Spengler v. Employers Commercial Union Ins. Co.

• Decision Date: 14 March 1974
• Docket Number: 48748,3,Nos. 48732,Nos. 1,2,s. 48732,s. 1
• Citation: 131 Ga.App. 443,206 S.E.2d 693
• Parties: Bernice P. SPENGLER et al. v. EMPLOYERS COMMERCIAL UNION INSURANCE COMPANY. AMERICAN MUTUAL LIABILITY INSURANCE COMPANY et al. v. Harry DUKES
• Court: Georgia Court of Appeals

Page 693

206 S.E.2d 693

131 Ga.App. 443

Bernice P. SPENGLER et al. v. EMPLOYERS COMMERCIAL UNION INSURANCE COMPANY.

AMERICAN MUTUAL LIABILITY INSURANCE COMPANY et al. v. Harry DUKES.

Nos. 48732, 48748.

Court of Appeals of Georgia, Division Nos. 1, 2, 3.

March 14, 1974.

Rehearing Denied March 29, 1974.

Adams, O'Neal, Hemingway & Kaplan, H. T. O'Neal, Jr., Macon, for Bernice P. Spengler et al.

George N. Skene, Macon, for Employers Commercial Union Ins. Co.

Brackett, Arnall & Stephens, H. P. Arnall, H. A. Stephens, Jr., Atlanta, for American Mut. Liability Ins. Co. et al.

Mundy, Gammage & Cummings, E. Lamar Gammage, Jr., William W. Mundy, Cedartown, for Harry Dukes.

Syllabus Opinion by the Court

EBERHARDT, Presiding Judge.

These are subrogation cases under the Workmen's Compensation Act. In Spengler it appears that Lloyd C. George was killed July 23, 1971, while in the course of his employment, as the result of an accident with a third party. Compensation was paid to his widow and minor son, but the employer's insurer gave appropriate notices to all parties as was provided by Code Ann. § 114-403 ¹ (Ga.L.1922, pp. 185, 186; 1937, pp. 528, 530; 1963, pp. 141, 145) for the protection of its subrogation and lien rights.

Thereafter the widow brought suit against the third party for the husband's wrongful death, and her suit was pending when Code Ann. § 114-403 was repealed by Ga.L.1972, p. 3, effective July 1, 1972. After the repeal the tort action was settled, and the proceeds (to the extent of $6,000) were placed in escrow with Bernice Spengler pending a determination of the insurer's claim of subrogation. Spengler, as the escrow agent, and the widow brought a declaratory judgment action in which a judgment was rendered directing that the escrow fund be paid over to the Employers Commercial Union Insurance Company and that the suit be dismissed, thus in effect holding that the repeal of Code Ann. § 114-403 was not retroactive and did not affect any claim of subrogation that the insurer had.

In American Mutual it appears that Harry Dukes suffered a compensable injury September 3, 1971, and by an agreement approved by the Board October 1, 1971 compensation payments were made to him. On the same date, however, the insurer gave appropriate notices to the claimant, to an alleged tortfeasor against whom the claimant was pressing a claim for damages, and to the tortfeasor's insurance carrier, as required by § 114-403, asserting its subrogation and lien rights in any settlement or recovery that the claimant might obtain.

Dukes then instituted a common law action against the third party tortfeasor, which was pending when the General Assembly repealed Code § 114-403, the repealer being effective July 1, 1972.

The suit was settled July 21, 1972 for a net recovery by Dukes of $55,361.56. On August 11, 1972 the employer-carrier applied to the Workmen's Compensation Board for a determination of change in condition and sought to enforce their subrogation and lien rights against future compensation payments. Claimant resisted, contending that by the repeal of § 114-403 the subrogation rights had been abolished.

The hearing director agreed with the contentions of the employer-insurer, and entered an award by which the insurer was authorized to credit future compensation payments against its subrogation claim until the total thereof amounted to the compensation which had been paid or which it was obligated to pay, had thus been recovered, but not to exceed the net recovery which Dukes had made by his settlement with the tortfeasor. The full board, on appeal, adopted the findings and award, but on appeal to the superior court there was a reversal.

In Spengler the employee appeals and in American Mutual the employer-insurer appeals from the adverse ruling and judgment. Held:

1. The questions raised in these appeals are identical, and we are disposing of each of the cases by this opinion and judgment.

2. 'The real purpose of the provisions in the workmen's compensation law for giving to the employer the right of subrogation has been described as a means for recouping the employer's loss and to prevent a double recovery be the employee and to do substantial justice.' Southern Ry. Co. v. Overnite Transportation Co., 223 Ga. 825, 830, 158 S.E.2d 387, 391. See also Travelers Ins. Co. v. Houck, 118 Ga.App. 154, 155, 162 S.E.2d 781. Code § 114-403 was enacted for the benefit of employers and their insurance carriers paying workmen's compensation, Cheek v. J. Allen Couch & Son Funeral Home, 125 Ga.App. 438, 448, 187 S.E.2d 907, and gives to them an express legal right to have the amount of compensation payments reduced. Hartford Acc. & Indem Co. v. Fidelity & Cas. Co., 183 Ga. 383, 385, 188 S.E. 517. The relation between the employer and employee with respect to the Act is governed by a contract created by law, in derogation of the common law rights of each, and of which the insurance policy is a part. Travelers Ins. Co. v. Georgia Power Co., 51 Ga.App. 579, 582, 181 S.E. 111. 'The policy of insurance issued to the employer constitutes a definite contract among all parties concerned. The insurance company which has issued such policy is the person called upon and obligated to pay compensation under the provisions of the Workmen's Compensation Act as amended; and, to the extent of the compensation paid by it to the injured employee, covered by the policy of compensation insurance, is entitled to recover from the person whose act caused the injury to the injured employee . . .' General Acc. & Assur. Corp. v. John P. King Mfg. Co., 60 Ga.App. 281, 282, 3 S.E.2d 841, 842.

3. Hence the right of subrogation upon the giving of notice as provided for by Code Ann. § 114-403 is a substantive right, vested upon the giving of the notice, and could not be changed or impaired by a subsequent statute. Thomas v. Town of Savannah Beach, 66 Ga.App. 178, 17 S.E.2d 747; Code § 102-104. In that case Code Ann. § 114-403, as it stood at the time of the employee's death, provided that the employer was entitled to set off against the compensation the gross amount of the recovery.

More than a year later § 114-403 was amended to provide that only the net amount could be set off, and the employee's widow contended that this amendment was applicable to the pending proceeding. In rejecting that contention, this court stated (p. 181, 17 S.E.2d p. 749): 'The widow's right to compensation under the compensation Act, for the death of her husband, and to damages against the tort-feasor causing his death, accrued on the date of the death, March 15, 1936, which was more than a year before the approval of the Act of 1937, supra. The amounts recoverable by her, either as compensation under the Act or as damages under the death statute, were fixed as of that date and could not, without depriving her of a vested right, be changed by any enactment of the legislature after that date. Likewise, any rights which the employer or the tort-feasor may have had as respected the amount recoverable against either of them were fixed and vested as of the date of the homicide, and could in no wise be changed by any subsequent statute. Whether the employer could set off the gross amount of damages recovered against the tort-feasor or paid by the tort-feasor to the plaintiff, or could set off the net amount recovered or paid, was a substantive and vested right which could not be changed by a subsequent statute. The Act of 1937, in so far as it provides for a set-off against the compensation of the 'net damages' which may be due or paid by the tort-feasor to the plaintiff, is not remedial and therefore has no retroactive effect.' Accord: McMullen v. Liberty Mut. Ins. Co., 119 Ga.App. 410, 167 S.E.2d 360; Cheek v. J. Allen Couch & Son Funeral Home, 125 Ga.App. 438, 187 S.E.2d 907, supra.

4. Subsequent to the decision in Thomas v. Town of Savannah Beach, 66 Ga.App. 178, 17 S.E.2d 747, supra, Code Ann. § 114-403 was amended to provide that the right of subrogation accrued upon the giving of written notice as provided for in the amendment. Ga.L.1963, pp. 141, 145. Consequently, upon the giving of the notices in each of the instant cases, the employer-carrier's right to subrogation became fixed and vested as of that time. Hartford Acc. & Indem. Co. v. Tolison, 118 Ga.App. 660, 165 S.E.2d 192.

5. There is nothing in the repealing statute (Ga.L.1972, p. 3) to authorize us to conclude that it is to have a retrospective, retroactive, or remedial application, and the instant cases are governed by our Constitution, Art. I, Sec. III, Par. II (Code Ann. § 2-302), by Code § 102-104, and by the rulings in Wilder v. Lumpkin, 4 Ga. 208; Winter v. Jones, 10 Ga. 190; Hargroves v. Chambers, 30 Ga. 580, 601; White v. Ross, 40 Ga. 339; Dennington v. Mayor & Council of Roberta, 130 Ga. 494(1a),61 S.E. 20; Bank of Norman Park v. Colquitt County, 169 Ga. 534, 150 S.E. 841; Seaboard Air-Line Ry. Co. v. Benton, 175 Ga. 491, 494, 165 S.E. 593; West v. Anderson, 187 Ga. 587, 588, 1 S.E.2d 671; Federal Deposit Ins. Corp. v. Beasley, 193 Ga. 727, 732, 20 S.E.2d 23; Anthony v. Penn,212 Ga. 292, 92 S.E.2d 14 and similar cases, and for the same reasons are not controlled by the rulings in Bank of St. Mary's v. State, 12 Ga. 475; Woodburn v. Western Union Tel. Co., 95 Ga. 808, 23 S.E. 116; Western Union Tel. Co. v. Smith, 96 Ga. 569, 23 S.E. 899; Western Union Te.. Co. v. Lumpkin, 99 Ga. 647, 26 S.E. 74; Kelly v. Hall, 191 Ga. 470, 12 S.E.2d 881; City of Valdosta v. Singleton, 197 Ga. 194, 28 S.E.2d 759; Franklin v. Harper, 205 Ga. 779, 791, 55 S.E.2d 221; Fulton County v. Spratlin, 210 Ga. 447, 80 S.E.2d 780; Fulton Bag & Cotton Mills v. Williams, 212 Ga. 783, 95 S.E.2d 848 and similar cases, where no vested rights were involved.

Claimants place great reliance upon the line of cases beginning with Bank of St. Mary's v. State, 12 Ga. 475, supra, continuing particularly through Fulton County v....