Smith v. American Emp. Ins. Co.
| Decision Date | 30 June 1960 |
| Citation | 163 A.2d 564,102 N.H. 530 |
| Court | New Hampshire Supreme Court |
| Parties | Dorothy SMITH v. AMERICAN EMPLOYERS' INSURANCE COMPANY. |
Burns, Bryant & Hinchey and Lawrence E. Spellman, Dover, for plaintiff.
Sheehan, Phinney, Bass, Green & Bergevin, Richard A. Morse, Manchester and Wm. L. Phinney, Manchester, for defendant.
The question presented is whether RSA ch. 281 deprives the plaintiff employee of her right to proceed at common law against a third party for allegedly negligently causing her injury, when the third party is her employer's workmen's compensation insurance carrier. The defendant contends that it does so. The issue is one of legislative intent and to determine it we must examine our workmen's compensation statute.
The material portions of RSA 281:14 read as follows: 'When an injury for which compensation is payable under the provisions of this chapter has been sustained under circumstances creating in some person other than the employer a legal liability to pay damages in respect thereto, the injured employee, in addition to the benefits of this chapter, may obtain damages from or proceed at law against such other person to recover damages; provided, however, that the employer shall have a lien on the amount of damages recovered by the employee, less the expenses and costs of action, to the extent of the compensation * * * paid, or agreed or awarded * * * by the employer under this chapter.' The statute goes on to provide that no settlement by the employee shall be binding until approved by the Commissioner of Labor, who shall make provision for payment to the employer of his lien, and it authorizes the employer to proceed against the third party if the employee delays doing so for a period of nine months after the injury, and to be subrogated in so doing to the rights of the employee. Any recovery by the employer in excess of what he has paid or agreed to pay the employee is to go to the latter.
It is obvious that the words 'some person other than the employer,' interpreted as they must be in accord with their 'common' usage (RSA 21:2) would include the defendant insurance carrier. McDonald v. Employer's Liab. Assur. Corp., Ltd., 288 Mass. 170, 192 N.E. 608. It is a person by statutory definition (RSA 21:9) and in every sense one 'other than the employer.' If the defendant is not to be so considered, it must be because the Legislature has intended otherwise. However, an examination of the pertinent provisions of RSA ch. 281 fails to disclose such an intent. Undisputably, there is no express exclusion of the insurance carrier.
The defendant argues that the subrogation provision in section 14, in favor of the employer, which under the policy inures to the benefit of the carrier when it has paid compensation, discloses such a design since the defendant could not be subrogated to a claim against itself. This contention fails to take into account the fact that the claim here against the carrier is for a tort allegedly committed by it as a third person against the plaintiff. Payment to the plaintiff by the defendant would not be under the policy nor in its status as carrier, but rather as an independent third party. McCullough v. John B. Varick Company, 90 N.H. 409, 412, 10 A.2d 245. So far as the defendant is concerned, its alleged liability is not that of an employer, under the Law, but one arising out of an alleged breach of common-law duty.
We have held that a fellow employee is a third party within the meaning of section 14 (Merchants Mutual Cas. Co. v. Tuttle, 98 N.H. 349, 352, 101 A.2d 262), and also that an independent contractor may be liable under this section. Butler v. King, 99 N.H. 150, 154, 106 A.2d 385. While this result is contrary to the decisions in some jurisdictions, it is based on what we believe to be the sound reason that had our Legislature not intended to preserve all common-law rights to the employee, except those against the employer under the Law, it would have said so.
The defendant's position that since it has contracted with the employer under the terms of its policy, in effect, to step into the employer's shoes (RSA 281:9) and thereby be entitled to its immunities, cannot be sustained. No agreement made between these parties, to which the employee is not a party, can govern her rights against the defendant.
In regard to the validity of the plaintiff's tort action against the defendant, it is a basic principle of our jurisprudence that one who undertakes to act, even gratuitously, may be liable to persons injured by his failure to use due care. Brunel v. Nashua Bldg. & Loan Association, 95 N.H. 391, 394, 64 A.2d 315, and authorities cited. This liability extends to all who may fairly be said to come within the orbit of risk created by the actor's negligence. See Derby v. Public Service Company, 100 N.H. 53, 58, 119 A.2d 335; Annotation 6 A.L.R.2d 284. We need not labor the point that the plaintiff employee, working in proximity to the tank which exploded, falls squarely within the class entitled to protection.
The defendant further asserts that to allow a recovery against it in tort is to allow a double recovery. This is not so. Under RSA 281:14, the employer has a lien upon any recovery by the employee from a third person in a tort action to the extent of the compensation payments it has made to the employee. One purpose of this section was to prevent a double recovery by the employee from the employer and the third party. See Gagne v. Garrison Hill Greenhouses, 99 N.H. 292, 293-294, 109 A.2d 840. Here, by the terms of the insurance policy, the defendant is subrogated to the rights of the employer against a third party tort-feasor. Since this is so, the defendant will be allowed to set off against any verdict against it obtained by the plaintiff in the tort action the amount of the compensation it has paid or has become obligated to pay her, on behalf of her employer, thereby preventing double recovery.
Since the question of the carrier's tort liability is purely one of local law, dependent upon the statute, authorities in other jurisdictions cited by the defendant and depending on different statutes and policies are neither controlling nor persuasive. It may be noted, however, that in such cases as Schulz v. Standard Accident Ins. Co., D.C.E.D.Wash.1954, 125 F.Supp. 411, substantially relied upon by the defendant, the Court based its denial of recovery on the fact that under the Idaho Compensation Act, I.C. § 72-101 et seq., the remedies against the employer or against a third person were mutually exclusive. This, as previously pointed out, is contrary to our law where an action lies against both. Butler v. King, 99 N.H. 150, 106 A.2d 385. Other cases cited by the defendant, also decided under statutes and policies at variance with our own, such as suits for malpractice against physicians furnished by the employer under the Act to treat an injured employee, are not in point.
The defendant strongly urges that to permit recovery here against the insurance carrier will produce undesirable results. There is force in this contention but as we have often held such a question of policy is for the Legislature and not for this court. Prassas v. J. F. McElwain Company, 100 N.H. 209, 211, 123 A.2d 157.
In summary, we are asked by the defendant to construe a statute, which the Legislature has directed should be liberally interpreted, so as to bar the plaintiff from a fundamental common-law right which she would otherwise have. Furthermore, we are requested to do so in the absence of any provision to this effect in the law, either expressed or fairly to be implied. We do not believe we can properly do this. Gagne v. Garrison Hill Greenhouses, 99 N.H. 292, 294, 109 A.2d 840. It follows that the defendant's exception to the denial of its motion to dismiss is overruled.
We come now to the carrier's final contention that the Court's order to the defendant to produce 'all correspondence' concerning the accident is too broad. The motion upon which the order is based rests in substance on the fact that for a long time after the accident the plaintiff was hospitalized and unable to conduct any investigation, that the defendant did carry on such, and that much of the evidence has disappeared or is in the exclusive possession of the insurance company.
Few states have been as liberal as ours in the matter of discovery; nevertheless the process must be kept within...
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