Case Name: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellant, v. Dr. Phillip C. OLLIS, D.C., Appellee
Court: Texas Courts of Appeals
Jurisdiction: Texas
Decision Date: 1988-06-29
Citations: 754 S.W.2d 781
Docket Number: No. 08-88-00045-CV
Parties: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellant, v. Dr. Phillip C. OLLIS, D.C., Appellee.
Judges: Before OSBORN, C.J., and WOODARD and SCHULTE, JJ.
Reporter: South Western Reporter Second Series
Volume: 754
Pages: 781–784

Head Matter:
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellant, v. Dr. Phillip C. OLLIS, D.C., Appellee.
No. 08-88-00045-CV.
Court of Appeals of Texas, El Paso.
June 29, 1988.
Rehearing Denied Aug. 10, 1988.
Mark C. Walker, Grambling & Mounce, El Paso, for appellant.
Philip E. Kenrick, El Paso, for appellee.
Before OSBORN, C.J., and WOODARD and SCHULTE, JJ.

Opinion:
OPINION
WOODARD, Justice.
This is an appeal from a summary judgment in the amount of $4,461.00. We affirm.
In September of 1984, Francisco Aldava was involved in an automobile accident with Eleno Hernandez.
Mr. Aldava was insured by the defendant insurance company for standard automobile liability coverage. The insurance company agreed to pay damages for bodily injury or property damage for which any covered person became "legally responsible" because of an auto accident.
The plaintiff doctor provided medical treatment to Mr. Hernandez after the accident. In return, Mr. Hernandez executed an assignment of "all of my rights, title and interest to collect and receive the benefits and sums payable otherwise to me by State Farm Insurance Company." The insurance company received this assignment. It did not inform the plaintiff doctor that it would not honor it. It received the doctor's bills and used his reports in evaluating settlement of the case. The insurance company subsequently paid Mr. Hernandez $9,000.00 directly in settlement of his claim against Mr. Aldava. Mr. Hernandez demanded direct payment as a prerequisite to the settlement.
The insurer contends the trial court erred in rendering summary judgment, as judgment against the insured by the injured party must first be obtained to determine legal responsibility of the insurer. Dairyland County Mutual Insurance Company of Texas v. Childress, 650 S.W.2d 770 (Tex.1983). In Houston General Insurance Company v. Owens, 653 S.W.2d 93 (Tex.App.—Amarillo 1983, writ ref'd n.r.e.), the Court noted a compromise settlement agreement is mere evidence and does not carry the same finality as a judgment. In that case, as in this case, the agreement did not admit the insured's liability in the accident. Admissions of liability are also mere evidence and not legally conclusive. Therefore, their inclusions or absence in the settlement agreement would not affect the theory of lack of finality of the agreement.
Although not completely final in the legal sense, a compromise settlement agreement arrives at a liquidated amount of obligation no less binding and assignable than any other chose in action.
The insurer became liable at the time the insured's obligation to pay had been finally determined by either judgment against the insured after actual trial or by written agreement of the insured, the claimant and the company. Great American Insurance Company v. Murray, 437 S.W.2d 264 (Tex.1969).
A third person not a party to a contract will still have a cause of action to enforce the contract if the contract was made for that person's benefit. Dairyland County Mutual Insurance Company of Texas v. Childress, supra.
The assignment in question was executed on October 17, 1984. The settlement agreement was executed on August 16, 1985. It was assignment of a future interest. To be valid, the assigned right must have an actual or potential existence. It must potentially arise from a contract in existence. Love v. Austin Bridge Co., 5 S.W.2d 570 (Tex.Civ.App.—Texarkana 1928), rev'd on other grounds, 34 S.W.2d 574 (Tex.Comm'n App.1931, holding approved). The insurance contract predated the assignment. As long as a claim is sufficiently defined by an assignment so that it can be identified and it arises out of an existing contract, the assignment is nonetheless effective because the amount payable is subject to contingency or dispute. Williston on Contracts, Third Edition, sec. 413, p. 63. Even though the third party beneficiary/assignor was not a named party to the insurance contract, the interest assigned had potential existence expressed in the contract by virtue of the promise to pay damages incurred by the insured.
Debtors, with knowledge of the assignment, may not pay money to a third person so as to deprive the assignee of his right. Mitchell, Gartner & Thompson v. Young, 135 S.W.2d 308 (Tex.Civ.App.—Fort Worth 1939, writ ref'd); C.H. Chapman v. Tyler Bank & Trust Company, 396 S.W.2d 143 (Tex.Civ.App.—Tyler 1965, writ ref'd n.r.e.).
At such time as the settlement contract was executed, the insured became legally obligated to pay the stipulated amount in lieu of damages, and the insurer became bound to the assignment.
There being no genuine issue of material fact, movant plaintiff doctor is entitled to judgment as a matter of law. City of Houston v. Clear Creek Basin Authority, 589 S.W.2d 671 (Tex.1979).
Judgment of the trial court is affirmed.