Henshaw v. Mays

• Decision Date: 24 July 1973
• Docket Number: CA-CIV,No. 1,1
• Citation: Henshaw v. Mays, 512 P.2d 604, 20 Ariz.App. 300 (Ariz. App. 1973)
• Parties: Rosie HENSHAW, surviving spouse of Sylvester Henshaw, Deceased, for herself and their minor children, Donald Leslie Henshaw, Kay Ann Henshaw and Rosie May Henshaw, Appellants, v. James M. MAYS and Doris Mays, his wife; and the Salt River Project Agricultural Improvement and Power District, a municipal corporation, Appellees. 1860.
• Court: Arizona Court of Appeals

Page 604

512 P.2d 604

20 Ariz.App. 300

Rosie HENSHAW, surviving spouse of Sylvester Henshaw, Deceased, for herself and their minor children, Donald Leslie Henshaw, Kay Ann Henshaw and Rosie May Henshaw, Appellants, v.James M. MAYS and Doris Mays, his wife; and the Salt River Project Agricultural Improvement and Power District, a municipal corporation, Appellees.

No. 1 CA-CIV 1860.

Court of Appeals of Arizona, Division 1, Department B.

July 24, 1973.

Rehearing Denied Sept. 5, 1973.

Richard Kamps, and Dennis J. Skarecky, Phoenix, for appellants.

Johnson, Shelley, Roberts & Riggs by John Rasmussen, Mesa, for appellees Mays.

Jennings, Strouss & Salmon by Jon L. Kyl and Gary L. Stuart, Phoenix, for appellees Salt River Project and Hallcraft Homes.

JACOBSON, Chief Judge, Division 1.

This appeal raises the question as to whether plaintiffs who are receiving benefits under the workmen's compensation laws of Arizona may maintain an action against allegedly negligent third party tort-feasors more than one year after the cause of action accrued.

The material facts giving rise to this appeal are not in dispute.On January 31, 1970, Sylvester Henshaw was killed in the course of his employment as a citrus fruit picker.Mr. Henshaw's death occurred when he came in contact with an electrical transformer.Rosie Henshaw, widow of Mr. Henshaw, and their minor children (plaintiffs-appellants in this action) have been and are now receiving the benefits to which they are entitled under the workmen's compensation laws from Industrial Indemnity, Mr. Henshaw's employer's industrial insurance carrier.

On February 5, 1971, (one year and five days after the death of Mr. Henshaw)plaintiffs brought an action sounding in wronguful death against defendants-appellees, James M. Mays and his wife, Doris Mays and the Salt River Project Agriculture Improvement and Power District, alleging that these defendants' negligent acts caused Mr. Henshaw's death.On May 5, 1971, Industrial Indemnity assigned to the plaintiff'all of its rights, title and interest claims and demands in and to that certain cause of action which Industrial Indemnity may have by virtue of A.R.S. § 23--1023, against those named defendants in CauseNo. C--244613, now pending in the Superior Court of the State of Arizona, in and for the County of Maricopa.'In addition, this assignment also assigned to the plaintiffs'all other rights, title, interest, claims and demands, if any, against the person or persons responsible for Sylvester Henshaw's accidental death.'

On this state of the record, both defendants moved for summary judgment on the grounds that the plaintiffs' failure to file their cause of action within one year after the incident resulting in the death of Mr. Henshaw barred their right to maintain the tort action.This contention is grounded upon A.R.S. § 23--1023, Subsec.B, which provides:

'If the employee entitled to compensation under this chapter, or his dependents, does not pursue his or their remedy against such other person (an allegedly negligent third party) by instituting an action within one year after the cause of action accrues, the claim against such other person shall be deemed assigned to the insurance carrier, or to the person liable for the payment thereof.Such a claim so assigned may be prosecuted or compromised by the insurance carrier or the person liable for the payment thereof.'

The trial court granted both motions for summary judgment and this appeal followed.

Following the granting of defendants' motions for summary judgment and on the last day within the two year statute of limitations set forth in A.R.S. § 12--542, Industrial Indemnity filed suit against these same defendants.

This case, together with the cases of Clark v. Kennecott Copper Corporation, Ariz.App.512 P.2d 611andSargent v. Hallcraft Homes, Inc., Ariz.App., 512 P.2d 612, all dealing with the same legal issue, were consolidated for oral argument before this court.Opinions in these two companion cases are also being released this date.

The sole question presented by these appeals is:

Does A.R.S. § 23--1023(B) bar recipients of workmen's compensation benefits from maintaining an action against third party tortfeasors where the action is brought more than one year after the accident but within two years and with the approval of the compensation carrier?

In order to answer this question, the legislative history of this section must be reviewed.The liability of third persons to an injured or deceased employee first appeared as § 1435 in the Revised Code of 1928 as follows:

'If an employee entitled to compensation hereunder is injured or killed by the negligence or wrong of another not in the same employ, such injured employee, or in case of death, his dependents, Shall elect whether to take compensation under this title or to pursue his remedy against such other.If he elect to take compensation, the cause of action against such other Shall be assigned to the state for the benefit of the compensation fund, or to the person liable for the payment thereof . . ..'(Emphasis added.)

This statute was first interpreted in the case of Moseley v. Lilly Ice Cream Co., 38 Ariz. 417, 300 P. 958(1931).The Moseley court analyzed the three types of statutes prevalent in the United States dealing with the right of the injured workman to pursue his common law remedies against a third party tortfeasor as being: (1) where the statute expressly gives the right to the employee to recover compensation and also to sue a third party for negligence; (2) where the statute does not expressly give the right to both compensation and common law remedies, but provides that the employer is subrogated to the rights of the employee so far as to the amount which the employer has paid is concerned, and that any surplus the employer may recover goes to the injured employee; and (3) where the statute'provides that if the employee elects to bring suit against a third person and his recovery is less than that granted by the Compensation Act, the insurance funds will make up the difference, but that if the employee elects to take compensation, the awarding of compensation shall act as an assignment of the cause of action to the state for the benefit of the insurance fund, or other insurer.'Moseley v. Lilly Ice Cream Co., 38 Ariz. at 422, 300 P. at 960.

Moseley pointed out that under the first two types of statutes, the employee may both obtain compensation benefits and pursue his tort remedy against the third party tortfeasor.The court held, however:

'On comparison of the different statutes in the three classes we have described above, it is apparent that the Arizona law falls clearly within the third class.We are of the opinion both on authority and on a logical interpretation of the language of our statute that, under its provisions, when payment under the Compensation Act is chosen by the injured employee, his rights of every nature against the third person passed as a matter of law to the state or other insurer, and no right of action, either direct or indirect, remains in him as against such third person.'38 Ariz. at 423, 300 P. at 960.

Moseley upheld the constitutionality of this statute on the basis that the injured employee had an election either to receive full compensation benefits or sue the third party in tort.

Moseley has been followed in State v. Pressley, 74 Ariz. 412, 250 P.2d 992(1952);Pressley v. Industrial Commission, 73 Ariz. 22, 236 P.2d 1011(1951);andLedbetter v. Savittieri, 10 Ariz.App. 65, 455 P.2d 1015(1969).

One additional case, decided prior to the 1965amendments, bears on the the problem before the court.In Industrial Commission v. Nevelle, 58 Ariz. 325, 119 P.2d 934(1941), the court was faced with the issue of the amount that the insurance carrier may collect from the negligent tortfeasor where an injured employee elects to take compensation.The court, likening the status of an insurance carrier who pays compensation to that of an 'indemnitor who was subrogated to the right of the injured workman in the same manner as any other surely, and can recover, therefore, only the amount which he had paid or was forced to pay by reason of his character . . .,'(id. at 332, 119 P.2d 937) held:

'that in an action by the commission based on an election made by the injured employee, under section 56--949(A.C.A., 1939, predecessor to A.R.S. § 23--1023) . . . it may recover only the amount which it has paid, or is bound to pay in the future, as the result of an award made to the employee . . ..'id.

Thus it was clear that prior to 1965, in the case of the injured workman versus the third party tortfeasor, the following prevailed:

1.The injured workman had to make the mutually exclusive election of either accepting workmen's compensation benefits or suing the third party tortfeasor.

2.If he elected to accept benefits, the entire cause of action of the employee, including all his claims for pain and suffering passed to the compensation carrier.

3.When the compensation carrier sued the third party tortfeasor, it was limited in its recovery to the amount it paid the employee (excluding, of course, pain and suffering.)

It was obvious that under this state of affairs the only party who was benefiting by this round robin was the third party tortfeasor, who allegedly caused all the problems in the first place.The law was in this posture until the legislature, in 1965, amended A.R.S. § 23--1023, still retaining the old 'election of remedies' language, but adding that:

'If the elction is to proceed against such other person, Compensation and accident benefits shall be paid as provided in this chapter and the commission or other person liable to pay the claim shall have a lien on the amount actually collectible from such other person to the extent of such compensation and accident benefits paid.'

This particular amendment was not the subject of judicial...