St. Paul Fire & Marine Ins. Co. v. Treadwell

• Decision Date: 12 November 1971
• Docket Number: No. 67,67
• Citation: 263 Md. 430,283 A.2d 601
• Parties: ST. PAUL FIRE AND MARINE INSURANCE COMPANY v. Mellicent Kidwell TREADWELL.
• Court: Maryland Court of Appeals

Page 430

263 Md. 430

283 A.2d 601

ST. PAUL FIRE AND MARINE INSURANCE COMPANY v. Mellicent Kidwell TREADWELL.

No. 67.

Court of Appeals of Maryland.

Nov. 12, 1971.

Hugh E. Donovan, Rockville (Donahue & Ehrmantraut, Rockville, on the brief), for appellant.

John F. McAuliffe, Rockville (Heeney, McAuliffe & McAuliffe, Rockville, on the brief), for appellee.

Argued before HAMMOND, C. J., and McWILLIAMS, FINAN, SINGLEY, SMITH and DIGGES, JJ.

McWILLIAMS, Judge.

On 4 January 1971 the appellant (Company), seeking to recover $5,081.49, sued the appellee (Treadwell) in the Circuit Court for Montgomery County. In its declaration the Company alleged it was the insurer of Treadwell's employer, that the Workmen's Compensation Commission found she had sustained an injury arising out of the course of her employment, that it ordered the payment of compensation, that upon appeal the court reversed the action of the Commission, that on 11 July 1969 when the Commission rescinded its earlier order the Company had paid Treadwell the $5,081.49 it seeks to recover. On 19 March 1971, the trial judge, Pugh, J. (now C. J.), sustained Treadwell's demurrer without leave to amend and from his order making it so the Company has appealed.

It seems we have never considered the precise question put to us by the Company's first contention. It says, correctly we think, that while the statute, Code (1964 Repl.Vol.), Art. 101, does not contain explicit language authorizing the recovery by an employer (or its insurer) of payments found on appeal to have been awarded erroneously, neither does it, in so many words, forbid the recovery of such payments. Had the Legislature intended to proscribe the recovery of such payments it would not have given the employer the right of appeal which, the Company insists, is a hollow right if, after success on appeal, payments erroneously ordered cannot be recovered. The Company contends, secondly, that it should succeed here because Treadwell has been unjustly enriched.

The pertinent language of the statute will be found in § 56(a) which, in part, is as follows:

'Any employer, employee, beneficiary or person feeling aggrieved by any decision of the Commission * * * may have the same reviewed by a proceeding in the nature of an appeal * * * in the circuit court * * *. If the court shall determine that the Commission has acted within its powers and has correctly construed the law and facts, the decision of the Commission shall be confirmed; otherwise it shall be reversed or modified. * * * An appeal shall not be a stay of an order of the Commission directing payment of compensation or * * * the furnishing of medical treatment. * * * All appeals from the Commission shall have precedence over all cases except criminal cases.' (Emphasis added.)

It should be observed at the outset that in other jurisdictions the weight of authority, such as it is, seems to support the notion that these payments cannot be recovered by the employer. Daoud v. Matz, 73 So.2d 51 (Fla.1954); Sassarro v. Wright Aeronautical Corp., 24 N.J.Misc. 57, 46 A.2d 52 (1946); Rubino v. City of New York, 32 App.Div.2d 44, 299 N.Y.S.2d 639 (1969); Manning v. Gossett Mills, 192 S.C. 262, 6 S.E.2d 256 (1939); Brakus v. Dept. of Labor and Industries, 48 Wash.2d 218, 292 P.2d 865 (1956). Over four decades ago our predecessors proclaimed the validity of the 'no stay' clause in § 56(a). Judge Urner, writing for the Court in Branch v. Indemnity Insurance Company of North America, 156 Md. 482, 489, 144 A. 696, 698 (1929), said:

'The right of the Legislature to provide that an appeal from a decision of the State Industrial Accident Commission (now the Workmen's Compensation Commission) shall not be a stay could not be denied consistently with the principle upon which the general validity of the act has been adjudicated. Its design was to ensure speedy, as well as certain, relief in proper cases within the scope of its application. That humanitarian policy would be seriously hampered if the weekly payments of compensation awarded by the commission could be suspended because of an appeal. In providing that an appeal should not be a stay, the statute was simply adopting a necessary expedient to accomplish one of the important purposes for which it was enacted.'

In Hoffman v. Liberty Mutual Ins. Co., 232 Md. 51, 56, 191 A.2d 575, 578 (1963), the question now before us was approached only tangentially. There the insurer sought to defeat the statutory lien of an attorney for his fee by applying funds escrowed by order of the Commission to the satisfaction of an overpayment made to the claimant. The overpayment, of course, was the consequence of the insurer's partial success on appeal. We held that the lien for the fee, as finally determined, could not be defeated. In the course of his opinion Judge Marbury said, for the Court:

'The appellee cannot set aside in escrow the original fee, prosecute an appeal resulting in a lower award, and then take the position that the attorney's lien does not apply. This would defeat the purpose of the law and the rule adopted pursuant thereto. The fact that appellee was compelled to make payments during the pendency of the appeal was not the result of appellant's action, but of the law, for this has been established since Branch v. Indemnity Ins. Co. (1929), 156 Md. 482, 144 A. 696. But for the appellant's lien the appellee would have been compelled to pay out the full amount of the first award before the appeal was determined. Appellee is estopped from claiming there is no fund from which the lien can be satisfied. The lien of the fee attached at the time of the Commission's original order, and, as stated above, the only effect of the new modified award and order was to change the amount of the fee. Contrary to appellee's contention, no money was owed by the claimant to appellee, since an overpayment does not permit a recovery by the insurer in this situation.' (Emphasis added.)

We have come no closer to the question here presented than the dictum (italicized) in Judge Marbury's opinion.

Virtually indistinguishable from the case at bar is Tompkins v. Rinner Construction Co., 196 Kan. 244, 409 P.2d 1001 (1966). The question, as stated by the Kansas Supreme Court, follows:

'Where, in an appeal to this court by an employer and its insurance carrier from a judgment affirming an award of compensation by the director, it is ultimately determined that the accidental injury did not arise 'out of' the employment and therefore compensation is to be denied, is the insurance carrier entitled to 'recover back' the payments made by it pending disposition of the appeals?' 196 Kan. at 244-245, 409 P.2d at 1002.

The position of the appellee (Rinner), as stated by the court, was:

'In support of the district court's judgment ordering restitution respondent contends that by this court's decision it was conclusively determined that the claimant had no right at any time to compensation on account of the death of her husband and therefore has no right to retain any payments which had been made to her; that the provisions of the workmen's compensation law requiring payment of compensation pending appeals are for the protection of claimants who are justly entitled thereto and are not intended to result in unjust enrichment of claimants who had no valid claim or right to compensation ab initio; that considerations of every day common justice dictate that 'recovery back' must be allowed, and that it is inconceivable to say that one should be permitted to retain money to which he had no right in the first place.' Id. at 246, 409 P.2d at 1003.

The court then proceeded to state the position of the appellant (Tompkins):

'Claimant, on the other hand, contends that the workmen's compensation act establishes and provides a procedure of its own covering every phase of the right to compensation and that such procedure is complete and exclusive; that a compensation award is unlike a 'judgment' in that it is flexible and subject to review and modification under certain circumstances; that under the circumstances of this case respondent could reap the benefit of paying a lesser sum in the event of claimant's remarriage (K.S.A. 44-510(2) (d)); that KSA 44-556 provides that payments are to be made pending appeal to the district court and to this court and if the legislature had intended that they could be recovered back in event of reversal by this court it would have so provided; that it is not the intention and spirit of the act to allow a respondent to recover back money paid under an award which already has been spent by a claimant for living expenses, otherwise there would have been no purpose in requiring payments to be made pending an appeal-and therefore common law rules relating to the general doctrine of restitution have no application.' Id. at 247, 409 P.2d at 1003.

The court noticed the failure of either party to cite any 'authority bearing on the question.' Mention was made, also, of the frank admission of Rinner's counsel that 'he knew of no instance where, under similar facts and circumstances-'recovery back' had been sought.' In conclusion the court said:

'From a purely 'legalistic' standpoint it can, of course, logically be argued that under that decision claimant was entitled to no compensation in the first place-and therefore it is somewhat 'shocking' to say that she should now be permitted to retain the payments made to her. We believe, however, the matter does not end there, and that in view of the provisions of the compensation act general rules relating to 'restitution' have no application and that 'recovery back' is not to be permitted. Nowhere in the act is there any provision authorizing a 'recovery back'. If the anomalous situation presented here is to be corrected it is within the power of the legislature to do so.

'The judgment of the district court directing that claimant make restitution to respondent is therefore...