Court Opinion

ID: 9528119
Source: CourtListenerOpinion
Date Created: 2023-08-07 03:37:14.72911+00
Date Added: 2024-06-11T13:26:30.704707
License: Public Domain

CARTER, J.
I dissent.
I do not agree with that portion of the majority opinion which holds that the injured employee is not entitled to have his employer (when the word “employer” is used herein it indicates the employer’s insurance carrier) bear a share of the expenses (including attorney’s fees) incurred in the employee’s action for damages where he recovers from the third party tort feasor expenditures made by the employer as the result of injuries suffered by such employee by reason of the negligence of such third party tort feasor, or the holding that if the employer sues the third party tort feasor on behalf of himself and such employee he may have his attorney’s fees and expenses paid out of the judgment recovered against such third party. We have here a simple case where an employee has suffered an injury compensable under the workmen’s compensation law, but the injury was due to the negligence of a third party tort feasor. In such a case the employee may recover from the third person but the employer is entitled to a lien against any judgment so recovered as reimbursement for amounts paid as compensation and medical and hospital treatment to or on behalf of the injured employee.
At the outset it should be noted that the majority opinion holds (as I have above stated) that the workmen’s compensa*507tion law, properly interpreted, provides that the employer may have his attorney’s fees paid from the judgment against the tort feasor when he brings the action, but the employee may not when he brings the action, and that means not only that such fees come out of the judgment, but they come out of the portion of the surplus that would be payable to the employee after the employer is reimbursed; that is, the employer would be entitled to have all of the fees paid out of the employee’s share of the judgment. There is not even a sharing of those fees between the employer and the employee. On the other hand when the employee sues he is not entitled to subject the recovery on behalf of the employer to the payment of any portion of such fees. He must pay them all. Suppose the compensation paid to the employee was $4,000, the attorney’s fee a 25 per cent contingency, and the recovery from the tort feasor was $4,000. The employer would be made whole and the employee would suffer a total loss of $1,000 or his attorney would receive no fee. If the provisions of the Workmen’s Compensation Act are so construed they are clearly discriminatory and violate the privileges and immunities and equal protection provisions of the 14th Amendment to the Constitution of the United States. In Builders’ Supply Depot v. O’Connor, 150 Cal. 265, 268 [88 P. 982, 119 Am.St.Rep. 193, 17 L.R.A.N.S. 909], this court declared unconstitutional a provision in the mechanics’ lien law allowing attorney’s fees to the lien claimant in an action to enforce his lien but denying this right to the defendant or other persons similarly situated. The court stated: “This provision is in our opinion violative both of the federal and the state constitution—of the fourteenth amendment of the former, which guarantees to every person ‘the equal protection of the law,’ and of the provisions of the state constitution which provide that general laws shall be uniform, prohibit special laws, and declare the inalienable rights of all men of acquiring, possessing, and protecting property. A statute which gives an attorney’s fee to one party in an action and denies it to the other, and allows such fee in one kind of action and not in other kinds of actions where, as in the statute here in question, the distinction is not founded on constitutional or natural differences, is clearly violative of the constitutional provisions above noticed. That said law is violative of the fourteenth amendment to the federal constitution was established by the supreme court of the United States in Gulf etc. Ry. Co. v. Ellis, 165 U.S. 150 [17 S.Ct. 255, 41 L.Ed. 666].”
*508In the instant.case there is no basis for a constitutional classification or distinction between the employer and employee with reference to the allowance of attorney’s fees. The employer or his insurance carrier is bound to pay the compensation and the employee is entitled to receive it. Either the employer or the employee may sue the tort feasor for the total damages incurred by the employee including expenses for medical and hospital treatment furnished by the employer or his insurance carrier. The action is for the benefit of both, regardless of which one sues. The employer is entitled to reimbursment because he was required to pay a law-imposed obligation arising out of a tort for which he was in nowise at fault. The real wrongdoer is the tort feasor. The employee is entitled to recover damages because workmen’s compensation benefits do not include all the elements of damage involved in his injury and the tort feasor is liable for all damages suffered by him. Basically there is no distinction whatsoever between their positions, hence there is no basis for allowing the employer to recover his attorney’s fees and the employee not, when each is protecting his own rights and the rights of the other in the action.
If the provision authorizing attorney’s fees to the employer but not to the employee is invalid, then we have no provision in either ease and the equitable principle (hereafter discussed) requiring a sharing of the fees must be enforced. On the other hand, I would be disposed to hold that while the statute would be unconstitutional if construed as allowing attorney’s fees to the employer only, in view of the rule that a statute must be construed to avoid invalidity if possible, it would be reasonable to construe this statute to authorize both the employer and employee to share the attorney’s fees regardless of who prosecutes the action, thus avoiding discrimination and the denial of equal protection to the employee.
Turning to the question of the construction of the provisions of the workmen’s compensation statute it is clear that there is no authority for either granting or denying the employee the right to require the employer to pay his share of the attorney’s fees. After providing that either the employer or employee may bring the action against the tort feasor, and for notice by the one bringing the action to the other, it is stated: “The court shall first apply, out of the entire amount of any judgment for any damage recovered by the employee, a sufficient amount to reimburse the employer *509for the amount of his expenditures for compensation. If the employer has not joined in the action or has not brought action, or if his action has not been consolidated, the court, on his application shall allow, as a first lien against the entire amount of any judgment for any damages recovered by the employee, the amount of the employer’s expenditures for compensation.” (Lab. Code, § 3856.) [Emphasis added.] And that: “After payment of the employer’s lien, the employer shall be relieved from the obligation to pay further compensation to or on behalf of the employee under this division up to the entire amount of the balance of the judgment, if satisfied, without any deduction.” (Lab. Code, § 3858.) [Emphasis added.] The only basis for asserting that those provisions prohibit the sharing of attorney’s fees is the reference to the lien as being against the entire judgment for damages. Obviously that does not refer to the judgment without having first deducted attorney’s fees incurred in the prosecution of the action. Such phraseology was used for the sole purpose of having the lien attach not only to the portion of the judgment which represented the amount of compensation paid but also to the balance thereof including allowances for pain and suffering and other items not compensable under workmen’s compensation laws. It was adopted by amendment to meet cases reaching a contrary result. (See Jacobsen v. Industrial Acc. Com., 212 Cal. 440 [299 P. 66].) That is succinctly stated in Heaton v. Kerlan, 27 Cal.2d 716, 723 [166 P.2d 857] : “The employer’s lien attaches to the ‘entire amount’ of a judgment ‘for any damages.’ (Lab. Code, § 3856.) The Legislature so defined the lien (Stats. 1931, p. 2370, Deering’s Gen. Laws, 1931, Act 4749) after this court held that the lien of the employer under the former statute did not attach to that part of a judgment representing damages for the employee’s pain and suffering, and suggested that the difficulties of segregating the elements of the employee’s recovery ‘might well call for further legislative action on the subject.’ (Jacobsen v. Industrial Acc. Com., supra, 212 Cal. 440, 449.) Under the statute as amended, it is clear that the employer’s lien attaches to the entire judgment and that it is no longer necessary to segregate the part thereof that represents damages for pain and suffering. (Pacific Gas & Electric Co. v. Industrial Acc. Com., 8 Cal.App.2d 499, 504 [47 P.2d 783].)” [Emphasis added.]
The majority opinion argues that because attorney’s fees are allowed to the employer expressly that the absence of a *510similar express provision for the employee shows an intent that attorney’s fees shall not be shared. I have pointed out the invalidity or doubtful validity of such a provision on the assumption that such was the law of this state.
Thus, we have no provision one way or another on attorney’s fees or the sharing thereof. Hence, the equitable principle that when expenditures are incurred to recover a common fund (the judgment against the tort feasor which inures to the benefit of both employer and employee) the beneficiaries of the fund must share those expenditures or, as said in Winslow v. Harold G. Ferguson Corp., 25 Cal.2d 274, at 277 [153 P.2d 714] : “It is a well-established doctrine of equity jurisprudence that where a common fund exists to which a number of persons are entitled and in their interest successful litigation is maintained for its preservation and protection, an allowance of counsel fees may properly be made from such fund. By this means all of the beneficiaries of the fund pay their share of the expense necessary to make it available to them. (14 Am.Jur. § 74, p. 47; Trustees of Int. Imp. Fund v. Greenough, 105 U.S. 527 [26 L.Ed. 1157]; Estate of Marre, 18 Cal.2d 191 [114 P.2d 591] ; see, also, notes 49 A.L.R. 1149 ; 107 A.L.R. 749.) ” And at page 283 : “ [The] long prevailing rule in equity which allows such charge as a proper means of securing contribution from those entitled to participate in the benefits of the litigation. And such counsel fees are customarily made senior to other claims against the fund. (Scott v. Superior Court, 208 Cal. 303 [281 P. 55].) . . . Where a lawyer has rendered such valuable service as to make available a fund for a class, even though he appeared for only one claimant, it is equitable that his compensation and expenses should come from the entire fund saved for all classes concerned before it is distributed. (Sprague v. Ticonic Nat. Bank, 307 U.S. 161 [59 S.Ct. 777, 83 L.Ed. 1184].) Counsel’s right to compensation under such circumstances arises from the benefit conferred upon those who would have suffered loss but for his timely intervention, and not by reason of an agreement to pay his fees. . . . As is stated in Estate of Marre, 18 Cal.2d 191, 192 [114 P.2d 591] ; ‘Plaintiffs who have succeeded in protecting, preserving or increasing a fund for the benefit of themselves and others may be awarded compensation from the fund for the services of their attorneys.’ This principle is derived from the equitable concept that where one of a group has borne the cost of litigation resulting in *511benefit to the entire group, the latter should contribute to such expenses. (Nolte v. Hudson Nav. Co., 47 F.2d 166; O’Hara v. Oakland County, 136 F.2d 152.])
“Not only is it established that the litigant is entitled to be compensated for the expense he has incurred in the prosecution of such an action, but there is created in favor of the attorney who renders the service an equitable lien against the fund so preserved. (Central Railroad t& Bkg. Co. v. Pettus, 113 U.S. 116 [5 S.Ct. 387, 28 L.Ed. 915] ; Colley v. Wolcott, 187 F. 595 [109 O.C.A. 425] ; Muskegon Boiler Workers v. Tennessee Valley I. & R. Co., 274 F. 836.)
“These equitable considerations sustain appellant’s position as to the priority of his claim against the trust fund. . . . Nor on equitable considerations should the claim of the federal government for income taxes accrued before the commencement of this action stand on a distinguishable level in relation to appellant’s allowance for counsel fees for preservation of the fund. The latter, viewed as an expense of judicial administration in making the trust assets available for distribution to claimants, should properly take priority.” [Emphasis added.]
In my opinion the equitable principle discussed above is applicable to the facts of this case. It has been applied in many cases involving similar factual situations. (See Hardware Mut. Casualty Co. v. Butler, 116 Mont. 73 [148 P.2d 563] ; Ellis v. Atlantic Refining Co., 308 Pa. 287 [163 A. 531, 83 A.L.R. 936] ; Appeal of Harris, 323 Pa. 124 [186 A. 92, 96]; Wilson v. Pittsburgh B. & I. Works, 85 Pa.Super. 537.)
The order denying plaintiff’s application for attorney’s fees should be reversed.
Schauer, J., concurred.