Alexander v. Creel

• Decision Date: 16 February 1944
• Docket Number: No. 3097.,3097.
• Citation: 54 F. Supp. 652
• Parties: ALEXANDER v. CREEL.
• Court: U.S. District Court — Western District of Michigan

54 F. Supp. 652

ALEXANDER v.CREEL.

No. 3097.

District Court, E. D. Michigan, S. D.

February 16, 1944.

Yerkes, Goddard & McClintock, of Detroit, Mich., for plaintiff.

Ernest P. LaJoie, of Detroit, Mich., for defendant.

LEDERLE, District Judge.

This is a common law action for damages for personal injuries received by plaintiff, Dale Alexander, in a fall on the steps of a hotel operated by defendant, Lyle Creel, at Coldwater, Michigan, while plaintiff was a guest there.Plaintiff is a citizen of Indiana, where he now resides and is employed.Defendant is a citizen of Michigan.The matter in controversy exceeds $3,000, the jury having returned a verdict for plaintiff in the amount of $6,500.Consequently, this court has jurisdiction by virtue of diverse citizenship and amount involved, under 28 U.S.C.A. § 41(1).

At the close of the proofs, defendant moved for a directed verdict, which was overruled.Within ten days after reception of the verdict, in accordance with Rule 50 (b),Rules of Civil Procedure,28 U.S.C.A.followingsection 723c, defendant moved to have the verdict and judgment thereon set aside and to have judgment of no cause of action entered in accordance with his motion for directed verdict, coupled with an alternative motion for new trial.All of the reasons assigned in these motions have been fully considered.They are all without merit, except that the verdict and judgment are contrary to the law of the case.

One of defendant's affirmative defenses is that plaintiff is not the real party in interest for the reason that prior to institution of this suit this cause of action was assigned to plaintiff's former employer, Cream Top Bottle Corporation, of Albany, New York, or its insurer, Hartford Accident Indemnity Insurance Company, of New York City by virtue of plaintiff's acceptance of compensation under a New York award entered more than six months before institution of this suit and more than one year after the cause of action arose, in accordance with Section 29 of the New York Workmen's Compensation Act, Consol. LawsN.Y. c. 67, which provides:

"1.If an employee entitled to compensation under this chapter be injured * * * by the negligence or wrong of another not in the same employ, such injured employee * * * need not elect whether to take compensation under this chapter or to pursue his remedy against such other but may take such compensation and at any time either prior thereto or within six months after the awarding of compensation, pursue his remedy against such other subject to the provisions of this section.If such injured employee * * * take or intend to take compensation under this chapter and desire to bring action against such other, such action must be commenced not later than six months after the awarding of compensation and in any event before the expiration of one year from the date such action accrues.In such case * * * the person, association, corporation or insurance carrier liable for the payment of such compensation, as the case may be, shall have a lien on the proceeds of any recovery from such other, whether by judgment, settlement or otherwise, after deduction of the reasonable and necessary expenditures, including attorney's fees, incurred in effecting such recovery, to the extent of the total amount of compensation awarded under * * * this chapter for such case and the expenses for medical treatment paid by it and to such extent such recovery shall be deemed for the benefit of such * * * person, association, corporation or carrier.Notice of the commencement of such action shall be given within thirty days thereafter to the Commissioner, the employer and the insurance carrier upon a form prescribed by the commissioner."

"2.If such injured employee * * * has taken compensation under this chapter but has failed to commence action against such other within the time limited therefor by subdivision one, such failure shall operate as an assignment of the cause of action against such other * * * to the person, association, corporation, or insurance carrier liable for the payment of such compensation.If such * * * person, association, corporation or carrier, as such an assignee, recover from the other, either by judgment, settlement or otherwise, a sum in excess of the total amount of compensation awarded to such injured employee * * * and the expenses for medical treatment paid by it, together with the reasonable and necessary expenditures incurred in effecting such recovery, it shall forthwith pay to such injured employee * * * two-thirds of such excess, and to the extent of two-thirds of any such excess such recovery shall be deemed for the benefit of such employee * * *."

Plaintiff's injury occurred on July 14, 1939.This suit was instituted on December 12, 1941.Defendant offered in evidence the deposition of the Clerk of the New York Department of Labor, Division of Workmen's Compensation, showing that on June 28, 1940, plaintiff filed a claim for compensation for these injuries from his then-employer, Cream Top Bottle Corporation, of Albany, New York, for whom he was employed as a travelling salesman at the time of his injury; that the claim was contested by the employer and its compensation insurer, Hartford Accident Indemnity Insurance Company, of New York City; that on April 11, 1941, an award was made, awarding plaintiff approximately $3,000 for compensation, attorney fees and medical expenses; that an appeal was taken, but abandoned, and on October 7, 1941, this award was paid in full by the insurance carrier; that plaintiff never filed the statutory notice showing that he had notified the Commissioner, his employer or its insurance carrier of the institution of suit against this defendant.

Plaintiff conceded that this deposition disclosed the true situation, but objected to the proffer, and the testimony was not presented to the jury for the reason that it raised a pure question of law under defendant's special plea.

Defendant's various contentions can be analyzed as follows:

(I) That the maintenance of a common law action by an injured employee after acceptance of compensation is contrary to the public policy of Michigan as expressed in its Compensation Act, Comp.Laws Mich. 1929, § 8407 et seq., which requires an injured employee to elect whether he will accept compensation under the Act or sue the third person responsible for his injuries, his election to accept compensation operating to vest in his employer title to the cause of action against the third person, in which event recovery by the employer is limited to the amount of compensation paid;

(II)That plaintiff is not the real party in interest for the reason that his acceptance of compensation under the New York Act, combined with his failure to institute this suit within one year after this cause of action arose or within six months after the compensation award, operated to assign this cause of action to the compensation insurer by virtue of Section 29 of the New York Act, quoted above; and

(III)That said Section 29 of the New York Act is a statute of limitations, which limits the time for instituting suit on this cause of action to six months after the compensation award.

Plaintiff correctly contends that the Michigan Compensation Act is optional and applies only where both the employer and employee have accepted such act, and, as neither plaintiff nor his employer accepted it, its provisions are not controlling, and would not, of themselves, bar recovery where the employee had accepted compensation under some other act.Ford v. Kuehne, 1928, 242 Mich. 428, 219 N.W. 680;Quick v. Western Michigan Transp. Co., 1940, 294 Mich. 402, 293 N.W. 696.

This leaves only the determination of the legal effect to be given the New York Compensation Act by this federal court sitting in Michigan, trying a Michigan common law action for damages for injuries received by plaintiff in this state as a result of defendant's negligence, which action was instituted after plaintiff had accepted compensation under the New York Act.

Because the case relied on by defendant, Moore v. Hechinger, 1942, 75 U.S.App.D.C. 391, 127 F.2d 746, involving compensation and third-party suit within the District of Columbia, is not the complete answer to this phase of our problem, it appears appropriate that an explanation be made of the reasoning by which a decision for defendant has been reached.

Plaintiff has contended flatly throughout this proceeding that the New York statute has no force or effect on this cause of action, and should be disregarded, citing excerpts from the following cases as supporting his position: Solomon v. Call, 1932, 159 Va. 625, 166 S.E. 467;Reutenik v. Gibson Packing Co., 1924, 132 Wash. 108, 231 P. 773, 37 A.L.R. 830;Personius v. Asbury Transp. Co., 1936, 152 Or. 286, 53 P.2d 1065;Betts v. Southern R. Co., 4 Cir., 1934, 71 F.2d 787;Saloshin v. Houle, 1941, 85 N.H. 126, 155 A. 47;Scott v. Missouri Pac. R. Co., 1933, 333 Mo. 374, 62 S.W.2d 834;Rorvik v. North Pac. Lbr. Co., 1921, 99 Or. 58, 190 P. 331, 195 P. 163;Gilbert v. Des Lauriers Column Mould Co., 180 App.Div. 59, 167 N.Y.S. 274;Bernard v. Jennings, 1932, 209 Wis. 116, 244 N.W. 589.

As was stated in Maki v. George R. Cooke, 6 Cir., 1942, 124 F.2d 663, 664, 146 A.L.R. 1352, certiorari denied316 U.S. 686, 62 S.Ct. 1274, 86 L.Ed. 1758:

"We are cognizant of the doctrine that in diversity of citizenship cases, the rules of conflict of laws which govern are the rules of the state in which the Federal Court sits.Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L. Ed. 1477;Griffin v. McCoach, 313 U.S. 498, 61 S.Ct. 1023, 85 L.Ed. 1481, 134 A.L.R. 1462.But we have been pointed to no opinions of Michigan courts which erect signposts to appropriate decision of the instant case."

However, an independent search of the authorities has revealed signposts in Michigan and other opinions, hereinafter referred to,...