Ruediger v. Kallmeyer Bros. Service

• Decision Date: 12 November 1973
• Docket Number: No. 58212,58212
• Citation: 501 S.W.2d 56
• Parties: Leroy F. RUEDIGER, Jr., Appellant, v. KALLMEYER BROTHERS SERVICE, Respondent.
• Court: Missouri Supreme Court

Page 56

501 S.W.2d 56

Leroy F. RUEDIGER, Jr., Appellant, v. KALLMEYER BROTHERS SERVICE, Respondent.

No. 58212.

Supreme Court of Missouri, En Banc.

Nov. 12, 1973.

Richard L. Hughes, Mogab, Hughes & Green, St. Louis, D. Sherman Cox, St. Louis, for appellant.

Ronald C. Willenbrock, Holtkamp & Amelung, St. Louis, for (defendant) respondent.

DONNELLY, Chief Justice.

On February 10, 1965, Leroy F. Ruediger, Jr., was injured in a two vehicle accident while in the employ of Kallmeyer Brothers Service. He was found to be permanently and totally disabled under the Missouri Workmen's Compensation Law and entitled to $42.50 per week for the first 300 weeks of permanent total disability and thereafter to $27.50 per week for life, in addition to all medical aid which might become necessary.

Ruediger filed a third party claim against American Bus Lines, Inc. which resulted in judgment, plus interest, in the amount of $140,582.62.

This appeal involves the question of apportionment of a third party recovery under § 287.150, RSMo 1969, V.A.M.S., when the employee effects the recovery. The case was transferred here by this Court after opinion by the Missouri Court of Appeals, St. Louis District, because of an apparent conflict in the law between the Kansas City and St. Louis Districts of the Missouri Court of Appeals.

Section 287.150, RSMo 1969, V.A.M.S., reads in part as follows:

'1. Where a third person is liable to the employee or to the dependents, for the injury or death, the employer shall be subrogated to the right of the employee or to the dependents against such third person, and the recovery by such employer shall not be limited to the amount payable as compensation to such employee or dependents, but such employer may recover any amounts which such employee or his dependents would have been entitled to recover. Any recovery by the employer against such third person, in excess of the compensation paid by the employer, after deducting the expenses of making such recovery shall be paid forthwith to the employee or to the dependents, and shall be treated as an advance payment by the employer, on account of any future installments of compensation.

'3. Whenever recovery against the third person is effected by the employee or his dependents, the employer shall pay from his share of the recovery a proportionate share of the expenses of the recovery, including a reasonable attorney fee. After the expenses and attorney fee has been paid the balance of the recovery shall be apportioned between the employer and the employee or his dependents in the same ratio that the amount due the employer bears to the total amount recovered, or the balance of the recovery may be divided between the employer and the employee or his dependents as they may agree. Any part of the recovery found to be due to the employer, the employee or his dependents shall be paid forthwith and any part of the recovery paid to the employee or his dependents under this section shall be treated by them as an advance payment by the employer on account of any future installments of compensation.'

The St. Louis District of the Court of Appeals (opinion by Simeone, J.), posed the problem presented by this case as follows:

'The procedure to be followed in the enforcement of third party liability, and the procedure concerning the responsibility for expenses of the recovery and the distribution of the proceeds of a third party recovery, have been termed by this court to be a 'vexatious' problem in every state which has adopted a workmen's compensation law. McKenzie v. Missouri Stables, 225 Mo.App. 64, 34 S.W.2d 136, 138. For general discussions see 101 C.J.S. Workmen's Compensation § 1042; Annot., 142 A.L.R. 170. The statutes vary so widely that each state is compelled to interpret its own unique provisions. § 287.150(3) has many deficiencies which should be corrected and which make the statute particularly difficult to apply to a permanent and total disability case. We urge the General Assembly to examine the statute and correct the numerous deficiencies therein.

"Originally most states passed rather restricted Workmen's Compensation Laws. Legislatures and courts seemed fearful of possible double recovery and had no desire to promote litigation. It is elementary that a claimant should not be allowed to keep the entire amount both of his compensation award and his common law damage recovery.' Knox v. Land Const. Co., Mo.App., 345 S.W.2d 244, 247. See also Anderson v. Quality Furnace Co., Mo.App., 447 S.W.2d 828, 830. At first it seemed that the proper disposition of the third party proceeds would be to give to the employer so much thereof as to reimburse him for his compensation payments and give to the employee the remainder. Prior to 1955 this apparently was the procedure and still is when the third party recovery is 'effected' by the employer under § 287.150(1). Under that subsection the 'expenses' of recovery of the third party claim are first paid, then the employer is reimbursed for his compensation outlay and the balance is paid to the employee as an advance payment on any future installments. Maryland Cas., Co. v. General Elec. Co., Mo., 418 S.W.2d 115. In that decision the Supreme Court held that when the insurer paid a certain sum to a widow for compensation and instituted action against a third party, with the widow participating in the suit, the widow was entitled to receive only the balance of a recovery after payment of the subrogated amount plus the expenses of litigation.

'But in 1955 the General Assembly amended § 287.150 (Laws, 1955, p. 597) by adding subsection (3). Under that subsection, a method of sharing the expenses and a division of the balance of the third party recovery after expenses is provided whenever the recovery is 'effected' by the employee. This section has resulted in great confusion, uncertainty and differences of opinion as to the proper formula to be utilized in the sharing of expenses and in the distribution of the third party recovery between the employer and the employee. On the one hand, the Kansas City Court of Appeals (Missouri Court of Appeals, Kansas City District) in Knox and Anderson, supra, takes one view, and the Industrial Commission another.

'The statute first directs that when the employee effects recovery '. . . the employer shall pay from his share of the recovery a proportionate share of the expenses . . .' What is the employer's share of the recovery? What is his proportionate share of the expenses? The statute then goes on to say 'After the expenses and attorneys fee has been paid the balance of the recovery shall be apportioned between the employer and the employee . . . in the same ratio that the amount due the employer bears to the total amount recovered, or the balance of the recovery may be divided between the employer and the employee . . . as they may agree.' What is the amount due the employer? Is it the amount of the total compensation award or the amount actually paid to the employee on the award (the amount accrued and paid)?

'In both Knox and Anderson, supra, the amount of the award rather than the amount actually paid on the award was used as the basis for determining how the distribution of the balance of the recovery was to be achieved. In both cases the amount of the award was certain ($2,197.60--$342.50 paid in Anderson, and $12,797.85--$4,597.85 paid in Knox) and the formula used to distribute the third party proceeds in those cases was, after expenses, to distribute the proceeds in the ratio that the total amount of the award ('amount due the employer') bears to the total amount of the third party recovery. The Kansas City Court rejected as 'unworkable' and even 'absurd' the Commission's 'Tisius' formula (Tisius v. Morrell Meat Packing Company, Injury No. ZZ--26007, entered September 21, 1966) which held that the employer should bear only that portion of the expenses of a recovery and attorneys fee in proportion which the amount paid by the employer bears to the total recovery.

'The amount of the award in both Knox and Anderson, supra, was certain; Knox involved a death and Anderson did not involve a permanent total injury. Therefore, neither Knox, Anderson, nor Tisius control the resolution of this proceeding. All agree that Mr. Ruediger is permanently and totally disabled and is entitled to compensation for a certain amount for 300 weeks and an amount for the remainder of his life as a pension. All agree that the...