Lenoir Memorial Hospital, Inc. v. Stancil

ShaRp, J. The terms of the policy which obligated Insurer to pay Stancil’s medical bill involved in this case gave Insurer the option to pay the amount of this bill to or for Stancil. Upon this point the policy is positive and unambiguous. Insurer has paid Stancil. Therefore, for plaintiff to impose liability upon Insurer, it must show either a contractual obligation or conduct on Insurer’s 'part giving rise to an estop-pel or a waiver. Stancil, as the injured party, not plaintiff, is the third person for whose direct benefit Insurer and Randolph entered into the medical-payments provision of the insurance contract. Annot., Coverage, construction, and effect of medical payments and funeral expense clauses of liability policy, 42 A.L.R. 2d 983. Any benefit which plaintiff might have received under it would have been incidental. The amount of plaintiff’s demand being within the limits of the medical-payments coverage of the liability policy, Insurer was, under its terms, obligated to pay that amount to or for Stancil.. *633 No contractual relation ever existed between plaintiff and Insurer. Plaintiff did not render its services to Stancil upon any promise of Insurer to pay it for the services. So far as the record discloses, plaintiff had no knowledge of Insurer’s obligation to Stancil until Insurer’s adjuster requested information as to the amount of Stancil’s bill with plaintiff. In .placing plaintiff’s name on the draft, Insurer made to plaintiff a unilateral concession completely without consideration. Even if Insurer had promised to make plaintiff the payee at the time it requested the bill, the promise would have been nudum 'pactum, there being no antecedent obligation on Insurer’s part. 12 Am. Jur., Contracts, § 98 (1938). Absent any element of estoppel, the promise would have been unenforceable. There was no estoppel. Insurer did not induce plaintiff to alter its position by any misleading act or promise. When Insurer’s adjuster requested information from plaintiff as to Stancil’s bill, the adjuster did nothing to lull plaintiff into indiligence in perfecting its lien under G.S. 44-50 upon any money Insurer might pay Stancil. He made no representation as to whom Insurer would name payee in the draft. If Insurer had sent the draft to Stancil made payable to him only, clearly his collection of the proceeds would have discharged Insurer’s obligation under the policy, and we take it that plaintiff would not contend otherwise. Plaintiff does contend, however, that by making both plaintiff and Stancil payees, Insured waived its privilege to pay either Stancil or plaintiff and thus became liable to plaintiff, also, when Stancil collected the draft without its endorsement and failed to pay plaintiff’s bill. It is, of course, unfortunate that Stancil did not use the money to clear the moral and legal obligation for which it was provided. Nevertheless, we cannot hold that Insurer, merely by issuing its draft to both Stancil and plaintiff in the amount of plaintiff’s bill to Stancil, converted its liability to Stancil alone into a liability to plaintiff, also. It goes without saying that Insurer would never intentionally have relinquished the privilege to acquit its liability under the policy by paying one of the two permissible payees. Though often used interchangeably with reference to insurance contracts, the terms waiver and estoppel are not synonymous. Waiver is the intentional surrender of- a known right or privilege, which surrender modifies other existing rights or privileges or varies the terms of a contract. It does not necessarily imply that the one against whom it is sought to be invoked has misled the other to his prejudice, whereas estoppel always involves a prejudicial misleading. 56 Am. Jur., Waiver § 3 (1947). Sometimes a waiver partakes of the nature of an estoppel and sometimes of contract. Where the facts relied upon to establish an estoppel fail to do so for lack of essential elements, they will also *634 fail to establish the valid waiver of a substantial right or privilege unless the waiver is supported by a consideration. Clement v. Clement, 230 N.C. 636, 55 S.E. 2d 459. Although there may be a valid waiver of a formal, as distinguished from a substantial, right or privilege without a consideration, to waive the latter the same consideration is required as for any other contract. Doerr v. National F. Ins. Co., 315 Mo. 266, 285 S.W. 961, 54 A.L.R. 1336. There being no estoppel here, a valid waiver required consideration, which was lacking. The ease comes down to this: By acquiescing in its drawee’s payment of the draft in question, Insurer simply exercised its privilege, which it had not waived, to pay the injured person, Stancil. This case, although relatively uncomplicated, would have been entirely so had either plaintiff-payee or Insurer-drawer, or had both of them, sued First National Bank of Minneapolis, the drawee, whose oversight thwarted Insurer’s obvious purpose to see plaintiff paid. G.S. 25-47; Bank v. Bank, 197 N.C. 526, 150 S.E. 34; Dawson v. Bank, 197 N.C. 499, 150 S.E. 38; accord, American National Bank v. First National Bank, 130 Colo. 557, 277 P. 2d 951; United States Fidel. & G. Co. v. Peoples National Bank, 24 Ill. App. 2d 275, 164 N.E. 2d 497; Annot., Payment of check upon forged or unauthorized indorsement as affecting the right of true owner against the bank, 14 A.L.R. 764, 69 A.L.R. 1076, 137 A.L.R. 874, as supplemented. Unhappily, however, our case is not so constituted. Insurer’s motion for nonsuit should have been allowed. Reversed.