Phifer v. . Berry

162 S.E. 119, 202 N.C. 388, 1932 N.C. LEXIS 516

• Court: Supreme Court of North Carolina
• Decided: March 16, 1932
• Status: Published

Opinion

Adams, J.

In her reply the plaintiff alleged that after her husband’s death she instituted a proceeding before the Industrial Commission against Foremost Dairy Products, Incorporated, her intestate’s employer, and the Indemnity Insurance Company of North America, which had insured the employer, to recover compensation for the death of her intestate; that the respondents denied liability; that compensation was finally awarded pursuant to an opinion of the Supreme Court (Dependents of Phifer v. Dairy, 200 N. C., 65) ; that the insurer then admitted its liability and undertook to carry out and is now carrying out the terms of the award; that while the proceeding begun before the Indus trial Commission was pending on appeal and before it bad been determined sbe began an action at law against tbe defendants in tbe Superior Court of Mecklenburg County; and that it is now prosecuted by tbe Indemnity Insurance Company of North America as constructive assignee of tbe plaintiff.

Tbe demurrer admits tbe plaintiff’s allegations of fact but not her inferences or conclusions of law. Yarborough v. Park Commission, 196 N. C., 284. It raises an issue of law which involves an interpretation of section 11 of tbe Workmen’s Compensation Act. Pub. Laws 1929, cb. 120; N. C. Code, 1931, sec. 8081 (r).

After providing that tbe rights and remedies therein granted shall exclude all other rights and remedies of an employee, bis personal representative, parents, dependents, and next of kin, as against tbe employer at common law, section 11 proceeds as follows: “When such employee, bis personal representative or other person may have a right to recover damages for such injury, loss of service, or dea^h from any person other than such employer, be may institute an action at law against such third person or persons before an award is made under this act, and prosecute tbe same to its final determination; but either tbe acceptance of an award hereunder, or the procurement of a judgment in an action at law, shall be a bar to proceeding further with the alternate remedy. . . . The acceptance of an award under this act against an employer for compensation for the injury or death of an employee shall operate as an assignment to the employer of any right to recover damages which the injured employee or his personal representative or other person may have against any other party for such injury or death; • and such employer shall be subrogated to any such right, and may enforce, in his own name or in the name of the injured employee or his personal representative the legal liability of such other party. If the injured employee, his personal representative or other person entitled so to do, has made a claim under this act against his employer, and has not proceeded against such other party, the employer may, in order to prevent the loss of his rights by the passage of time, institute such action prior to the making of an award hereunder. . . . When any employer is insured against liability for compensation with any insurance carrier, and such insurance carrier shall have paid any compensation for which the employer is liable or shall have assumed the liability of the employer therefor, it shall be subrogated to all the rights and duties of the employer, and may enforce any such rights in its own name or in the name of the injured employee or his personal representative: Provided, however, nothing herein shall be construed as conferring upon insurance carriers any other or further rights than those existing in the employer at the time of the injury to his employee, anything in the policy of insurance to the contrary notwithstanding.”

The first provision restricts the employee, his personal representative, or other person to recovery by one of the alternate remedies. If he has a right to recover damages from any person other than the employer, he may institute an action at law before an award is made and may prosecute his suit to its final determination; but if he procures a judgment in the action at law he is barred of his remedy for an award under the Workmen’s Compensation Law, and if he accepts an award he is barred of his remedy in the action at law. He may recover by one of the alternate remedies, but not by both. Though he may proceed concurrently against the employer and a third person, he cannot recover both compensation under the act and damages in an action at law. Honnold on Workmen’s Compensation, 154, sec. 41; Horsman v. Richmond, F. & P. R. Co., 157 S. E. (Va.), 158. But, as pointed out by Connor, J., in Brown v. R. R., ante, 256, 264, this does not affect the right of the employer or of the insurance carrier, who has paid the award, to maintain an action against a third party who has wrongfully caused the injury for which compensation was given.

Section 11 provides that the acceptance of an award shall operate as an assignment to the employer of any right to recover damages which the injured employee or his representative may have; that the employer shall be subrogated to such right and may enforce in his own name or in the name of the employee or his personal representative the legal liability of the other party; and that an insurance carrier which has paid compensation for the employer shall be subrogated to the employer’s rights and duties and may enforce such rights in its own name, or in the name of the injured employee or his jiersonal representative. The compensation law assigns the injured person’s right of action against a tort-feasor to the employer or to the employer’s insurer and enables the assignee to maintain the action which the employee could have maintained had no such assignment been made. 2 Schneider’s Workmen’s Compensation, sec. 466. In such case the action is prosecuted, not in behalf of the injured employee, or of the persons designated as beneficiaries of the recovery under C. S., 160, but in behalf primarily of the employer or of the insurance carrier. Brown v. R. R., supra.

Here the Indemnity Insurance Company of North America is liable for the award and is undertaking to pay it. By the terms of the act the company is, therefore, the assignee of any right to recover damages which the employee or his personal representative had against the defendants, and is, moreover, subrogated to such right, subrogation being merely an application of equitable principles.

Tbe Compensation Law provides tbat any amount collected by the employer in excess of the amount paid by him, or for which he is liable, shall be held for the benefit of the injured employee, or other person entitled thereto, less such amounts as are paid by the employer for reasonable expenses and attorney’s fees when approved by the Industrial Commission. It is .alleged in the reply that the present action is prosecuted by the Indemnity Insurance Company of North America as assignee of the rights of the plaintiff for its own use and benefit and for such use and benefit as the plaintiff may have under the law, and that the administratrix has agreed to be bound by the prior rights of the insurer in the recovery. The demurrer admits these allegations. Upon this admission we must assume, at least in the absence of allegation or proof to the contrary, that the insurer is prosecuting the action by virtue of the assignment of the employee’s rights and its subrogation thereto, and that the action is properly constituted in court.

In Horsman v. Richmond, F. & P. R. Co., supra, the Supreme Court of Appeal of Virginia held that the plaintiff by accepting compensation under the Workmen’s Compensation Act from his employer’s insurer was “barred from instituting an action in his own name for recovery against the defendant”; and in Williamson v. Wellman, 158 S. E., 117, the same Court remarked that in Horsmaris case the plaintiff amended the writ and endorsed thereon the names of the employer and the insurance carrier without their consent. In the latter ease a similar endorsement was made with the knowledge and consent of the employer, and it was held that the action was for his sole benefit. The cause was remanded for proceedings to- ascertain the sum to be paid.

As was said in Williamson v. Wellman an employee’s acceptance of an award “is a complete bar to his proceeding with the alternative remedy.” Rut the common-law rule that by the transfer pendente lite of the plaintiff’s interest in the subject-matter the action necessarily abates, has been abrogated by statute. C. S., 446, 461; 47 C. J., 159, sec. 296. In case of a transfer of interest “the action shall be continued in the name of the original party or the court may allow the person to whom the transfer is made to be substituted in the action.” 0. S., 461. Under section 11 the subrogated party may enforce the legal liability of “any person other than such employer” in his own name or in the name of the injured employee or his personal representative.

Upon the allegations admitted by the demurrer we think the judgment should be

Affirmed.