A basic tenet of law is that when one party is injured by another party the innocent party is entitled to be "made whole." This concept in its simplest terms means that the innocent party should be awarded damages sufficient to put the innocent party back in the position it was in before the injury occurred. Often, the innocent party has insurance which will provide compensation to the innocent party until a recovery from the wrongful party can be obtained. The insurance company holds what is called a "right of subrogation" to any funds the innocent party receives from the wrongful party—a concept entitled to prevent the innocent party from double recovery (i.e., recovery from both the insurance company and the wrongful party).

In the case of Armstrong and Hill v. Miss. Farm Bureau Ins. Co., Armstrong and Hill were both injured in an automobile accident. Farm Bureau made payments to Armstrong and Hill under an insurance policy. Armstrong and Hill sued the negligent party and obtained a judgment which they collected from the negligent party. Farm Bureau took the position that it was entitled to receive the funds the negligent party had paid pursuant to Farm Bureau’s right of subrogation. Conversely, Armstrong and Hill took the position that Farm Bureau was not entitled to the money because their damages were higher than what they had been awarded by the jury in the trial and, therefore, they were not "made whole."

In a case of first impression, the Mississippi Supreme Court decided what "made whole" means in a factual setting of this kind. The Court ruled that the jury had decided what dollar amount of damages were necessary to make Armstrong and Hill "whole" when the verdict was rendered. Since it was a jury verdict, Armstrong and Hill could not contend that their damages were higher and re-litigate the issue with Farm Bureau. Thus, since Farm Bureau had already paid Armstrong and Hill, Farm Bureau was entitled to the funds paid by the negligent party.

This decision still leaves unanswered what would happen if the insurance company pays more than the jury awards. We’ll have to await that answer for another Court ruling.

The Mississippi Supreme Court recently made it unmistakably clear that a contractual indemnity provision cannot exceed the limitations set in Miss. Code Ann. § 31-4-41 which provides:

With respect to all public or private contracts or agreements, for construction, alteration, repair or maintenance of buildings, structures, highway bridges, viaducts, water, sewer or gas distribution systems, or other work dealing with construction, or for any moving, demolition or excavation connected therewith, every covenant, promise and/or agreement contained therein to indemnify or hold harmless another person from that person’s own negligence is void as against public policy and wholly unenforceable.


This section does not apply to construction bonds or insurance contracts or agreements.

(Emphasis added.)

In this recent decision, the Court considered an indemnity provision in a Shipyard Agreement. The Court found the statute unambiguous and concluded that to the extent that the indemnity provision sought to indemnify one party for its own negligence the provision was void. The Court further held that this defense can be preserved by setting forth the defense that plaintiff failed to state a claim upon which relief can be granted pursuant to Miss. R. Civ. P. 12(b)(6).

Remember to read your contract and carefully consider the language of any indemnity provision when you sign the contract and again if you become involved in litigation. Depending upon the particular circumstances, you might even consider purchasing additional insurance coverage of your own for adequate protection.