Fort Worth Lloyds v. Haygood, A-3228

• Citation: 246 S.W.2d 865,151 Tex. 149
• Decision Date: 23 January 1952
• Docket Number: No. A-3228,A-3228
• Parties: FORT WORTH LLOYDS v. HAYGOOD et al.
• Court: Supreme Court of Texas

Page 865

246 S.W.2d 865

151 Tex. 149

FORT WORTH LLOYDS v. HAYGOOD et al.

No. A-3228.

Supreme Court of Texas.

Jan. 23, 1952.

Rehearing Denied April 2, 1952.

Kemper, Wilson & Schmidt, Houston, for petitioner.

Helm & Jones and Baker, Botts, Andrews & Parish, Houston, and R. E. Keeton, Dallas, for respondents.

GRIFFIN, Justice.

On June 21, 1949, respondent, Tom E. Haygood, an employee of S. P. Braud Conveyor Service, was injured while installing in the plant of the Imperial Sugar Company certain machinery which the Conveyor Service had contracted with the Sugar Company to install. Haygood was paid $7139 as compensation for his injuries by petitioner, Fort Worth Lloyds, the compensation carrier of Conveyor Service under the Workmen's Compensation statute. Thereafter, haygood filed a suit against the Sugar Company, as a third party tort-feasor, and Fort Worth Lloyds intervened and sought recovery of the amount of compensation paid by it to Haygood, and for expenses and attorney's fees. Efforts were made by the Sugar Company to settle this suit with Haygood and Fort Worth Lloyds, but no agreement was reached. Sugar Company and Haygood contend that no settlement was reached because of the illegal and unjust demands made by Fort Worth Lloyds as to the amount of expenses and attorney's fees claimed. On date of trial, Sugar Company and Haygood announced in open court that they had entered into an agreement whereby Haygood, for a consideration of $12500 cash, plus an additional $100 to be paid to Haygood, in the event of an ultimate recovery of a judgment against Sugar Company in the then pending suit in excess of $12500, had assigned 'all rights to levy execution, effect collection, or in any way secure or demand payment for my use and benefit * * * upon or on account of any judgment which may be rendered in my favor against Imperial Sugar Company or any other party on account of said accident.' The agreement further provided that it was executed without prejudice to, or effect upon, the subrogation rights of Fort Worth Lloyds in accordance with the Workmen's Compensation Act of the State of Texas, Vernon's Ann.Civ.St. art. 8306 et seq. and stated that Haygood would cooperate fully with Fort Worth Lloyds in the prosecution of the pending suit. This agreement was not reduced to writing on that date, but was reduced to writing later and before trial was over. Fort Worth Lloyds took the responsibility of proceeding with the case, and put on proof of the agreement and assignment-which, we construe, to all intents and purposes as being a settlement and release of Sugar Company by Haygood, except for an additional $100 upon a certain contingency. The trial court, finding that plaintiff's attorneys refused to proceed with the trial, entered a judgment dismissing Haygood's suit against Sugar Company for want of prosecution, and providing that Fort Worth Lloyds, intervener, take nothing. Upon appeal this judgment was affirmed by the Court of Civil Appeals at Galveston, 238 S.W.2d 835.

It is the contention of Fort Worth Lloyds that when it had proven the facts that Haygood and Sugar Company, with full knowledge of its subrogation rights, had settled Haygood's cause of action against the Sugar Company for $12500, plus the $100 additional, it was entitled to a judgment against the settling parties for the amount of its compensation payments plus reasonable expenses and attorney's fees. It is the contention of the Sugar Company that Fort Worth Lloyds could not recover without first proving up Haygood's cause of action against the Sugar Company.

We think this case is controlled by previous decisions of this court, among which is Traders & General Ins. Co. v. West Texas Utilities Co., 140 Tex. 57, 165 S.W.2d 713. We cannot find any real difference in the legal principles applied in that case and those controlling this case.

When the Workmen's Compensation statute was originally passed in this state in 1913, it contained no provision requiring an injured employee to make an election between suing for his compensation due him, and filing a common law suit against the third party tort-feasor; nor was there any provision subrogating the insurance carrier who had paid compensation to the employee to any rights of the injured employee. Fox v. Dallas Hotel Co., 111 Tex. 461, 240 S.W. 517. However, the Compensation Act in 1917 was amended in its entirety and what is now Section 6a of Article 8307, Vernon's Tex.Ann.Civ.Stats. 1925 was inserted in the Act. That section reads as follows:

'Where the injury for which compensation is payable under this law was caused under circumstances creating a legal liability in some person other than the subscriber to pay damages in respect thereof, the employe may at his option proceed either at law against that person to recover damages or against the association for compensation under this law, but not against both, and if he elects to proceed at law against the person other than the subscriber, then he shall not be entitled to compensation under this law. If compensation be claimed under this law by the injured employe or his legal beneficiaries, then the association shall be subrogated to the rights of the injured employe in so far as may be necessary and may enforce in the name of the injured employe or of his legal beneficiaries or in its own name and for the joint use and benefit of said employe or beneficiaries and the association the liability of said other person, and in case the association recovers a sum greater than that paid or assumed by the association to the employe or his legal beneficiaries, together with a reasonable cost of enforcing such liability, which shall be determined by the court trying the case, then out of the sum so recovered the association shall reimburse itself and pay said cost and the excess so recovered shall be paid to the injured employe or his beneficiaries. The association shall not have the right to adjust or compromise such liability against such third person without notice to the injured employe or his beneficiaries and the approval of the board, upon a hearing thereof.'

Under this it has been held that an injured employee has an option as to which of two persons he will sue, and that he cannot receive compensation if he first prosecutes his suit against the third party tort-feasor, but that after he has received compensation payment he may proceed against the third party tort-feasor, in the event the compensation carrier fails or refuses to so proceed. Texas Employers Ins. Ass'n v. Brandon, 126 Tex. 636, 89 S.W.2d 982; Houston Gas & Fuel Co. v. Perry, 127 Tex. 102, 79 S.W.2d 623, 91 S.W.2d 1052.

The constitutionality of this Section 6a was attacked in Consolidated Underwriters v. Kirby Lumber Co., Tex.Com.App., 1924, 267 S.W. 703, 706. This court approved the holding of the Commission of Appeals on the question discussed. There it was said that under the 1913 Act the employee could recover against the compensation carrier and the third party tort-feasor, and the compensation, carrier, although it had paid the full compensation, had no rights of subrogation. 'This situation was, in reason, imperfect; it served to bring to the employe more than his damages, which was, perhaps, not sound economy, and to make the insurance more burdensome to the insurer and hence more expensive to the employer and ultimately to the public than would have been the case had the amount recovered from the actual tort-feasor been applied first to the repayment of the amount of the compensation, and then the balance to the employe , to make him whole.'

'It was doubtless to remedy these defects and supply this juster and more politic substitute that the particular section(6a) of the amendment that is now under investigation was passed.' Ibid, 267 S.W. at page 706, 2nd col., emphasis added.

It has been held that there is but one cause of action against the third party tortfeasor. Texas Employers' Insurance Ass'n v. Texas & P. Ry. Co. et al., Tex.Civ.App., 129 S.W.2d 746, at page 750, writ dismissed, correct judgment, (5); Hartford Accident & Indemnity Co. v. Weeks Drug Store, Tex.Civ.App., 161 S.W.2d 153, 154 (1-3), error refused, want of merit. Also that no cause of action exists in favor of the injured employee, or his representatives, except as to the damages, if any, suffered in excess of the amount of compensation insurance collected by them. Mitchell v. Dillingham, Tex.Civ.App., 22 S.W.2d 971, at page 972, writ dismissed, and authorities cited therein. Houston Gas & Fuel Co. v. Perry, supra.

Where suit has been first filed against the third party tort-feasor it has been held that no right of subrogation is given to the compensation carrier, and therefore, the carrier is not liable to the injured employee, or his representatives, for any amount. Employers' Indemnity Corporation v. Felter et al., Tex.Com.App., 277 S.W. 376.

In Houston Gas & Fuel Co. v. Perry, supra, Mrs. Perry, and as next friend for her minor daughter, sued the Gas Company and Hartford Accident & Indemnity Company for damages on account of the death of her husband and the father of the minor. After allegations of negligence against the Gas Company, it was alleged that the Indemnity Company had heretofore paid compensation and expenses to plaintiffs, by virtue of being the compensation carrier for Hermann Hospitals Estate, the employer of the deceased D. N. Perry. Indemnity Company was duly served with process, but filed no pleading of any kind whatsoever. Plaintiffs obtained a jury verdict for an amount in excess of the expenses and compensation paid, and the trial court rendered judgment for plaintiffs and also for the Indemnity Company for the amount of expenses and compensation theretofore paid. Upon appeal this judgment was reformed by the Court of Civil Appeals as to an obvious error in calculation, but otherwise affirmed. This court reformed the judgment so as to deduct from plaintiffs'...