Roberts v. City Ice & Coal Co.

Devin, J. Two questions are presented here: (1) Was the employer, under the Workmen’s Compensation Act, relieved of liability for the payment of the balance of an award for the benefit of the widow and children of the employee by reason of the insolvency of the insurance carrier ? *21 (2) Under these circumstances, was the employer discharged of liability by reason of the fact that the insurance carrier brought suit in the name of the administratrix of the employee against a third party and recovered an amount sufficient to pay the award in full, which amount the insurance carrier received and was thereafter unable to pay by reason of insolvency? Standing alone, the proposition that the employer under the Workmen’s Compensation Act should be relieved of liability for the compensation to his injured employee by reason of the insolvency of his insurance carrier would present no serious difficulty. The liability of the employer under the award is primary. He, by contract, may secure liability insurance for his protection, but his obligation to the injured employee is unimpaired. As was said in C. & O. R. R. v. Palmer, 140 S. E. (Va.), 831: “Into the construction of every act must be read the purpose of the Legislature, and the underlying purpose in this instance (Workmen’s Compensation Act) was to give relief to workmen. This relief in the nature of things had to be charged against the employer.” The primary consideration is compensation for injured employees. In the words of Brogden, J., in Hodges v. Mortgage Co., 201 N. C., 701, “The title and theory of the act import the idea of compensation for workmen and their dependents.” The statute requires the employer to insure and keep insured his liability or furnish proof of his own ability to pay the compensation. It is further provided that insolvency of the employer shall not relieve the insurer, and manifestly the insolvency of the insurer should not relieve the insured, nothing else appearing. The obligation of the insurance company is to insure the employer against liability under the act, and while the statute gives to insurer the right of subrogation, that is for the benefit of the insurer and not intended to impair the right of the injured workman to compensation from the insured employer. But here the 'defendant Ice Company, the employer, contends that where the insurance carrier, after paying a part of the award, brings a suit in the name of the injured employee against a third party and recovers and receives an amount in excess of the award, and, after paying such excess to the employee, appropriates the remainder to itself to reimburse itself for payments made and to be made, and then becomes insolvent, a different question is presented. It is contended that since the plaintiff, administratrix of deceased employee, was party to the suit against the tort-feasor, the Carolina Power and Light Company, even though she was merely a nominal party, and received part of the recovery, to wit, the excess over the amount of the award, she was in position to have required that the fund be retained within the jurisdiction of the court or the Commission, and having failed to take steps to safeguard *22 the fund which should have been held in trust to secure the payment of the award to her, and thus prevent the resulting loss, the employer is thereby relieved and discharged of its obligation to make the payments as to which the insurance carrier is in default and cannot now respond; that, having no notice of the suit, it had no opportunity to protect itself. The facts, however, set out in the findings and opinion of the Industrial Commission, which by agreement constitute the case before us, and the principles of law dedueible therefrom, do not sustain these contentions. The plaintiff Yera Sparrow Roberts, as administratrix of her deceased husband, the employee, was only a nominal party to the suit against the Carolina Power and Light Company. She had no control over it. At the outset the law gave her the election to pursue her remedy under the act, or against the Carolina Power and Light Company. Her election of the former precluded the latter. But the statute gave the employer the right to sue in her name for reimbursement from the third party, and by subrogation the same right, no more, no less, was given to the insurance carrier when it paid the compensation or assumed liability therefor. “For the protection of the employer and for the proper distribution of the recovery, it (the Act) provided that one action should be brought, and that by the employer. All this was for his benefit.” C. & O. R. R. v. Palmer, supra. In Brown v. R. R., 202 N. C., 256, opinion by Connor, J., we find this language: “The action is prosecuted, not in behalf of the injured employee, but in behalf, primarily, of the employer or the insurance carrier. The amount recovered is applied first to reimbursement of the employer or the insurance carrier for such sums as may have been paid by either of them to the employee. Only the excess, if any, is payable to the injured employee.” Indeed, the injured employee, to whom an award has been made, is not the real party in interest. McCarley v. Council, 205 N. C., 370. In the instant case formal notice was given the Power Company that the suit against it was being prosecuted by the New York Indemnity Company, in the name of plaintiff administratrix, by its attorneys, Messrs. Creekmore and Allen. The recovery was turned over by the clerk of the Superior Court of Wake County, where the case was tried, to Mr. Creekmore, who was attorney for the Indemnity Company. The fund was disbursed by the Indemnity Company pursuant to order of the Industrial Commission by paying the plaintiff the excess of the recovery over the award, less certain expenses, and permitting the insurer to retain the remainder for the reimbursement of itself for payments made and to be made. The plaintiff had no control over the disposition of the fund. This was 9 May, 1932, and in December, 1932, the Union *23 Indemnity Company, which had assumed the liability of the New York Indemnity Company, went into receivership, leaving unpaid a balance due under the award to the plaintiff. It would seem, looking back on it now, that if the fund bad been secured, or retained within the jurisdiction of the court, or bad the Indemnity Company been required presently to pay the entire balance of the award, this unfortunate situation would probably not have arisen. A loss has been occasioned by the insolvency of the Indemnity Company. But to bold that the plaintiff widow and her infant children, the beneficiaries, should suffer for the failure to safeguard the fund in the bands of the insurance carrier which had been selected by the employer, and to provide against the carrier’s subsequent default, would seem to require of her greater foresight and care than was exercised by the Commission and the careful attorneys appearing in the case, and would tend to defeat the primary object of the Act, to wit, to provide for the widow and children of an employee who was killed while in discharge of bis duty to bis employer. Neither the employee nor this plaintiff bad any voice in the selection of the insurance carrier chosen by the defendant Ice Company. The plaintiff was not in law charged with responsibility for its solvency. She bad no knowledge of nor right to interfere with or question the successive changes in the identity of the defendant’s insurance carriers. She bad a right to rely on the employer’s care for bis own protection in the selection of solvent insurers. In the matter of the original award the defense was bandied by the employer’s insurance carrier by its attorney, Mr. Creekmore, who also prosecuted the suit against the third party and for it received the recovery, nominally acting for the plaintiff, but in reality the attorney of the New York Indemnity Company. The employer under the law bad the right at the outset to institute suit in the name of the plaintiff against the Carolina Power and Light Company if it bad seen fit to do so, but was precluded from doing so after the Indemnity Company bad brought the suit and occupied the Ice Company’s shoes in that respect. It is found that the Ice Company bad no notice of that suit. There being a community of interest between the insurer and.insured, the failure of the one to inform the other of action taken with respect to a common interest should not be held to the discredit of the plaintiff, or prevent her from claiming the remainder of the award. The suit was prosecuted' in the county where the employer was doing business, by its chosen insurance carrier. The plaintiff, the widow of the deceased employee, was at all times a resident of another county. The defendant’s contention that it should have credit for the “excess” received by the plaintiff cannot be sustained. There is nothing in the *24 statute to indicate an intent that the “excess” should go as a credit to the employer on his obligation to compensate the employee. It is an additional amount accruing for the benefit of the employee. And the same rule applies to the fee of plaintiff’s attorney. The amount originally awarded may not be reduced, but may be enlarged by subsequent suit by the employer or insurance carrier against a tort-feasor. Nor is the right of the plaintiff affected by the insolvency of the insurance carrier. The Industrial Commission carefully considered this case and reached a unanimous decision in favor of the plaintiff on the facts found. On appeal the able and careful judge of the Superior Court approved and affirmed that decision, and in this we find no error. As the case is presented to this Court, we conclude that defendant City Ice and Coal Company is liable under the original award of the North Carolina Industrial Commission for the unpaid balance on the compensation to the plantiff Vera Sparrow Roberts, administratrix of D. I. Roberts, and her children. Affirmed. Stagy, C. J., dissents.