Nyquist v. Batcher, 35553

• Decision Date: 25 January 1952
• Docket Number: No. 35553,35553
• Parties: NYQUIST v. BATCHER.
• Court: Minnesota Supreme Court

Page 566

51 N.W.2d 566

235 Minn. 491

NYQUIST v. BATCHER.

No. 35553.

Supreme Court of Minnesota.

Jan. 25, 1952.

Syllabus by the Court.

1. A demurrer admits only well-pleaded material facts and Not bare conclusions of law.

2 and 4. Our decisions in Thornton Bros. Co. v. Reese, 188 Minn. 5, 246 N.W. 527, and Standard Accident Ins. Co. v. Minnesota Utilities Co. 207 Minn. 24, 289 N.W. 782, are not determinative of the issue of whether a third-party defendant in an action brought pursuant to M.S.A. § 176.06, subd. 2, may assert as a defense the employer's contributory negligence.

3. Any action brought under § 176.06, subd. 2, to recover damages, whether prosecuted or controlled by the employe, by his dependents, or by the employer, is for the primary benefit of the employe or his dependents.

5. Without determining whether the defense of the employer's contributory negligence may be asserted by a third-party defendant under § 176.06, subd. 2, when the facts clearly show that the employer will necessarily become entitled to all damages recoverable against such defendant, it is clear that such defense is not available to the third-party defendant, irrespective of which party commences and maintains the action, as long as the beneficiaries of the compensation award have any real interest in the proceeds of the judgment which may be entered against the third-party defendant.

McGivern & Kennedy, Staples, Bradford & Kennedy, Wadena, Minnesota, for appellant.

Mordaunt & Mordaunt, Minneapolis, King & Fenske, Long Prairie, for respondent.

MATSON, Justice.

Defendant appeals from an order sustaining plaintiff's demurrer to certain allegations of his answer.

Plaintiff, as special administrator of decedent's estate, brought this action under the statute for death by wrongful act, M.S.A. § 573.02, to recover $10,000 damages for the death of the decedent for the benefit of decedent's widow and three children, as next of kin. On August 3, 1949, decedent, Harry S. Mathison, who was then employed as the operator of an oil transport truck of John A. Kuether, doing business as Mille Lacs Transport Company--hereinafter referred to as the employer--received burns and injuries which caused his death as the result of the fire which occurred while he was unloading oil in defendant's bulk oil plant at Staples, Minnesota. The complaint alleges that the injuries and death were caused by defendant's negligence in the maintenance of an electric motor.

Defendant's answer, aside from a denial of negligence, made certain allegations to which plaintiff's demurrer is directed. Pursuant to these allegations, it appears that decedent's dependents, Who are also his next of kin under § 573.02, ¹ instituted proceedings under the workmen's compensation act against the employer, who was insured pursuant to § 176.03. A compensation award of $30 weekly, but not to exceed a total of $10,000, was granted to the dependents During their dependency, plus $257.77 for medical and hospital expenses and $350 for burial expenses. Defendant further alleged that the total award is greater than the amount recoverable under the wrongful-death statute; that by the dependents' acceptance of such award the employer became subrogated to, and is the owner of, all the rights of such dependants in any cause of action against defendant; and that as a result the employer and his insurer are the real parties in interest. It is further alleged that the employer and insurer actually instituted and now maintain this action, and that they will own in its entirety any judgment obtained pursuant thereto under the wrongful-death act. It is further alleged that the employer was contributorily negligent in furnishing to decedent for use in his employment certain defective hoses, couplings, and equipment, and that the accident and decedent's resulting death occurred as a direct and proximate result of such unsafe and defective equipment. Plaintiff's demurrer to these allegations was sustained by the trial court, and from this order defendant appeals.

The primary issue with which we are now concerned is: May contributory negligence of the employer be asserted as a defense by a third-party defendant in an action for damages brought against him by the dependents of an employe for whose death compensation has been paid, or is payable, to them pursuant to § 176.06, subd. 2, of the workmen's compensation act?

1. As a preliminary to the disposal of the primary issue, as it arises upon the demurrer herein, it is to be noted that defendant's allegation that the employer and his insurer are the real parties in interest and will own the entire proceeds of any judgment obtained is a bare conclusion of law and is not admitted by the demurrer. A demurrer admits only well-pleaded material facts and Not bare conclusions of law. McGuigan v. Allen, 165 Minn. 390, 206 N.W. 174; Robinson v. Butler, 226 Minn. 491, 33 N.W.2d 821, 4 A.L.R.2d 143.

Defendant asserts that, the employe's dependents having once instituted compensation proceedings and having accepted certain payments of compensation, it necessarily follows, under § 176.06, subd. 2, that the employer has been subrogated to all rights of such dependents; and, further, that their action is in effect now maintained and continued by and for the sole benefit of the employer. The contention that the dependents no longer have any interest in the action is based on the theory that any damages recovered for them under the wrongful-death act can in no event exceed the total compensation payable to them under the compensation award. In other words, in the event of a recovery of damages for the employe's death, there will be no excess payable to the dependents after first deducting the amount of compensation payable, in that the wrongfuldeath statute limits recovery to the sum of $10,000, which sum is wholly offset by the compensation award in the same amount. On the assumption that the employer is now the sole party in interest as to any amount which can be recovered, defendant seeks to assert the employer's contributory negligence as a defense under the holdings of this court in Thornton Bros. Co. v. Reese, 188 Minn. 5, 246 N.W. 527, and Standard Accident Ins. Co. v. Minnesota Utilities Co., 207 Minn. 24, 289 N.W. 782.

2. In passing upon the validity of defendant's theory, we shall first consider the authoritative scope of the two decisions cited. The Thornton Bros. decision is clearly confined by its controlling facts--and also by its language of limitation--to the right of a third-party defendant to assert the contributory negligence of an employer Under the first subdivision of the statute, namely, § 176.06, subd. 1, whereas the instant case arises under subd. 2 thereof. These two statutory subdivisions, § 176.06, subds. 1 and 2, are at variance with each other as to the nature of the right of recovery granted and as to the parties who are primarily interested.

Under § 176.06, subd. 1, in the case of an employe's injury or death which occurs under circumstances which create a legal liability for damages on the part of any party other than the employer, the employe, or in the case of his death his dependents, may either sue such party at law for damages or, in the alternative, may proceed against the employer for compensation. One remedy may be pursued to the exclusion of the other, but not both. By specific language, this subdivision applies only to those cases where the employer liable for compensation and the other party who is legally liable for damages were both either insured or self-insured and, in addition, were both engaged in the due course of business (a) in the furtherance of a common enterprise, or (b) the accomplishment of the same or related purposes in operation on the premises where the injury was received at the time thereof. See, Wagner v. City of Duluth, 211 Minn. 252, 300 N.W. 820. Under this subdivision, as so limited, if an election to receive compensation from the employer is once made by the employe or his dependents, the employer is automatically subrogated to the right of the employe or his dependents against the other party, and may bring legal proceedings against the latter and recover the aggregate amount of compensation and medical expense payable by him to such employe or his dependents, plus costs, disbursements, and reasonable attorney's fees. In other words, a Compensation-receiving employe and his dependents are wholly barred from any right of action against the third party. Furthermore, the employer has no right of recovery by subrogation unless he has first become liable for payments of compensation; and the amount of his recovery in such case is strictly limited to the aggregate of his compensation liabilities and related expenses And can in no event include any damages for the employe or his dependents. ²

3. Subd. 2 of § 176.06, however, covers all insured or self-insured employers and legally liable third parties who are not covered by subd. 1; And in contrast to subd. 1, an employe, or his dependents in case of his death, may thereunder, irrespective of their right to or acceptance of any compensation, bring an action against such other party for the recovery of any and all damages that may have been sustained, subject only to the condition that any amount recovered shall, after the deduction of costs, reasonable attorney's fees, and expenses, be first applied in repayment to the employer of any compensation payable by him and actually received by the employe or his dependents. If under this subd. 2 of the statute there is once a commencement of compensation proceedings, or an acceptance of compensation, the employer is subrogated to the rights of the employe or his dependents; and he may then start an action, or continue one that has already been started, against such other party To recover damages, not merely to recover the aggregate amount of his compensation liability. Anything...