Wheeler v. American Asbestos Products Co., 15

• Decision Date: 20 July 1968
• Docket Number: No. 15,15
• Parties: Myrtella WHEELER (Deceased), by Deanna K. Gamble, Administratrix, Plaintiff and Appellant, v. AMERICAN ASBESTOS PRODUCTS COMPANY and Michigan State Accident Fund,Defendants and Appellees.
• Court: Michigan Supreme Court

Page 839

159 N.W.2d 839

381 Mich. 105

Myrtella WHEELER (Deceased), by Deanna K. Gamble, Administratrix, Plaintiff and Appellant, v. AMERICAN ASBESTOS PRODUCTS COMPANY and Michigan State

Accident Fund,Defendants and Appellees.

No. 15.

Supreme Court of Michigan.

July 20, 1968.

Goodman, Eden, Robb, Millender, Goodman & Bedrosian, by Morton A. Eden, Detroit, for plaintiff-appellant.

Peter Munroe, Lansing, Richard Rogers, Earl Mossner, Detroit (William J. Nelson, Detroit, of counsel), for Michigan State Accident Fund.

Before the Entire Bench.

DETHMERS, Chief Justice.

Plaintiff-appellant states the question involved in this appeal to be:

'Where an injured employee, admittedly entitled to weekly workmen's compensation benefits from the workmen's compensation insurance carrier, settles her claim against an alleged tort feasor Prior to the entry of judgment, executing her individual release therefor and discontinuing the suit, such release not being a bar to action by the workmen's compensation insurance carrier against the third party for its interest of claim, are the proceeds thereof to be reimbursed to the workmen's compensation carrier or treated as an advance payment of workmen's compensation benefits?'

More succinctly stated, appellees put it this way:

'May a compensation carrier treat as a credit against compensation benefits paid or payable a settlement achieved by a compensation recipient against a third party tort feasor?'

The parties have stipulated the facts to be, in part, as follows:

"Paragraph One--On January 26, 1956, the plaintiff sustained an amputation of the right hand while employed by the defendant. And the Michigan State Accident Fund, the insurer of the employer, voluntarily paid two hundred fifteen weeks of benefits at the statutory rate of $32.00 per week.

"Paragraph Two--On January 23, 1961 following a hearing on plaintiff's application for compensation benefits on the basis of general disability, the hearing referee entered an order providing for the continued payment of weekly workmen's compensation benefits at the rate of $32.00 per week for the period following the specific loss period and until the further order of the Department which order remains in full force and effect.

"Paragraph Three--Plaintiff herein instituted a third party suit in the United States District Court for the Eastern District of Michigan, Southern Division, against the T. W. and C. D. Sheridan Company alleging negligence in the design and installation of the press on which the plaintiff was injured herein. Notice was given to the defendants herein in accordance with Section 15, Part III of the Michigan Workmen's Compensation Act, Michigan Statutes Annotated 17.189.

"Paragraph Four--Defendants herein took no action to join in said suit as a party plaintiff.

"Paragraph Five--In July, 1962, prior to the entry of judgment plaintiff executed a release of her claim against the T. W. and C. D. Sheridan Co., third party defendant. * * * The said third party case was discontinued in the United States District Court and the consideration covered by the release paid simultaneously or very shortly thereafter.

"Paragraph Six--After payment of reasonable costs and attorney fees, the plaintiff received a new recovery of $3,000.00 from the third party defendant. The liability in the aforesaid third party case was extremely doubtful, and the settlement was essentially what is determined a nuisance settlement. The damage of the plaintiff had it been possible to establish liability would have been many times the amount of the settlement."

The hearing referee and the appeal board of the workmen's compensation department held that from the proceeds of the settlement received by plaintiff the insurance carrier was entitled to a credit against compensation installments to become due from it to plaintiff in the future. From this the Court of Appeals denied appeal and the matter is here on leave granted.

Statutory provisions relating to this matter are to be found in C.L.S.1961, § 413.15 (Stat.Ann.1960 Rev. § 17.189), and particularly the following:

'Where the injury for which compensation is payable under this act was caused under circumstances creating a legal liability in some person other than a natural person in the same employ or the employer to pay damages in respect thereof, the acceptance of compensation benefits or the taking of proceedings to enforce compensation payments shall not act as an election of remedies, but such injured employee or his dependents or their personal representative may also proceed to enforce the liability of such third party for damages in accordance with the provisions of this section. If the injured employee or his dependents or personal representative does not commence such action within 1 year after the occurrence of the personal injury, then the employer or its compensation insurance carrier may, within the period of time for the commencement of actions prescribed by statute, enforce the liability of such other person in the name of that person. Not less than 30 days before the commencement of suit by any party under this section, such party shall notify, by registered mail at their last known address, the workmen's compensation commission, the injured employee, or in the event of his death, his known dependents, or personal representative or his known next of kin, his employer and the workmen's compensation insurance carrier. Any party in interest shall have a right to join in said suit.

'Prior to the entry of judgment, either the employer or his insurance carrier or the employee or his personal representative may settle their claims as their interest shall appeal and may execute releases therefor.

'Such settlement and release by the employee shall not be a bar to action by the employer or its compensation insurance carrier to proceed against said third party for any interest or claim it might have.

'In the event the injured employee or his dependents or personal representative shall settle their claim for injury or death, or commence proceedings thereon against the third party before the payment of workmen's compensation, such recovery or commencement of proceedings shall not act as an election of remedies and any moneys so recovered shall be applied as herein provided.

'In an action to enforce the liability of a third party, the plaintiff may recover any amount which the employee or his dependents or personal representative would be entitled to recover in an action in tort. Any recovery against the third party for damages resulting from personal injuries of death only, after deducting expenses of recovery, shall first reimbburse the employer or its workmen's compensation insurance carrier for any amounts paid or payable under the workmen's compensation act to date of recovery, and the balance shall forthwith be paid to the employee or his dependents or personal representative and shall be treated as an advance payment by the employer on account of any future payment of compensation benefits.'

Note is to be taken of the statutory provisions (1) permitting the injured employee, despite his acceptance of compensation benefits or taking proceedings to enforce compensation payments to bring action against a third party tort-feasor having legal liability for the injury; (2) permitting the employee, prior to the entry of judgment against the third party, to settle his claim as his interest may appear and execute a release therefor; (3) permitting the employer, or its compensation insurance...