Conley Byrd, Justice.
The issue on this appeal by The Hartford Insurance Group is whether a release executed by an employee to a third party tortfeasor before the filing of a workmen’s compensation claim is a defense to the employer’s subsequent action against the tortfeasor brought pursuant to Ark. Stat. Ann. § 81-1340 (b) (Repl. 1960).
The record shows that appellant, The Hartford Insurance Group, hereinafter referred to as the compensation carrier, was the workmen’s compensation insurance carrier for Bill Yates Buick-GMC, Inc., on October 2, 1969. On that dáte Paul Ruth, an employee of Bill Yates Buick-GMC Inc., had an automobile collision with appellee Harriet Carter, an employee of appellee Bel-Air Sales Company, Inc., (the appellees will hereinafter be referred to as third parties). On October 29, 1969, Paul Ruth, the employee, settled his and his wife’s claim for personal injuries with the third parties for $1,000 and executed a complete release. Subsequently the employee made a claim for workmen’s compensation benefits. The workmen’s compensation claim, which could have been compensable for approximately $2,500.00, was settled by joint petition with the approval of the Workmen’s Compensation Commission for $1,760.45. Admittedly the compensation carrier did not notify the third parties of its subrogation rights until March 19, 1970. It is not contended that the employee gave the compensation carrier notice of his claim against the third parties before the settlement. The record is also silent as to whether the compensation carrier knew of the third party release when it compromised the workmen’s compensation claim on March 17, 1970.
The compensation carrier brought this action against the third parties pursuant to Ark. Stat. Ann. § 81-1340 (b) to recover the $1,760.45 paid to the employee Paul Ruth. On a motion for summary judgment, the trial court held that the employee’s release to the third parties was binding on the compensation carrier. For reversal the compensation carrier states the issues in this manner:
"Appellant has no contention with and does not argue against the well established rule of equitable and contractual subrogation law that a subrogee succeeds to only those rights against a third party which were held by the subrogor at the time the subrogation right was created, neither does appellant contend with the consequential rule that a release of the third party by the subrogor prior to a payment creating a subrogation right in the subrogee bars a later attempt by the subrogee to enforce the subrogation right. See, e. g., Home Insurance Company v. Dearing, 248 Ark. 574, 542 S. W. 2d 852 (1970); Phillips v. Worthen, 220 Ark. 877, 251 S. W. 2d 118 (1952). It is the contention and argument of the appellant that the ‘action in tort’ created by the Arkansas Workmen’s Compensation Act in comperisation carriers such as the appellant takes on certain legal characteristics which distinguishes it from ordinary equitable and contractual subrogation rights. Appellant does not contend that the statutorily created ‘action in tort’ is an entirely distinct cause of action. Rather, appellant contends that the ‘action in tort’ has some characteristics, but not all characteristics, which distinguishes it from normal subrogation rights, and that one of the distinguishing characteristics is that the action is not destroyed by a release given to a third party by the employee prior to the payment of workmen’s compensation benefits and without the consent of the employer or the employer’s workmen’s compensation carrier.”
The particular section of the Workmen’s Compensation Law here involved is Ark. Stat. Ann. § 81-1340 which provides:
“(a) LIABILITY UNAFFECTED. (1) The making of a claim for compensation against any employer or carrier for the injury or death of an employee shall not affect the right of the employee, or his dependents, to make claim or maintain an action in court against any third party for such injury, but the employer or his carrier shall be entitled to reasonable notice and opportunity to join in such action. If they, or either of them, join in such action they shall be entitled to a first lien upon two-thirds [2/3] of the net proceeds recovered in such action that remain after the payment of the reasonable costs of collection, for the payment to them of the amount paid and to be paid by them as compensation to the injured employee or his dependents.
(2) The commencement of an action by an employee or his dependents against a third party for damages by reason of an injury, to which this act [§§ 81-1301 —81-1349] is applicable, or the adjustment of any such claim shall not affect the rights of the injured employee or his dependents to recover compensation, but any amount recovered by the injured employee or his dependents from a third party shall be applied as follows: Reasonable costs of collection shall be deducted; then one-third [1/3] of the remainder shall, in every case, belong to the injured employee or his dependents, as the case may be; the remainder, or so much thereof as is necessary to discharge the actual amount of the liability of the employer and the carrier; and any excess shall belong to the injured employee or his dependents.
“(b) SUBROGATION. An employer or carrier liable for compensation under this act [§§ 81-1301 — 81-1349] for the injury or death of an employee shall have the right to maintain an action in tort against any third party responsible for such injury or death. After reasonable notice and opportunity to be represented in such action has been given to the compensation beneficiary, the liability of the third party to the compensation beneficiary shall be determined in such action as well as the third party’s liability to the employer and carrier. After recovery shall be had against such third party, by suit or otherwise, the compensation beneficiary shall be entitled to any amount recovered over and above the amount that the employer and carrier have paid or are liable for in compensation, after deducting reasonable costs of collection, and in no event shall the compensation beneficiary be entitled to less than one-third [1/3] of the amount recovered from the third party, after deducting the reasonable cost of collection.
“(c) SETTLEMENT OF CLAIMS. Settlement of such claims under subsections (a) and (b) of this section must have the approval of the Court or the Commission, except that the distribution of that portion of the settlement which represents the compensation payable under this act [§§ 81-1301 — 81,-1349] must have the approval of the Commission. Where liability is admitted to the injured employee or his dependents by the employer or carrier, no cost of collection shall be deduced from that portion of the settlement under subsections (a) or (b) of this section, representing compensation, except upon direction and approval of the Commission.”
When section 40 of the Workmen’s Compensation Law is viewed from the drafter’s standpoint, it is at once obvious that the drafters were generally dealing with the correlative rights of employee and employer relative to bringing third party tort actions and distribution of the proceeds.
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Conley Byrd, Justice.
The issue on this appeal by The Hartford Insurance Group is whether a release executed by an employee to a third party tortfeasor before the filing of a workmen’s compensation claim is a defense to the employer’s subsequent action against the tortfeasor brought pursuant to Ark. Stat. Ann. § 81-1340 (b) (Repl. 1960).
The record shows that appellant, The Hartford Insurance Group, hereinafter referred to as the compensation carrier, was the workmen’s compensation insurance carrier for Bill Yates Buick-GMC, Inc., on October 2, 1969. On that dáte Paul Ruth, an employee of Bill Yates Buick-GMC Inc., had an automobile collision with appellee Harriet Carter, an employee of appellee Bel-Air Sales Company, Inc., (the appellees will hereinafter be referred to as third parties). On October 29, 1969, Paul Ruth, the employee, settled his and his wife’s claim for personal injuries with the third parties for $1,000 and executed a complete release. Subsequently the employee made a claim for workmen’s compensation benefits. The workmen’s compensation claim, which could have been compensable for approximately $2,500.00, was settled by joint petition with the approval of the Workmen’s Compensation Commission for $1,760.45. Admittedly the compensation carrier did not notify the third parties of its subrogation rights until March 19, 1970. It is not contended that the employee gave the compensation carrier notice of his claim against the third parties before the settlement. The record is also silent as to whether the compensation carrier knew of the third party release when it compromised the workmen’s compensation claim on March 17, 1970.
The compensation carrier brought this action against the third parties pursuant to Ark. Stat. Ann. § 81-1340 (b) to recover the $1,760.45 paid to the employee Paul Ruth. On a motion for summary judgment, the trial court held that the employee’s release to the third parties was binding on the compensation carrier. For reversal the compensation carrier states the issues in this manner:
"Appellant has no contention with and does not argue against the well established rule of equitable and contractual subrogation law that a subrogee succeeds to only those rights against a third party which were held by the subrogor at the time the subrogation right was created, neither does appellant contend with the consequential rule that a release of the third party by the subrogor prior to a payment creating a subrogation right in the subrogee bars a later attempt by the subrogee to enforce the subrogation right. See, e. g., Home Insurance Company v. Dearing, 248 Ark. 574, 542 S. W. 2d 852 (1970); Phillips v. Worthen, 220 Ark. 877, 251 S. W. 2d 118 (1952). It is the contention and argument of the appellant that the ‘action in tort’ created by the Arkansas Workmen’s Compensation Act in comperisation carriers such as the appellant takes on certain legal characteristics which distinguishes it from ordinary equitable and contractual subrogation rights. Appellant does not contend that the statutorily created ‘action in tort’ is an entirely distinct cause of action. Rather, appellant contends that the ‘action in tort’ has some characteristics, but not all characteristics, which distinguishes it from normal subrogation rights, and that one of the distinguishing characteristics is that the action is not destroyed by a release given to a third party by the employee prior to the payment of workmen’s compensation benefits and without the consent of the employer or the employer’s workmen’s compensation carrier.”
The particular section of the Workmen’s Compensation Law here involved is Ark. Stat. Ann. § 81-1340 which provides:
“(a) LIABILITY UNAFFECTED. (1) The making of a claim for compensation against any employer or carrier for the injury or death of an employee shall not affect the right of the employee, or his dependents, to make claim or maintain an action in court against any third party for such injury, but the employer or his carrier shall be entitled to reasonable notice and opportunity to join in such action. If they, or either of them, join in such action they shall be entitled to a first lien upon two-thirds [2/3] of the net proceeds recovered in such action that remain after the payment of the reasonable costs of collection, for the payment to them of the amount paid and to be paid by them as compensation to the injured employee or his dependents.
(2) The commencement of an action by an employee or his dependents against a third party for damages by reason of an injury, to which this act [§§ 81-1301 —81-1349] is applicable, or the adjustment of any such claim shall not affect the rights of the injured employee or his dependents to recover compensation, but any amount recovered by the injured employee or his dependents from a third party shall be applied as follows: Reasonable costs of collection shall be deducted; then one-third [1/3] of the remainder shall, in every case, belong to the injured employee or his dependents, as the case may be; the remainder, or so much thereof as is necessary to discharge the actual amount of the liability of the employer and the carrier; and any excess shall belong to the injured employee or his dependents.
“(b) SUBROGATION. An employer or carrier liable for compensation under this act [§§ 81-1301 — 81-1349] for the injury or death of an employee shall have the right to maintain an action in tort against any third party responsible for such injury or death. After reasonable notice and opportunity to be represented in such action has been given to the compensation beneficiary, the liability of the third party to the compensation beneficiary shall be determined in such action as well as the third party’s liability to the employer and carrier. After recovery shall be had against such third party, by suit or otherwise, the compensation beneficiary shall be entitled to any amount recovered over and above the amount that the employer and carrier have paid or are liable for in compensation, after deducting reasonable costs of collection, and in no event shall the compensation beneficiary be entitled to less than one-third [1/3] of the amount recovered from the third party, after deducting the reasonable cost of collection.
“(c) SETTLEMENT OF CLAIMS. Settlement of such claims under subsections (a) and (b) of this section must have the approval of the Court or the Commission, except that the distribution of that portion of the settlement which represents the compensation payable under this act [§§ 81-1301 — 81,-1349] must have the approval of the Commission. Where liability is admitted to the injured employee or his dependents by the employer or carrier, no cost of collection shall be deduced from that portion of the settlement under subsections (a) or (b) of this section, representing compensation, except upon direction and approval of the Commission.”
When section 40 of the Workmen’s Compensation Law is viewed from the drafter’s standpoint, it is at once obvious that the drafters were generally dealing with the correlative rights of employee and employer relative to bringing third party tort actions and distribution of the proceeds. The only place the drafters attempted to place any burden upon third parties tortfeasors different from their common law duty was in subsection (a) (1) wherein it was specifically provided that the employer or its carrier would have a lien upon the proceeds if it should join in an action by the employee against the third party. However, it is to be noted that the drafters in providing' the manner for perfecting the employer’s lien on the proceeds also provided an adequate notice to the tortfeasor by requiring that the employer either join or intervene in the action against the tortfeasor. Having thus provided a manner and method of perfecting the employer’s lien on the proceeds, the third party tortfeasor should have every right to proceed according to the common law as if no employer is involved until such time as the lien is perfected. In fact subsection (a) (2) recognizes that an employee can make such an adjustment before filing a Workmen’s Compensation claim by providing a procedure for the application of the proceeds thereof between the employee and the employer when a claim is filed.
In St. Paul Fire & Marine Insurance Company v. Wood, 242 Ark. 879, 416 S. W. 2d 322 (1967), we held that Section 40 recognized but one cause of action against the third party tortfeasor. We can find nothing in Section 40 (b) that would make the third party’s liability to the employer any greater than that of any other subrogation claimant. Winfrey and Carlile v. Nickles, Admr., 223 Ark. 894, 270 S. W. 2d 923 (1954), upon which the compensation carrier relies, merely involved a controversy between the employee and the employer relative to the employer’s obligation for expenses of recovery. St. Paul Fire & Marine Ins. Co. v. Wood, supra, involved a court approved compromise pursuant to subsection (c) by which the third party tortfeasor was permitted to buy his peace from the employee at a discount the employer was unwilling to take. The common law liability of the third party tortfeasor to the employer was not increased in either case.
Finally the compensation carrier argues that the release is ineffectual as to it because the third parties failed to obtain the court approval of the settlement required by Section 40(c). We find no merit in this contention. In the first place there is no showing that the third parties knew that they were settling a claim under subsections (a) and (b). In the next place it does not appear that the drafters of the Compensation Law intended for subsection (c) to be binding upon third party tortfeasors. Rather it appears to us that the purpose of subsection (c) was to permit the adjustment of controversies between the employee and employer such as occurred in St. Paul Fire & Marine Ins. Co. v. Wood, supra, and to require that settlements as between them have the approval of either the court or the Workmen’s Compensation Commission to prevent an employee from compromising his claims through his tort action in a manner that would not be permitted under the Compensation Law as by way of joint petition.
See Ark. Stat. Ann. § 81-1319(i). To hold subsection (c) applicable to third party tortfeasors would leave the adequacy or inadequacy of a compromise settlement approved by both the employer and the employee to the discretion of a court or the Commission. There is nothing in the Workmen’s Compensation Law to indicate that any such far reaching result was intended.
The public policy of this State is to encourage settlements of tort claims. No greater harm would be done to an employer by permitting a conscientious citizen to amicably settle his just obligations before the employer has paid compensation than would be done to the conscientious citizen by making him, as a third party, pay twice for the same obligation. If we should accept the compensation carrier’s interpretation of Section 40(c), no citizen could effectively obtain a tort release from his neighbor without the employment of a lawyer to file a complaint and causing a court to hear enough facts to approve a settlement. A law making it that difficult for a citizen to discharge his just obligations without running the risk of having to pay twice should be plain and unequivocal in its application to a tortfeasor.
Cases from other jurisdictions can be found going both ways on the issues involved here. Such decisions usually turn upon the particular wording of the statute involved. Our construction here is not only consistent with the statute's design of a lien only upon notice to third parties of the employer’s claims but also conforms to the general proposition that statutes imposing burdens and liabilities unknown at common law are to be strictly construed in favor of those upon whom the burden is sought to be imposed. See Thompson, Commissioner of Revenues v. Chadwick, 221 Ark. 720, 255 S. W. 2d 687 (1953) and State v. International Harvester Co., 79 Ark. 517, 96 S. W. 119 (1906).
Affirmed.
Harris, C. J. & Fogleman, J., dissent.