Employer's Liability Corp. v. Webb

• Decision Date: 17 May 1940
• Citation: 140 S.W.2d 825,283 Ky. 115
• Parties: EMPLOYER'S LIABILITY CORPORATION v. WEBB.
• Court: Kentucky Court of Appeals

140 S.W.2d 825

283 Ky. 115

EMPLOYER'S LIABILITY CORPORATION v. WEBB.

Court of Appeals of Kentucky

May 17, 1940

Appeal from Circuit Court, Henry County; Charles C. Marshall, Judge.

Action by Employer's Liability Corporation against Charles Webb to recover compensation payments made to salesman who was allegedly injured by negligence of defendant. From an adverse judgment, plaintiff appeals.

Affirmed.

James F. Thomas, of New Castle, for appellant.

Polk South, Jr., of Frankfort, and John M. Berry, of New Castle for appellee.

MORRIS Commissioner.

Prior to and on February 4, 1935, Leich & Company were engaged in the drug business in Evansville, Indiana. In their employ was Walter Fritts, a traveling salesman. On the date mentioned while driving a motor vehicle, admittedly engaged in the company's business, and near Versailles, Kentucky, there occurred a collision between the car driven by Fritts and one driven by Charles Webb. Fritts was severely injured, and for some time incapacitated from following his usual or other occupation.

His employer carried compensation insurance, the indemnifying policy having been issued by the appellant. Fritts later filed with the Industrial Board of Indiana his claim for compensation. It is stated that the company, on its own, and on behalf of its insurer denied liability. However, after a hearing the Indiana Board awarded Fritts $1,650, apparently for total temporary disability, and a further sum on account of payments made by him in seeking relief and cure.

On December 30, 1938, the insurer filed its petition in the Henry County, Kentucky, circuit court, making Webb party defendant. It alleges the facts as above outlined, and further that it had paid the total of the two above named sums "for Leich & Company, all of which payments were the direct result of the injuries received by Fritts in the collision of February 4, 1937." In this pleading it sought recovery of the payments it had made to Fritts under the Board's award. It specifically alleged that the injuries to Fritts were due to the fact that Webb "carelessly and negligently drove his car into one owned by Leich & Company, while same was being operated by its employee Fritts, at that time on business of Leich & Company thereby injuring him."

As a basis of its alleged right to proceed against and have recoupment from Webb, to the extent only of the amount it had paid Fritts under the terms of its policy and the award of the Indiana board, it specifically plead: "The plaintiff states that by the terms of its policy issued to Leich &amp Company, the Employer's Liability Assurance Corporation was subrogated to the claim of Leich & Company arising out of said accident and injury to the employe of Leich & Company as aforesaid, and the payment of compensation."

The appellee, defendant below, filed demurrer to the petition, and upon consideration the court sustained same, and upon plaintiff's declination to plead further, the petition was dismissed over objection, and appeal granted. As presented to us, appellee relies upon Henderson Tel. & Tel. Co. v. Owensboro Home Tel. & Tel. Co., 192 Ky. 322, 233 S.W. 743, in his contention that the appellant is not entitled to be subrogated to the rights of the employer. That the assignor of plaintiff's right, if any it had, was a necessary party to the action. Monmouth County Mut. Fire Insurance Co. v. Hutchinson and Camden & A. R. & T. Co., 21 N. J. Eq. 107, and Civil Code of Practice, § 19. Lastly that the petition showed on its face that appellant's claim was barred, because the suit was instituted against Webb more than one year after the date of the injury. Ky. Stats. § 2516.

We have found it necessary to consider only the first point argued, and wherein it is contended that appellant, in the absence of certain prerequisite pleading, had no right to proceed against Webb for recoupment.

As we observe the contract of indemnity between appellant and Leich & Company, which is made a part of the petition, we find that clause "K" of the policy provides: "The corporation (insurer) shall be subrogated in case of any payment under this policy to the extent of such payment, to all rights of recovery therein vested by law either in this employer, or in any employee or his dependents claiming hereunder, against persons, corporations, associations or estates."

Counsel for appellant admits in the outset of his brief that he has been unable to find a decision of this court where the precise question here presented has been raised or discussed. He then takes the position that the general doctrine of equitable subrogation should apply, notwithstanding he pleads that appellant's rights grow out of the contract and the application of law. He cites Ford v. Jones, 174 Ky. 252, 192 S.W. 28, and Illinois Surety Co. v. Mitchell, 177 Ky. 367, 197 S.W. 844, L.R.A. 1918A, 931. The first case lays down fully the doctrine of subrogation on equitable principles.

The doctrine is so well known that it needs no repetition. While in the second case, supra, much is said of the equitable doctrine and the reason for its almost universal recognition by the courts, the claim of subrogation as upheld was clearly under a contract of subrogation as between the principle and surety.

In the Henderson-Owensboro case, supra, cited by appellee, it will be noted that the opinion was rendered in 1921, at which time our Compensation Act (§ 4890, Ky.Stats.) did not provide that the insurer might be subrogated to the rights of employer or employee. The employer was allowed subrogation. In 1922 this statute was amended (same section) so as to allow the remedy and relief to the insurer. In that case we held that where an employer had paid the award to an employee, he could proceed against a third party who might be legally liable for the injury. However, we w...