S. Sur. Co. of N.Y. v. Chi., R. I. & P. Ry. Co.

• Decision Date: 15 December 1932
• Docket Number: No. 41221.,41221.
• Citation: 215 Iowa 525,245 N.W. 864
• Parties: SOUTHERN SURETY CO. OF NEW YORK v. CHICAGO, R. I. & P. RY. CO.
• Court: Iowa Supreme Court

215 Iowa 525

245 N.W. 864

SOUTHERN SURETY CO. OF NEW YORK

v.CHICAGO, R. I. & P. RY. CO.

No. 41221.

Supreme Court of Iowa.

Dec. 15, 1932.

Appeal from District Court, Polk County; Loy Ladd, Judge.

This is an action at law to recover payments made by an insurance company to an injured employee, under the Iowa Workmen's Compensation Law, from a third party. It was alleged that the injury to the employee was caused under circumstances creating a legal liability against the third party to pay damages. The third party made a settlement with the employee in full payment and satisfaction of any and all claims which he might have, arising out of the injuries received, and for the dismissal of his suits pending against the third party. A jury was waived, and the case submitted to the court. The court dismissed the plaintiff's action with costs.

Affirmed.Stipp, Perry, Bannister & Starzinger, of Des Moines, for appellant.

Gamble, Read & Howland, of Des Moines, for appellee.

DE GRAFF, J.

The appellant appeals on two counts. It becomes necessary to set out an extended statement of the facts in the case and the proceedings taken in the matter by the parties involved in the action.

C. W. Wills was in the employ of Earl Cooper of Newton, Iowa, and both employer and employee had elected to be subject to the provisions of the Iowa Workmen's Compensation Law (Code 1927, § 1361 et seq.). The appellant, Southern Surety Company of New York, had issued to the employer a workmen's compensation insurance policy which covered the employee. While engaged in the course of his employment, on January 11, 1929, Wills received personal injuries in some manner, not disclosed by the record, while the switch crew of the appellee, Chicago, Rock Island & Pacific Railway Company, was engaged in switching cars on the premises of the employer, Earl Cooper. The insurance company made compensation payments under its policy to the injured employee, and for medical services rendered him, under the provisions of the law, to an amount of $1,189. A suit for damages against the railway company was commenced in the district court of Jasper county, Iowa, by Wills, but was later dismissed by him. The record is not clear as to whether the appellant intervened in or was a party to that suit. After the dismissal of the Jasper county district court case, another suit was brought by Wills in the district court of Steele county, Minn., to recover damages from the railway company. The dates of the commencement of these two suits are not definitely fixed by the record. It is not shown that the appellant became a party to or intervened in the Minnesota action. It appears that the claim adjusters of the insurance company and the railway company were assiduously engaged in looking after the case and co-operated in their attempt to effect some settlement with Wills. It also appears that the railway company continuously denied liability for the injury received by Wills. On or about August 13, 1930, a proposition for settlement was made by Wills to the railway company in writing as follows:

+----------------------------+
                ¦“$1,350.00¦Kellerton, Iowa. ¦
                +----------+-----------------¦
                ¦          ¦August 13, 1930. ¦
                +----------------------------+
                

This certifies that if the Chicago, Rock Island and Pacific Railway Company will pay me by draft at Kellerton, Iowa, within a reasonable time (ten days) the sum of One Thousand Three Hundred Fifty and no/100 dollars I hereby agree to accept the said sum in full payment and satisfaction of all claims, of whatsoever kind or description, arising from or growing out of all damages by reason of personal injuries received at or near Newton, Iowa, Jan. 11, 1929. It being agreed in this proposition that the Railway Company to take care of liens of Tautges, Wilder & McDonald, in Minnesota, and of the Southern Surety claim for compensation and Attorney R. J. Bannister of Des Moines. It being agreed that on payment to me I will dismiss any and all suits now pending in Minnesota and Iowa. This is my only proposition of settlement and it is agreed it is not to be used against me, in case trial is forced on me in either court.

[Signed] C. W. Wills.

In presence of undersigned witnesses:

R. G. Coffman.”

It is evidenced by the following stipulation, entered into by counsel for the parties in the trial in the lower court, that the foregoing proposition for settlement was accepted by the railway company:

“It is stipulated and agreed by and between the parties hereto that the jury is waived in this case, and the same may be tried and submitted to the court. It is further stipulated and agreed that the said C. W. Wills on January 11, 1929, was employed by Earl Cooper, Newton, Iowa, and while so employed was injured by reason of a car of the defendant company passing over his hand on a sidetrack, while being moved or shifted on the premises of Earl Cooper.

It is further stipulated and agreed that claim was made by the said C. W. Wills that his injuries were caused by the negligence of the defendant, and without contributory negligence on his part, and that he brought suit in the District Court of Jasper County, Iowa, against the defendant for said injuries. That later and shortly prior to the date set for trial of said suit he dismissed the same and brought suit again in the District Court of Steele County, Minnesota, being represented by the firm of Tautges, Wilder & McDonald, attorneys of Minneapolis, Minnesota. That while suit was pending against the defendant company in the State of Minnesota to recover for said injuries the defendant entered into certain negotiations with said C. W. Wills looking to the compromise and settlement of any claims which he might have; that the defendant secured from said C. W. Wills a proposition of settlement in writing, the original of which is marked Exhibit‘A’ and made a part of this stipulation and offered in evidence; that following the execution of said proposition of settlement of said C. W. Wills on or about the 13th day of August, 1930, the defendant herein accepted said proposition and paid to C. W. Wills at Kellerton, Iowa, on August 18, 1930, the sum of $1350.00 and that the said C. W. Wills at that time executed to the defendant a general release covering all claims or causes of action which he then had or claimed to have against the defendant on account of said injury.”

The appellant's cause of action is based on two counts: (1) That upon its payment of compensation, under the Iowa Workmen's Compensation Law, to Wills, it had a lien on the claim for damages of Wills against the railway company and was entitled to indemnity for the amount so paid by it. (2) That, in the settlement made with Wills by the railway company, there was an agreement that the appellee was to take care of (or, in other words, to pay) the claim of the appellant insurance company for the amount it had paid Wills.

[1][2] I. Whatever lien on, indemnity or subrogation of rights to Wills' claim against the railway company the appellant had must have arisen out of the provisions of the Iowa Workmen's Compensation Law. Section 1382, Code 1927, dealing with “third party” cases, as pertains to this action, reads as follows:

“When an employee receives an injury for which compensation is payable * * * and which injury is caused under circumstances creating a legal liability against some person other than the employer to pay damages, the employee * * * may take proceedings against his employer for compensation, and * * * may also maintain an action against such third party for damages. When an injured employee * * * brings an action against such third party, a copy of the original notice shall be served upon the employer by the plaintiff, not less than ten days before the trial of the case, but a failure to give such notice shall not prejudice the rights of the employer, and the following rights and duties shall ensue:

1. If compensation is paid the employee, * * * the employer by whom the same was paid, or his insurer which paid it, shall be indemnified out of the recovery of damages to the extent of the payment so made * * and shall have a lien on the claim for such recovery and the judgment thereon for the compensation for which he is liable. In order to continue and preserve the lien, the employer or insurer shall, within thirty days after receiving notice of such suit from the employee, file, in the office of the clerk of the court where the action is brought, notice of the lien.

2. In case the employee fails to bring such action within ninety days * * * after written notice so to do given by the employer or his insurer * * * then the employer or his insurer shall be subrogated to the rights of the employee to maintain the action against such third party, and may recover damages for the injury to the same extent that the employee might. In case of recovery, the court shall enter judgment for distribution of the proceeds thereof as follows:

a. A sum sufficient to repay...