Harrington v. Edwards ex rel. Estate of Burch

Littlejohn, Justice: The plaintiff-respondent, Harrington, suffered personal injuries while riding in an automobile owned and operated by Bennie L. Burch. Burch was killed. This action was commenced by Harrington against Mary W. Burch, as Administratrix of the Estate of Bennie L. Burch, to recover damages sustained as a result of the collision. At the time of the collision Nationwide Mutual Insurance Company had issued its liability insurance coverage policy to protect Burch from liability arising as a result of his negligent operation of the automobile. In addition, Nationwide, by way of endorsement in the same policy, provided medical payments coverage to injured occupants of the Burch automobile, regardless of liability on the part of the operator of the vehicle. Prior to the institution of this tort action, Nationwide had advanced medical payments to Harrington in excess of the $1,000.00 stipulated in the medical payments endorsement. At the time of the advancement no written agreement was executed by Harrington. [266] The jury returned a verdict in the amount of $5,412.05 against the administratrix of Burch’s estate. This amount included Harrington’s medical bills. Nationwide paid the jury-verdict judgment except for $1,000.00. The lower court ruled that Harrington was entitled to collect the entire amount of $5,412.05 by reason of the liability insurance coverage, plus $1,000.00 by reason of the medical payments coverage. Both Nationwide and Burch’s administratrix have appealed. It is the contention of Harrington that he is entitled to collect $5,412.05 under the liability coverage, plus $1,000.00 under the medical payments coverage, and that the medical payments provision did not allow an offset against the judgment. It is the position of Nationwide that under the medical payments policy provisions the $1,000.00 already disbursed should be credited against the judgment. The liability insurance policy on an automobile must meet the requirements of South Carolina statutes. There is, however, no statute in this State requiring, controlling, or regulating medical payments coverage; accordingly the medical payments coverage which Burch provided for his passengers, including Harrington, was entirely voluntary. We therefore look to the terms of the contract to determine what benefits are provided for Harrington. The contracting parties are Burch and Nationwide. Harrington, as a third party beneficiary is entitled to recover only that amount provided by the contract. The contract as set forth in the medical payments endorsement of the policy provides in relevant part as follows: “In consideration of the payment of the required premium the Company agrees with the Policyholder ... as follows: * * * [267] “To pay all reasonable expenses, incurred within one year following the accident, for necessary medical . . . services ... , to or for: “B. any person . . . who by accident suffers bodily injury, sickness, disease or death while in or upon, entering or alighting from: 1. the described automobile being used by the Policyholder, . . . : * ‡ “Provided that no such payment shall be made . . . unless the person to or for whom such payment is made shall have executed a written agreement that the amount of such payment shall be applied toward the settlement of any claim, or the satisfaction of any judgment for damages entered in his favor, against any person entitled to protection because of bodily injury arising out of any accident to which the Automobile Bodily Injury Liability Coverage applies.” From the last paragraph quoted above, it is readily seen that the liability coverage and the medical payments coverage are not entirely severable. It is provided that Burch’s insurance carrier did not have to pay, under the medical payments provision, the $1,000.00 unless and until Harrington “executed a written agreement” that the amount paid would be applied towards the settlement of any judgment payable under the liability coverage. The admissions of counsel for Harrington in argument before this Court narrow the issues. He candidly admits that Nationwide was not required by the policy to pay the $1,000.00 unless Harrington executed a written agreement to apply it to the judgment. And secondly, he admits that if Harrington had executed the written agreement prior to receipt of the $1,000.00, an offset would be proper. The question, therefore, for determination by this Court is: Did the fact that Nationwide paid the $1,000.00 without [268] requiring Harrington’s signature deprive the company of the right to offset? We find no logic in the argument that if Nationwide had desired to offset the $1,000.00, it could have required Harrington to sign an agreement. The waiver of the requirement that a written agreement be executed by Harrington before such payment was made did not waive the company’s rig'ht to credit or offset the judgment. The provision permitting Nationwide to require the agreement enures solely to the benefit of the insurer, and Harrington was not prejudiced by Nationwide’s failure to require such written agreement. Under the policy provisions, Nationwide is entitled to offset the payment. Much litigation has arisen out of policy provisions akin to those involved in this action. Each case must be determined on the basis of the policy provisions and the facts surrounding the claim. Our holding is limited to the policy provisions and the facts here involved. We think the policy provisions require the determination we have made. Our holding is certainly consistent with what we conceive to be the intent of the contracting parties. Of interest are the cases of Yarrington v. Thornburg, 205 A. (2d) 1 (Del. Supr. 1964), and Tart v. Register, 257 N. C. 161, 125 S. E. (2d) 754 (1962); also, Annot., 11 A. L. R. (3d) 1115 (1967). We deem it unnecessary to consider the subrogation section of the policy under which Nationwide also contends it should be entitled to offset. Reversed. Moss, C. J., and Brailsford, J., concur in result. Lewis and Bussey, JJ., dissent.