Court Opinion

ID: 3884590
Source: CourtListenerOpinion
Date Created: 2016-07-06 09:14:56.963895+00
Date Added: 2024-06-11T14:15:25.530368
License: Public Domain

I am constrained to disagree with the majority disposition of this appeal. I think it applies a construction of an at least doubtful provision of the compensation act which excludes the injured employee from the protection of the law in conflict with our previous decisions which accord with the general rule, that this remedial law should be construed by resolving doubts so as to include employees rather than exclude them from the benefits. More will be later said upon this point.
The compensation act created a new right in the employee and is a part of his contract of employment. Code Sec. 70356;Brown v. Town of Patrick, 202 S.C. 236,24 S.E.2d 365. For the purpose of the present problem it may be likened to accident insurance. An employee with such a policy collects under it for his accident without effect upon his right to workmen's compensation. His employer is not subrogated to his rights against the insurance company. How then does subrogation arise against a third person who is liable to the *Page 426 
injured employee in tort, instead of on contract as in the case of the supposed insurer of the employee against accident?
The answer is the statute. The court cannot go afield of it without encroaching upon the sphere of the legislature, and that, I am afraid, is what is proposed to be done here. The act says with explicit plainness what conditions shall bar such an injured employee from his right to compensation — "procurement and collection of a judgment in an action at law". Compromise settlement of a questionable claim is far from that. Instead of applying the plain words of the statute, it seems to me that it is proposed to apply a sort of parallel to the common law rule of election of remedies or follow the doctrine of equitable estoppel. I think neither has any place in this adjudication of claimant's rights under the compensation act.
It is axiomatic that our duty is to administer our law as it stands, not as perhaps it should be or as the laws of other states are. Dawson v. Southern Railway Co., 196 S.C. 34,11 S.E.2d 453, 454, is authority for the application of our Workmen's Compensation Act as it is written, and not in accord with the decisions of the courts of other states construing corresponding, but not identical, provisions of the compensation laws of their states. The following is the concluding paragraph of the opinion: "The appellant cites and relies on decisions by the Court of Appeals of Virginia, which sustain its contention; and the respondent cites in support of its argument an opinion of the Supreme Court of North Carolina. The citations from the Courts of both of these States deal with the Workmen's Compensation Act of those States, which are in close analogy with ours, and the citations are interesting. However, as we have said in other cases, we prefer to construe our own Act, where its provisions, in our judgment, are plain and unambiguous". It was held in that decision that the personal representative of a deceased employee could not, after accepting an award of workmen's compensation, sue a third person tort-feasor for damages under Lord Campbell's Act, in the absence of the consent of the *Page 427 
employer. It was a literal application of the terms of the act as it then stood; the court declined to undertake to construe the act in the manner that it may have been thought it should have been written. Incidentally, the result of the Dawson case
(which was followed in Davis v. Fleming, 196 S.C. 343,13 S.E.2d 434) appears to have inspired the passage of Act No. 527 of 1941, 42 Stat. 1314, whereby it was enacted that should the subrogee of the injured employee's right of action against the third person fail to bring suit thereupon after notice, the employee or his representative may do so. The provisions of the 1941 Act, just cited, appear as sections 7035-12 and 7035-13 of the 1942 Code. Similarly in this instance I see no room for "construction" of the Act before us; its terms are too plain. If the result of the application of it is not in accord with the legislative intent, the legislature should follow the course (not open to the court) of amendment of the act as it apparently did as a consequence of the decisions in the Dawson and Davis cases, supra. It might be said with at least some degree of accuracy that literal application of the terms of the compensation law served to oust employees injured by third persons from the law courts in the cited cases, and now the act will be interpreted to bar a similarly injured employee from the benefits of workmen's compensation.
Not only do I think the latter stated result inconsistent with our earlier cited cases but, if it be granted that the answer to the present question is doubtful, it is violative of the apparently universal rule that doubts of the meaning of the provisions of the compensation law should be resolved in favor of claimants; the law should be construed so as to include workmen within its benefits rather than exclude them. There are many decisions of this court to that effect. See cases digested in 34 S.E. Dig. 2-582 et seq., Workmen's Compensation, Key No. 51, 52.
It is respectfully suggested that the judgment of the majority rests upon the faulty premise that claimant has destroyed the employer's statutory right to subrogation by his voluntary *Page 428 
settlement with the third person tort-feasor. First it should be repeated parenthetically that the decision under review provides for credit of the whole amount collected by the employee upon the compensation award, so the employer is receiving full benefit of the settlement and it is not shown that it will suffer any financial loss. But is the effect of the voluntary settlement and release that all right of recovery by the employer against the tort-feasor, by way of subrogation, has been extinguished? That, I think, is a difficult question which perhaps is unnecessary to decision of the present appeal because the explicit language of the act controls. But the majority opinion decides it — I think erroneously. The tort-feasor and his liability insurer had notice (constructive, at least) at the time of the settlement of the provisions of the compensation law, including the right of subrogation in the employer, and I do not think that the employer is concluded by the settlement to which it was not a party. There is much support for this view in the decisions of other jurisdictions, apparently the majority. See the strongly reasoned opinion in Napier v. John P. Gorman Coal Co., 242 Ky. 127,45 S.W.2d 1064, (summarized in 88 A.L.R. 675, 676) and the other authorities there cited. Cases of similar result from the courts of New York, Nebraska, California, Iowa, Alabama, Pennsylvania and Wisconsin are digested in the annotations in 19 A.L.R. 788, 789; 67 A.L.R. 266, 267, 271, 272; and 88 A.L.R. 687.
The stated rule is recognized in the following quotation from 71 C.J. 1567, Workmen's Compensation Acts, Sec. 1606: "So, according to some cases, a settlement between an employee and a third person, without the consent of the employer, does not destroy or otherwise affect the employer's right given by the act, to recover from a third person; such a settlement made without the consent of insurer does not affect insurer's rights in this regard. The rule applies where a settlement is made without consent as required by a provision of the act in the case of the employer or insurer. Where the act provides that the making of a claim for compensation *Page 429 
shall operate as an assignment, a settlement between the employee and the third person is a nullity in so far as the employer or insurer is concerned, where the employee has made a valid claim for compensation. The effectiveness of a settlement between the employee and the third person has, however, been recognized in some cases, even where the consent required by the act was not obtained. The view has been expressed pressed that a covenant of an employee not to sue a third person does not deprive the employer or insurer of any right of subrogation". See also, 71 C.J. 926, Sec. 678.
The principle is likewise embraced in the following from 28 R.C.L. 739: "In case the employee has compelled the payment of compensation by the employer, the latter becomes subrogated to any right of recovery that the employee might have enforced against a third person. And if the employee has settled with the third person, the employer, in a subsequent proceeding to enforce the payment of compensation, is entitled to credit for the amount paid in settlement of the claim". For the foregoing R.C.L. cites Rosenbaum v. HartfordNews Co., 92 Conn. 398, 103 A. 120, and the appended annotation in L.R.A. 1918-F, 521, 524.
The majority opinion is influenced by decisions of the courts of Tennessee and Virginia. The first is Walters v.Eagle Indemnity Co., 166 Tenn. 383, 61 S.W.2d 666, 88 A.L.R. 654, where the compensation act of the State of Tennessee, quoted in the opinion, is quite different from that of this State and the decision is dependent upon the terms of the act, Code 1932, § 6865 (the employee may claim compensation "or proceed at law" or both) and not upon the proposition that the right of the employer to subrogation, if liable, had been destroyed by the voluntary settlement of the injured employee with the third person tort-feasor. Moreover, the facts of the case were not those before us. There the injured employee brought suit against the alleged tort-feasor which went to trial and during the trial the settlement was reached. That procedure was much nearer fulfillment of the condition of our statute, but still not quite. Our statute *Page 430 
does not contain the words of the Tennessee law upon which the cited decision largely rests, that the injured employee "shall not be entitled to collect from both". In that case it does not appear that in the claim for compensation it was sought to credit upon any award the substantial sum recovered from the third person tort-feasor, which is the condition of the award under attack in the instant appeal. Indeed, I see no important point in the case which is similar to ours.
The other decision relied upon by the majority is Stonev. George W. Helme Co., 184 Va. 1051, 37 S.E.2d 70. The pertinent act is set out in the margin of the report of the case and demonstrates its differences from ours. However, a more important distinction is that the reason for that decision was that otherwise the claimant would be entitled to a double recovery. That point is not in our case for credit was allowed upon the compensation award for the whole amount paid to this claimant by the tort-feasor. It is not suggested that he recover any more than he is entitled to under the compensation act alone.
The North Carolina Compensation Act which governed the decision of Rowe v. Rowe-Coward Co., 208 N.C. 484,181 S.E. 254, was close in terms to ours. It provided that the "procurement of a judgment in an action at law (by the employee against the tort-feasor) shall be a bar" to compensation. Code 1931, § 8081(r). The employee sued the tort-feasor by way of counterclaim for the alleged tort which caused his compensable injuries. He failed in his cross-action and collected nothing, whereupon his subsequently revived claim for workmen's compensation was allowed. The court found no election in that case even under the applicable statute and suit brought to unsuccessful conclusion.
It is said in the leading opinion, upon the authority of the cited Massachusetts decision (also relied upon by the Virginia court in Stone v. George W. Helme Co., supra,184 Va. 1051, 37 S.E.2d 70), that the right of subrogation *Page 431 
in the employer does not depend upon equitable principles but is purely statutory and arises when the conditions are met which are specified in the act. This seems to me to mean that the statutory right of subrogation of the employer is fixed by law and is beyond effect of any transaction between the injured employee and the tort-feasor to which the employer is not a party. And that is as it should be; the valuable right of subrogation, carefully created by solemn statute, should not be subject to destruction by the secret transaction of the employee and tort-feasor, and I do not think that it is. It was said in the opinion in Rosenbaum v. Hartford News Co.,supra, 92 Conn. 398, 103 A. 120, 121, L.R.A. 1918-F, 521: "If the settlement (between the employee and the tort-feasor) is made behind the back of the employer, he will not be bound by it. But, if it is to his advantage to do so, he must be permitted to ratify it * * *."
I fear that the majority decision creates a condition in which collusion is invited, from which employees will suffer in the loss of compensation for injuries. There may well be cases in which the liability insurer of the tort-feasor is the compensation carrier of the employer, which was not the case here. However, the rather prompt settlement with the badly injured employee, before suit brought, was effected by the liability insurance carrier of the alleged tort-feasor, which by reason of the nature of its business was doubtless thoroughly familiar with the provisions of the compensation law. In any event, the law itself was constructive notice of its terms. There is this further consideration which is important irrespective of collusion: It is common knowledge that people generally, and especially liability insurers, frequently pay relatively nominal sums for releases in cases where there is probably no liability, rather than defend lawsuits. Every such release executed by unwary workmen will deprive them of their otherwise deserved benefits under the compensation act, by the majority decision. Such result is not expressed in the terms of our act and I do not think that it can be reasonably implied or inferred. The facts of Stone *Page 432 v. George W. Helme Co., supra, 184 Va. 1051,37 S.E.2d 70, make it, I think, a striking example of miscarriage of justice. It should constitute a warning of the error of the rule
I am convinced that the majority decision of the court does violence to the compensation act and denies benefits to the claimant which he was intended by the law to receive. Hence I disagree. I think claimant is entitled to compensation despite his "release" of the tort-feasor, less the sum received therefor; and the employer entitled by subrogation, relating back to the tort, to sue the tort-feasor, giving credit upon any recovery for the amount paid for the "release".