Diedrick v. Gehring

• Decision Date: 02 April 1974
• Docket Number: No. 103,103
• Citation: 216 N.W.2d 193,62 Wis.2d 759
• Court: Wisconsin Supreme Court
• Parties: Thomas DIEDRICK, by Allan Cain, his guardian ad litem, et al., Plaintiffs-Appellants, The Hartford Accident & Indemnity Co., Plaintiff-Respondent, v. Donald GEHRING et al., Defendants and Third Party Plaintiffs-Respondents, Rex Chainbelt Co., Impleaded Third Party Defendant-Respondent.

Page 193

216 N.W.2d 193

62 Wis.2d 759

Thomas DIEDRICK, by Allan Cain, his guardian ad litem, et

al., Plaintiffs-Appellants, The Hartford Accident & Indemnity Co., Plaintiff-Respondent, v. Donald GEHRING et al., Defendants and Third Party

Plaintiffs-Respondents,

Rex Chainbelt Co., Impleaded Third Party Defendant-Respondent.

No. 103.

Supreme Court of Wisconsin.

April 2, 1974.

Allan Cain, Appleton (Robert E. Henke, Neenah, of counsel), for plaintiffs-appellants.

Fulton, Menn & Nehs, Ltd., Appleton, for plaintiff-respondent.

ROBERT W. HANSEN, Justice.

The twin issues presented are whether the compensation carrier's attorney's fee was properly included as a cost of collection of the entire award, and whether the allocation of attorneys' fees, representing costs of collection, as between plaintiffs' attorney and the insurer's attorney was fair and reasonable.

DISTRIBUTION OF PROCEEDS.

The trial court approved the settlement and entered its order for distribution of proceeds 'under Wis.Stat. Sec. 102.29(1).' As to distribution of proceeds, that statute provides (relevant portions italicized) as follows:

'102.29 Third party liability (1) The making of a claim for compensation against an employer or compensation insurer for the injury or death of an employe shall not affect the right of the employe, his personal representative, or other person entitled to bring action, to make claim or maintain an action in tort against any other party for such injury or death, hereinafter referred to as a 3rd party; nor shall the making of a claim by any such person against a 3rd party for damages by reason of an injury to which ss. 102.03 to 102.64 are applicable, or the adjustment of any such claim, affect the right of the injured employe or his dependents to recover compensation. The employer or compensation insurer who shall have paid or is obligated to pay a lawful claim under this chapter shall likewise have the right to make claim or maintain an action in tort against any other party for such injury or death. However, each shall give to the other reasonable notice and opportunity to join in the making of aush claim or the instituting of an action and to be represented by counsel. If a party entitled to notice cannot be found, the department shall become the agent of such party for the giving of a notice as required herein and the notice, when given to the department, shall include an affidavit setting forth the facts, including the steps taken to locate such party. Each shall have an equal voice in the prosecution of said claim, and any disputes arising shall be passed upon by the court before whom the case is pending, and if no action is pending, then by a court of record or the department. If notice is given as herein provided, the liability of the tort-feasor shall be determined as to all parties having a right to make claim, and irrespective of whether or not all parties join in prosecuting said claim, the proceeds of such claim shall be divided as follows: After deducting the reasonable cost of collection, one-third of the remainder shall in any event be paid to the injured employe or his personal representative or other person entitled to being action. Out of the balance remaining, the employer or insurance carrier shall be reimbursed for all payments made by it, or which it may be obligated to make in the future, under the workmen's compensation act, except that it shall not be reimbursed for any payments of increased compensation made or to be made under s. 102.22, 102.57 or 102.60. Any balance remaining shall be paid to the employe or his personal representative or other person entitled to bring action. If both the employe or his personal representative or other person entitled to bring action, and the employer or compensation insurer, join in the pressing of said claim and are represented by counsel, the attorneys' fees allowed as a part of the costs of collection shall be, unless otherwise agreed upon, divided between such attorneys as directed by the court or by the department. A settlement of any 3rd party claim shall be void unless said settlement and the distribution of the proceeds thereof is approved by the court before whom the action is pending and if no action is pending, then by a court of record or the department.' (Emphasis supplied.)

On the point raised by this appeal, the statute clearly provides what the court is to do when, as here, an employee by his personal representative and a workmen's compensation carrier 'join in the pressing of said claim and are represented by counsel.' In such situation, the attorney's fees allowed by the court as a part of the costs of collection 'shall be, unless otherwise agreed upon, divided between such attorneys as directed by the court.' The statute specifically requires the court approving the settlement to determine the attorneys' fees to be allowed where both the injured party and the compensation carrier joined in bringing the claim to court, and then requires the trial court to divide the fees allowed 'between such attorneys.' The statute clearly provides that such fees allowed are to be taken from the total award as a cost of collection, before the plaintiff is awarded a mandatory one-third 'of the remainder,' followed by full reimbursement to the carrier for 'all payments made by it, or which it may be obligated to make in the future, under the workmen's compensation act,' with the balance then remaining to be paid to the employee or his personal representative.

We see no reason for going beyond the plain mandate of a clear statute in holding that the trial court correctly followed the division of proceeds mandated by the statute. We note, however, that the procedure outlined in the Wisconsin statute ¹ is not unique or unusual. ² It is true that some states have enacted statutes providing that, in certain situations, the compensation carrier is obliged to pay a portion of its attorney fees out of its share of the proceeds. ³ This is a matter for the legislative branch to determine, and appellants' counsel's argument that it would be a better scheme to require compensation carriers in third-party actions to pay their own costs of collection in securing reimbursement are to be addressed to the legislature, not the courts. While the statutes there involved were substantially similar to the Wisconsin law, it is solely for the purpose of completeness that we mention decisions in Michigan, ⁴ Delaware, ⁵ Mississippi, ⁶ California, ⁷ and New York. ⁸ With the Wisconsin statute clear in its terms and plain on its face, there is no need to go to other jurisdictions to support a holding that, as to manner of division of proceeds, the trial court here did exactly what the stature required that it do.

ALLOCATION OF FEES.

Since the statute requires the trial court to (1) determine the attorneys' fees to be allowed as a part of the costs of collection, and (2) unless otherwise agreed upon, to divide such fee set between the attorney...