Court Opinion

ID: 9619780
Source: CourtListenerOpinion
Date Created: 2023-08-22 05:33:09.695625+00
Date Added: 2024-06-11T12:45:25.522026
License: Public Domain

CARTER, J.
I dissent.
The majority holding here is subject to all the objections pointed out in my dissent in Dodds v. Stellar, 30 Cal.2d 496 [183 P.2d 658], (See discussion 21 So.Cal.L.Rev. 298.)
After the decision of this court in the Dodds case the Legislature amended the Workmen’s Compensation Act for the obvious purpose of rectifying the manifest inequities permitted by the Dodds ease. Yet the majority here holds that the amendments do not embrace a case where, as here, a settlement of the claim against the tort feasor has been consummated without suit, because the Legislature did not amend section 3860 of the Labor Code which provides that a settlement with or without suit is subject to the employer’s claim for the compensation paid by him. Manifestly that can refer only to such portion of the settlement as remains after the attorney’s fee, for obtaining the settlement, has been paid. It is obvious that the provision authorizing the payment of attorney’s fees is clearly applicable to a settlement consummated by the employee. (Lab. Code, § 3861, as amended Stats. 1949, eh. 120.) That section authorizes the crediting to the employee of his attorney’s fees whether the recovery is by settlement or judgment. It refers to the application of the settlement to the payment of attorney's fees pursuant to section 3856, and the latter section speaks of attorney’s fees where there is a recovery in an action, but inasmuch as section 3861 includes a settlement without action, the words in section 3856, in referring to settlement after action, are not words of limitation to that situation. If they are, the language in section 3861 is rendered meaningless.
The effect of the majority holding is to make settlements with the tort feasor an impossibility. The employee will not want to settle, at least until after he has commenced an action, because he will lose his attorney’s fees. The employer will not wish to settle for the same reason. I am assuming, and it seems that the majority opinion holds, that the employer may not deduct attorney’s fees in case of a settlement by *792him. If settlements before action are to be completely discouraged, either party may get around his inability to get attorney’s fees by first bringing action and then settling. It is hard to believe the Legislature intended such an absurd situation to exist. Any reasonable construction would allow the deduction of attorney’s fees by either employer or employee whether the settlement is made before or after the commencement of an action against the tort feasor.
The majority seems to think that unfairness will result where there is a settlement by either one or the other and hence the rule favoring compromise is not applicable. This is based on the premise, assumed by the majority, that either the employer or employee may lawfully consummate a settlement without consent of the other. The statute provides otherwise. (Lab. Code, §§ 3853, 3859, 3860.) The statute was held inapplicable as between the employee and the tort feasor (Cilibrasi v. Reiter, 103 Cal.App.2d 397 [229 P.2d 394]) but of course it still applies as between the employer and the employee. Here the employer is not objecting to the settlement consummated by the employee with the tort feasor. He, in effect, has approved the settlement as he is seeking to benefit thereby. It is obvious that if the settlement had been consummated without his consent, he would not be bound by it and could sue the tort feasor to recover all sums which he had expended on behalf of the employee for compensation and medical and hospital treatment as a result of the injury suffered by the employee for which the tort feasor is liable. We then have this anomalous situation. An employee who has suffered an injury in the course of his employment as the result of the negligence of a third party, employs an attorney to handle his claim for damages against such third party. The attorney is able to consummate a settlement of the employee’s claim which is satisfactory to both the employee and the employer, but after the settlement is consummated, the employer claims the entire amount of the settlement and refuses to allow any compensation to the attorney whose services were responsible for consummating the settlement and obtaining the money which appears to have been obtained solely for the benefit of the employer. As pointed out above, if the employer had not consented to the settlement, he would not be bound by it and could sue the tort feasor for the amount of any claim he may have. It seems to me that under any consideration of fairness and justice, as well as a reasonable interpretation of the statutory *793provisions applicable to such a situation, it requires that the reasonable value of the services of the employee’s attorney in obtaining the settlement should be paid before the employer’s claim is satisfied in whole or in part.
Assuming the majority opinion is correct in stating, “when the third party’s liability has been settled, either by the employee or the employer, there is no provision for reimbursement to either of them for his legal expense,” we then have a situation in which the statutes do not cover the subject of attorney’s fees where there is a settlement, and, therefore, we must turn to the “. . . 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].)” (Winslow v. Harold G. Ferguson Corp., 25 Cal.2d 274, 277 [153 P.2d 714].) And at page 283: “[The] long prevailing rule in equity . . . 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 *794group has borne the cost of litigation resulting in benefit 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 & Bkg. Co. v. Pettus, 113 U.S. 116 [5 S.Ct. 387, 28 L.Ed. 915]; Colley v. Wolcott, 187 F. 595 [109 C.C.A. 425]; Muskegon Boiler Works 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; Winslow v. Harold G. Ferguson Corp., supra; see, also, Restatement, Restitution, § 105.)
I can see no reason why the rule announced in the authorities above cited should not be applicable to a situation such as that presented in the case at bar. Certainly all of the elements necessary to bring such rule into operation are present here and I can see no reason why it should not be invoked in the interests of justice.
For the foregoing reasons I would affirm the award.