Johanson v. Cudahy Packing Co. , 107 Utah 114 ( 1944 )

Preliminary to setting forth my reasons for disagreeing with the decision of the court, let it be said that the result reached in the prevailing opinion accords with my views of what the law in the premises should be. From the standpoint of a legislator I can see no good reason why a third party wrongdoer should be able to point to the fact that a person injured by him was awarded compensation for the disability occasioned thereby, as a reason,under any set of circumstances, why he should not respond in full to such workman for the damage done. The law, in my opinion, should but protect him from responding more than once. Under the statute, the construction of which we are here called upon to make, it does that; but it also, in my opinion, results in giving control of the cause of action, where the workman elects to receive compensation, to the employer or insurance carrier. It results in the employer or insurance carrier becoming the real party in interest within the meaning of Section 104-3-1, U.C.A. 1943. The election by the employee divests him of any legal interest in the cause of action and leaves him but a conditional interest in any judgment entered in favor of the plaintiff.

The statute, Section 42-1-58, R.S.U. 1933, reads:

"When any injury for which compensation is payable under this title shall have been caused by the wrongful act of a third person, the injured employee, or in case of death his dependents, may at their option claim compensation under this title or have their action for damages against such third person; and, if compensation is claimed and awarded, the employer or insurance carrier having paid the compensation shall be subrogated to the rights of such employee or his dependents to recover against such third person; provided, if such recovery shall be in excess of the amount of the compensation awarded and paid, then such excess, less the reasonable expenses of the action, shall be paid to the employee or his dependents * * *."

Construction of this section is little aided, if at all, by any other section of Title 42, dealing with compensation, since it is the only one (except for subsection (5) of 42-1-42 defining "personal injury * * * arising out of or in the course of employment") which deals at all with a third party wrongdoer. Unless the section itself, or such section in the light of its historical background, sustains the construction given in the prevailing opinion; the meaning given it cannot look to butresses elsewhere in Title 42. The problem before us is to divine the intention of the legislature. I think its solution is not aided by summoning to our aid the provision of the Code of Civil Producure relative to the bringing of an action in the name of the real party in interest or that permitting the joinder as parties plaintiff of all persons having an interest in the subject of the action and in obtaining the relief demanded (Sec. 104-3-12, U.C.A. 1943). We must first determine whether the plaintiff here is after his election to take compensation, a real party in interest, or one having an interest in the subject of the action and in obtaining the relief demanded. I do not say that the prevailing opinion takes a different view of the matter. I but eliminate other provisions of the Code in approaching the problem of discovering the legislative intent.

Section 42-1-58, R.S.U. 1933, quoted above, voices three ideas expressed in three independent clauses of a single sentence. All have reference to a situation where an injury for which compensation is payable is caused by the wrongful act of a third person. The first idea expressed is that the injured workman, or in case of death his dependents, have an option to claim compensation or to have their action for damages against the wrongdoer. Without more, this clearly does not mean that the dependents may have both. They have a choice of one of the two courses open to them to recoup or partially recoup the pecuniary loss. No one, of course, would contend that the legislature meant that the dependents were given an option to pursue either one or both of the remedial courses.

The second idea expressed in the sentence has reference to what results upon one of the alternative remedies being chosen, to wit: if compensation is claimed and awarded. In such case, "the employer or insurance carrier * * * shall be subrogated to the rights of such employee or his dependents to recover against such third person." Upon the meaning of this clause depends, to my mind, the validity of the court's reasoning. They are construed, as I read the opinion, to mean that the employer or insurance carrier "is subrogated only to the extent that it has been required to pay compensation." This is not what the words of the statute quoted hereinabove say. They say that such person shall be subrogated to the rights of the employee or dependentsto recover against such third person. But the opinion adds the limitation by virtue of the use of the word "subrogation" in the second clause of the sentence which constitutes the section, and in light of the third clause. The latter is aproviso. It is to the effect that if in the action against the wrongdoer an amount is recovered in excess of the compensation awarded and paid, such excess, "less the reasonable expenses ofthe action, shall be paid to the employee or his dependents." (Italics supplied.)

Now it must be conceded that if the meaning of the second clause of the section is correctly found by the opinion of the court, the result reached relative to dependents being real parties in interest must follow. And this is so because by reading the limitation into such clause, we leave an interest inthe cause of action in the dependents; if, in fact, we do not leave the entire cause of action in the dependents, giving the subrogee but an interest in the resulting judgment. See insurance cases cited in the court's opinion. The result is that despite dependent's election not to sue they in effect "elect," as would any sensible person if given the right, to both sue and receive compensation.

I think such construction of the second clause untenable. In reaching its result the court errs in two particulars. It over-emphasizes the word "subrogated" and gives it too restricted a meaning; it under-emphasizes if, indeed, it does not disregard certain words in the third clause. The verb "subrogate" means "to put in the place of another; to substitute." Webster's New International Dictionary, Second Edition. It is the verb form "shall be subrogated" which is used in the statute. The clause means that the insurance carrier is put in the place of the employee or dependents as to any right of action against the wrongdoer. We are not aided in getting at the legislative intent by importing into the meaning of the vital phrase content from the doctrine of subrogation. Nor are cases dealing with statutes in which the limitation is expressed persuasive authority for reading the limitation into that here construed where it is not expressed. That the limitation should not be read into the statute is emphasized by the third clause — the proviso. It not only provides that the excess recovered, if any, be paid to the employee or his dependents — whereas, if such person or persons was or were parties plaintiff the judgment would be in his or their favor as well as in favor of the employer or insurance carrier and no one would be directed to pay them anything — but it also specifies that only the excess less the reasonable expenses of the action shall be so paid. This clearly indicates that someone other than those who are to receive the excess shall prosecute the action and that any judgment secured shall be in favor of such other; since if the dependents were the sole parties plaintiff they would be required to pay the costs, and if they were joint parties plaintiff they normally would pay their share thereof.

It is, then, the right to recover against the third party to which the employer or insurance carrier is subrogated and not the right to have the benefit of any judgment recovered up to the amount paid or awarded as compensation. And this is so simply because the statute says so, and we are aided in reaching the contrary by no legislative pronouncement, either express or implied. Indeed the statute of 1921, cited in the opinion of the court in connection with the discussion relative to assignability, left no room for doubt that it was the cause of action and not some part of it or a share of the recovery which had to be assigned to the employer or insurance carrier before compensation was payable. Hence, it cannot be argued that it would be unreasonable to ascribe to the legislature an intention to transfer to the employer or insurance carrier the cause of action under the present statute; and, clearly, the change in the structure of the section to its present form evidences no legislative intent to alter its meaning insofar as relates to the right or rights to which the payor of compensation succeeds.

On the former appeal, Johanson v. Cudahy Packing Co.,100 Utah 399, 115 P.2d 794, while there was diversity of opinion as to the assignability of the right suceeded to by the payor of compensation, this court was, it appears, unanimous as to the nature of the right. The right succeeded to was held to be the right to recover against the wrongdoer; the cause of action, which before exercise of the option rested in the employee or his dependents; and the whole thereof. See opinion of Mr. Justice Pratt at page 401 of 100 Utah, at page 795 of 115 P.2d, concurred in by Mr. Justice Moffat; opinion of Mr. Justice Wolfe at page 404, of 100 Utah, at page 796 of 115 P.2d; opinion of Mr. Justice Larson at page 405 of 100 Utah, at page 797 of 115 P.2d; dissenting opinion of the writer at page 409 and 410 of 100 Utah, at page 799 of 115 P.2d. And in Baker v.Wycoff, 95 Utah 199, 79 P.2d 77, a case involving construction of the statute here considered. Chief Justice Folland, voicing the unanimous opinion of the court, stated at page 206 of 95 Utah, at page 81 of 79 P.2d:

"Baker accepted compensation both before and after he became aware of the negligence of the physician. He must, therefore, be held to have elected to take compensation under the act. Any right of action he had passed, under the statute, to the insurance carrier, who was by law subrogated to the rights of the workman."

Cases in support are cited from other jurisdictions. True this pronouncement was made in response to the query: Has the insurance carrier the right to maintain the action? Hence whether the injured employee might be joined as a party plaintiff was not before the court. The injured employee commenced the action against the third party and the insurance carrier intervened. A demurrer to plaintiff's complaint was sustained by the trial court, evidently upon the theory that plaintiff was not a real party in interest. The insurance carrier was permitted to prosecute the action to judgment. The ruling on demurrer was not attacked by plaintiff on appeal. Hence, its correctness was not before this court. However, among the cases cited in support of the pronouncement is one from North Dakota which construes a statute which in substance is the same as ours, and in which the construction here contended for is made. Polucha v. Landes,60 N.D. 159, 233 N.W. 264. And see Vayda v. DeWitt et al.,261 Mich. 165, 246 N.W. 199 and Overbuk v. Nex, 261 Mich. 156, 246 N.W. 196, wherein the North Dakota case is discussed and a statute similar to ours is construed to the same effect.

While I dissent from the opinion of the court insofar as it construes 42-1-58 in such manner to leave some control of the cause of action in the employee or dependents after the claiming of compensation, and am of the opinion that the defendant's demurrer was properly sustained, I am in accord with it in other respects. I concur in the holding that the cause of action discussed is not assignable. That it is not was the ground of my dissent on the former appeal. I likewise concur in the construction of the words "wrongful act of a third person" as used in the statute, and in the holding relative to the bar of the statute of limitations. I am in accord with the conclusion reached by the opinion to the effect that payment of the total award by the insurance carrier is not a condition precedent to suit. Under the construction given in the opinion of the second clause of the section such payment obviously is not a condition precedent. For if it be the legislative intent that the dependents may sue in their own name; the insurance carrier being subrogated, not to the right of the dependents to recover against the third party, but merely to an interest in such right; then, of course, it was not the legislative intent to delay the bringing of the action by and in the name of the real party in interest until the total award be paid by the subrogee.

Nor am I convinced that under the construction herein advanced, payment of the total of the award must be alleged and proved by the payor of compensation. If it must, an incongruous result is brought about. Under such construction of the statute, no subrogation to the cause of action takes place until total payment. Yet such cause of action exists because the statute provides that the insurance carrier "having paid the compensation shall be subrogated to the rights of such employee or his dependents to recover against such third person." But before such provision becomes operative, the employee or dependents must have theretofore elected not to sue. The cause of action must then reside, between the date of the award and the time when payment thereof has been completed, in the one who so elected or be vagrant during such time. Because no subrogation takes place, no part or parcel of the right, no interest in the cause of action rests in the insurance carrier until total payment. But if we assert that under the statute the cause of action resides in the dependents because it has not yet been transferred by operation of law to the insurance carrier and in the same breath assert that by virtue of the exercise of their option to claim compensation they lost their right to sue the wrongdoer, we in effect state that they now possess a remedial right of which the exercise of their option heretofore deprived them. On the other hand, if we conceive of the remedial right, recognized by the law as being vested in the one or ones whose primary right has been invaded as wandering around, after the election of the dependents, in the ethereal void like a disembodied spirit seeking its permanent home, difficulties present themselves. Should the insurance carrier pay most of the award and then become financially unable to continue payments so as to preclude transfer of the cause of action to him, does the right revest, after the strange interlude, in those who elected not to exercise it, or is it merely extinguished by operation of the exercise of the option by the one and the failure to make payment of the total award by the other? And, query: Should the total compensation be ultimately paid, is the statute of limitations tolled during the interim between the exercise of the option and the vesting of the cause of action in the insurance carrier; that is, for the period during which no one could prosecute it?

By what is said above, I am not asserting that the legislature might not give an election to the one having a cause of action not to assert it and still make full payment of the award a condition to the exercise by the assignee or subrogee of the right to maintain such cause of action. But the scheme of the statute, in my opinion, is indicative of a contrary intention. I think the words "the employer or insurance carrier having paid the compensation" are clearly susceptible of the meaning "having made payment of compensation pursuant to the award." This I think not a forced construction in light of the provisions of the statutes dealing with payment of compensation, which contemplate weekly payments over a period of time, and in view of the context. The words quoted from the section are preceded, it will be noted, by the words "if compensation is claimed and awarded." In light of such words, a reasonable meaning of the clause is that if after a claim and award of compensation, the insurance carrier pays compensation in accordance with the terms of the award he becomes vested with the right theretofore residing in the employee or dependents.