Case Name: JOHANSON et ux. v. CUDAHY PACKING CO.
Court: Utah Supreme Court
Jurisdiction: Utah
Decision Date: 1941-07-21
Citations: 100 Utah 399
Docket Number: No. 6302
Parties: JOHANSON et ux. v. CUDAHY PACKING CO.
Judges: MOFFAT, C. J., concurs.
Reporter: Utah Reports
Volume: 100
Pages: 399–413

Head Matter:
JOHANSON et ux. v. CUDAHY PACKING CO.
No. 6302.
Decided July 21, 1941.
(115 P. 2d 794.)
A. H. Hougaard and E. LeRoy Shields, both of Salt Lake City, for appellants.
M. E. Wilson, of Salt Lake City, for respondent.

Opinion:
PRATT, Justice.
Carl and Clara Johanson, plaintiffs herein, allege in substance in their complaint that Robert Johanson was their son; that they were dependents of his; that he was killed in the course of his employment with the Royal Crystal Salt Company; that his death was due to the negligence of the defendant Cudahy Packing Company in having him back his truck into some high tension wires across the driveway leading to a place where he was to deliver salt to them from his employer's place of business; that plaintiffs were awarded $2,500 under the Workmen's Compensation Act of this state; that the London Guarantee & Accident Company, Ltd., was the insurance carrier in the case; that under section 42-1-58, R. S. U. 1933, said insurance carrier became subrogated to the rights of plaintiffs by reason of such award; that for a valuable consideration the insurance carrier executed and delivered to plaintiffs herein a "waiver of said right of subrogation and an assignment of its said cause of action against the defendant herein;" that plaintiffs are now the owners of said cause of action; and that they suffered damages in the sum of $2,950 as the result of Robert's death. Plaintiffs ask judgment for this amount. Defendant filed a demurrer. The demurrer was sustained and, as plaintiffs chose to stand upon their complant, the action was dismissed. Plaintiffs have appealed the case.
Section 42-1-58, R. S. U. 1933, reads as follows:
"When any injury for which compensation is payable under this title shall have been caused by the wrongful act of a third person, the inj'ured employee, or in case of death his dependents, may at their option claim compensation under this title or have their action for damages against such third person; and, if compensation is claimed and awarded, the employer or insurance carrier having paid the compensation shall be subrogated to the rights of such employee or his dependents to recover against such third person; provided, if such recovery shall be in excess of the amount of the compensation awarded and paid, then such excess, less the reasonable expenses of the action, shall be paid to the employee or his dependents." (Italics added.)
It is rather obvious that the purpose of the act is to permit the insurance carrier, or the employer under like circumstances, to recover for itself the amount of money it had to expend as compensation, where the loss was caused by the wrongful act of a stranger to the employment of the deceased. If the insurance carrier paid nothing for compensation, then it is not entitled to recover anything from the defendant. By its very terms, payment by the insurance carrier is a condition precedent to recovery. Subrogation arises only if the compensation has been paid. This is evidenced by the words in italics in the quotation.
Counsel and the lower court apparently acted upon the theory that the cause of action upon which plaintiffs brought suit was one which could not be assigned. If the cause cannot be assigned, amendments will avail plaintiffs nothing. This appeal is principally upon the question of whether or not the cause of action may be assigned.
Plaintiffs may not maintain this action in their own right. Section 42-1-58 offered them one of either of two alternatives. Their acceptance of either waived their rights under the other. Having accepted compensation, they are not permitted to sue for damages for the death of their son. The fact that they may possibly acquire the advantage of the excess in the judgment as the result of an action by the insurance carrier, if the latter enforces its rights acquired by subrogation, does not give the plaintiffs the right to sue the defendant to establish that excess. Their right in that matter is purely one which arises if and when a judgment is entered establishing the fact that there is an excess. The insurance carrier may, if it sees fit, refrain from enforcing the rights it acquired by subrogation, in which event the dependents, plaintiffs herein, have no complaint. They may not insist that the carrier enforce its rights. There is but one way that plaintiffs, the defendants, may sue, if they may sue at all, and that is as assignees of the insurance carrier's cause of action.
For the carrier to state a cause of action under section 42-1-58, it must allege not only the allegations necessary for the dependents to state a cause of action for the death of their son, but in addition thereto, that the dependents elected to take and were awarded compensation, and that the insurance carrier paid to the dependents that compensa tion. Plaintiffs suing as assignees, must include the same allegations in their cause of action. In other words plaintiffs as assignees do not rely simply upon the allegations which would have been sufficient to have supported a recovery by them had they, in the first instance, elected to sue for damages rather than to take compensation. Thus the question of whether or not the insurance carrier's cause of action under this section is one that may be assigned, is not the same question as that of whether or not the cause of action in favor of the dependents for the death of their son is one that may be assigned. Assuming that the latter were not subject to assignment, that difficulty is overcome in this case by the fact that section 42-1-58 transfers that cause to the carrier upon payment of the award of compensation. So transferred, there no longer remains a reason for adhering to the rule that the cause is not assignable, if that be the rule. By such transfer the cause of action for death loses its individuality as a complete cause of action, a statutory cause in favor of the insurance carrier. Subrogation keeps the cause of action for death alive when otherwise it would die with the payment and satisfaction of the award, keeps it alive for the purpose of securing to the one who pays the award, the recovery of the amount paid (6 C. J. S., Assignments, p 1051 § 2, subd. b(12), keeps it alive to become part of the statutory cause in favor of the carrier. It secures a right in the insurance carrier to recover a fixed amount of money. Possibly it may turn out as valueless security, but the right to its use as such security is existent, nevertheless.
When the dependents elect to take compensation, the award is made to them without regard to whether or not the defendant is a wrongdoer. When the insurance carrier pays that award it does so without regard to whether or not the defendant is a wrongdoer. By paying the award the carrier becomes entitled to such rights as the dependents have against the defendant, be they good, bad, or indifferent. It is not until the carrier seeks to satisfy those rights acquired from the dependents that the question of the alleged wrongdoing of the defendant comes into the case. It is clear, then, that it is the payment of the award that gives birth to the carrier's rights. The facts upon which the cause of action for death is based, do not give birth to those rights. That birth is in a property, money, expenditure and not in the tort. The cause in tort is security for the satisfaction of the right born out of the property expenditure. The two together constitute the carrier's cause of action under section 42-1-58. Thus there is less reason for considering that statutory cause of action one in tort than there is for considering it in the nature of a property right in which the value is evidenced by the amount of the expenditure of money for and on behalf of another. The carrier's interests are measured by the amount paid and not by the personal relationship between the parents and son, which, in the cause of action for death, governs the amount of damages recovered. The latter merely goes to the question of the extent to which the carrier's interests may ultimately be satisfied. It would seem that the cause is one which should survive to the successor of the insurance carrier the same as any other cause in the nature of a property right.
We are of the opinion and so decide that the cause of action under section 42-1-58 in favor of the insurance carrier may be assigned.
The following cases discuss to some extent the matters discussed in this case, but they must be read in the light of the statutes of the states from which they are taken: Ridley v. United Sash & Door Co., 98 Okl. 80, 224 P. 351, quoted with approval in Eagle-Picher Lead Co. v. Kirby, 109 Okl. 96, 235 P. 176; Saudek v. Milwaukee E. R. & L. Co., 163 Wis. 109, 157 N. W. 579; Frankfort General Ins. Co. v. Milwaukee, 164 Wis. 77, 159 N. W. 581; Martell v. Kutcher, 195 Wis. 19, 216 N. W. 522; Swanson v. Lake Superior Terminal & Transfer Co., 195 Wis. 633, 219 N. W. 274.
The complaint was insufficient as against a general demurrer since it does not contain an allegation that the in surance carrier has paid the award; but as the lower court's ruling was apparently predicated upon the theory that the cause of action was not assignable, we shall assume that that court would have permitted an amendment as to payment had it believed the cause assignable. For that reason the judgment of the lower court is vacated and the case remanded with permission to the parties to amend the pleadings if the parties desire and the facts justify that amendment.
Costs to appellants.
MOFFAT, C. J., concurs.