THE ETNA

• Decision Date: 09 September 1943
• Docket Number: No. 8125.,8125.
• Citation: 138 F.2d 37
• Parties: THE ETNA. MITCHELL v. THE ETNA et al.
• Court: U.S. Court of Appeals — Third Circuit

138 F.2d 37 (1943)

THE ETNA MITCHELL v. THE ETNA et al.

No. 8125.

Circuit Court of Appeals, Third Circuit.

Submitted on Briefs December 21, 1942.

Decided September 9, 1943.

Raymond Pace Alexander and Howard M. Long, both of Philadelphia, Pa., for appellant.

S. B. Fortenbaugh, Jr., of Philadelphia, Pa. (Shields, Clark, Brown & McCown, of Philadelphia, Pa., on the brief), for Jarka Corporation of Philadelphia, appellee.

Before BIGGS, MARIS, and JONES, Circuit Judges.

JONES, Circuit Judge.

The decree here appealed from allowed an employer to intervene in the admiralty suit which his employee had instituted against third persons for damages for personal injury and accorded to the employer a right of subrogation, in respect of the employee's recovery, to the extent of the compensation and medical expenses theretofore paid by the employer in accordance with the Longshoremen's and Harbor Workers' Compensation Act¹ because of the injury which was the subject-matter of the employee's suit for damages. The relevant facts out of which the present controversy arises are as follows.

The plaintiff, Mitchell, an employee of the Jarka Corporation whose business is that of stevedoring as an independent contractor, was seriously injured on April 15, 1940, while engaged for his employer in unloading cargo from the steamship "Etna" owned and operated by Aktievolaget Transmarine, a Swedish corporation. Jarka promptly gave the local deputy commissioner the required notice of Mitchell's injury and of the commencement of Jarka's payment of compensation to him, which was at the maximum weekly rate prescribed by the Compensation Act. The payments were made by checks of Jarka to the order of Mitchell, each bearing a notation indicating that it was in payment of compensation or medical expenses under "U.S. Public Act No. 803", i. e., the Longshoremen's Compensation Act. In addition to the compensation payments, Jarka reimbursed Mitchell for medical expenses to which he claimed to have been subjected by his injury and also paid his hospital expenses and doctors' bills which, for the most part, had been incurred during his five months hospitalization following his injury.

On January 7, 1941, Mitchell instituted his suit in admiralty seeking damages from the "Etna" and her owner on the ground that his injury was the direct result of their negligence in the stowing of the cargo which collapsed and injured him. But it was not until May 22, 1941 (just four days before trial of the admiralty suit was commenced), that Mitchell filed with the deputy commissioner his election under the Act to sue the allegedly responsible third persons for damages instead of receiving compensation from his employer. Mitchell had not only accepted the compensation payments, which his employer had regularly made from the date of the injury, but he continued so to do down to February 1942. On February 9, 1942, the District Court rendered judgment in his favor and against the owner of the "Etna" and the owner's surety in the sum of $12,000. No appeal was taken from that judgment, which, when paid, would be more than sufficient to cover the whole of the employer's liability under the Act, which was $7,500 for compensation, whereof $1,743.43 had already been paid in weekly installments, and $2,164.85 for medical expenses including the hospital's and doctors' services, which the employer had also paid.

After recovering judgment against the owner of the "Etna" and its surety, Mitchell refused to recognize his employer's claim to subrogation for the compensation and medical expenses theretofore paid. Jarka thereupon petitioned the admiralty court for leave to intervene in Mitchell's suit against the "Etna" and her owner for the purpose of having its right to subrogation and the amount thereof determined and impressed upon the money due Mitchell under his judgment against the third persons. Upon agreement of counsel for all parties in interest, including the owner of the "Etna" and the surety, $8,091.72 on account of the judgment was forthwith paid to Mitchell and the balance of $3,908.28, which equalled the payments made by the employer for compensation and medical expenses, was deposited in the registry of the court to abide the court's ultimate order with respect to the employer's claim to subrogation. It was in these circumstances that the District Court entered the decree allowing Jarka to intervene in the admiralty suit and directing the clerk to pay the fund, then in the registry of the court, to the Jarka Corporation in discharge of its right to reimbursement. It is that decree from which the plaintiff took the present appeal.

The appellant contends (1) that the employer is not entitled to subrogation for the reason that the acceptance of the compensation paid the plaintiff was not "under an award in a compensation order filed by the deputy commissioner" as provided for in Sec. 33 (b) of the Longshoremen's Compensation Act and (2) that the District Court was without jurisdiction to hear and determine the employer's claim to subrogation on a petition to intervene in the plaintiff's suit in admiralty against the third persons.

Sec. 33 (a) of the Longshoremen's Compensation Act, 33 U.S.C.A. § 933, provides, that: "(a) If on account of a disability or death for which compensation is payable under this chapter the person entitled to such compensation determines that some person other than the employer is liable in damages, he may elect, by giving notice to the deputy commissioner in such manner as the commission may provide, to receive such compensation or to recover damages against such third person."

Then follows subdivision (b) of Sec. 33 upon which the appellant bases his first contention: "(b) Acceptance of such compensation under an award in a compensation order filed by the deputy commissioner shall operate as an assignment to the employer of all right of the person entitled to compensation to recover damages against such third person."

Subdivision (e) of Sec. 33 prescribes how "Any amount recovered by such employer on account of such assignment * * * shall be distributed * * *."²

In assigning Sec. 33 (b) as the measure of an employer's right to reimbursement for compensation and medical expenses paid on account of an injury to an employee where a third person is answerable in damages for inflicting the injury, we think that the appellant misconceives both the purpose and the scope of that provision and entirely ignores the right to subrogation which, under equitable principles, attaches where one, not acting officiously, pays money on account of a legal obligation resting upon him for the imposition whereof another is held pecuniarily responsible. See Restatement, Restitution, § 162, p. 653, and comment thereon. In the instant case, the employer's payments, both of compensation and of medical expenses, were in accordance with and pursuant to its liability as prescribed by the Compensation Act and not otherwise. The employer, unless it controverted its liability, could not have done other than pay compensation except it violate the requirements of Secs. 7 (a) and 14 (a) of the Act, 33 U.S.C.A. §§ 907 (a), 914 (a). No reasonable basis is present, therefore, for considering the employer's payments either as gratuitous or as voluntary, as the appellant would have us do.

As we have seen, Sec. 33 (a) gives the injured employee a right to elect either "to receive * * * compensation or to recover damages against a third person" where the injury for which compensation becomes payable is the fault of a third person. But Sec. 33 (a) does not provide that the employee shall have a right to both compensation from his employer and damages from responsible third persons. This, it seems to us, is an implicit recognition that the employer has a right to reimbursement for his outlay under the Compensation Act out of his employee's adequate recovery from a third person in all cases regardless of whether the employer has become the assignee of the employee's right of action against a third person by paying compensation "under an award" or has paid the compensation "without an award" — a procedure which the Act expressly directs employers to follow. See Sec. 14 (a). The case of Chapman v. Hoage et al., 296 U.S. 526, 528, 56 S.Ct. 333, 80 L.Ed. 370, appears to recognize that a right of subrogation, incident to the relationship of employer and employee, where a third person has been made to answer in commensurate damages for inflicting the compensable injury attaches because of the employee's acceptance of compensation.

Any construction of the Act which would deny an employer a right to reimbursement for compensation payments made in the circumstances here present because the compensation was not paid "under an award in a compensation order filed by the deputy commissioner" would necessarily impute an exclusory effect to Sec. 33 (b) which that provision neither expresses nor implies and would, moreover, defeat one of the principal expressed purposes of the Act.

In passing, it may be noted that the deputy commissioner's records contain a timely notation of the commencement of Jarka's payment of compensation to Mitchell. In a case involving entries hardly any more formal than here the Court of Appeals for the Second Circuit held that the deputy commissioner's notations in his records of the disposition he had made of the employee's claim for compensation "was equivalent to an order and satisfied the provisions of the amendment i. e. in Sec. 33 (b)." See Toomey v. Waterman Steamship Co., Ltd., 123 F.2d 718, 721. However that may be, the employer in the instant case does not assert that the compensation was paid "under an award" in an order filed by the deputy commissioner nor does it claim that, by virtue of the payment of compensation, it became the assignee of Mitchell's right of action against the third persons responsible for his injury. In fact, Jarka, at...