Barrett v. Indemnity Insurance Co. of North America

On March 28th, 1923, John Edgar Shilling, whilst in the employ of the Pen Mar Company, was killed in an accident which arose out of and in the course of that employment under circumstances which created a legal liability in Clough Maloy, Inc. Compensation was claimed under article 101, C.P.G.L. of Md., by Effie Shilling, his widow, for herself and her infant children, and the State Industrial Accident Commission, on March 4th, 1923, entered an award directing the Indemnity Insurance Company of North America, the insurer, to pay compensation to the claimant at the rate of $18 per week for 277-7/9 weeks, and a sum not to exceed $125 for funeral expenses incurred by the claimant in connection with the death of the said John E. Shilling. The insurer acquiesced in that award and made payments thereunder as they accrued. The insurer having advised the claimant that in its opinion the death of Shilling did not occur under circumstances creating a legal liability in Clough Maloy, Inc., or in any person other than his employer, and having failed and refused to proceed against Clough Maloy, Inc., to enforce any such supposed liability, she employed Franklin P. Barrett, an attorney at law, practicing his profession in the courts of Baltimore City, to institute on her behalf and on behalf of the infant children of the decedent proceedings against Clough Maloy, Inc., to recover such damages as they and the insurer were entitled to recover from it by reason of the death of the said John Edgar Shilling. Thereupon, Barrett, with certain other attorneys whom he associated with him, with the knowledge and acquiescence of the insurer, instituted in the Superior Court of Baltimore City an action at law for the use of the said Effie Shilling, and the infant children of the decedent, and as well for the use of the insurer, to recover such damages, which resulted in a verdict and judgment for the plaintiffs for $15,000 apportioned as follows:

To the Indemnity Insurance Company of North
America ......................................  $5,125
To Effie Shilling, widow .......................   5,000
To Ruth E. Shilling, infant ....................     500
To Dorothy M. Shilling, infant .................     875
To John Walter Shilling, infant ................   1,500
To Edith May Shilling, infant ..................   2,000

That judgment was affirmed on appeal, and was paid. Mr. Barrett, who with his associates conducted the entire proceedings for the plaintiffs under his contract with Mrs. Shilling, collected from her as compensation for his services one-third of the amount paid to her under the judgment, and then demanded that the insurer also pay him a fee for recovering for it the sum of $5,125, which it, under the award of the State Industrial Accident Commission, was obliged to pay to Mrs. Shilling, and upon its refusal to make such payment he brought this suit against the insurer. The plaintiff in his narr., in addition to these facts, alleged "that by reason of the services so rendered by him to the defendant and accepted by it, he was and is entitled to claim and have of the defendant compensation for his services in such amount as the said services may be fairly and reasonably worth, and he has demanded the same, but the defendant has refused to recognize any obligation to the plaintiff, and has refused his demands." A demurrer to that narr. was overruled, and the case finally proceeded to trial on an agreed statement of facts. The only material difference between the statement of fact contained in the narr., and the facts agreed upon by the parties, was that the narr. alleged that plaintiff's services were "accepted" by the defendant, whereas no such fact is found in the agreed statement. At the close of the case and upon the agreed statement of fact, the court instructed the jury that there was no evidence in the case legally sufficient to entitle the plaintiff to recover, and that their verdict should be for the defendant. A verdict was accordingly returned for the defendant, and from the judgment thereon this appeal was taken.

The only exception contained in the record was taken to the action of the court in directing a verdict for the defendant, and the question which it presents is whether there is any legal obligation upon the appellee, the insurer, to pay any part of the appellant's fee for his services in conducting the litigation which resulted in the payment of $5,125 to the appellee, to reimburse it for the liability imposed upon it by the award of the State Industrial Accident Commission.

The appellant's contention, as we understand it, is that since, through the services rendered by Barrett as the attorney for Mrs. Shilling and the infant children of John Edgar Shilling, the appellee received $5,125 to reimburse it for the liability imposed upon it by the award of the State Industrial Accident Commission, it is bound to pay the appellant a proportionate part of what such services were reasonably worth, based upon the ratio which the amount paid appellee bears to the whole amount of the judgment, and he asserts that it is liable for such payment on any one of three theories: (1) that there was a quasi contract; (2) that there was an implied contract, and (3) that there was an express contract between the parties under which appellant undertook to make such payment.

At first glance natural justice would seem to support the plaintiff's claim, whatever his legal rights may be, but a more careful examination of the evidence corrects that impression.

Mrs. Shilling and her children had, through the death of her husband, suffered a loss of $15,000, of which amount the insurer was bound under the award to pay $5,125, and while she and her children only received $9,875 under the judgment against Clough Maloy, Inc., nevertheless from both sources she and her children received either in cash or its equivalent the full amount of the loss they had sustained, to wit, the sum of $15,000. If she had elected not to claim compensation under article 101, C.P.G.L. of Md., but to proceed against Clough Maloy, Inc., under article 67, C.P.G.L. of Md. in the first place, she would naturally have been required to pay all counsel fees incurred in the prosecution of such suit. And if in establishing her claim under article 101, Bagby's Code, she had employed counsel, she and not the employer or insurer would have been liable for his fees. But she had not, so far as the record discloses, been obliged to pay any counsel fees for the establishment of her claim for compensation against the insurer, and there is no more apparent reason why it should be required to pay her, in addition to compensation, counsel fees for recovering for its use and to reimburse it for an award which it had paid or was obliged to pay her, than there would have been for requiring it to pay her counsel fees incurred in establishing her claim before the commission, or in a court of law. She recovered for herself and her children in two proceedings the total amount of their loss, and she alone was responsible for all counsel fees incurred in effecting such recovery. It may be urged, however, since the services of her counsel resulted in reimbursing the insurer for the loss which accrued to it through the award of the State Industrial Accident Commission, that it should pay the reasonable value of such services in so far as they contributed to the recovery of such amount. The fallacy of that contention lies in the fact, already stated, that if the claim is made on behalf of Mrs. Shilling, there is no just reason why the insurer should pay her counsel fees in addition to the award, because the litigation which she instituted was not brought to recover the amount of the award which it was obliged to pay, but to recover for her use and that of her children an amount which she claimed Clough Maloy, Inc., ought to pay, over and above the award, and the recovery of $5,125 for the insurer was a necessary incident of that suit, which she could not control. The action against Clough Maloy, Inc., was not a cumulative remedy, independent of her right to compensation under the Workmen's Compensation Act, but one arising under the statute and governed by its provisions. The statute gave Mrs. Shilling the right to elect whether she would proceed at law against the tort feasor to recover damages, or against the employer to recover compensation under article 101, C.P.G.L. of Md., but except in the manner provided by the statute she could not do both. And when she claimed and received compensation from the employer and the insurer, she could thereafter proceed only against the intervening tort feasor, whose act caused the death of her husband in compliance with the terms of the statute, Stark v.Gripp, 150 Md. 655. In that respect section 58 of the statute, as construed by this court in Bethlehem Steel Company v. RaymondConcrete Pile Co., 141 Md. 87, was not changed by chapter 456 of the Acts of 1920, or chapter 303 of the Acts of 1922, but it creates a special statutory remedy, and the rights of all persons affected by the proceedings are, so far as they are applicable, measured and limited by the terms of the statute. Prior to the Act of 1920, one claiming compensation from an employer could not proceed at all against other persons, but the right to enforce any legal liability against other persons for torts resulting in the injury or death of the workman was vested exclusively in the employer or insurer (Bethlehem Steel Co. v. Raymond ConcretePile Co., supra), and the damages recovered in any such proceedings in excess of the compensation already paid or awarded were payable to the injured employee or his dependents less the employer's "expenses and costs of action." Considering this language and also the purpose of the original act, as stated in the preamble thereto, the obvious intention of the Legislature was that the injured employee or his dependents should not receive any part of the damages recovered in a proceeding brought to enforce a legal liability in some person other than the employer, until the employer or the insurer had been reimbursed for all sums paid under the award against them or either of them, including payments for medical and surgical services and funeral expenses, and the "employer's expenses and costs of action" had been paid.

In our opinion, therefore, the appellee was not obliged to contribute to the counsel fees incurred by Mrs. Shilling in the institution and prosecution of the proceeding against Clough Maloy, Inc. But this suit is not brought by Mrs. Shilling, but by Barrett, her attorney, and even if the appellee were obliged to contribute to the expenses incurred by her for counsel whom she employed, Barrett, her attorney, would have no right to enforce that obligation in his own name, and we have only discussed the question of her rights because she is the only possible source of any rights which Barrett may have for compensation for his services in connection with the litigation. It is true he alleges that he had an express contract with the appellee for compensation, but not only is there no evidence of any such contract in the record, but in his brief he states: "The widow and her children, through Barrett, then assumed the entire burden of prosecuting the claim and consequent litigation against Clough Maloy, Inc." And in the agreed statement of fact the parties have agreed that the appellee refused to proceed against Clough Maloy, Inc., and that Mrs. Shilling, after that refusal, employed Mr. Barrett to conduct the proceedings. It is also agreed that the proceeding was instituted and prosecuted with the knowledge and acquiescence of the appellee, and appellant attaches some importance to that fact, but it is wholly without significance, when it is considered that under the statute the appellee could do no less than "acquiesce" in the institution of the proceedings. Since it had refused to bring the action, Mrs. Shilling had the right at the proper time to institute it with or without appellee's consent, and its mere acquiescence in her exercise of an absolute statutory right, which rested upon its positive refusal to bring the action, cannot well be regarded as equivalent to a promise to pay her counsel whom she had employed to assert her rights. Any other construction of the statute would lead to an absurdity, for although it gives the employer or insurer the option of suing or not, that right would not mean much if, willing or unwilling, he could be required to pay counsel, employed by the injured employee or his dependents, for services rendered in prosecuting actions against third persons, in whom there was a legal liability for such injuries. For even if the employer could only be required to pay for such services if the "legal liability" were established, the judgment might be worthless, or the damages might be insufficient to pay the fair value of such services, and in addition to the award, the employer would be obliged to pay additional sums for the services of counsel whom he did not employ in a proceeding brought against his wishes. There is, therefore, no evidence in the case of any express contract between the parties to this appeal.

Nor is there in the case any evidence from which a contract between the parties can be implied. Appellant seeks to draw that implication from the fact that appellee acquiesced in his employment and accepted the fruit of his labors, but the "acquiescence" referred to was failing to protest against the institution of a proceeding which under the statute Mrs. Shilling concededly had the right to bring, and its "acceptance" was no more than receiving the sum which the statute allotted to it. Such facts have no apparent relation to the rule that where one acquiesces in services rendered him by another, and knows or should know that the person rendering such services expects compensation, and where he accepts the benefit of such services, a contract to make such payment will be implied, for in this case the "acquiescence and the acceptance," relied upon to raise the implication, rested not upon any affirmative acts of the appellee, but upon the statute, and were conditions imposed upon the right of the dependents of John Edgar Shilling to recover at all against the tort feasor.

It is suggested that in some way the doctrine of subrogation should apply to the facts of this case, because section 58 is a "subrogation" section, but the reasons for that contention are not convincing. The section merely gives first to the employer and then to the employee or his dependents the right to enforce a legal liability against a third person, and to the extent of his interest therein it subrogates the employer to the rights of the workman or his dependents against the tort feasor, but it did not subrogate Mrs. Shilling to the appellee's right to proceed against the tort feasor, for while appellee paid a part of the compensation which Clough Maloy, Inc., ought to have paid, no such payment was made by Mrs. Shilling. But even if she was subrogated to the right of the insurer to proceed against Clough Maloy, Inc., certainly her attorney, who had no relation to the cause or the parties at all, except to conduct the litigation, was not.

Nor have we been able to discover the elements of a quasi contract between appellant and appellee. Such benefits as appellee received were primarily conferred by the statute, and so far as they were realized through the litigation they must be attributed to Mrs. Shilling, who instituted the proceedings, and not to the agents or attorneys whom she employed to conduct it.

Finally it is said that Mrs. Shilling was the statutory agent of the appellee to employ counsel, but that contention is without force, for while her right to bring the action was contingent and conditional, nevertheless, when the conditions were performed and the contingency occurred, her right was independent and complete, and she was no more appellee's agent to employ counsel than she was to bind him for costs.

Finding no error in the ruling of the court in granting defendant's prayer, the judgment will be affirmed.

Judgment affirmed, with costs.