Liberty Mut. Ins. Co. v. Nutting Truck & Caster Co., 43437

• Decision Date: 12 January 1973
• Docket Number: No. 43437,43437
• Citation: 203 N.W.2d 542,295 Minn. 211
• Parties: LIBERTY MUTUAL INSURANCE COMPANY, Appellant, v. NUTTING TRUCK AND CASTER COMPANY, Respondent, Johnson & Webster Company, Inc., d.b.a. Excelsior Super Valu Store, Respondent.
• Court: Minnesota Supreme Court

Page 542

203 N.W.2d 542

295 Minn. 211

LIBERTY MUTUAL INSURANCE COMPANY, Appellant, v. NUTTING TRUCK AND CASTER COMPANY, Respondent Johnson & Webster Company, Inc., d.b.a. Excelsior Super Valu Store, Respondent.

No. 43437.

Supreme Court of Minnesota.

Jan. 12, 1973.

Syllabus by the Court

An employer or insurer who pays workmen's compensation benefits to an injured employee has certain statutory subrogation rights against third-party tortfeasors. He may maintain an action or continue an action already instituted. This action may be maintained in the name of the employee or in the name of the employer or insurer against the third-party tortfeasor for the recovery of damages. If the action is timely commenced by the injured employee, despite the fact he settles for his damages and excludes the employer-insurer interests, the statute of limitations will not bar maintenance of the action for the employer-insurer's interests even if the employer or insurer failed to commence an action within the statutory period.

Robb, Van Eps & Gilmore and Don James Chantry and John H. Lewis, Minneapolis, for appellant.

Mahoney, Dougherty, Angell & Mahoney, Minneapolis, for Nutting Truck and Caster Co.

Castor, Stich & Ditzler, John E. Castor and Austin D. Ditzler, Minneapolis, for Johnson & Webster.

Heard before KNUTSON, C.J., and KELLY, MURPHY, and SCHULTZ, JJ.

HAROLD W. SCHULTZ, Justice. ^*

The sole question presented on appeal is whether the claim of a workmen's compensation insurer who is subrogated to the rights of an injured employee against a third-party tortfeasor is barred by the statute of limitations where the insurer failed to commence an action against the third-party tortfeasor within the statutory period, but where the employee had commenced an action within that period.

On January 15, 1962, Ralph Ekker was employed as a delivery driver for Northland Milk and Ice Cream Company. Northland was insured for workmen's compensation liability by Liberty Mutual Insurance Company. On January 15, within the course and scope of his employment, Ekker made a delivery to the Excelsior Super Valu Store. While he was at the store and was descending a stairway which was not equipped with a handrail, as is required by village ordinance, the two-wheel hand cart which Ekker was using broke. The cart was manufactured by defendant Nutting Truck and Caster Company. Ekker fell, sustaining injuries, and was paid workmen's compensation benefits in excess of $7,000 for permanent partial disability and approximately $7,000 for medical expenses by Liberty Mutual.

On January 13, 1968, an action was commenced by Ekker against Nutting Truck and Excelsior Super Valu Store. This was 2 days before the statute of limitations ran on Ekker's cause of action.

On April 25, 1968, after the running of the statute of limitations, defendants moved to join Liberty Mutual as a party plaintiff under Minn.St. 176.061, subd. 7, providing for a separate cause of action by an employer against the third-party tort-feasor to recover amounts paid by the employer for medical expenses. On July 12, 1968, the court issued an order joining Liberty Mutual as an additional party plaintiff in order to separate its cause of action for medical treatment paid to Ekker from Ekker's personal claims.

On September 30, 1968, pursuant to the court order of July 12, 1968, Liberty Mutual by amended complaint set forth its claim for both medical expenses and compensation benefits paid to Ekker. Shortly after the commencement of trial, Ekker settled his personal claims against defendants for $15,500 and executed a release which expressly excluded 'payments made or to be made by reason of the Workmen's Compensation laws of the State of Minnesota as a result of the aforesaid accident.' On the same day, by motion of the defendants, Liberty Mutual's cause of action was dismissed on the grounds that it was barred by the 6-year statute of limitations.

On February 6, 1969, Liberty Mutual commenced a suit against Ekker and garnished the funds to be paid to Ekker by the defendants pursuant to the settlement. On May 21, 1969, the court reinstated Liberty Mutual's cause of action in its entirety against the defendants. Liberty Mutual then dismissed its suit against Ekker. On July 1, 1971, the court, pursuant to defendants' motion, struck Ekker's name from the remaining action as a party plaintiff and limited Liberty Mutual's recovery to only the medical expenses it paid for Ekker, ruling that Liberty Mutual's claim for compensation benefits was barred by the statute of limitations.

On appeal, it is Liberty Mutual's contention that its entire subrogation claim, for both medical expenses and disability payments, was included in Ekker's original action, which was timely brought. Thus, Liberty Mutual contends that it was not barred by the statute of limitations. Liberty Mutual further contends that a settlement by the employee which excludes the employer's interests cannot extinguish those claims as against the third-party tort-feasor.

We agree. That part of the trial court's order limiting the right of Liberty Mutual to recover only the medical expenses sustained by Ekker is reversed, and the case remanded for trial or Liberty Mutual's entire subrogation claim.

Minn.St. 176.061, subd. 5, spells out the rights of an employer and employee when compensation benefits have been paid and the employee was injured under circumstances giving rise to liability on the part of a third party. This statute specifically gives the employer and insurer a right of subrogation once compensation benefits have been paid. Thus, once Liberty Mutual paid workmen's compensation benefits, it was subrogated to any rights Ekker...