Standard Surety & Cas. Co. v. Standard Acc. Ins. Co.

• Decision Date: 10 July 1939
• Docket Number: No. 11409.,11409.
• Court: U.S. Court of Appeals — Eighth Circuit
• Parties: STANDARD SURETY & CASUALTY CO. OF NEW YORK v. STANDARD ACC. INS. CO.

104 F.2d 492 (1939)

STANDARD SURETY & CASUALTY CO. OF NEW YORK v. STANDARD ACC. INS. CO.

No. 11409.

Circuit Court of Appeals, Eighth Circuit.

June 19, 1939.

Rehearing Denied July 10, 1939.

Douglas Stripp, of Kansas City, Mo. (E. R. Morrison and Homer H. Berger, both of Kansas City, Mo., Hobart R. Marvin, of New York City, and Morrison, Nugent, Berger, Byers & Johns, of Kansas City, Mo., on the brief), for appellant.

Charles E. Whittaker, of Kansas City, Mo. (Henry N. Ess and Watson, Ess, Groner, Barnett & Whittaker, all of Kansas City, Mo., on the brief), for appellee.

Before SANBORN and THOMAS, Circuit Judges, and SULLIVAN, District Judge.

SANBORN, Circuit Judge.

This appeal is from a decree of the United States District Court for the Western District of Missouri requiring the appellant to reimburse the appellee for workmen's compensation which the appellee paid to the dependents of a deceased employee of the Western Terra Cotta Company under a judgment of the District Court of Wyandotte County, Kansas, entered in a proceeding brought under the Workmen's Compensation Law of Kansas, Gen.St.Kan.1935, 44-501 et seq.; and requiring the appellant to assume liability for the unpaid future installments of compensation provided for in the judgment.

The facts are not in dispute. The Western Terra Cotta Company, at all times which are here material, was an employer subject to the Workmen's Compensation Law of Kansas. The appellant and the appellee were casualty companies licensed to write Workmen's Compensation liability insurance in that State. The appellee insured the employer against such liability incurred in the year 1934. The appellant insured it for the year 1936. The policy issued by the appellee covering the year 1934 was in exactly the same form as that issued by the appellant covering the year 1936. Joe Evans was employed by the Western Terra Cotta Company in Kansas during the years 1934, 1935, and up to May 5, 1936, at which time he suffered a strangulation of a previously existing hernia. He was taken to a hospital, and died on May 16, 1936, after an operation. The appellant was promptly notified of Evans' death, and employed a doctor to make for it a copy of the hospital record with respect to his last illness. On June 23, 1936, Susie Evans, the widow of Joe Evans, filed with the Commissioner of Workmen's Compensation for the State of Kansas a claim for compensation, in which she asserted that Joe Evans' death resulted from a compensable injury received by him in September, 1934. This claim named the employer as respondent. The Commissioner included as an additional respondent the appellee, the insurer of the employer's liability for 1934. In July, 1936, a hearing upon the claim was had before the Commissioner. The appellee assumed the defense. The appellant had a representative present at the hearing, but did not participate in it. The Commissioner determined that Joe Evans had not sustained a compensable injury in 1934, and denied the claim. On appeal to the District Court of Wyandotte County, Kansas, a judgment was entered determining, in effect, that Evans had sustained a compensable injury on May 5, 1936, resulting in his death on May 16, 1936. This judgment awarded to his dependents, Susie Evans, Raymond Evans and John Evans, funeral and medical expenses of $399.95, and the further sum of $4,000 as compensation for his death, payable in installments of $16.41 a week from May 16, 1936. An appeal from this judgment was taken to the Supreme Court of Kansas by the employer and the appellee, and that court affirmed. Evans v. Western Terra Cotta Co. et al., 145 Kan. 924, 67 P.2d 426. With respect to the liability of the appellee, the court said, 67 P.2d at page 428: "The appellant insurance carrier the appellee here in this court contends that it was the insurance carrier in September, 1934, but was not the insurance carrier in May, 1936; hence that it is not liable for any accidental injury at the later date. We are unable to find from the record that this question was mentioned either before the compensation commissioner or the trial court. The insurance carrier appeared before the commissioner and before the trial court without any suggestion that it was not liable. It is too late to raise the question here. In fact, we know nothing about it except what appellants now tell us in their briefs." The appellant had been invited by the appellee to participate and assist in the presentation of the appeal to the Supreme Court of Kansas, but the invitation was not accepted. Under threat of execution, the appellee paid to the dependents of Evans what the judgment required should be paid. It also expended $246.95 in prosecuting the appeal to the Supreme Court of Kansas. Unless relieved from its liability to the dependents of Joe Evans, the appellee will have to pay the balance of the judgment.

Upon these facts, the court below concluded: (1) That the appellee was not, in equity, primarily and ultimately liable for the compensation awarded to the dependents of Evans on account of his death resulting from an accident sustained on May 5, 1936, and that the appellant was liable in equity for such compensation and ought to pay it; (2) that the appellee was subrogated to the rights of the dependents of Evans against the appellant and was also subrogated to the right of the employer to be indemnified by the appellant against the liability imposed by law upon the employer for the death of Evans; (3) that the appellee, having paid, under compulsion, $2,632.51, including $246.95, the cost of prosecuting an appeal to the Supreme Court of Kansas, was entitled to judgment for $2,632.51 against the appellant and to a decree requiring the appellant to pay all future installments of compensation provided for in the judgment of the District Court of Wyandotte County as they fall due.

The appellant contends that the judgment and decree of the court below is erroneous because: (1) The appellee failed to prove that it had a superior equity entitling it to subrogation. (2) It had merely discharged its own primary obligation. (3) It has not satisfied the debt to the dependents of Evans in full. (4) The judgment of the District Court of Wyandotte County, Kansas, is res judicata between these parties and cannot be collaterally attacked. (5) The expenditures of the appellee in prosecuting the appeal to the Supreme Court of Kansas may not be charged to the appellant.

The argument of the appellant is based upon two erroneous assumptions: First, that the determination by the District Court of Wyandotte County that Joe Evans died as the result of a compensable injury sustained in 1936 is not binding upon the appellant; and, second, that the determination of that court that the appellee was liable to the dependents of Joe Evans constituted an adjudication binding upon the parties to this suit that the appellee was, and the appellant was not, primarily obligated to pay the claim upon which the judgment was based.

The determination by the State Court that Joe Evans died as the result of a compensable injury sustained in 1936 is binding upon the appellant. Its policy provided: "As between the employee and the Company the appellant, notice to or knowledge of this Employer of any injury or death covered hereby shall be notice or knowledge as the case may be of the Company; the jurisdiction of this Employer for the purposes of any Workmen's Compensation Law covered hereby shall be jurisdiction of the Company and the Company shall in all things be bound by and subject to the findings, judgments, awards, decrees, orders or decisions rendered against this Employer in the form and manner provided by such laws and within the terms, limitations and provisions of this Policy not inconsistent with such laws." This provision of the contract is in accord with the Kansas Workmen's Compensation Law, which provides (G.S. Kansas 1935, Art. 5, 44-559): "Every policy of insurance against liability under this act shall be in accordance with the provisions of this act and shall be in a form approved by the commissioner of insurance. Such policy shall contain an agreement that the insurer accepts all of the provisions of this act, that the same may be enforced by any person entitled to any rights under this act as well as by the employer, that the insurer shall be a party to all agreements or proceedings under this act, and his appearance may be entered therein and jurisdiction over his person may be obtained as in this act provided, and such covenants shall be enforceable notwithstanding any default of the employer. (L.1927, ch. 232, § 56; June 30.)" Therefore, in the proceedings brought by Susie Evans, the widow of Joe Evans, before the Commissioner of Workmen's Compensation, the appellant was as much a party as though expressly named therein, and was bound by the final judgment entered in those proceedings.

In Murphy v. Continental Casualty Co., 134 Kan. 455, 7 P.2d 84, 85, the Supreme Court of Kansas said: "We note this statute 44-559 requires the policy to contain an agreement `that the same may be enforced by any person entitled to any rights under this act as well as by the employer'; hence the provision authorizing an injured workman, or his dependents, to proceed directly against the insurance carrier is required to be in all policies of this character. The statute further provides `that the insurer shall be a party to all agreements or proceedings under this act'; hence is a party to the proceedings before the compensation commissioner." Also see and compare, Gust v. Provident Life & Acc. Ins. Co., 136 Kan. 88, 12 P.2d 831; Samson v. United States Fidelity & Guaranty Co., 131 Kan. 59, 289 P. 427; Lovejoy v. Murray, 70 U.S. 1, 10, 3 Wall. 1, 10, 18 L.Ed. 129; International Indemnity Co. v. Steil, 8 Cir., 30 F.2d 654, 655; Kramer v. Morgan, 2 Cir., 85 F.2d 96, 97; B. Roth Tool Co. v. New Amsterdam Casualty Co., 8 Cir., 161 F. 709; Rhymer...