Western Maryland Ry. Co. v. Employers' Liability Assur. Corp.

• Decision Date: 20 June 1932
• Docket Number: 16.
• Citation: 161 A. 5,163 Md. 97
• Parties: WESTERN MARYLAND RY. CO. ET AL. v. EMPLOYERS' LIABILITY ASSUR. CORPORATION, LIMITED.
• Court: Maryland Court of Appeals

161 A. 5

163 Md. 97

WESTERN MARYLAND RY. CO. ET AL. v. EMPLOYERS' LIABILITY ASSUR. CORPORATION, LIMITED.

No. 16.

Court of Appeals of Maryland

June 20, 1932

Appeal from Circuit Court No. 2 of Baltimore City; H. Arthur Stump Judge.

Suit by the Employers' Liability Assurance Corporation, Limited against the Western Maryland Railway Company and others. From a decree overruling a demurrer to the bill of complaint defendants appeal.

Affirmed.

Argued before BOND, C.J., and URNER, ADKINS, OFFUTT, DIGGES, PARKE, and SLOAN, JJ.

Paul S. Parsons and George Cochran Doub, both of Baltimore (Eugene S. Williams and William R. Semans, both of Baltimore, on the briefs), for appellants.

James Morfit Mullen, of Baltimore, for appellee.

SLOAN J.

This appeal is from a decree overruling a demurrer to a bill of complaint on which an order had been passed restraining a settlement between two alleged tort-feasors (appellants) and an injured workman to whom the plaintiff (appellee) had, as insurer, paid compensation.

The bill alleged that one of the appellants, Joseph W. Wright, in the course of his employment by R. C. Heller Company, Inc., was injured in June, 1929, and, as the insurer of the employer, the Employers' Liability Insurance Corporation, Limited, appellee, to December 5, 1931, paid the said Joseph W. Wright as compensation and medical expenses, $1,915.98; that under the provisions of section 58 of article 101, of the Code, the Workmen's Compensation Law, the appellee and Joseph W. Wright within two months of the date of accident brought suit against the Western Maryland Railway Company, and later by amendment the Baltimore Fidelity Warehouse Company, both of which may be referred to as the railway company, as tort-feasors, to recover the compensation and expenses incurred as the insurer of Wright's employer; that the railway company answered, denying liability, but that recently it had entered into an agreement of settlement with Wright, whereby it agreed to pay and he agreed to accept $1,500 and certain medical, surgical, and hospital expenses, to which the appellee had, without success, objected; that the appellee is advised that Wright's acceptance of the awards made to him "amounted to an assignment of his claim against the corporate defendants for his said injury"; and that the institution of the suit at law against the railway company amounted to notice of such assignment. The contention is made in the bill that the appellee is subrogated to the rights of the defendant Wright to the extent of such payments as it has already made, and such further sums as it may be obliged to pay as such insurer. It is further alleged that the appellee has refused to make any further payments on account of the award to Wright until its rights are determined, but that Wright has threatened to take steps to compel the appellee to continue payments under the award to him of compensation. The bill then charges that if the defendants are permitted to settle among themselves as proposed, "the effect of the same will be a legal fraud" on the appellee which it is advised it has a right to prevent, and that it has a right to compel the corporate defendants to pay "its claim in the premises before making any payment to the defendant, Wright, as the corporate defendants have admitted their legal liability in the premises, at least to the extent of the cash sum of $1,500.00 and other sums which they have obligated themselves to pay"; and that the appellee has no adequate remedy at law.

The bill then prays: (1) A money decree against the corporate defendants for the full amount of the appellee's claim before making any payments to Wright; (2) that the appellee be subrogated to the claims of Wright to the extent of its claim; (3) that the corporate defendants be enjoined from paying any money to Wright until its rights are determined; (4) that Wright be enjoined from proceeding against the appellee; (5) that the prosecution by the defendants of the suit at law brought by the appellee and Wright be enjoined pending this suit; and (6) general relief. On this, an order for the writ of injunction was passed forbidding the defendants from doing any of the acts prayed against in the third, fourth, and fifth prayers for relief.

It was stipulated in the agreement between defendants that the release therein contained should "not operate to release or discharge, or in any way affect any right or claim the Employer's Liability Insurance Corporation, Ltd., its successors and assigns, may have against said Baltimore Fidelity Warehouse Company and/or Western Maryland Railway Company * * * by virtue of any rights obtained by subrogation or under section 58 of article 101" of the Code, or any interest the insurance company may have in the suit at law now pending.

The appellee amended its bill by alleging that the corporate defendants had agreed to pay Wright the sum of $1,500 no matter what the outcome of this suit may be, and further alleged Wright's insolvency.

The defendants (appellants) demurred generally to the bill of complaint, and after hearing, the demurrer was overruled and this appeal taken.

The appellants' contentions are: (1) That an injured employee's claim for damages against a third person in excess of his compensation award may be compromised and settled independently of the insurer's claim under its right to subrogation, and (2) that the employee's claim for damages is separable from the insurer's under section 58, article 101, Workmen's Compensation Act. The appellee's contention is that it must be satisfied to the extent of the award paid before the employee is entitled to receive anything from the tort-feasor, either by way of suit or compromise.

The corporate appellants contend that until the appellee (insurer) recovers a judgment against them it cannot be known or determined whether it is entitled to reimbursement to any extent for the compensation paid the employee, in which event the amount agreed to be paid the latter would be nothing but a gratuity in which the appellee would have no interest. In other words, the appellee would have no rights as against the third parties until they are judicially determined. In support of their theory that the compromise of the third parties with the employee does not settle or decide anything with reference to the insurer's rights against them, the appellant cites 12 C.J. 339 to the effect that: "The compromise of a suit neither admits the validity of the claim nor ascertains any amount as being due and amounts to no more than saying so much is paid to be rid of the controversy." 3 Wigmore on Evidence, § 1061. This is also very true if it is a settlement of the claim, but in this case the purpose is to be rid of part of the claim and one of the claimants, and let the other shift for itself. They further, in support of the right to settle with the employee, rely on one expression in State v Francis, 151 Md. 147, 151, 134 A. 26, 28, that the...