Court Opinion

ID: 9700021
Source: CourtListenerOpinion
Date Created: 2023-08-25 21:06:59.36008+00
Date Added: 2024-06-11T18:21:03.009091
License: Public Domain

Knutson, Justice
(concurring specially).
I concur in the result in so far as we hold that the custodian of the special compensation fund is not entitled to subrogation. Even as to that there might be some doubt since it would seem that to so hold is to permit double recovery for the same injury, but I think that there is sufficient reason for holding that there is a difference between the payment made by the custodian of the special compensation fund and that paid by an employer or his insurer. The custodian of the special compensation fund acts in a manner as a trustee for employers who contribute to the fund,4 but apparently it was created by the legislature for the purpose of enabling disabled employees to receive, in cases of aggravated injuries, more than they could receive from their employer, under certain specified conditions. I think that the matter of determining whether the custodian of the special compensation fund should be entitled to subrogation should be left to the legislature.
I see no necessity, however, for holding that the insurer of an employer is not entitled to subrogation where such insurer has made payments to the employee. Apparently this part of the decision is based *151on the assumption that “The right of subrogation to an injured employee’s third-party action appears strictly dependent upon statutory authorization rather than upon common-law principles.” This assumption is contrary to what we have heretofore held. It is claimed also that this question has not heretofore been before us. I think that it has been decided heretofore. Even if it has not been squarely presented, we have inferentially held that such right exists for such a long time that it is now only fair to assume that employers and insurers alike have been led by our decisions to believe that they have such right both under the statute and on the equitable principles of subrogation.
In Fidelity & Cas. Co. v. St. Paul Gas Light Co. 152 Minn. 197, 198, 188 N. W. 265, 6 Minn. L. Rev. 594, the employer’s insurer brought the action, and with respect to its rights we said:
“* * * Plaintiff in this action had insured the employer, and, in discharge of its contract obligation thereunder to protect the company from such liabilities, assumed the payment of the judgment, and under the statute has become subrogated to the right of the employer to reimbursement from the third party wrongdoer.” (Italics supplied.)
After discussing the respective rights of employee and employer, we said (152 Minn. 200, 188 N. W. 266):
“* * * The remedy is that of the employe, passing to the employer only under the rule of subrogation. In fact the provisions of the act on this subject are no doubt merely declaratory of the common law rule of subrogation, available to the employer without act of the legislature.”
In City of Red Wing v. Eichinger, 163 Minn. 54, 203 N. W. 622, the city employed one Haga as a street sweeper. While Haga was engaged in his work, he was injured by a collision between two automobiles operated by defendants. The Industrial Commission made an award to the employee. The city’s insurer paid it. The city then sued defendants to recover the amount so received by the employee. We held that the city could not maintain the action because it was not the real party in interest. In addition to the statutory right of subrogation, the insurance policy involved in that case contained a provision which read (163 Minn. 55, 203 N. W. 623):
*152“K The Company shall be subrogated, in case of any payment under this Policy, to the extent of such payment, to all rights of recovery therefor vested by law either in this Employer, or in any employee or his dependents claiming hereunder, against persons, corporations, associations or estates.”
With respect to the relative rights of the parties, we said (163 Minn. 55, 203 N. W. 623):
“Our compensation act recognizes the insurer as such. * * * It does not compel a municipality, as it does some employers, to carry insurance. * * * The municipality, however, may carry such insurance if it so chooses. * * * Our statute * * * in reference to subrogation has had judicial recognition.”
After discussing the rights of the parties, we said (163 Minn. 56, 203 N. W. 623):
“That fundamental element which supports the doctrine of subrogation, namely, the call for substantial justice, is absent. The city has been protected by the insurance company paying the employe. The city has paid nothing. It is not obligated to pay anything. It has not suffered any damage by reason of the alleged negligence of the defendants. It cannot maintain this action. Its payment of the premium to the insurance company does not change this situation. It was not incurred or paid because of the alleged negligence of defendants. * * * The city is not the real party in interest. * * *
“The insurance company and not the city has suffered the loss to the extent of the amount of money paid. If anyone is entitled to prosecute the alleged cause of action, it would be the insurance company. * * * Such right of subrogation as the law gave the city, it, by contract, assumed to pass to the insurance company. Analogous rights in case of fire insurance are fully discussed in 26 C. J. 465.” (Italics supplied.)
In McGough v. McCarthy Improvement Co. 206 Minn. 1, 287 N. W. 857, 24 Minn. L. Rev. 301, while we held that under the facts of that case the employer or his insurer were not entitled to recover, we did not question the right of the insurer to recover if the employer could do so. Again, in Hartford Acc. & Ind. Co. v. Schutt Realty Co. 210 Minn. *153235, 297 N. W. 718, 719, we recognized the right of the insurer to maintain the action when we said:
“The Hartford Accident & Indemnity Company as subrogee brought action against the Schutt Realty Company for its negligence in causing the death of a workman whose employer was insured by Hartford. It seeks to recover workman compensation benefits paid to the workman’s family and appeals from an adverse judgment.” (Italics supplied.)
In Standard Acc. Ins. Co. v. Minnesota Utilities Co. 207 Minn. 24, 289 N. W. 782, the insurer brought the action and recovered a verdict. We affirmed. We said, apparently without any objection (207 Minn. 24, 289 N. W. 783):
“* * * Plaintiff [the insurer] sought recovery under the provisions of 3 Mason Minn. St. 1938 Supp. § 4272-5, as subrogee, having as an insurer under the workmen’s compensation act indemnified the Houston Creamery Company for its liability to the dependents of James William Nelson, an employe of that company, who was killed in the course of his employment August 16, 1937, through the alleged negligence of the defendant * * (Italics supplied.)
In Nyquist v. Batcher, 235 Minn. 491, 496, 51 N. W. (2d) 566, 570, 36 Minn. L. Rev. 550, we said with respect to the nature of the remedy under § 176.06:
“* * * Subrogation is an equitable remedy; * *
We recognized the rights of an insurer when we said (235 Minn. 501, 51 N. W. [2d] 572):
“* * * it follows that the employer herein — or his insurer7 — as a subrogee under § 176.06, subd. 2, is not, upon the facts or as a matter of law, the sole party in interest as to the right to the entire proceeds of any recovery against defendant under the wrongful-death act.” (Italics supplied.)
Under footnote 7 we said:
“As to rights of insurer as subrogee, see Standard Accident Ins. Co. v. Minnesota Utilities Co. 207 Minn. 24, 289 N. W. 782; 24 Minn. L. Rev. 719.”
*154In a recent case comment found in 24 Minn. L. Rev. 719, 721, we find the following:
“* * * As to the problem of whether, in Minnesota, an insurer who has paid compensation should be subrogated to the rights against the third party to the same extent as the employer, see (1940) 24 Minnesota Law Review 301, 303, which suggests that this is the desirable result. Cf. Aetna Life Ins. Co. v. Moses, (1933) 287 U. S. 530, 53 Sup. Ct. 231, 77 L. Ed. 477, 88 A. L. R. 647; (1922) 6 Minnesota Law Review 593.”
In the article referred to, found in 24 Minn. L. Rev. 301, 303, we find the following:
“* * * While Mason’s 1927 Minn. Stat., 1938 Supp., sec. 4272-5 [now M. S. A. 176.061] refers only to employers and not to insurers, it would seem desirable that an insurer who has become liable for compensation should be subrogated by his contract provisions upon equitable principles. That this will be done may be inferred from certain language which the court has used. Cf. Fidelity & Casualty Co. v. St. Paul Gas Light Co., (1922) 152 Minn. 197, 188 N. W. 265 * * * "
In Lang v. William Bros Boiler & Mfg. Co. 250 Minn. 521, 85 N. W. (2d) 412, we recognized the right of the insurer even to the extent of holding that under certain conditions the insurer can intervene in an action by an employee against a third-party tortfeasor.
Finally, in Dockendorf v. Lakie, 251 Minn. 143, 148, 86 N. W. (2d) 728, 731, we said:
“No one disputes the right of the plaintiff to maintain and prosecute to completion the action which he commenced against the third-party tortfeasors under the provisions of § 176.06, subd. 2, notwithstanding payments of benefits and medical expenses had theretofore been made to him by employer’s insurer; neither can it be disputed that employer's insurer was entitled to make its application to intervene in said action in order to establish its right to reimbursement.” (Italics supplied.)
While cases can be found from foreign jurisdictions supporting either *155view,5 I think the better rule is that the insurer who has paid compensation benefits under a statute such as ours stands in the same position with respect to rights of subrogation as the employer.6
Aetna Life Ins. Co. v. Moses, 287 U. S. 530, 53 S. Ct. 231, 77 L. ed. 477, 88 A. L. R. 647, involved an action under the Longshoremen’s and Harbor Workers’ Compensation Act (33 USCA, § 901, et seq.), which is applicable as a workmen’s compensation act in the District of Columbia. The subrogation provisions in case of an action against a third party are substantially the same as ours. It provides (287 U. S. 537, 53 S. Ct. 232, 77 L. ed. 480, 88 A. L. R. 650):
“* * * ‘Acceptance of such compensation shall operate as an assignment to the employer of all right of the person entitled to compensation to recover damages against such third person,’ * * (Italics supplied.)
With respect to the right of subrogation of the employer’s insurer, the United States Supreme Court said (287 U. S. 541, 53 S. Ct. 233, 77 L. ed. 482, 88 A. L. R. 652):
“We do not doubt, although other courts have, Henderson Tel. & Tel. Co. v. Owensboro Home Tel. & Tel. Co., 192 Ky. 322; 233 S. W. 743 ;7 Hartford Accident & Indemnity Co. v. Englander, 93 N. J. Eq. 188; 118 Atl. 628, that the insurer is subrogated to the rights of the employer to the extent that it has discharged his duties, though whether its rights extend to compensation which it is liable to pay, as well as to that which it has paid, we need not decide. Notwithstanding, the provision of the statute and of the policy permitting an award for compensation to be made against the insurer directly, the function of the insurer is essentially that of indemnifying the employer. The statute contemplates that the payment of compensation should be secured by insurance, and *156nothing in it indicates that the insurer is to be denied an indemnitor’s rights. Subrogation is a normal incident of indemnity insurance.”
In a Note found in 46 Yale L. J. 695, 697, entitled Subrogation of Insurer Under Workmen’s Compensation Laws, we find the following:
“A few statutes, making no reference to the insurer, provide only for subrogation of the employer to the employee’s cause of action, and require him to hold any recovery above the amount of compensation in trust for the employee.8 Under such circumstances the insurer should be permitted to assert the injured workman’s cause of action, since the insurer, by promising to indemnify the employer fully for any compensation he has to pay, is entitled, in the absence of statute, to be subrogated pro tanto to the rights of the employer, who in turn is subrogated by statute to the rights of the employee. * * *
“But even if the subrogation issue is decided in the insurer’s favor, and the majority of courts so decide, a special procedural difficulty is created by statutes of the type last discussed, where the insurer is subrogated only to so much of the cause of action against the tortfeasor as is covered by its contract indemnifying the employer.” (Italics supplied.)
It is therefore apparent that, throughout the history of our Workmen’s Compensation Act, we, as well as those affected by the act, have assumed that an insurer who has paid workmen’s compensation benefits is entitled to the same rights of subrogation as the employer has under the statute. If we are now to adopt a different course, I think it should not be done in this case. The question has not been raised here by either party. It has neither been briefed nor argued. As a matter of fact, respondent relies on McGough v. McCarthy Improvement Co. 206 Minn. 1, 287 N. W. 857, which, inferentially at least, recognizes the right of the insurer to subrogation. Our statute requires all employers, except the state and its municipal subdivisions, to be insured unless they are given permission by the Industrial Commission to be self-insured. M. S. A. 176.181, subd. 2. I think it can be safely said that the great majority of employers are insured. It seems to me that no *157good reason exists under these circumstances why an employer who is self-insured should have a right of subrogation against a third-party tortfeasor and that we then should deny it both to the employer and the insurer where the employer is insured. This necessarily follows by denying subrogation to the employer where the insurer has paid the compensation benefits, for the reason that the employer is not the real party in interest,9 and then by denying subrogation to the insurer, because it is not expressly mentioned in the statute. This question is of major importance to employers and insurers under our Workmen’s Compensation Act, and, if determination of the question is essential to a decision in this case, I think that we should ask for briefs and hear arguments on it rather than to proceed to a decision of our own when none of the parties have raised the question or argued it.

 Senske v. Fairmont & Waseca Canning Co. 232 Minn. 350, 45 N. W. (2d) 640.

 See, 58 Am. Jur., Workmen’s Compensation, § 358; Annotations, 19 A. L. R. 782, 27 A. L. R. 500, 37 A. L. R. 844, 67 A. L. R. 266, 88 A. L. R. 678, 106 A. L. R. 1053, 117 A. L. R. 571.

 See, for instance, Staples v. Central Surety & Ins. Corp. (10 Cir.) 62 F. (2d) 650.

 Henderson T. & T. Co. v. Owensboro H. T. & T. Co. 192 Ky. 322, 233 S. W. 743, is cited in the opinion above in support of the opposite rule. It was rejected by the United States Supreme Court.

 Among others in support of this statement is cited the Longshoremen’s and Harbor Workers’ Compensation Act.

 City of Red Wing v. Eichinger, 163 Minn. 54, 203 N. W. 622.