Court Opinion

ID: 9589980
Source: CourtListenerOpinion
Date Created: 2023-08-21 23:50:44.925655+00
Date Added: 2024-06-11T09:04:56.273072
License: Public Domain

Sears, Justice,
dissenting.
In concluding that the complete compensation rule applies in *649this case, the majority fails to recognize the significance of the right of freedom of contract in this State and errs in concluding that the reimbursement clause at issue does not grant a priority of payment to Integon. Because I conclude that the parties’ contract does give Integon priority, and because I do not find that that contractual provision is contrary to the public policy of this State, I dissent.
1. The reimbursement clause of the parties’ contract provides as follows:
B. If we [the insurance company] make a payment under this policy and the person to or for whom payment is made recovers damages from another, that person shall: 1. Hold in trust for us the proceeds of the recovery; and 2. reimburse us to the extent of our payment.
The majority concludes that “[t]he policy language at issue does ‘not express an intent to invest the [insurance] carrier with a priority over its less than fully compensated insured.’ ’1 The language of the reimbursement clause, however, can have no other effect. Its plain language requires Duncan to hold any recovery from the tortfeasor in trust for Integon and to pay any recovery to Integon, to the extent of its payment to Duncan.2 By this language, the clause establishes a priority of payment in favor of Integon relating to any proceeds recovered from a tortfeasor. Although cases from other jurisdictions are divided on whether subrogation and reimbursement clauses unambiguously grant an insurer a priority to any recovery from a tortfeasor,3 the present clause is clearly unambiguous. The majority errs *650in reaching a contrary conclusion.
2. The question then becomes whether this unambiguous clause violates any state statutes or public policy. Georgia has historically afforded great protection to the freedom to contract with another person.4 Georgia courts are thus bound to enforce contracts as made so long as they are not contrary to law or public policy.5 In this case, because there is no relevant statute, the focus must be on whether the reimbursement clause is contrary to public policy.
The following discussion from Dept. of Transp. v. Brooks6 regarding the ability of a court to void a contract on the ground that it violates public policy is relevant to the present case.
OCGA Title 13, Ch. 8, contains the statutory provisions on the subject of contracts which are void as violative of public policy. OCGA § 13-8-1 provides, “A contract to do an immoral or illegal thing is void. If the contract is severable, however, the part of the contract which is legal will not be invalidated by the part of the contract which is illegal.” OCGA § 13-8-2 (a) provides, “A contract which is against the policy of the law cannot be enforced. Contracts deemed contrary to public policy include but are not limited to: (1) Contracts tending to corrupt legislation or the judiciary; (2) Contracts in general restraint of trade; (3) Contracts to evade or oppose the revenue laws of another country; (4) Wagering contracts; (5) Contracts of maintenance or champerty.”
“Public policy” is an amorphous concept; thus, “[pjroblems have arisen here, as elsewhere, in ascertaining the authoritative sources of public policy and in channeling the discretion of the trial judge.” 4 Ga. L. Rev. 469, 480, The Unconscionability Offense (1970) (footnote omitted.) [sic]. Accordingly, it has been held that, “the delicate and undefined power of courts to declare a contract void as contravening public policy should be exercised with great caution, and only in cases free from substantial doubt . . .” Foster v. Allen, 201 Ga. 348, 349 (40 SE2d 57) (1946); McClelland v. *651Alexander, 117 Ga. App. 663 (2) (161 SE2d 397) (1968).
Basic criteria have been set down for the determination of whether a contract is void as against public policy. “A contract cannot be said to be contrary to public policy unless the General Assembly has declared it to be so, or unless the consideration of the contract is contrary to good morals and contrary to law, or unless the contract is entered into for the purpose of effecting an illegal or immoral agreement or doing something which is in violation of law. Camp v. Aetna Ins. Co., 170 Ga. 46, 50 (152 SE 41) (1930); Brown v. Five Points Parking Ctr., [121 Ga. App. 819, 821 (175 SE2d 901) (1970)].” Porubiansky v. Emory University, 156 Ga. App. [at] 603, aff’d sub nom. Emory University v. Porubiansky, 248 Ga. 391. Accord Williams v. Cox Enterprises, Inc., 159 Ga. App. 333 (1) (283 SE2d 367) (1981). But see Strickland v. Gulf Life Ins. Co., 240 Ga. 723 (242 SE2d 148) (1978).7
It has also been held that the provisions of § 13-8-2 setting forth instances when a contract is void as against public policy “ ‘should not be enlarged without convincing and conclusive reasons.’ ”8
I can discern no public policy that would void the reimbursement clause in Duncan’s contract with Integon. Duncan contends that, although the reimbursement clause in this case arises by contract, it is appropriate to look to and apply the principles of equity underlying the doctrine of equitable subrogation, and that those equitable principles require that the complete compensation doctrine be engrafted onto the reimbursement clause in her contract. I conclude, however, that equitable subrogation principles cannot be engrafted onto the reimbursement clause.
First, even apart from the public policy hurdle that Duncan must overcome, it is problematic whether equitable principles of subrogation should override the clear provisions of an insurance contract. “Without discounting the equitable properties of subrogation, we can conceive of no sound reason why broad principles of equity should be imbued with dominance over clear and specific provisions of a contract agreed to by the parties, at least where public policy considerations are wanting.”9
Further, and more significantly for Duncan, Duncan must in fact be able to show that the equitable principles on which she relies are part of the public policy of this state before they can override the *652reimbursement clause in her contract. Although I understand the nature of equitable subrogation,10 as well as the considerations supporting the complete compensation rule,11 under the standards for determining public policy discussed above, I cannot conclude that these equitable considerations constitute a public policy of this state so that an insurer and an insured can never enter into a clear agreement allocating their risks differently from those considerations.12 In this regard, although the legislature has on occasion required that an insured be completely compensated before an insurer is entitled to subrogation or reimbursement, the legislature also has on occasion not required complete compensation.13 Further, the legislature has no statute addressing the issue raised by this case.
Moreover, although the right of subrogation granted to insurers by our uninsured motorist statute14 has been construed to be dependent upon the complete compensation of the insured,15 the statute is silent on the question of whether the insurer or the insured should have a priority of payment from the tortfeasor, merely providing that the insurer “shall be subrogated to the rights of the insured.”16 Lewis therefore involved only the construction of an ambiguous statute and not a question of whether public policy may supersede the clear terms of a contract.
Because the power to declare a contract void as against public policy must be “ ‘exercised with great caution,’ ”17 and because, for the reasons given above, I cannot conclude that “ ‘clear and conclusive reasons’ ”18 exist for enlarging the provisions of § 13-8-2, I would hold, as did the court in Fields,19 that public policy does not permit us to ignore the unambiguous terms of Duncan’s insurance policy. I *653therefore dissent.
Decided March 17, 1997.
William S. Sarandis, Philip L. Westee, Butler, Wooten, Overby, Cheeley & Pearson, Albert M. Pearson III, for appellant.
Smith, Howard & Ajax, Michael D. Amand, Christopher M. Ziegler, for appellee.
Doffermyre, Shields, Canfield & Knowles, Kenneth S. Canfield, amicus curiae.
I am authorized to state that Presiding Justice Fletcher and Justice Hines join in this dissent.

 Majority opinion at 648.

 See United States Fire Ins. Co. v. Capital Ford Truck Sales, 257 Ga. 77, 79 (1) (355 SE2d 428) (1987) (where the meaning of an insurance contract is “plain and obvious, it should be treated as literally provided therein”).

 Compare Fields v. Farmers Ins. Co., 18 F3d 831, 835 (10th Cir. 1994) (holding that language in subrogation clause was unambiguous in granting preference to insurer); Higginbotham v. Arkansas Blue Cross & Blue Shield, 849 SW2d 464, 466 (Ark. 1993) (same); Unified School District No. 259 v. Sloan, 871 P2d 861, 866 (Kan. App. 1994) (holding that reimbursement clause in policy was unambiguous), with Garrity v. Rural Mut. Ins. Co., 253 NW2d 512, 513, 516 (Wis. 1977). In the latter case, the subrogation clause merely granted the insurer the right to be subrogated to the “right of recovery against [a tortfeasor],” distinguishing that case from the present one. Further, although the majority relies on Oss v. United Services Auto. Assn., 807 F2d 457 (5th Cir. 1987), and Wine v. Globe American Cas. Co., 917 SW2d 558, 564 (Ky. 1996), and although the insurance policies in those cases contained reimbursement clauses like the one in this case, neither opinion specifically addressed the meaning of the reimbursement clause, and neither court based its holding on the language of the reimbursement clause. In Wine, the court focused only on the language in the parties’ policy giving the insurer the right to be “subrogated” “to [the insured’s] right to recover damages from another,” holding that the insurers did not have a priority to payment because the “policy language cited above only provides the insurance carrier the right of subrogation, i.e., at some future time to be substituted in the place of its insured.” Wine, 917 SW2d at 564. *650In Oss, the holding of the court did not stem from the reimbursement clause, but from the simple fact that “[i]n Texas . . . the same principles govern both equitable and contractual subrogation. By construing subrogation clauses to confirm, but not expand, the equitable subrogation rights of insurers, Texas properly recognizes the expectations of insureds.” Oss, 807 F2d at 460.

 Porubiansky v. Emory Univ., 156 Ga. App. 602, 604 (275 SE2d 163) (1980), aff’d, 248 Ga. 391 (282 SE2d 903) (1981).

 Talley v. Mathis, 265 Ga. 179 (453 SE2d 704) (1995); Porubiansky, 156 Ga. App. at 603-604.

 254 Ga. 303 (328 SE2d 705) (1985).

 Brooks, 254 Ga. at 311-312.

 Porubiansky, 156 Ga. App. at 604.

 Higginbotham, 849 SW2d at 466. Accord Fields, 18 F3d at 835; Sloan, 871 P2d at 865-866.

 See Carter v. Banks, 254 Ga. 550, 552 (330 SE2d 866) (1985) (subrogation, arises from “an equitable principle founded on the proposition that an insured ought not to collect damages for his loss from both his insurer and the tortfeasor, a double recovery’).

 It has been stated that the rule is most consistent with the equitable principles underlying subrogation, Rimes v. State Farm Mut. Auto. Ins. Co., 316 NW2d 348, 353 (Wis. 1982); Powell v. Blue Cross & Blue Shield, 581 S2d 772, 777 (Ala. 1990), and that “where either the insurer or the insured must to some extent go unpaid, the loss should be borne by the insurer for that is a risk the insured has paid it to assume,” Garrity, 253 NW2d at 514.

 See Fields, 18 F3d at 835.

 Compare OCGA § 34-9-11.1 (b) (requiring complete compensation of injured employee before employer or employer’s insurer can exercise the right of subrogation granted by OCGA § 34-9-11 (b)), with former OCGA § 33-34-3 (d) (1), as amended by Ga. L. 1984, p. 516 (requiring complete compensation of the insured before the insurer could exercise its limited right of subrogation only if the tortfeasor was uninsured), see Southern Gen. Ins. Co. v. Cotton States Mut. Ins. Co., 193 Ga. App. 240 (387 SE2d 435) (1989).

 See OCGA § 33-7-11 (f).

 See Cherokee Ins. Co. v. Lewis, 187 Ga. App. 628 (1) (371 SE2d 103) (1988).

 Id.

 Brooks, 254 Ga. at 311-312.

 Porubiansky, 156 Ga. App. at 604.

 18 F3d at 836.