitioner's contention in the trial court the subrogation clause contained in his policy was null and void as against public policy and the laws of this State.

On the other hand, it was the contention of the defendant the subrogation clause in the policy and the subrogation agreement executed by the petitioner were valid and enforceable agreements.

The trial court held as follows:

'The court is of the opinion and does hold that if the subrogation clause contained in the insurance policy and the subrogation agreement executed by petitioner purport to pass to the Insurance Company the right to go out and institute a cause of action against the tort-feasor to recover the amount claimed, it is invalid and void; but, on the other hand, it is the opinion of the court and the court holds that this agreement constitutes a contract between the insurance company and the injured party whereby that party undertakes to save the Company harmless or to refund these moneys, not by authorizing the Insurance Company to institute suit for in that event it would be void, but the court holds that it does constitute a contract and an undertaking whereby the insured will refund to the Insurance Company the amount paid him under the policy if the insured collects for his injuries from the tort-feasor, which contract is valid and enforceable.'

Petitioner has perfected an appeal to this Court and has assigned as error the action of the trial court in holding the defendant was subrogated to the right of petitioner to the extent of the medical payments made to petitioner.

Petitioner insists the agreement executed by the petitioner is an assignment; and that a...