No. 12575 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1974 

DARLENE A. (Ehni) FISHER, GDN., 

FATAL, RICHARD D. EHNI, 

Plaintiff and Appellant, 

-vs - 

MISSOULA WHITE PINE SASH COMPANY, 

Employer, 

-vs - 

MICHIGAN MUTUAL LIABILITY COMPANY, 

Defendant and Respondent. 

Appeal from: District Court of the Fourth Judicial District, 

Honorable Jack L. Green, Judge presiding. 

Counsel of Record: 

For Appellant : 

Loble, Picotte, Loble, Pauly and Sternhagen, 

Helena, Montana 

Gene A. Picotte argued, Helena, Montana 

For Respondent: 

Worden, Thane, Haines and Williams, Missoula, Montana 

Shelton Williams argued, Missoula, Montana 

Submitted : January 17, 1974 

Decided : FEB - 7 1974 

Filed : 

FEB -7 lSt4 
Mr. Justice Frank I. Haswell delivered the Opinion of the Court. 

This is an action to determine the subrogation rights of 

an employer's insurer under the Montana Workmen's Compensation 

Act. Claimant was awarded workmen's compensation benefits for 

the accidental death of her husband. Claimant also received a 

compromise settlement of $18,000 from an alleged third party 

tortfeasor in a wrongful death action. 

The workmen's Compensation Division denied the employer's 

insurer subrogation to any part of the $18,000 compromise settlement proceeds received from the alleged third party tortfeasor. 

On appeal, the district court of the fourth judicial district, 

Missoula County, the Hon. Jack L. Green, district judge, reversed 

and awarded subrogation to one-half of the net amount of settlement proceeds with interest. Claimant appeals to this Court from 

the district court's judgment. 

On July 3, 1965, Richard D. Ehni, an employee of Missoula 

White Pine Sash Company, was killed in the course of his employment when a fork lift being driven by him was struck by a Northern 

Pacific train. At the time of his death he was married and had 

three minor children. On July 19, 1965, the Industrial Accident 

Board (now workmen's Compensation Division) issued its order awarding 

compensation to the surviving widow and three minor children at 

the rate of $46 per week for 500 weeks. Payments have been made 

by the employer's Plan I1 insurer, Michigan Mutual Liability 

Company, in an undetermined amount. 

On or about October 18, 1965, the widow, as administratrix 

of the estate of Richard D. Ehni, filed a wrongful death action 

against the Northern Pacific Railway Company alleging its negligence caused the decedent's death and seeking damages for funeral 

expenses, loss of support, comfort and companionship. On July 10, 

1969, the Northern Pacific Railway Company paid the sum of $18,000 

as a compromise settlement for dismissal of the lawsuit and for 

full and complete release of all claims. 
Claimant, who remarried on October 18, 1969, and whose name 

is now Darlene Fisher, refused to pay Michigan Mutual Liability 

Company any subrogation share of the $18,000 compromise settlement 

received from the Northern Pacific Railway Company. The employer 

and its insurer then filed a petition with the ~orkmen's Compensation Division to determine the amount of its subrogation claim 

therein. It was submitted on an agreed statement of facts together with the files and records of the workmen's Compensation 

Division. The workmen's Compensation Division entered findings of 

fact, conclusions of law, and an order denying the employer's 

insurer any subrogation rights in the settlement proceeds received 

by claimant from the Northern Pacific Railway Company. 

The employer and its insurer appealed to the district court 

of Missoula County, the Hon. Jack L. Green, district judge, where 

the matter was submitted on the record before the workmen's Compensation Division. The district court held that the employer's 

insurer is subrogated to one-half the net amount received by 

claimant and her minor children from the Northern Pacific Railway 

Company less a prorata share of the fees and costs expended to 

procure the settlement; a lien to secure the same; interest at 

the rate of 6% per annum on such amount from July 10, 1969; and 

an offset credit to such extent against future installments of 

workmen's compensation benefits. Claimant appeals to this Court 

from the district court's judgment. 

The sole issue argued on appeal is whether the employer's 

insurer is entitled to subrogation against the $18,000 compromise 

settlement received by claimant from the Northern Pacific Railway 

Company. 

Claimant contends that any subrogation right the employer 

or its insurer possesses is purely statutory under section 92-204, 

R.C.M. 1947, of the Montana FJorkmen's Compensation Act. She 

argues that this statute grants subrogation only on derivative 

claims of the injured employee and has no application to wrongful 

death actions involving claims for damages suffered by the survivors. 
We agree that the subrogation rights of the employer and 

its insurer are governed by the provisions of the Montana Workmen's 

Compensation Act, Section 92-204, R.C.M. 1947, provides in pertinent part: 

"Where both the employer and employee have elected 

to come under this* ac;, the pro;isions of this act 

shall be exclusive, and such election shall be held 

to be a surrender by such employer and such employee, 

as between themselves, of their right to any other 

method, form or kind of compensation, or determination 

thereof, or to any other compensation, or kind of determination thereof, or cause of action, action at 

law, suit in equity or statutory or common-law right 

or remedy, or proceeding whatever, for or on account 

of any personal injury to or death of such employee, 

except as such rights may be hereinafter specifically 

granted; and such election shall bind the employee 

himself, and in case of death shall bind his personal 

representative, and all persons having any right or 

claim to compensation for his injury or death, as 

well as the employer * *." (Emphasis added). 

The extent of subrogation rights granted by the Workmen's 

Compensation Act is governed by provisions of this statute set 

out hereinafter. In view of the express provisions of this 

statute, the statement in Hardware Mutual Casualty Co. v. Butler, 

116 Mont. 73, 148 P.2d 563, suggesting that subrogation rights of 

the employer and insurer against a third party tortfeasor may 

exist independently of the workmen's Compensation Act is dictum 

and should be disregarded. 

We also recognize that a distinction exists between a 

survival action which preserves after death a purely derivative 

right through decedent for his damages, and a wrongful death 

action which creates an independent right in designated survivors 

for damages they sustain by reason of decedent's death. See Dillon 

v. Great Northern Railway Co., 38 Mont. 485, 100 P. 960. In our 

view this distinction is neither preserved nor differentiated 

in providing subrogation rights under the Workmen's Compensation 

Act. 

Section 92-204, R.C.M. 1947, in pertinent part, provides 

these subrogation rights: 

"* * * Provided, that whenever such employee shall 

receive an injury while performing the duties of 

his employment and such injury or injuries, so 
received by such employee, are caused by the act 

or omission of some persons or corporations other 

than his employer, then such employee, or in case 

of his death his heirs or personal representatives, 

shall, in addition to the right to receive compensation under the Workmen's Compensation Act, have a 

right to prosecute any cause of action he may have 

for damages against such persons or corporations, 

causing such injury. In the event said employee 

shall prosecute an action for damages for or on 

account of such injuries so received, he shall not 

be deprived of his right to receive compensation 

but such compensation shall be received by him in 

addition to and independent of his right to bring 

action for such damages, provided, that in the 

event said employee, or in case of his death, his 

personal representative, shall bring such action, 

then the employer or insurance carrier paying such 

compensation shall be subrogated only to the extent 

of either one-half (1/2) of the gross amount paid 

at time of bringing action and the amount eventually 

to be awarded to such employee as compensation under 

the workmen's compensation law, or one-half (l/2) 

of the amount recovered and paid to such employee 

in settlement of, or by judgment in said action, 

whichever is the lesser amount. All expense of 

prosecuting such action shall be borne by the employee, or if the employee shall fail to bring - such 

action or make settlement of his cause of action 

within six (6) months from the time such injury is 

received, the employer or insurance carrier who pays 

such compensation may thereafter bring such action 

and thus become entitled to all of the amount received from the prosecution of such action up to the 

amount paid the employee under the workmen's Compensation Act, and all over that amount shall be paid 

to the employee. In the event that the amount of 

compensation payable under this act shall not have 

been fully determined at the time such employee shall 

receive settlement of his action, prosecuted as aforesaid, then the industrial accident board shall determine what proportion of such settlement the insurance 

carrier would be entitled to receive under its right 

of subrogation and such finding of the board shall be 

conclusive. Such employer or insurance carrier shall 

have a lien on such cause of action for one-half (1/2) of the amount paid to such employee as compensation 

under the Workmen's Compensation Act or one-half (l/2) 

of the amount recovered and paid to such employee in 

settlement of, or by judgment in said action, whichever 

is the lesser amount, which shall be a first lien thereon." 

(Emphasis added). 

Claimant contends the quoted language and particularly the 

underlined words and phrases clearly indicate that subrogation 

rights extend only to claims for damages sustained by the injured 

employee himself and not to claims by his surviving kin for damages 

they have suffered by reason of his death; to claims derived 

through the employee and not independent claims of his surviving 

kin; and to survival actions but not to wrongful death actions. 
We reject such construction as inconsistent with the 

statutory plan and purpose of the Workmen's Compensation Act. 

The purpose of the subrogation provisions is to compensate the 

employer and his insurer to some extent for the additional liability they assume under the Workmen's Compensation Act for 

wrongful acts of independent third party tortfeasors. Koppang 

v. Sevier, 101 Mont. 234, 53 P.2d 455. This purpose remains the 

same whether compensation is paid to the employee or in case of 

his death to his surviving dependents, or whether the injuryproducing damages are suffered by the employee himself or in the 

case of his death by his surviving kin. In a wrongful death 

action as well as a survival action, the liability of the third 

party tortfeasor is derivative through the injured employee and 

subject to such rights and defenses as exist between such employee 

and the third party tortfeasor, Melville v. Butte-Balaklava Copper 

Co., 47 Mont. 1, 130 P. 441; Northern Pacific Ry. Co. v. Adams, 

192 U.S. 440, 24 S.Ct. 408, 48 L ed 513. Accordingly, the 

claimed distinction between subrogation rights in survival actions 

and wrongful death actions finds no support in the statutory plan 

or purpose of the workmen's Compensation Act. 

Policy considerations command a like result. The following 

excerpt from 2 arson's Workmen's Compensation Law, 5 71:20, 

summarizes the rationale: 

"1t is equally elementary that the claimant should 

not be allowed to keep the entire amount both of 

his compensation award and of his common-law damage 

recovery. The obvious disposition of the matter is 

to give the employer so much of the negligence recovery as is necessary to reimburse him for his compensation outlay, and give the employee the excess. 

This is fair to everyone concerned: the employer, who, 

in a fault case, is neutral, comes out even; the 

third person pays exactly the damages he would normally pay, which is correct, since to reduce his 

burden because of the relation between the employer 

and the employee would be a windfall to him which he 

has done nothing to deserve; and the employee gets 

a fuller reimbursement for actual damages sustained 

than is possible under the compensation system alone." 

In Montana, subrogation rights have been heretofore allowed 

without apportionment in a case involving counts of wrongful death 

and a survival action. Hardware Mutual Casualty Co. v. Butler, 

116 Mont. 73, 148 P.2d 563. 
Finally, if claimant's construction of the statute is 

correct there could be no subrogation rights even in survival 

actions, no lien rights in any death case, and the personal representative would not be subject to any expense in prosecuting 

the action against the third party tortfeasor, Such result is 

clearly inconsistent with the subrogation provisions of section 

92-204, R.C.M. 1947. Claimant's construction is predicated on the 

reference to "his action" and to the absence of the word "heirs" 

in parts of the statute. Although the statute might have been 

more precisely drafted, its general intent is ascertainable and 

its failure to specifically refer in each and every clause thereof 

to death cases or actions prosecuted by or on behalf of heirs of 

the deceased employee in their own right against independent third 

party tortfeasors is not significant in our view. 

Were we to adopt claimant's literal construction of section 

92-204, R.C.M. 1947, standing alone without reference to the 

statutory plan and purposes of the act as a whole, absurd results 

would follow. Under such literal construction, the employer or 

insurer would be subrogated only to the extent of a portion of 

I I its payments of compensation to such employee" foreclosing recovery of any compensation paid to his surviving dependents in 

death cases. Similarly, under such literal construction lien 

rights would be limited to the amount "paid to such employee" 

without reference to compensation paid to his surviving dependents 

in death cases. Further, because the expenses of prosecution of 

an action against a third party tortfeasor "shall be borne by 

the employee", his personal representative or heirs in death cases 

would not be chargeable with such expense were we to adopt the 

literal construction urged by claimant. As these results are 

squarely at cross purposes with the statutory plan and purposes 

of the act and its subrogation provisions, we hold the legislature 

intended no such results nor construction. 
The judgment of the district court is affirmed. We remand 

the case to the district court of Missoula County for determination 

of the dollar amount the employer's insurer is entitled to receive 

under its right of subrogation. 

Justice 

/ 

We Concur: .-- = 4. 

Chief Justice '