Orth v. Shiely Petter Crushed Stone Co.

• Citation: 91 N.W.2d 463,253 Minn. 142
• Decision Date: 11 July 1958
• Docket Number: No. 37179,37179
• Parties: Chester P. ORTH, Relator, v. SHIELY PETTER CRUSHED STONE COMPANY, Employer, Liberty Mutual Insurance Company, Insurer, State Treasurer, Custodian of Special Compensation Fund, Respondent.
• Court: Supreme Court of Minnesota (US)

Page 463

91 N.W.2d 463

253 Minn. 142

Chester P. ORTH, Relator, v. SHIELY PETTER CRUSHED STONE COMPANY, Employer, Liberty Mutual Insurance Company, Insurer, State Treasurer, Custodian of Special Compensation Fund, Respondent.

No. 37179.

Supreme Court of Minnesota.

July 11, 1958.

Syllabus by the Court.

1. In determining subrogation rights to employee's third-party negligence action under Workmen's Compensation Act, court is governed by general principle that, in absence of unmistakable language, act should not be interpreted to cut off or limit workman's common law or statutory remedies not otherwise limited therein.

2. Under M.S.A.1949, § 176.06, subd. 2, the only limitation imposed upon employee's third-party negligence action as provided for therein is that Employer may deduct from funds recovered thereunder amount which has been paid employee for compensation and may be subrogated in such an action for this purpose.

3--4. Right of subrogation in injured employee's third-party negligence action ordinarily is dependent upon statutory authorization rather than upon common-law principles and majority of courts have refused to enlarge or extend specific language of compensation acts with reference thereto.

5. Section 176.06, subd. 2, has not been construed to include with term Employer as used therein the compensation insurer of employer so as to entitle it to be subrogated in employee's third-party negligence action, but language of court in a number of decisions has implied that such construction would be proper.

6. In so far as § 176.06, subd. 2, limits employee's common-law right of action, it must be strictly construed. Accordingly, term Employer as used therein cannot be construed to include custodian of special compensation fund, who is not employer's indemnitor, and who represents all employers as a general class rather than any specific employer.

7. Where legislature failed to include custodian of special compensation fund as subrogee to employee's third-party negligence action, this court cannot supply omission by judicial construction. Held employee here entitled to recover $5,000 under M.S.A.1949, § 176.13, and custodian of special compensation fund may not offset such amount by any funds recovered by employee in third-party negligence action.

Ralph Foster, Minneapolis, for relator.

Miles Lord, Atty. Gen., Robert Latz, Sp. Asst. Atty. Gen., St. Paul, for respondent.

THOMAS GALLAGHER, Justice.

Certiorari to review an order of the Industrial Commission which denied relator an award of $5,000 from the special compensation fund over and above compensation previously paid him in the sum of $10,000; and which ordered that the special compensation fund be credited with payment of $5,000 to relator out of the proceeds of $20,000 received by him in settlement of a third-party action which arose out of the accident.

Relator's injuries were sustained on July 18, 1949, in the course and arising out of his employment by Shiely Petter Crushed Stone Company. They resulted in the loss of both of his legs and of his right arm. The employer and its insurer admitted liability therefor and paid compensation to relator to the extent of $10,000, final payment being made in July of 1956. As a result of such injuries, relator instituted a common-law action against a third party based upon negligence. As indicated above, a settlement was made therein, whereby relator was paid the net sum of $20,000. The employer and insurer waived their subrogation rights to any part of this sum and continued to pay relator compensation until they had paid him the full amount of $10,000.

On August 29, 1956, after the full $10,000 compensation had been said, relator filed with the Industrial Commission a petition requesting payment of an additional $5,000 from the special compensation fund, pursuant to M.S.A.1949, § 176.13, which provides in part:

'All employees who are now receiving, or who may hereafter become entitled to receive, compensation for permanent total disability, whether from the employer or from the special fund, after receiving the full amount of $10,000 for such disability, shall be paid from the fund an additional sum of not to exceed $5,000, in the same manner and with the same limitations, except as to amounts, at the rate of two-thirds of the wages they were receiving at the time of the injury which rendered them permanently totally disabled * * *.'

The special compensation fund was created and is maintained by payments from employers to the Industrial Commission of certain specified sums in cases of death where there are no dependents entitled to compensation; and in cases of compensable injuries resulting in permanent partial disability which entitle an employee to compensation under M.S.A. § 176.101.

In its opinion the commission stated:

'* * * it is clear that payment from the special fund was nothing more than and could only be considered as payment of compensation to the totally disabled employe. If by virtue of a situation giving rise to a third-party suit, and money recovered in such a suit is available, then it seems elementary that the right of subrogation lies for those who have paid compensation because of the liability imposed.

'The payments of compensation provided by the act * * * all follow from the basic compensation act * * *. To say that subrogation lies under one section and is denied under another section would be contrary to be broad and general acceptance of the act.

'* * * We cannot * * * see any distinction in compensation paid, whether from the fund or by an insurance carrier; therefore, we conclude that the fund be credited with the payment of $5,000 from the money in the hands of the employe resulting from the third-party recovery.'

On appeal relator asserts that subrogation rights under the compensation act are fixed by M.S.A.1949, § 176.06, subd. 2, ¹ which authorizes subrogation of an employer in third-party negligence actions instituted by an employee, but which does not extend subrogation rights to the custodian of the special compensation fund, and that therefore he should be required to pay relator the additional $5,000 as provided in § 176.13.

Respondent contends that, even though § 176.06, subd. 2, makes no reference to the custodian of the special compensation fund, under common-law principles of equity, the latter may be subrogated in third-party negligence actions arising out of industrial accidents wherein an employee recovers all or part of compensation previously paid him; and that, since relator here has received payments in excess of the $10,000 compensation paid him and the $5,000 provided for in § 176.13 no further liability rests upon the custodian thereunder.

The question has not previously been presented here, and since the provisions of § 176.13 are not common to the workmen's compensation acts of other states, there are no decisions of other jurisdictions to guide us in our determination thereof.

1. In determining whether respondent custodian of the special compensation fund may be subrogated to employee's third-party negligence action, we are governed by the general principle that, in the absence of unmistakable language, the Workmen's Compensation Act should not be interpreted to cut off or limit a workman's common-law or statutory remedies not eliminated or otherwise restricted by the provisions thereof. Cook v. Minneapolis Bridge Const. Co., 231 Minn. 433, 43 N.W.2d 792; 21 Dunnell, Dig. (3 ed.) § 10385(9).

2. One such remedy expressly reserved to an injured workman is his right of action against a third party not within the provisions of the act whose negligence proximately caused the injuries. § 176.06, subd. 2. The only limitation imposed upon this right is that the Employer may deduct from compensation funds due the workman the amount which the latter shall have received in the third-party action and may be subrogated to the right of the workman for such purpose. There is nothing in § 176.06, subd. 2, which authorizes such subrogation to anyone except the employer.

3. The right of subrogation to an injured employee's third-party action appears strictly dependent upon statutory authorization rather than upon common-law principles. The workmen's compensation acts of the various states grant authority for such subrogation to either (1) the employer alone; or (2) to the employer, or, in the alternative, to his compensation insurer, or to the state compensation fund. ² Where such legislation fails to authorize subrogation by specific designation, or limits its extent, or specifies the kind of action in which it is authorized, the courts will not enlarge upon or extend the specific language or provisions thereof. ³ Metropolitan Cas. Ins. Co. v. Sloss-Sheffield Steel & Iron Co., 241 Ala. 545, 3 So.2d 306; Merino v. Pacific Coast Borax Co., 124 Cal.App. 336, 12 P.2d 458; New Amsterdam Cas. Co. v. Griner, 176 Ga. 69, 166 S.E. 864; Pittsburgh, C.C. & St. L.R. Co. v. Keith, 89 Ind.App. 233, 146 N.E. 872; Henderson Telephone & Telegraph Co. v. Owensboro Home Telephone & Telegraph Co., 192 Ky. 322, 233 S.W. 743; Fidelity & Cas. Co. v. Huse & Carleton, Inc., 272 Mass. 448, 172 N.E. 590, 72 A.L.R. 1143; United States Cas. Co. v. Hercules Powder Co., 4 N.J. 157, 72 A.2d 190; Truscon Steel Co. v. Trumbull Cliffs Furnace Co., 120 Ohio St. 394, 166 N.E. 368; Fox v. Dunning, 124 Okl. 228, 255 P. 582; Aetna Life Ins. Co. v. Otis Elevator Co., Tex.Civ.App., 204 S.W. 376; Marshall-Jackson Co. v. Jeffery, 167 Wis. 63, 166 N.W. 647.

4. Thus, it has been said that a compensation insurer's 'right of subrogation depends entirely upon the (workmen's compensation) statute' (Metropolitan Cas. Ins. Co. v. Sloss-Sheffield Steel & Iron Co., 241 Ala. 545, 3 So.2d 306, 308); that 'The right of recovery is statutory and is to be distinguished from cases involving subrogation' (Merino v. Pacific Coast Borax Co., 124 Cal.App. 336, 344, 12 P.2d 458, 461); that an...