Case Name: BANNER v. TRAVELERS INS. CO.
Court: Michigan Court of Appeals
Jurisdiction: Michigan
Decision Date: 1971-03-24
Citations: 31 Mich. App. 608
Docket Number: 
Parties: BANNER v. TRAVELERS INS. CO.
Judges: Before: Lesinski, C. J., and Levin and O’Hara, JJ.
Reporter: Michigan appeals reports; cases decided in the Michigan Court of Appeals.
Volume: 31
Pages: 608–612

Head Matter:
BANNER v. TRAVELERS INS. CO.
Opinion of the Court
1. Workmen’s Compensation — Third-Party Tortfeasor — Right to Sue.
The Workmen’s Compensation Act allows an employee to sue third parties whose acts of negligence cause injury (MCLA . § 418.827 [1]).
2. Workmen’s Compensation — Compensation—Insurance Carrier —Liability—“Third-Party” Tortfeasor.
A workmen’s compensation insurance carrier is a third party, not an employer for purposes of the statute allowing an injured employee to sue a third party whose negligence has caused the employee’s injuries; a workmen’s compensation insurance carrier is not immune from common-law tort liability for its own acts of negligence which cause injury to an employee (MCLA § 418.827 [1]).
3. Workmen’s Compensation — Compensation—Insurance Carrier —“Third-Party” Tortfeasor — Liability—Negligence.
Workmen’s compensation insurance carrier whose allegedly negligent performance of its safety inspection and service contract with the plaintiff’s employer was claimed to have been the proximate cause of the plaintiff employee’s injury was a third-party tortfeasor under the Workmen’s Compensation Act, and, therefore, liable for its own acts of negligence (MCLA § 418-.827[1]).
Concurrence by O’Hara, J.
4. Workmen’s Compensation — Compensation—Insurance Carrier —Liability—Primary Liability.
Liability of a workmen’s compensation insurance carrier is primary, not that of an indemnitor or a guarantor; an insurance carrier, as evidenced by the facts that it is a named party defendant and that it is required to respond directly when compensation benefits are awarded, is indistinguishable, in law and fact, from the employer.
References for Points in Headnotes
58 Am Jur, Workmen’s Compensation §§ 60, 264.
58 Am Jur, Workmen’s Compensation §§ 42, 555 et seq.
5. Workmen’s Compensation — Compensation—Insurance Carrier —“Third-Party” Tortfeasor — Liability.
Judicial construction that a worhmen’s compensation insurance carrier is a “third party” subject to suit for its own negligence causing injuries to its insured’s employees, although illogical, the insurance carrier’s liability is primary and, as shown, by the fact that the judicial construction would mean that a self-insured employer would be liable in fact on the ground that the employer is also the insurance carrier, is nevertheless the settled law of this state.
Appeal from Wayne, Thomas Roumell, J.
Submitted Division 1 December 7, 1970, at Detroit.
Decided March 24, 1971.
Leave to appeal denied June 30, 1971, 385 Mich 760.
Complaint by Michael Banner by Ralph Banner, bis next friend, against The Travelers Insurance Co. for negligent performance of contract with plaintiff’s employer. Summary judgment for defendant. Plaintiff appeals.
Reversed and remanded with instructions.
Plunkett, Cooney, Butt é Peacock (by Boleslaus I. Stanczyk and Joel 8. Morse) for plaintiffs.
Vandeveer, Doelle, Garzia, Tonkin <& Kerr (by Buell Doelle) and Travis, Warren, Nayer <& Burgoyne (by Harry M. Nayer), for defendant.
Before: Lesinski, C. J., and Levin and O’Hara, JJ.
Former Supreme Court Justice, sitting on the Court of Appeals by assignment pursuant to Const 1963, art 6, § 23 as amended in 1968.

Opinion:
Lesinski, C. J.
Plaintiff Michael Banner brought this action against his employer's workmen's compensation insurance carrier, defendant Travelers Insurance Company, alleging that negligence during the performance of a contract with the employer to provide safety inspections and safety engineering services was the proximate cause of his injury. Defendant moved for and was granted summary judgment on the ground that the suit was barred by the Workmen's Compensation Act and that this Court's prior interpretation of that act in Ray v. Transamerica Insurance Company (1968), 10 Mich App 55, was incorrect. Plaintiff appeals as of right.
The Workmen's Compensation Act allows an employee to sue third parties whose acts of negligence cause injury. MCLA §418.827(1) (Stat Ann 1971 Cum Supp § 17.237[827] [1]), provides:
"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 the injured employee or his dependents or personal representative may also proceed to enforce the liability of the third party for damages in accordance with the provisions of this section." (Emphasis supplied.)
In Ray, supra, this Court construed the above-quoted language to mean that the insurance carrier was a "third party", rather than an "employer", and not immune from common-law tort liability for its own acts of negligence.
After a review of divergent authority from other jurisdictions, we conclude that resolution of the issue depends upon the interpretation given various state compensation schemes, and not upon principles of constitutional law.
We conclude that the decision in Ray, supra, was a correct interpretation of legislative intent. It was error to grant defendant's motion for summary judgment.
Beversed and remanded for action not inconsistent with this opinion. Costs to plaintiff.
Levin, J., concurred.
MCLA § 418.101 et seq. (Stat Ann 1971 Cum Supp § 17.237 [101] et seq.).
At the time Ray v. Transameriea Insurance Company (1968), 10 Mich App 55, was decided, MCLA § 413.15 (Stat Ann 1960 Rev § 17.189), embodied the present provision.
Fabricius v. Montgomery Elevator Co. (1963), 254 Iowa 1319 (121 NW2d 361); Mager v. United Hospitals of Newark (1965), 88 NJ Super 421 (212 A2d 664), affirmed (1966), 46 NJ 398 (217 A2d 325); Kerner v. Employers Mutual Liability Insurance Company (1967), 35 Wis 2d 391 (151 NW2d 72); Flood v. Merchants Mutual Insurance Company (1963), 230 Md 373 (187 A2d 320).
Defendant asserted below that the decision in Bay, fn 2, supra, unconstitutionally impaired existing insurance contracts. We find no merit in this contention. See Ruth v. Bituminous Casualty Corporation (CA6, 1970), 427 F2d 290.