Opinion
No. 41044.
March 2, 1959.
1. Workmen's Compensation — purpose of statute requiring approval by Commission of settlements of employees' claims against third party tort-feasors — statute clearly prohibits such settlement without approval of Commission.
Purpose of statute requiring approval by Workmen's Compensation Commission of settlements of employees' claims against third-party tort-feasors is to insure protection of employees in their compensation rights, to prevent improvident and unwise releases of claims against such third parties, and to preserve the subrogation and indemnity rights of the employer or insurer against third parties, and statute clearly prohibits such settlement without approval of Commission. Sec. 6998-36, Code 1942.
2. Workmen's compensation — attempted settlements of employees' claims against third party tort-feasors without approval of Commission — invalid.
Attempted settlements of employees' claims against third parties for injuries sustained in course of employment without approval of Workmen's Compensation Commission are invalid. Sec. 6998-36, Code 1942.
3. Workmen's Compensation — minor compensation beneficiary's settlement with third party tort-feasor before action brought though authorized by Chancery Court was not binding on minor, employer or employer's compensation insurer where settlement was not approved by Commission.
Where delivery boy was injured in collision with taxi in course of his employment, boy's employer paid him compensation benefits and Chancery Court entered decree authorizing boy's parents to receive sum as full settlement of boy's claim against taxi driver, but no action had been brought against taxi driver and settlement was not approved by Workmen's Compensation Commission, settlement was not valid or binding on boy, employer or employer's compensation insurer and release executed pursuant to settlement did not bar subsequent action by boy against taxi driver. Secs. 6998-15, 6998-21, 6998-36, Code 1942.
4. Workmen's compensation — clause of Act requiring approval by Commission of settlements of employee's claims against third party tort-feasor applies to all employees, adults and minors, their dependents, employers and insurers.
Clause of Workmen's Compensation Act to effect that settlement of employee's claim against third party before an action is brought shall be subject to approval of Workmen's Compensation Commission applies to all employees, adults and minors, their dependents and employers and insurers. Sec. 6998-36, Code 1942.
5. Workmen's compensation — employer's insurer as not waiving right to contest minor compensation beneficiary's settlement with third party tort-feasor before action brought without approval of Commission nor was insurer estopped to do so.
Where employer's insurer had notice that insured employee and third party contemplated making a settlement of employee's claim against third party but insurer did not acquiesce in it, and settlement was made before action was brought and without approval of Workmen's Compensation Commission in violation of statute, insurer did not waive its right to contest the settlement and was not estopped to do so. Sec. 6998-36, Code 1942.
6. Workmen's compensation — compensation for injuries where third parties are liable — rights of compensation carrier with respect to proceeds of judgment which might be obtained against third party tort-feasor.
Compensation insurer has right to receive out of proceeds of any judgment which might be recovered from negligent third party both compensation payments made to date and exoneration for future legal liability to injured employee. Sec. 6998-36, Code 1942.
7. Workmen's compensation — limitation of actions — one-year statute with respect to workmen's compensation claims does not begin to run until minor employee reaches twenty-one years of age.
One-year statute of limitations with respect to workmen's compensation claims does not begin to run until minor becomes twenty-one years of age. Sec. 6998-27, Code 1942.
8. Workmen's compensation — medical services and supplies — minor's rights to additional compensation for medical benefits under Act — rights of compensation carrier with respect of proceeds of judgment which might be obtained against third party tort-feasor.
Employee who was injured at age of fifteen had right to file supplemental petition for additional compensation for medical benefits under the Act in event such payment subsequently became allowable until he became twenty-one years of age and employer and its insurer were entitled to have a pro tanto discharge of any future liability from proceeds of judgment which might be obtained against third party and paid to employee. Sec. 6998-27, Code 1942.
9. Workmen's compensation — compensation for injuries where third parties are liable — distribution of proceeds of judgment obtained by compensation beneficiary against third party tort-feasor — employee — compensation carrier.
Where employee obtained workmen's compensation for injuries sustained and a sum from third party under settlement which was void, any judgment obtained by employee against third party would be distributed to compensation insurer to extent of amount of compensation already paid, balance of judgment, if any, less amount received in attempted settlement would be paid to employee, and, in event insurer should become liable for any future compensation, it would be credited with any sum actually paid by third party to employee and payment of future compensation would be suspended until it equalled sum third party paid to employee to satisfy judgment plus amount paid in attempted settlement. Sec. 6998-27, Code 1942.
Headnotes as approved by Ethridge, J.
APPEAL from the Circuit Court of Lauderdale County; WM. J. GUNN, JR., Chancellor.
Rabb Watts, Meridian, for appellants.
I. Under Section 30 of the Mississippi Workmen's Compensation Act (Mississippi Code of 1942, Section 6998-36), an employee injured in the scope of his employment and compensated therefor by his employer's compensation carrier may not, without the consent of the carrier and the approval of the Workmen's Compensation Commission, settle his claim against a third party tort-feasor before suit is filed. Fort Worth Lloyds v. Haygood, 151 Tex. 149, 246 S.W.2d 865; Traders Gen. Ins. Co. v. West Texas Utilities Co., 165 S.W.2d 713; Independent Eastern Torpedo Co. v. Herrington, 128 Tex. 17, 95 S.W.2d 379; Fidelity Union Cas. Co. v. Texas Power Light Co. (Tex.), 35 S.W.2d 782; Empire Gas Fuel Co. v. State, 121 Tex. 138, 47 S.W.2d 265; Shell Petroleum Co. v. Tippett (Tex.), 103 S.W.2d 448; Hartford Acc. Indemnity Co. v. Weeks Drug Store (Tex.), 161 S.W.2d 153; Western Maryland Ry. Co. v. Employer's Liability Assur. Corp., 161 A. 5; Walters v. Clackledge, 220 Miss. 485, 71 So.2d 433; Sutberry v. Meridian Fertilizer Factory, 106 Miss. 744, 64 So. 723; Joseph Lang v. William Bros. Boiler Mfg. Co., 85 N.W.2d 412; Secs. 1453, 6998-36, Code 1942; Dunn's Miss. Workmen's Comp., Sec. 145; Larson's Workmen's Comp. Law, Sec. 73.22.
II. Section 30 of the Mississippi Workmen's Compensation Act gives the employer or compensation carrier the right to proceed against a third party tort-feasor in the name of the employee, if the employer or carrier so elects, and this right cannot be defeated or derogated from by a prior settlement between the employee and said third party tort-feasor prior to the filing of any suit. Industrial Comm. v. Wasatch Grading Co., 14 P.2d 988; Wells v. Edwards House, 96 Miss. 191, 50 So. 628; Turnquist v. Hannon (Mass.), 107 N.E. 443; Becker v. Eastern Massachusetts St. Ry. Co. (Mass.), 181 N.E. 757; Sec. 6998-36, Code 1942; Larson's Workmen's Comp. Law, Sec. 74.41; Vol. I, Schneider's Workmen's Comp. Law (2d ed.), pp. 332-85.
III. The cause of action which arises when an employee is injured in the scope of his employment as a result of the negligence of a third party tort-feasor under Section 30 of the Mississippi Workmen's Compensation Act is a single cause of action in which the employee and his employer (or its compensation carrier) have an interest, and said cause of action may be prosecuted in the name of the employee for the full provable damages to said employee in spite of an attempted settlement of part of said cause of action by either the employee or the employer (or carrier) when they both do not consent to said settlement. Murphy v. Liberty Mut. Ins. Co., 2 N.E.2d 490; Joseph Lang v. William Bros. Boiler Mfg. Co., supra; Coker v. Five-Two Taxi Service, Inc., 211 Miss. 820, 52 So.2d 356; Richardson v. U.S.F.G. Co., 233 Miss. 375, 102 So.2d 368; Industrial Comm. v. Wasatch Grading Co., supra; Becker v. Eastern Massachusetts St. Ry. Co., supra; Palmer v. Whitney, 166 Mass. 306, 44 N.E. 229; Michel v. New England Coal Coke Co., 47 A.2d 187; Bambanello v. Throm, 104 Conn. 504, 133 A. 577; UVA v. Alonzy, 116 Conn. 91, 163 A. 612; Jarbet v. Hengst (Tex.), 260 S.W.2d 88; Sweatt v. Allen (Fla.), 200 So. 348; Everard v. Woman's Home Companion Reading Club (Mo. App.), 122 S.W.2d 51; General Acc. Assur. Corp. v. John P. King Mfg. Co., 60 Ga. App. 281, 3 S.E.2d 841; 15 Am. Jur., Damages, Sec. 201.
IV. Section 30 of the Mississippi Workmen's Compensation Act (Section 6998-36, Code of 1942) grants a compensation carrier who has paid benefits and become liable for future benefits the following rights out of a recovery from a third party wrongdoer by suit or otherwise: (1) reasonable costs of collection as approved by the Court, if suit is pending, or by the Commission in case of settlement without suit; (2) all sums which the carrier has paid under the Act to or on behalf of the employer will be paid over to the carrier; and (3) the remainder shall be applied against the future liability of the carrier by delivery to the employee and the carrier given an appropriate credit against its future liability under the Act. H.C. Moody Sons v. Dedeaux, 223 Miss. 832, 79 So.2d 225; Richardson v. U.S.F. G. Co., supra.
Shumate Eppes, Meridian, for appellee.
I. A carrier paying workmen's compensation benefits to an employee has no absolute right of reimbursement of proceeds of a third party settlement and has no rights of any kind where it has knowledge that settlement is contemplated, and fails to intervene or join in the employee's settlement. Travelers' Ins. Co. v. Georgia Power Co., 51 Ga. App. 579, 181 S.E. 111; Sec. 6998-36, Code 1942.
II. A minor receiving workmen's compensation benefits under the Mississippi Workmen's Compensation Act, may, pursuant to authority of a decree of the proper chancery court, make and deliver a valid and binding release of all claims of every kind, including future compensation benefits. Browne v. Merchants Co., 186 Miss. 398, 191 So. 59; Kimbrall v. Louisville RR. Co., 94 Miss. 396, 48 So. 230; Cilibrasi v. Reiter, 229 P.2d 394; Walters v. Blackledge, 220 Miss. 485, 71 So.2d 433; Fort Worth Lloyds v. Haygood, 246 S.W.2d 865; Sec. 159, Constitution 1890; Sec. 448, Code 1942; Dunn's Miss. Workmen's Comp., p. 114.
III. There exists no right of exoneration from contingent liability to a carrier paying workmen's compensation benefits to an employee, if the employee has previously released the third party tort-feasor, from liability for the injuries sustained, as the liability of the carrier is terminated by the employee's actions. Sanders v. Cities Service Oil Co. (Fla.), 46 So.2d 597; Robbins v. National Veneer Lbr. Co. (Ind.), 88 N.E.2d 773; Greehn v. Miller Brown, Inc., 90 N.Y.S.2d 724, 275 App. Div. 975; Taylor v. Mount Vernon-Woodberry Mills, 211 S.C. 414, 45 S.E.2d 809; Gardner v. City of Columbia Police Dept. (S.C.), 57 S.E.2d 308; Stove v. George W. Helme Co., 184 Va. 1051, 37 S.E.2d 70; Terminal Shipping Co. v. Branham, 47 F. Supp. 561, 136 F.2d 655; Behout v. F.L. Mendez Co., 37 N.E.2d 690; De Shazer v. National Biscuit Co., 196 Okla. 458, 165 P.2d 816; Stanford v. Holloway, 25 Tenn. App. 379, 157 S.W.2d 864; Hart v. Traders General Ins. Co. (Tex.), 185 S.W.2d 605, 189 S.W.2d 493; Parkhill Truck Co. v. Wilson, 190 Okla. 473, 125 P.2d 203; Sec. 6998-36, Code 1942; Vol. II, Larson's Workmen's Comp. Law, Sec. 73.22, 74.10, 75.40 pp. 202, 225.
IV. The Trial Judge was correct in requiring appellant to reduce the amount sought to the amount paid by or loss suffered by appellant, United States Fidelity and Guaranty Company. Richardson v. U.S.F.G. Co., 233 Miss. 375, 102 So.2d 368.
APPELLANTS IN REPLY.
I. In reply to appellee's Point I. Travelers Ins. Co. v. Georgia Power Co., 181 S.E. 111; Sec. 6998-36, Code 1942; 1 Am. Jur., Actions, Sec. 5.
II. In reply to appellee's Point II. H.C. Moody Sons v. Dedeaux, 223 Miss. 832, 79 So.2d 225; Browne v. Merchants Co., 183 Miss. 398, 191 So. 58; R.E. Spriggs, Inc. v. Industrial Acc. Comm., 269 P.2d 876; Cilibrasi v. Reiter, 103 Cal.App.2d 397, 229 P.2d 394; Sec. 159 (d), Constitution 1890; Secs. 6998-02(4), 6998-17, 6998-36, Code 1942; Anno. 120 A.L.R. 395; 71 C.J., Workmen's Comp., Secs. 745, 776, 1356; Vol. II, Larson's Workmen's Comp. Law, Appendix 5; Vol. IV, Schneider's Workmen's Comp. (3rd ed.), Sec. 1177.
III. In reply to appellee's Point III. Richardson v. U.S.F.G. Co., 233 Miss. 375, 102 So.2d 368; Secs. 6998-21, 6998-36, Code 1942; Larson's Workmen's Comp. Law, Sec. 73.22.
IV. In reply to appellee's Point IV. Murphy v. Liberty Mut. Ins. Co., 2 N.E.2d 490.
The principal issue is whether a settlement of a tort claim by an injured employee with a negligent third party, before any action is brought, and without the approval of the Workmen's Compensation Commission, is valid and binding on the employer and compensation insurer.
Section 30 of the Workmen's Compensation Act recognizes the right of an injured employee or his dependents to sue a third party for injury or death, and authorizes the employer or insurer to join in such action. Miss. Code 1942, Section 6998-36. The amount recovered in such suit is disbursed by first paying reasonable costs of collection, next the amount necessary to discharge the legal liability, present and future, of the employer or insurer, and any excess belongs to the injured employee or his dependents. The employer or insurer is given the independent right to maintain such an action against the third party in their own name or in the name of the injured employee.
The fourth paragraph of Section 30, which is pertinent here, provides: "In case of settlement of any action before the trial thereof, such settlement shall be subject to the approval of the court wherein such action is pending, and settlement before an action is brought shall be subject to the approval of the commission . . ." (Emphasis supplied.)
Appellant Powe, a minor then fifteen years of age, was employed by the Point Drug Store in Meridian as a delivery boy. The employer carried compensation insurance with appellant, United States Fidelity Guaranty Company (hereinafter called Company). On February 17, 1957, while driving a motor scooter for his employer, Powe was injured in a collision with a taxi driven by the defendant-appellee, J.A. Jackson. The injury arose out of and in the course of his employment. The Company paid Powe compensation benefits in the amount of $598.78. Apparently he has recovered and payments have ceased.
On July 12, 1957, Powe and his parents filed an ex parte petition in the Chancery Court of Lauderdale County for authority to settle a doubtful claim against Jackson for the injuries the minor received in the accident. Miss. Code 1942, Section 448. On the same day the chancery court entered a decree authorizing settlement of this claim with Jackson. The parents were authorized to receive for the minor $400 as full settlement of his claim, subject to the rights of the Company. The decree stated that settlement "shall not prejudice the rights" of the insurer for its claim against the parties for the recovery "of all amounts paid as workmen's compensation benefits." The minor and his next friend executed a release of Jackson from all claims arising out of the collision. The release states that it does not include settlement of any claim the insurance carrier might have, and is without prejudice to the latter.
About seven months later Powe, the minor, by his next friend, filed a suit in the Circuit Court of Lauderdale County against Jackson, for damages of $12,800 which he allegedly received in the accident. Jackson answered, and pleaded as an affirmative defense the chancery court decree authorizing Powe to settle his claim, and the release executed pursuant to that decree. He asserted this release was a complete bar to any action which Powe might have. In response, plaintiff admitted the ex parte chancery court proceedings, but averred that the real party in interest as plaintiff was the Company, which, under Section 30 of the Workmen's Compensation Act, was seeking reimbursement and exoneration of future liability under the Act. Plaintiff asserted that the release was obtained in violation of the requirements of Section 30 and was void. Jackson then moved to strike plaintiff's claim for damages in the amount of $12,800, and averred that the right of action vested in the Company is limited to the amount of benefits which it had paid Powe to date, $598.78. The settlement between Powe and Jackson was made without approval of the Workmen's Compensation Commission. The insurer had notice that a settlement was contemplated, but did not acquiesce in it.
There was a preliminary hearing on the plea in bar and motion to strike. They were sustained. The court held that plaintiff could proceed only for $598.78, benefits paid to date, plus reasonable costs of collection. Since plaintiff refused to amend by so limiting the claim, the circuit court dismissed the suit with prejudice. This appeal by Powe and the Company as subrogee is from that judgment.
There are four earlier cases dealing with other, related aspects of Section 30. The act makes the carrier and employer proper but not necessary parties in a third party action. In American Creosote Works of Louisiana v. Harp, 60 So.2d 515 (Miss. 1952), they were given notice and did not join, but the final judgment in favor of the employee directed distribution of the proceeds as required by the statute.
Richardson v. U.S.F. G. Company, 102 So.2d 368 (Miss. 1958), was a suit by a compensation claimant against a third party tort-feasor. The carrier intervened, and showed the amount of benefits paid to date and its future liability. The suit was settled before trial for $50,000, and approved by the circuit court. The balance of the proceeds after payment of costs of collection, it was held, shall be used to discharge all liability of the employer or insurer, including that to accrue in the future as well as that already paid or accrued. Where the future liability is not ascertainable at time of recovery, the net proceeds, after payment of costs of collection and reimbursement of employer or insurer to that date, shall be paid to the compensation beneficiary. The employer and insurer were authorized to suspend payment of such compensation benefits as they may be liable for under the Act, until such suspended benefits, which they would have paid except for such suspension, equal the amount of the third party recovery paid to the compensation beneficiary. The case was ordered to remain an active one on the records of the Commission, so that the rights of all parties may be protected.
Bush v. Byrd, 108 So.2d 211 (Miss. 1959) involved settlement of a claim between the employee and a third party tort-feasor after the former had filed suit in the circuit court. One of the claimants was a minor. On ex parte petition, the chancery court authorized settlement by the minor. After attorney's fee, claimants received a net balance of $1,675. The circuit court, in which the suit had been filed, entered an order in effect approving the settlement, and dismissing the suit with prejudice. After this settlement, claimants propounded their compensation claim. Appellants, employer and insurer, contended claimants were barred from obtaining it, because they gave no notice to appellants of having filed suit against the third party, as required by Section 30. The Commission awarded benefits, but gave appellants credit for the $1,675 claimants had received under the settlement. Hence the Court refused to hold that failure to give notice of the suit to appellants barred claimants from propounding a compensation claim. No issue with reference to the validity of the settlement with the third party was involved. The court simply held that failure to give notice of the suit to the employer and insurer did not bar dependents of the deceased employee from prosecuting their compensation claim, where the former were given credit on their compensation liability for the net amount received by dependents from the third party.
In U.S.F. G. Co. v. Higdon, No. 40,966, decided February 23, 1959, it was held that the subrogation rights of the insurer and employer are limited to those of the compensation beneficiary. Where the beneficiary has no rights under the wrongful death act, they have no claim by subrogation in that respect against a third party. None of the foregoing cases deal directly with the question now presented.
(Hn 1) The settlement between Powe and Jackson was executed at a time when there was no action pending in the circuit court against the third party, Jackson. It was in violation of the provision in the fourth paragraph of Section 30: "settlement before an action is brought shall be subject to the approval of the commission." The legislative purpose in requiring approval by the Commission of settlements of employees' claims against third party tort-feasors was to insure the protection of employees in their compensation rights, to prevent improvident and unwise releases of claims against such third parties, and to preserve the subrogation and indemnity rights of the employer or insurer against such third parties. The statute clearly prohibits such settlements without approval of the Commission.
The legislative policy in this respect is also reflected in other provisions of the compensation act, with reference to settlements between employees and employers or insurer. Section 6998-15 provides: "Commutation and lump sum settlement payments shall be governed by rules of the commission, and shall not be made except when determined to be in the best interest of the injured worker or his dependents, the commission having final authority in such questions." Under Section 6998-21, "No agreement by an employee to waive his right to compensation under this act shall be valid." And, in the case of lump sum payments, "the commission shall be the sole judge as to whether or not a lump sum payment shall be to the best interest of the injured worker or his dependents." Section 6998-19 (j).
(Hn 2) These provisions are in pari materia with the one in Section 30 requiring approval by the Commission of settlements with a third party before an action is brought. Failure to obtain such approval is in direct violation of the statute, and such attempted settlements without Commission approval are invalid and void. (Hn 3) Hence Powe's settlement with appellee Jackson is void. The phrase, "settlement before an action is brought," refers to the bringing of an action for damages against the third party. It does not pertain to the ex parte petition filed by Powe and his parents in the chancery court for authority to settle a doubtful claim under Code Section 448. The decree in that proceeding authorized the minor to do only that which he could do if he were an adult. (Hn 4) The settlement clause of Section 30 applies to all employees, adults and minors, their dependents, and employers and insurers.
(Hn 5) The insurance carrier had notice that Powe and Jackson contemplated making a settlement, but did not acquiesce in it. Appellee contends that the company had the duty to either join in the settlement or to seek to prevent it, apparently by a bill for injunction; that it did not do so, and accordingly has waived its right to contest the settlement, or is estopped to do so. The statutory requirement that the Commission approve such settlement is for the benefit of the employee and his dependents as well as the employer and insurer. Failure to obtain Commission approval before an action is brought invalidates it. The stated circumstances certainly furnish no basis for a waiver or estoppel of appellant. (Hn 6) Moreover, the Company has the right, under Section 30 Richardson, to receive out of the proceeds of any judgment which might be recovered from Jackson, the third party, both compensation payments made to date and exoneration for future legal liability to the injured employee.
(Hn 7) Under H.C. Moody Sons v. Dedeaux, 223 Miss. 832, 79 So.2d 225 (1955), the one-year statute of limitations, Section 6998-27, does not begin to run until the minor employee becomes twenty-one years of age. The judgment appealed from was dated April 25, 1958, and at that time he was almost seventeen years of age. (Hn 8) Hence at any time within approximately five years thereafter he has the right to file a supplemental petition for additional compensation or medical benefits under the Act, in the event such payments subsequently become allowable. Under Richardson, the employer and insurer are entitled to have a pro tanto discharge of any future liability from the proceeds of a judgment which might be obtained against a third party and paid to the employee under Section 30.
(Hn 9) The question arises as to how any judgment appellants might obtain against Jackson on remand of this case should be distributed. Except as the situation is altered by reason of the fact that Powe has received from Jackson $400 in the atempted settlement, and for which said sum Jackson is entitled to credit on any judgment that might be rendered insofar as Powe is concerned but not insofar as the Company is concerned, the rule laid down in Richardson should be applied. In other words, after first deducting the cost of collection, any judgment against Jackson should be distributed to the Company to the extent of $598.78, the amount of compensation benefits already paid by the Company to Powe. The balance of the judgment, if any, less $400 credit to Jackson by reason of the attempted settlement, should be paid to Powe. In the event the Company should become liable for any future compensation benefits resulting from Powe's injuries, it shall be credited with any sum actually paid by Jackson to Powe, plus $400; and payment of future compensation benefits shall be suspended until such benefits which the Company would otherwise be required to pay equal the sum Jackson actually pays to Powe to satisfy any such judgment, plus $400.
The judgment of the circuit court, sustaining appellee's plea in bar and motion to strike, limiting the claim of plaintiff and the insurer to $598.78, and, upon appellants' refusal to so amend, dismissing the suit with prejudice, is reversed. The plea in bar and motion to strike are overruled, and the case is remanded for a trial on the merits.
Reversed, judgment rendered overruling appellee's plea in bar and motion to strike, and cause remanded.
McGee, C.J., and Kyle, Arrington and Gillespie, JJ., concur.