Oklahoma Natural Gas Co. v. Mid-Continent Casualty Co.

• Decision Date: 13 July 1959
• Docket Number: No. 6071.,6071.
• Citation: 268 F.2d 508
• Parties: OKLAHOMA NATURAL GAS COMPANY, a corporation, Appellant, v. MID-CONTINENT CASUALTY COMPANY, a corporation (formerly General Bonding and Insurance Company), Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

268 F.2d 508 (1959)

OKLAHOMA NATURAL GAS COMPANY, a corporation, Appellant, v. MID-CONTINENT CASUALTY COMPANY, a corporation (formerly General Bonding and Insurance Company), Appellee.

No. 6071.

United States Court of Appeals Tenth Circuit.

July 13, 1959.

Clayton B. Pierce, Oklahoma City, Okl. (Melvin F. Pierce, and Pierce, Mock & Duncan, Oklahoma City, Okl., of counsel, on the brief), for appellant.

John B. Dudley, Jr., Oklahoma City, Okl. (Dudley, Dudley & Dudley, Oklahoma City, Okl., of counsel, on the brief), for appellee.

Before MURRAH, PICKETT and BREITENSTEIN, Circuit Judges.

BREITENSTEIN, Circuit Judge.

The trial court granted a summary judgment in favor of appellee-plaintiff, a workmen's compensation insurer, and against the appellant-defendant¹ whose alleged wrongful acts caused the injuries for which compensation was paid by the insurer. There was no proof of negligence. It was held that liability was fixed by a settlement which the wrongdoer had made with the injured persons.

The facts are undisputed. The insurer provided compensation protection for the employer of those injured and pursuant to the Oklahoma law paid the awards to which the injured were entitled. Thereafter the injured sued the appellant, Natural Gas, asserting that the accident resulting in their injuries, was caused by the negligence of Natural Gas. The insurer had knowledge of the pendency of these suits but was not joined as a party and did not intervene. Natural Gas had notice of the compensation payments made by the insurer and of its claim for reimbursement from Natural Gas. The suits were settled and dismissed with prejudice without notice to or consent of the insurer. The amounts paid were substantially in excess of the compensation awards. Each settlement release contained the following provision:

"It is not our intention in making this release to release the claim of the insurance company that paid medical expenses and compensation to us; but, it is our intention to settle each and every claim which we have."

After the settlements, the insurer sued Natural Gas asserting two claims: (1) that the payments by Natural Gas to those injured with knowledge of the insurer's rights made Natural Gas liable to it as a matter of law, and (2) that it had suffered a loss, the payment of the compensation awards, because of the negligence of Natural Gas for which it was entitled to recover. The trial court granted summary judgment on the first claim. The position of Natural Gas is that the settlements did not determine its liability as a matter of law and that recovery can only be had under the second claim and on proof of negligence. Natural Gas concedes that the insurer may maintain the second claim.

The Oklahoma Workmen's Compensation law provides² that if a workman entitled to compensation thereunder is injured by the negligence of another not in the same employ, he shall, before any suit or claim, elect whether to take compensation or to pursue his remedy against such other person and "If he elects to take compensation under this Act, the cause of action against such other shall be assigned to the insurance carrier liable for the payment of such compensation * * *."

The theory of appellant, Natural Gas, is that the injured persons and the insurer each have an independent claim and the settlement of one does not affect the other. The insurer asserts that there is but one claim against the wrongdoer responsible for the injuries and that on the settlement of such claim a trust or lien is impressed on the proceeds of the settlement in favor of the insurer to the amount of its loss with the result that the wrongdoer by ignoring the rights of the insurer became liable as a matter of law to the insurer to the extent of the compensation awards.

In Staples v. Central Surety & Ins. Corporation, 10 Cir., 62 F.2d 650, 653, this court upheld the right of a compensation insurer to maintain in its own name a claim against a wrongdoer whose negligence had caused the injuries for which the insurer had paid compensation. The rule so announced was followed by Oklahoma in State Insurance Fund v. Smith, 184 Okl. 552, 88 P.2d 895, 897, and Stinchcomb v. Dodson, 190 Okl. 643, 126 P.2d 257, 259-260. Almost contemporaneously with Stinchcomb the Oklahoma Supreme Court decided Parkhill Truck Co. v. Wilson, 190 Okl. 473, 125 P.2d 203,³ but neither decision mentioned the other. In Parkhill it was held that the injured workman could maintain a claim against the wrongdoer and the wrongdoer could not be required to pay more than one judgment. At the same time Parkill said that the insurer can require recoupment in the event of recovery from the negligent third party. Subsequent decisions have left the rules announced in Stinchcomb and Parkhill without clarification.⁴ This court has followed the Staples decision in the Oklahoma case of Baker v. Traders & General Ins. Co., 10 Cir., 199 F.2d 289.

The significance of the foregoing decisions relates only to the question of whether there is one cause of action against the wrongdoer or whether the injured person and the insurer each has a separate and independent cause of action. The importance of...