Maryland Casualty Co. v. Paton

• Decision Date: 11 February 1952
• Docket Number: No. 12937.,12937.
• Parties: MARYLAND CASUALTY CO. v. PATON et al.
• Court: U.S. Court of Appeals — Ninth Circuit

194 F.2d 765 (1952)

MARYLAND CASUALTY CO. v. PATON et al.

No. 12937.

United States Court of Appeals Ninth Circuit.

February 11, 1952.

Cake, Jaureguy & Tooze, Dwight L. Schwab, Denton G. Burdick, Jr., Lamar Tooze, Jr., Portland, Or., for appellant.

Senn, Recken & Recken, L. A. Recken, Portland, Or., for appellees.

Before STEPHENS, HEALY and POPE, Circuit Judges.

POPE, Circuit Judge.

James Buie, an employee of James T. Moore, doing business in California, was killed instantly on an Oregon highway when his automobile collided with a truck driven by a servant of the appellees, who are citizens of California. Although Buie's work as a traveling salesman for Moore was exclusively in the State of Oregon, yet because of his employment for a California employer his wife was entitled under the California Workmen's Compensation Act, Labor Code, ß 3201 et seq., to compensation which was awarded by the California Industrial Accident Commission. The award of $6300 was paid by Maryland Casualty Company, appellant here, a Maryland Corporation, which then brought this action in the United States District Court for the District of Oregon, against the defendants-appellees. Following defendant's motion to dismiss and for summary judgment an agreed statement of facts was incorporated in a pre-trial order¹ upon the basis of which both motions were sustained and judgment for defendants entered accordingly.

Appellant argues that there are two grounds on which it was entitled to proceed to trial upon the question of the negligence of appellees' servant. The first is that it was entitled to recover under the Industrial Accident provisions of the California Labor Code.² Both parties agree that if the accident had occurred in California, the appellant insurance carrier could have maintained the action.

In response to appellee's contention that the California statute could not operate extra-territorially to create a cause of action because of acts done or performed in the State of Oregon, appellant argues that if this action had been brought in an Oregon state court, that court's obligation to give full faith and credit to the public acts of California would have led it to enforce the latter's statute authorizing an action of this kind. In support of its view, appellant cites cases in which an employee, covered by workmen's compensation in state A, has received injuries in state B. When the employee brought an action in state B against the third person charged with negligently causing the injuries, the court in state B recognized defenses based upon the provisions of the compensation act of state A, which provided that the employer or his insurance carrier alone could sue the third person. Sloan v. Appalachian Electric Power Co., D.C.W.Va., 27 F.Supp. 108; Biddy v. Blue Bird Air Service, 374 Ill. 506, 30 N.E.2d 14.

On the other hand appellee cites Personius v. Asbury Transportation Co., 152 Or. 286, 53 P.2d 1065, 1075, dealing with a similar state of facts. The employee, hired in Idaho, was injured by defendant's truck in Oregon; he received compensation in Idaho, under the Idaho Act, which granted the employer the right to sue a third person in such circumstances. The defendant attempted to plead by way of defense in the Oregon court, this Idaho statutory provision. The court said: "It may be conceded for the purposes of this opinion that the state of Idaho `has power to forbid its own courts to give any other form of relief for such injury' than prescribed by its Workmen's Compensation Act. * * * The prohibition imposed on the Idaho courts has no extraterritorial effect on the courts of this state."

The cases upon which appellant relies are not in point here. They deal with what would constitute a clear cause of action in state B, but hold that by reason of the employment contract in state A, of which the compensation act of state A is a part, the cause of action belongs to the employer. The court simply gave effect to the employment contract. Cf. Bradford Elec. Co. v. Clapper, 286 U.S. 145, 52 S.Ct. 571, 76 L. Ed. 1026.

Here, however, the question is not whether the appellant insurance carrier may enforce a cause of action clearly arising in Oregon. It is whether a cause of action wholly unknown to Oregon law, may nevertheless be enforced there because the defendants violated some duty created by a California statute. In this portion of its argument appellant disclaims any right to enforce a cause of action created by Oregon law. That state has a wrongful death statute³ permitting recovery, up to $10,000, by the personal representative, primarily for the benefit of the widow and dependents of the decedent. A two year limitation applicable to such actions had expired before the instant action was filed. Appellant does not claim subrogation to any right of Buie, or of his estate. It asserts that under the California statute its right is a separate and distinct one, ‚Äî a new cause of action created for the employer, or his insurance carrier.⁴

We are unable to perceive how the California statute can be said to add to the consequences of the negligent operation of a truck on an Oregon highway. It seems clear that had this action been brought in a California court, such court would have held that the statute was not intended to apply to acts done outside the state.⁵

Appellant's second contention is that under common law principles the defendants-appellees were liable, either to the plaintiff-appellant, or to the employer, and that if the liability be to the latter, the appellant is subrogated to his action. It calls this a "common law doctrine of indemnity". Principal reliance is upon the case of Staples v. Central Surety & Ins. Corporation, 10 Cir., 62 F.2d 650. The facts there were very similar to those here. The court said, 62 F.2d at page 653: "It is a well-recognized rule, supported by a great weight of authority, that, where one has been subjected to liability, and has suffered loss thereby, on account of the negligence or wrongful act of another, the one has a right of action against the other for indemnity."

In Crab Orchard Imp. Co. v. Chesapeake & O. Ry. Co., 4 Cir., 115 F.2d 277, the facts were like those here and in the Staples case, supra, except that the employer, having itself paid the workmen's compensation award, sued the defendant which it charged with negligently causing the employee's death. That court considered at length the same arguments made here, and those sustained in the Staples case.⁶ In dealing with the contention that liability could be predicated upon a "principle of indemnity", the court referred to ß 76 of the Restatement of Restitution for a broad definition of indemnity, as follows: "A person who, in whole or in part, has discharged a duty which is owed by him but which as between himself and another should have been discharged by the other, is entitled to indemnity from the other, unless the payor is barred by the wrongful nature of his conduct." The court stated its summary of this principle as follows, 115 F.2d at page 282: "Not only must a benefit be conferred upon the defendant by a discharge of his duty or obligation, but the discharge must have occurred under circumstances in which the plaintiff was, at the same time, discharging a personal obligation coextensive with that of the defendant.

"We think that there is no factual basis here which justifies indemnification."

We agree with that statement. We note that the principle of indemnity, in the language of the Restatement, applies to a person who has discharged "a duty which is owed by him but which as between himself and another should have been discharged by the other." (Emphasis added)

Appellant's duty here was to pay the compensation owed by the employer under the California Act. By no stretch of reasoning can it be said that such duty "should have been discharged" by these appellees. Whatever duty they owed, assuredly it was not that.

The Staples case, however, proceeded to place its conclusion upon a further, more general ground. It said: "The negligence of appellants directly resulted in a financial loss to appellee; under elementary principles of the law of torts, recovery may be had therefor." Of a similar argument made in the Crab Orchard case, supra, the court said, 115 F.2d at page 283: "Appellant proceeds upon the final theory that appellee breached a legal duty owed to appellant, and that this breach is actionable. This theory predicates appellee's liability to the appellant on the ordinary principle of tort-liability — that appellee's negligence was the proximate cause, in a chain of causation, resulting in damage...