Court Opinion

ID: 9636793
Source: CourtListenerOpinion
Date Created: 2023-08-22 14:43:12.209727+00
Date Added: 2024-06-11T18:09:49.537935
License: Public Domain

Tunnell, Justice
(dissenting).
While I agree with the rationale of the majority opinion as to plaintiff’s first cause of action, I do not agree at all in respect to the second cause. To permit a party sued in tort to defend upon the ground that the plaintiff is insured seems to me to be a strange new doctrine. Such an innovation appears to be without support in the express terms of our Delaware Workmen’s Compensation Act of 1917, as it stood at the time here in question, and, if any ambiguity lurks in the statute which I fail to perceive, requiring judicial interpretation, there would seem to be no call for this particular interpretation on grounds of either public policy or precedent.
In the case of an injured employee who has elected to claim compensation, Sec. 38,1 Par. 6108, Revised Code of Delaware 1935, of the Act takes away any right he may have to sue a third-party tort feasor for damages and gives that right to the “employer”. The language of Sec. 38 is perfectly clear, and if it stood alone, Huber2 certainly could raise no question here. *24But it is said that Sec. 42, Par. 6112, Revised Code of Delaware, 1935, gives that right of action to the employer’s insurance company if it should happen that the employer is insured. This section which is supposed to effect this latter transfer reads as follows:
“Sec. 42.3 The following shall constitute employers subject to the provisions of this chapter: The State of Delaware, the County of New Castle, every corporation (private, public, municipal or public quasi), every association, every firm and every person (excepting the employers mentioned in Section 48 and Section 49 hereof) having' in his, her, or its service any employee defined in Section 43 of this chapter. If the employer is insured, it shall include his, her or its insurer as far as practicable.”
In particular, it is the last sentence of this Sec. 42 which is, and must he, relied upon if the employer is here to be denied the status of plaintiff.
But Sec. 42, when read as a whole, appears not to be an ordinary definition, but a delineation of the coverage of the Act, telling, by itself and by reference, what employers must comply with, and what employers may ignore, the Workmen’s Compensation Act. Therefore, to scrutinize this general provision in search of language which would settle a controversy arising between an employer and his insurer — both admittedly being “subject to the provisions” of the Act — as to which one of them is intended to be the nominal plaintiff in a suit to enforce the right of subrogation created by Sec. 38, is to look into this provision for treatment of a subject which it would be surprising to find mentioned there at all. The concluding sentence of Sec. 42 seems to me to relate to what went before. It seems to mean no more than this, that, wherever practicable, both the employer *25and his insurer shall be deemed to be “subject to the provisions” of the Act.4
And even if we wrest the final sentence of Sec. 42 entirely out of context, forgetting the language which introduces it, I am still unable to see how defendant Huber can be entitled to the summary judgment here awarded it on the second cause of action. So to hold seems to involve reading the sentence, not as it is written, but as if it were thus:
“Whenever an employer is insured, the word ‘employer’, wherever it appears in this Act, shall, so far as practicable, be taken to mean the insurer instead of the employer.”
That would have been an understandable position had the Legislature taken it. Likewise, it would have been very easy to say if the Legislature had meant to say it. What it did say was this:
“If the employer is insured, it shall include his, her or its insurer as far as practicable.”
Whatever this sentence means, we know that it applies to the Act as a whole, not just to some particular portion of it. And, throughout the Act generally, it makes sense to understand the word “include” in this sentence as if the General Assembly had been acquainted with its ordinary meaning and had actually intended in certain provisions to “include” the insurer, not to “exclude” the employer.-
It is not appropriate elsewhere in the Act to apply the sentence as it is in effect re-written in the majority opinion. We may note, for example, Sec. 4, Par. 6074,5 where every employer is described as deemed “to be bound by the * * * provisions of this Chapter * Sec. 7, Par. 6077, where it is provided that “No agreement, rule, regulation or other device shall """ * *26operate to relieve any employer * * * from any liability created by this Chapter * * and Sec. 8(b), Par. 6078, where every employer is required to “furnish reasonable surgical, medical, and hospital services, * * The statute is literally full of such sections, in which, bearing in mind that Sec. 31, Par. 6101, and Sec. 32, Par. 6102, give the employee his remedy against either his employer or his employer’s insurer, it makes sense— or is “practicable” — to include the insurance company along with the employer as being similarly subject to the provisions of the Act.
On the other hand, the Act frequently refers to employers who are, or may be, insured, when it really means the hirers of the men. Examples of this use of the word are Sec. 24, Par. 6094, where every “employer” is required to turn in a report of each accident, indicating therein the “nature of the business of the employer, the location of his establishment or place of work”, and other like details; Sec. 25, Par. 6095, where every employer is required to carry insurance covering the payment of the specified compensation; and Sec. 47, Par. 6117, where wages are defined as not including “amounts deducted by the employer under the contract of hiring.” Instances appear in abundance in which it is not practicable to read the word “employer” as including both; it cannot possibly have reference to the insurer. But — unless Sec. 38 is the single exception, — there is no place in the entire Act in which the word “employer” is used to refer to the insurer instead of the employer. In other words, the possible alternatives are either to “include” the insurer as being also subject to the provisions of the Act, or not to include it, as the sense may require. The first man in the class is the employer; there may or may not be a second one. The employer is in no case — unless this is it — to be “included” altogether out.
There is another instance in the Act in which language appears which is precisely parallel to what we have in Sec. 42. Sec. 11, subd. 9, Par. 6081, contains this provision:
*27“The terms ‘child’ and ‘children’ shall include step-children and adopted children and children to whom the deceased stood in loco parentis * *
Picture the consternation which would result if this language last quoted, looking exactly like what we now have under examination, were to be construed by some court as the majority has here construed Sec. 42!
As I understand the statute, therefore, Sec. 42 is not meant in any way to alter the meaning of the clear terms of Sec. 38.
So much for the dull, mechanical business of statutory construction. There are more interesting aspects of the question.
Throughout this case — on the briefs, at the argument, and in the courts’ opinions — there have been many general references to “subrogation”. To me, however, it appears necessary to notice that we here have two instances of subrogation and that the two are not alike.
The one subrogates the rights of the employee to his employer. This is entirely a creature of statute and carries with it not merely the right to recover what has been, or is to be, paid to the employee, but all rights whatever which the employee has acquired against the tort-feasor by reason of the tort. Further, even though the ultimate right of this subrogee is to share in only a part of the recovery, if, indeed, in any of it at all, the common-law rule6 is departed from, and the subrogee is expressly given the right to bring the suit in his own name.
The other instance of subrogation is of the employer’s rights to his insurer. This is subrogation in its ordinary sense, in which recovery is limited to the amount that the insurer is out of pocket. As Mr. Justice Stone said in Aetna Casualty & Surety *28Co. v. Phoenix National Bank & Trust Co., 285 U. S. 209, 214, 52 S. Ct. 329, 331, 76 L. Ed. 709:
“It is both the object and the justification of subrogation that it makes exact indemnity the measure of the liability.”
Obviously this type of subrogation is not based upon any supposed privity between the insurer and the third person sued, but “is derived from the insured alone”. Doleman v. Levine, 295 U. S. 221, 55 S. Ct. 741, 79 L. Ed. 1402; 29 Am. Jur., 1001. Where, as here, the damage suit has a larger potential than is required to indemnify the insurance company, the action may not be brought in the name of the insurer. 29 Am. Jur., “Insurance”, §§ 1355, 1358; Norwich Union Fire Insurance Soc. v. Standard Oil Co., 8 Cir., 59 F. 984; Continental Insurance Co. v. H. M. Loud & Sons Lumber Co., 93 Mich. 139, 53 N. W. 394; United States Fidelity & Guaranty Co. v. Graham & Norton Co., 254 N. Y. 50, 54, 171 N. E. 903.
To this kind of subrogation Liberty is undoubtedly entitled, both under the express terms of its contract with Sparks and by virtue of those principles which would apply even if the policy had failed to provide it. 29 Am. Jur. “Insurance”, § 1339. Therefore, if Huber had lost this case, Liberty would still be safely subrogated, up to the sum of the compensation payments, in any judgment which Sparks might recover. It made those payments in its capacity as insurer of Sparks. It is possible, therefore, to “derive from” Sparks the power to recover them.
But the right Sparks has to recover sums in excess of the compensation is a very different matter. This is not a common law or equitable right of Sparks in its own behalf, but was conferred upon it by the General Assembly. Such an assigned authority, of course, would not be assignable all over again. Restatement of Agency, § 78; Shankland v. Mayor, etc., of Washington, 5 Pet. 390, 8 L. Ed. 166.
Sparks is the agent designated by the statute to sue, either in its own name or in those of the employees involved, for the benefit of the employees. In order to avoid multiplicity of *29actions, this also necessarily means that Sparks is the agent to sue for the protection of Liberty. Sparks might also have had subrogated interests of its own to protect if it had been able to prove what it alleged in its complaint, a contract for compensation payments over and above those provided by the Act.
This cannot be understood as sacrificing or imperiling the interests of Liberty. If Sparks should fail to prosecute the action in good faith and with reasonable diligence, Liberty is afforded ample protection in a court of equity. In the field of indemnity insurance this is a routine affair. Couch, Cyclopedia of Insurance Law, § 1996; Vol. 11, Appleman, Insurance Law and Practice, § 6505; Aetna Life Insurance Co. v. Moses, 287 U. S. 530, 53 S. Ct. 231, 77 L. Ed. 477.
But it is argued that the defendant’s construction of Sec. 38 is demonstrated as being the only correct one by reason of a certain principle of public policy arising out of the purpose of the section. The true intent of this section, it is said, is to hand the cause of action to the one who has paid, or become hable to pay, the compensation. That reasoning however, fails in two respects to be satisfying to me.
When a payment has actually been made, who made it is a fact which can be established with certainty. But so long as two persons are both liable for a payment which is not yet made, there must be some degree of uncertainty as to who will eventually be the one to pay. Sec. 38 does not say that the subrogation is to be in favor of whoever has “paid” the compensation; it says that subrogation shall be to “the employer having paid the compensation or having become hable therefor”. Thus, while the courts, in the circumstances of this particular case, have felt able to say that the insurance company has the subrogation right, instead of the employer, one is left in perplexity as to how their method of identifying the proper plaintiff would operate if the obligation had not yet been paid, but had merely been fixed for future payment. The discussion in the majority opinion, to the effect that the insurer in all cases is the only one *30who is likely to have to pay, seems to put in question a principle which I had heretofore thought was undoubted, that is, that the employer, prior to discharge of the obligation, is always liable to the employee, even where he has insurance. Sec. 4, Par. 6074, and Sec. 31, Par. 6101.
Secondly, to say that the public policy which inspired the statute was the evident fairness of giving the right of action to whoever has paid the compensation, or whoever seems more likely to be in line to pay it, seems to leave something dangling, for the cause of action transferred is in ho sense the equivalent of the obligation which was paid or established.
The defendant, in concentrating upon the supposed purpose of Sec. 38, may have missed the mark because it has left out of account the purpose of the Act as a whole. As has so often been said, the Act was obviously intended for the benefit of employees, to give them quick and certain assistance in a time of trouble. No such remedy had theretofore existed. Just as this court, in Sylvia v. Scotten, 2 W. W. Harr. 295, 122 A. 513, could conclude that the Act was not designed to affect third-party tort-feasors, likewise, we may reason that it was not primarily concerned with the mechanics by which an insurance carrier, after a loss, would adjust with his insured. The machinery for compelling the employer to do whatever was necessary for accomplishing that adjustment was already in existence; it was entirely adequate; no statute was needed to implement it; and, of necessity, the procedure was perfectly familiar to every person, firm, or corporation in the insurance business. Why should “public policy” call for what we already had?
It seems to me that if public policy has any bearing on this case, we should instead concern ourselves with the election provided the employee. In practice, of course, an employee’s election to take compensation may be. made because the employee is without funds and has no practicable alternative to taking it, or because of confidence that his employer will protect his interests, or because he uses no intelligence in the matter at all, *31or by reason of some combination of these or other fortuities. But the statute purports to give the employee an “option”, and since it plainly is a public welfare statute for improving the lot of employees, if there is any need for “construction”, are we not bound to suppose that this “option” is intended to be a choice which is capable of being intelligently exercised?
The employee might well know how he stands with the man who hires him, and he might either know or be able to learn what that man’s feelings are toward the tort-feasor. He might well discover whether his employer has any connections with any insurance company which could affect his attitude toward the employee. But while the employee would, or could, know the name of his employer’s insurer, it is doubtful that he could even learn whether the tort-feasor had insurance, and, if so, who the insurer happened to be. Therefore, if “employer” here means his employer’s insurance company, the employee, instead of having an option between alternatives which he could reasonably weigh and analyze, would be able only to grope in the dark. And if, as here, the employer’s insurer turned out to be the tort-feasor’s insurer, so that any money the employee' would get would have to be at his so-called “employer’s” expense, this option might be a veritable booby trap.
It is said that the alternative which begins by taking compensation has already been established as being without any real substance, because Chancellor Josiah Wolcott, in Sylvia v. Scot-ten, pointed out with sharp regret that the employee is dependent for any hope of further recovery upon the “grace” or “interest” of the employer. That, of course, is an unfortunate weakness in the statute. But it does not necessarily mean that the employee need too often be altogether undone by his election to take compensation. Whose “grace” and whose “interest” are meant, as we see here, may make all the difference. Chancellor Wolcott’s opinion did not even touch upon that vital question. Sylvia v. Scotten settled that the employee is squeezed out of the negligence litigation and that he is left wih a mere *32expectancy which he can do little or nothing to further. Now we are confronted by this question: whether or not the employer, as statutory agent of the employee, is also to be squeezed out of the litigation. Certainly ours must be a different problem.
That the General Assembly may have designated the employer to act as the plaintiff as a matter of deliberate public policy, for the express purpose of affording some measure of protection to the employee, is a possibility emphatically illustrated by the coincidence of rights occurring here, where plaintiff’s insurer also insured one of the defendants. To put the litigation in the control of the employees who had already collected compensation might turn out to be very troublesome to the insurers. Doubtless there would be many attempts at the forbidden double collection. Moreover, insurance companies, dealing with each other all the time, as they must, would often be interested in both sides of a case, and even when they were not, they might, by common consent, too easily fall into the practice of never making any effort to procure anything for the employee over and above the compensation specified in the Act.
Finally, while putting the litigation in the hands of the insurance company might frequently be calamitous to an employee, on the other hand, in spite of pitiful intimations to the contrary, no reason appears why this should ever be in any respect injurious to an insurer in so far as his right to recover the compensation, is concerned. In other words, allowing Sparks to sue can do no harm to Liberty as the compensation insurer of Sparks, though, admittedly, it might cost Liberty money in its capacity as liability insurer of Huber.
Therefore, if the “policy” of the statute has anything to do with this decision — which I deny — it impels us to permit Sparks to proceed with the suit.
Now to the relatively unfruitful discussion of precedents.
At the conclusion of the majority opinion, four authorities are cited from other jurisdictions as having reached “results *33similar to the one here reached.” The first three were cases in which insurance companies had brought suits in their own names. The fourth, Donahue v. Thorndike & Hix, Inc., 119 Me. 20, 109 A. 187, was a case where the suit was brought in the name of the administratrix of a deceased employee. The second and third cases, Employers’ Liability Assurance Co. v. Indianapolis & Cincinnati Traction Co., 195 Ind. 91, 144 N. E. 615, and Travelers’ Insurance Co. v. Evans, 101 Vt. 250, 143 A. 290, seem to stop with a holding that the insurer is “included” in a class of proper plaintiffs. Not any of the four covers the question as to whether the employer can sue. None involves any test of rights as between the employer and his insurer. In so far as these cases, or the dicta they contain, have any pertinency to the question before us, it seems to me that they stand in a fine of authorities, of which Otis Elevator Company v. Miller & Paine, 8 Cir., 240 F. 376, is perhaps the leading one, which hold that it is no business of the defendant tort-feasor where the money goes which he will be required to pay if judgment is rendered against him in favor of the insurer, the employer, or the employee.
In Donahue v. Thorndike & Hix, Inc., for example, where, as above stated, suit had been brought by the personal representative of the deceased employee, and it was sought to amend the declaration by naming the insurer as plaintiff, the Supreme Judicial Court of Maine deemed the amendment allowable but entirely unnecessary, citing and quoting from the Otis Elevator case. In the Otis Elevator case the suit was, as here, brought by the employer, and the defendant objected that it should have been brought by the insurer. In disposing of the point, Judge Garland, speaking for the Circuit Court of Appeals for the Eighth Circuit, said, 240 F. at page 380:
“The second proposition advanced by counsel for the Elevator Company is based on the fact that the Elevator Company at the trial below offered to show that the liability of Miller & Paine under the Compensation Act had been insured by an insurance company licensed to do such business in the state of Nebraska, and that therefore, as Miller & Paine would suffer *34no damage, it could not recover any damages against the Elevator Company. But this argument involves a misconception of the action brought by Miller & Paine. That action was to be tried just the same as if it had been brought by the administrator of the estate of Pettengill. If nothing had been paid by Miller & Paine, or other person for them, the whole recovery would go to the dependents of Pettengill. Just how the amount recovered in this action shall be divided as between the dependents, Miller & Paine, or the insurance company, is no concern of the Elevator Company.”
If one accepts the liberal view of the principle of res judicata which these cases as a class represent, Huber’s motion for summary judgment in the second cause of action must be denied. If one rejects that view, the rejected doctrine itself distinguishes the cases.
On all counts, therefore, I am compelled to conclude that the proper order for this court to enter would be an affirmance of the judgment of the Superior Court on the first cause of action and a reversal of the one granted on the second cause.

Quoted in the majority opinion.

The same abbreviated nomenclature employed by the majority is used in this dissent.

The 1935 Code, Par. 6112, precedes the text of this section with these words: “Employers, Who Are.” This caption is not in the law as it was enacted, Vol. 35 Laws of Delaware, c. 193, § 1, and its injection into the Code may have contributed something to the present difficulty.

A better caption for Sec. 42, therefore, might have been something like this: “Who Are Subject to the Act.”

This and other “Par.” references are to the Revised Code of Delaware, 1935.

For references to the general rule, see Doleman v. Levine, 295 U. S. 221, 55 S. Ct. 741, 744, 79 L. Ed. 1402; 29 Am. Jur., “Insurance”, § 1355, 50 Am. Jur. 774; and Anno. 96 A. L. R. 865, et seq.; Ierardi v. Farmers’ Trust Co., 4 W. W. Harr. 246, 252-253, 151 A. 822.