Cole v. Morris

• Decision Date: 30 December 1966
• Docket Number: No. 51832,No. 1,51832,1
• Citation: 409 S.W.2d 668
• Parties: Sylvester COLE, Respondent, v. M.E. MORRIS, Treasurer of the State of Missouri, as Custodian of the Second Injury Fund, Appellant
• Court: Missouri Supreme Court

Page 668

409 S.W.2d 668

Sylvester COLE, Respondent, v. M.E. MORRIS, Treasurer of the State of Missouri, as Custodian of the Second Injury Fund, Appellant.

No. 51832.

Supreme Court of Missouri, Division No. 1.

Dec. 30, 1966.

Max M. Librach, St. Louis, for respondent.

Norman H. Anderson, Atty. Gen., Jefferson City, Irving L. Cooper, Special Asst. Atty. Gen., Clayton, for appellant.

HENLEY, Judge.

This is an appeal by the Treasurer of the State of Missouri, custodian of the Second Injury Fund, from a judgment of the circuit court of the City of St. Louis sustaining an award of The Industrial Commission of Missouri.

This court has jurisdiction for the reason that a state officer as such is a party. Article V. § 3, Constitution of Missouri, V.A.M.S.; Stewart v. Johnson, Mo., 398 S.W.2d 850(1); Grant v. Neal, Mo., 381 S.W.2d 838(3).

Respondent was employed by the General Tire Company as a truck driver. On the morning of January 6, 1961, while making a service call in his employer's behalf, he was involved in a collision between his employer's truck being operated by him and a truck of Armour Packing Company. As a result of the collision he sustained an injury to his back. His claim for workmen's compensation against his employer and its insurer was compromised and settled, leaving pending his claim against the Second Injury Fund; Consequently, we are concerned only with his claim against the Fund. While the claim was pending before the Referee, respondent settled his separate action for damages against the third party tort-feasor, Armour Packing Company, for $18,600. His total expense in recovering that sum from Armour was $6,341.50, leaving a net recovery of $12,258.50.

As a part of its final award to respondent on his claim against the Fund, the Commission made additional findings of fact and conclusions of law; (1) that as a direct result of the accident respondent sustained a 40% permanent partial disability of the body as a whole; (2) that prior to the accident respondent had an existing permanent partial disability equal to 30% of the body as a whole; and (3) that the previous disability and the disability from the last injury combined resulted in permanent total disability. The final award was that appellant pay respondent 140 weeks of compensation at the rate of $40 per week beginning February 4, 1964, and thereafter a pension of $27.50 per week for life.

Appellant contended before the Commission that the Second Injury Fund was entitled to be subrogated to the rights of respondent against the third party tort-feasor and credit on the award against the Fund of the amount respondent recovered from the third party. This contention, denied by the Commission and the denial sustained by the circuit court, constitutes appellant's first point relied on as error.

This precise question has not been ruled by an appellate court of this state. The authorities cited by appellant and respondent are, for the most part, far afield of and shed little light on the question for decision; the briefs are of little or no help to us. The decisions we find in other jurisdictions are not in agreement; however the weight of authority and the better reasoned opinions lead toward a conclusion that the Fund is entitled to subrogation.

Respondent contends that the Fund is not entitled to credit on the award against it, because the statutes (§§ 287.150 and 287.220 RSMo 1959, V.A.M.S.) do not give the Fund the right of subrogation; that § 287.220, providing for payments from the Fund, and other sections in chapter 287, creating the Fund, do not authorize credit to the Fund of any amount recovered by an employee from a third party tort-feasor. There is no specific mention of a right of subrogation to the Fund in those sections. Nor does § 287.150, providing for subrogation of the employer to the rights of the employee against third party tort-feasors, authorize subrogation of the Fund to rights of the employee against third parties except for rehabilitation benefits paid the employee pursuant to subsection 3 of § 287.141.

If we are confined to the subrogation section of the statutes (§ 287.150) for authority for crediting the Fund with the amount recovered by respondent from the third party, then obviously the Fund is not entitled to the credit claimed by appellant. But, are we confined to the statute? We think not.

'Subrogation is founded on principles of justice and equity, and its operation is governed by principles of equity. It rests on the principle that substantial justice should be attained regardless of form, that is, its basis is the doing of complete, essential, and perfect justice between all the parties without regard to form.' 83 C.J.S. Subrogation pp. 579--580, § 2 a. It is '* * * closely akin to, if not a part of, the equitable principle of 'restitution' and 'unjust enrichment.' It is in the nature of a constructive trust, of equitable origin, to serve best the justice of the situation * * *.' 83 C.J.S. p. 581, § 2 b. It has been said that '* * * the right of subrogation * * * is a device adopted or invented by equity to compel the ultimate discharge of a debt or obligation by the one who in fairness and good conscience ought to pay it. Though the doctrine is equitable in its origin, the right acquired is generally referred to as legal subrogation; * * *' McKenzie v. Missouri Stables, Inc., 225 Mo.App. 64, 34 S.W.2d 136, 138(2). 'Legal subrogation has its rise in equity, and arise out of a condition or relationship by operation of law. So it has been held that legal subrogation arises by operation of law where a person having a liability * * * in the premises pays a debt due by another under such circumstances that he is in equity entitled to the security or obligation held by the creditors whom he has paid.' 83 C.J.S. Subrogation pp. 583, 584, § 3 a.

As a general rule, any person who, pursuant to a legal obligation to do so, has paid for an injury resulting from the wrong of another may be subrogasted to the rights of the injured person against the wrongdoer. Before the effective date of The Workmen's Compensation Law this court recognized and applied the above rule in an action by an employer to recover from a third party for amount employer paid its injured employee as damages on account of negligence of the third party. Busch & Latta Painting Co. v. Woermann Const. Co., 310 Mo. 419, 276 S.W. 614, 619(7, 8), and cases there cited.

In Geneva Construction...