LUSK v. STATE FARM MUT. AUTO. INS. CO.

LUSK v. STATE FARM MUT. AUTO. INS. CO.
1977 OK 169
569 P.2d 985
Decided: 09/27/1977
Supreme Court of Oklahoma

Dennis L. LUSK, Appellant,
v.
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, a Foreign Corporation, Appellee.

Appeal from the District Court of Oklahoma County; Raymond Naifeh, Trial Judge.

¶0 Automobile passenger brought suit against insurer of the occupied automobile for medical payment under an automobile insurance policy. Insurer conditioned payment on execution of a loan receipt trust agreement, basically allowed under the policy. The validity of this type of settlement under medical payment coverage was challenged. Both parties sought summary judgment. Trial court enters judgment for insurer. Passenger appeals. REVERSED AND REMANDED.

Jack S. Dawson, Hunt and Thomas, Dawson Cooley & Gile, Oklahoma City, for appellant.
Procter, Fleming & Speck by Thomas G. Laughlin, Oklahoma City, for appellee.

LAVENDER, Vice Chief Justice:

¶1 Dennis L. Lusk (Lusk), as an automobile passenger, was involved in a two vehicle accident. Lusk made claim for medical payment, resulting from that accident, with the insurer of the automobile Lusk occupied, State Farm Mutual Automobile Insurance Company (State Farm). As a condition of payment under the medical payment coverage, State Farm required of Lusk the execution of its loan receipt trust agreement. This type of settlement for that kind of coverage was basically provided for in the insurance policy.

¶2 Lusk made settlement with possible negligent third party driver of the other automobile involved in the accident, and gave a general release. Lusk then delivered the executed agreement to State Farm. Upon learning of the prior general release, State Farm refused payment. Lusk sued on the policy for medical payment. Both parties filed motions for summary judgment. Trial court sustained State Farm's motion and entered summary judgment. Lusk appeals.

¶3 Lusk argues the loan receipt and trust agreement is void and not controlling for its nature and rights thereunder are essentially different than subrogation allowed to be included in the policy by statute. 36 O.S. 1971, s 6092.

¶4 In general, a loan receipt transaction will be held to constitute a valid or true loan where the obligation or liability of the insurer who advances or lends the money was not absolute, but was in any way contingent, conditional, excess or undetermined. Hiebert v. Millers' Mutual Insurance Ass'n of Ill., Kan., 212 Kan. 249, 510 P.2d 1203 (1973). That is not the kind of transaction in the present case. The medical payment is absolute, other than the condition of a trust on settlement, here in dispute.

¶5 This policy creates a trust, rather than a loan receipt transaction.

¶6 Automobile liability policies may provide for subrogation under the medical services coverage portion of the policy. s 6092. Here, the policy expressly excepted the medical payment coverage from subrogation. After having expressly excluded subrogation, State Farm would argue its trust agreement under the policy comes from that statutory permission. Under the law of Oklahoma, conditions and provisions of insurance contracts are construed against the insurer who proposed and prepared the policy. Hardberger and Smylie v. Employers Mutual Liability Ins. Co. of Wisconsin, 10th Cir.,

¶7 Reversed and remanded.

¶8 All of the Justices concur.

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