Indemnity Ins. Co. of North America v. Odom, 17702

• Decision Date: 23 August 1960
• Docket Number: No. 17702,17702
• Parties: INDEMNITY INSURANCE COMPANY OF NORTH AMERICA, Plaintiff-Appellant, and Evalene McCarley Lyda Pruitt, as Administratrix of the estate of C. Earl Lyda, Plaintiff-Respondent, v. R. A. ODOM, E. R. Watson and One 1955 Mack Truck, of whom E. R. Watson and One 1955 Mack Combination Truck are, Defendants-Appellants.
• Court: South Carolina Supreme Court

Page 22

116 S.E.2d 22

237 S.C. 167

INDEMNITY INSURANCE COMPANY OF NORTH AMERICA, Plaintiff-Appellant, and Evalene McCarley Lyda Pruitt, as Administratrix of the estate of C. Earl Lyda, Plaintiff-Respondent, v. R. A. ODOM, E. R. Watson and One 1955 Mack Truck, of whom E.

R. Watson and One 1955 Mack Combination Truck are,

Defendants-Appellants.

No. 17702.

Supreme Court of South Carolina.

Aug. 23, 1960.

Leatherwood, Walker, Todd & Mann, Greenville, for defendants-appellants.

Love, Thornton & Arnold, Greenville, for plaintiff-appellant.

John C. Williams, Spartanburg, for plaintiff.

OXNER, Justice.

About 7:40 on the morning of March 1, 1956, a pickup truck owned by Y. C. Ballenger Electrical Contractors and driven by C. H. Rogers, one of its employees, collided with a tractor-trailer unit owned by E. R. Watson and driven by R. A. Odom, one of his employees, at a point on the Greenville-Spartanburg highway near the entrance to the Winn-Dixie Warehouse. As a result of said accident, Earl Lyda, another employee of Y. C. Ballenger Electrical Contractors, who was riding in the rear of said pickup truck, received injuries from which he died shortly thereafter.

Death benefits under the Workmen's Compensation Act were duly paid to the widow and four minor children of Earl Lyda by the Indemnity Insurance Company of North America, the insurance carrier for Y. C. Ballenger Electrical Contractors. Thereafter this action was brought by the administratrix of the estate of Earl Lyda and the Indemnity Insurance Company of North America against Odom, Watson, and the tractor-trailer to recover damages in the sum of $100,000 for the alleged wrongful death of Lyda. It was alleged in the complaint that the action was prosecuted for the benefit of the insurance carrier to the extent of the amount which it had paid under the Workmen's Compensation Act, and for the benefit of the widow and children to the extent of any recovery exceeding said amount.

On the trial of the case, plaintiffs, at the conclusion of the testimony, were permitted to take a voluntary nonsuit as to Odom, leaving Watson and the tractor-trailer as the sole defendants. In addition to being required to find a general verdict, the jury was instructed to determine the following special issue: 'Was the death of C. Earl Lyda caused or brought about through contributory negligence or contributory wilfullness by C. H. Rogers the driver of the pickup truck in which the deceased was riding?'

The foregoing question was answered by the jury in the affirmative and a general verdict found in favor of the plaintiffs for $60,000 actual damages. An order was thereafter filed wherein the Court held that the finding on the special issue barred any recovery by the insurance carrier and accordingly directed that the amount paid by it be deducted from the verdict and judgment entered against the defendants for the balance.

The plaintiff Insurance Company has appealed from that portion of the order of the Circuit Judge holding that the contributory negligence on the part of the employer barred its right to recover the compensation paid. By numerous exceptions the defendants attack the entire judgment. There is no appeal by the administratrix.

We shall first discuss the legal effect of the finding of the jury that Rogers was guilty of contributory negligence. Such negligence, of course, must be imputed to his employer. The jury was instructed that contributory negligence on the part of the employer would not be a complete defense but would only constitute a bar, pro tanto, to the recovery of compensation paid by the insurance carrier. This is the view advanced by the administratrix on this appeal. The plaintiff Insurance Company contends that upon the payment of the award of the Industrial Commission, the entire cause of action for wrongful death was assigned to it unimpaired and that the defendants are liable for the full amount of the damages sustained by Lyda's dependents, irrespective of the contributory negligence of the employer. Defendants contend that the contributory negligence of the employer constitutes a complete bar to any recovery. They say that the payment of the award by the Industrial Commission operated as an assignment to the insurance carrier of the entire cause of action stated in the complaint; that the Insurance Company is the only real party plaintiff; and that the holding of the Court below that contributory negligence only constituted a bar pro tanto has the effect of splitting the cause of action, which cannot be done.

Section 72-122 of the 1952 Code permits an employee having a right to recover damages against a person other than his employer, to 'institute an action at law against such third person before an award is made under this Title and prosecute it to its final determination.' But under the terms of Section 72-123, 'either the acceptance of an award under this Title or the procurement and collection of a judgment in an action at law shall be a bar to proceeding further with the alternate remedy.'

Section 72-124 provides that an acceptance of an award for compensation 'shall operate as an assignment to the employer of any right to recover damages which the injured employee or his personal representative or other person may have against any other person for such injury or death and such employer shall be subrogated to any such right and may enforce, in his own name or in the name of the injured employee or his personal representative the legal liability of such other person. * * *' Section 72-125 requires that any amount collected by the employer in excess of the amount paid by him be held for the benefit of the injured employee or other person entitled thereto, and forbids any compromise settlement by the employer 'in the exercise of his right of subrogation without the approval of the Commission being first had and obtained.'

Under the terms of Section 72-126, whenever an employer or his carrier has become subrogated to the right of an employee to recover damages against a third party and refuses to bring an action against such third party for three months after being requested to do so by the employee, such employee 'may bring an action in his own name and for his own benefit against such third party.'

Section 72-127 reads: 'The amount of compensation paid by the employer or the amount of compensation to which the injured employee or his dependents are entitled shall not be admissible as evidence in any action brought to recover damages.'

Under the terms of Section 72-422, when the compensation is paid by an insurance carrier, such carrier becomes 'subrogated to all the rights and duties of the employer and may enforce any such rights in its own name or in the name of the injured employee or his personal representative.'

The holding of the Court below that a third party may plead and prove the independent concurring negligence of the employer as a bar, pro tanto, to the recovery of compensation paid by the employer or insurance carrier is sustained by several decisions: Thornton Bros. Co. v. Reese, 188 Minn. 5, 246 N.W. 527; Alaimo v. Du Pont, 11 Ill.App.2d 238, 136 N.E.2d 542; Lovette v. Lloyd, 236 N.C. 663, 73 S.E.2d 886. This was the construction placed upon our own Act by Chief Judge Wyche in American Casualty Co. of Reading, Pa. v. South Carolina Gas Co., D.C., 124 F.Supp. 30. These courts hold that it would be unjust and inequitable to permit an employer or his insurance carrier to recover compensation for injuries sustained in an accident to which the negligence of the employer contributed. They say that the provision subrogating an employer or his insurer to an employee's legal right in his cause of action is based upon equitable concepts and that an employer or his carrier who seeks reimbursement from a third party should be made susceptible to a demand in equity that he, himself, be free from fault. In Lovette v. Lloyd, supra, the Court said [236 N.C. 663, 73 S.E.2d 891]: 'It is contrary to the policy of the law for the employer, or his subrogee, the insurance carrier, to profit by the wrong of the employer.' But the overwhelming weight of authority is to the effect that under provisions similar to those contained in our Workmen's Compensation Act, the contributory negligence of the employer constitutes no defense to an action brought by him or his carrier against a third party to recover compensation paid. Fidelity & Casualty Co. v. Cedar Valley Elec. Co., 187 Iowa 1014, 174 N.W. 709; Graham v. City of Lincoln, 106 Neb. 305, 183 N.W. 569; Utley v. Taylor & Gaskin, Inc., 305 Mich. 561, 9 N.W.2d 842; Clark v. Chicago, M., St. P. & P. R. Co., 214 Wis. 295, 252 N.W. 685; Milosevich v. Pacific Elec. Ry. Co., 68 Cal.App. 662, 230 P. 15; City of Shreveport v. Southwestern Gas & Elec. Co., 145 La. 680, 82 So. 785; General Box Co. v. Missouri Utilities Co., 331 Mo. 845, 55 S.W.2d 442; Williams Bros. Lumber Co. v. Meisel, 85 Ga.App. 72, 68 S.E.2d 384; Johnson v. Willoughby, Tex.Civ.App., 183 S.W.2d 201; Coleman v. Hamilton Storage Co., 235 Ala. 553, 180 So. 553; Employers Mut. Liability Ins. Co. of Wisconsin v. Refined Syrups Sales Corp., 184 Misc. 941, 53 N.Y.S.2d 835; Otis Elevator Co. v. Miller & Paine, 8 Cir., 240 F. 376; United Gas Corp. v. Guillory, 5 Cir., 206 F.2d 49; Marciniak v. Pennsylvania Railroad Company, D.C., 152 F.Supp. 89; Cyr v. F. S. Payne Co., D.C., 112 F.Supp. 526; E. F. Hauserman Co., for Use and Benefit of Aetna Cas. & Sur. Co. v. United States, D.C., 103 F.Supp. 358.

In this Court the question is one of first impression. After careful consideration, we have concluded that the majority view is the sounder one. It is true, as counsel for defendants suggests, that upon payment of the award, the entire cause of action for the alleged wrongful death of Lyda was assigned to the insurance carrier and the representative of his estate retained no right of action for further damages. Dawson v. Southern...