Marshall-Jackson Co. v. Jeffery

SiebeckbR, J. The contentions of the appellant on this appeal involve the rights of the parties to the action under sec. 29 of the workmen’s compensation act of Illinois, set out [68] in the foregoing statement. The provisions of this section show a clear legislative intent to fix the rights of employees and employers to the damages recoverable for personal injuries to employees against persons other than the employer who are legally liable to the injured employee or his personal^ representative. When the employer, the employee, and the third person legally liable to the injured employee are all subject to this compensation act, then the right to damages by the employee or his personal representative against such other'person “shall be subrogated to his employer” and the employer may prosecute an action against such other person “to recover such damages sustained,” the amount thereof being limited to the aggregate amount of compensation payable. When, however, the third person who is legally liable to the injured employee or his personal representative is not subject to the compensation act, then an action may be prosecuted against such other person legally liable in damages to the injured employee or his personal representative by the injured employee or his personal representative, but if such employee or his personal representative have accepted or agreed to accept compensation, then the “employer shall be subrogated to all the rights of such employee or personal representative” and may sue in his name or in the name of the employee or his personal representative to recover, such damages, but of the damages so collected by the employer, any sum in excess of the compensation, costs, attorneys’ fees, and expenses incurred by him he is required to pay to the injured employee or his personal representative. We have not been favored with any decision of the courts of Illinois dealing with this statute and the question in-volvéd here. It is manifest from the provisions of the act that the legislature intended that the legal rights of the employee or his personal representative arising from acts of negligence of other persons than the employer proximately causing the employee damages should not be affected by the [69] provisions of the compensation act, except that the employer is subrogated to the right to recover such damages for the purpose of applying such damages in payment of the compensation paid by the employer and to receive and account for all sums he received in excess thereof to the employee or his personal representative. This object of the legislature conflicts with a claim that an insurer of the employer be' comes subrogated to any right to any such damages upon payment under the contract of insurance to 'the employer of the amount of its liability. It is manifest that the right the employer acquires to the injured employee’s right to such damages contemplated by the act is the right to enforce the employee’s claim against such other person for the benefit of •himself and the employee, and that they are to be applied ifa payment of the compensation provided for in the act, and any 'excess is the property of the employee or his personal representative. Under these conditions and relations of the parties the employer has and acquires no rights of action against the third party liable to the employee, but is simply subrogated to the right óf enforcing the employee’s claim and to distribute the amount recovered between the employer and employee as prescribed by the compensation act. This right does not vest in the employer any such right of action which can pass by subrogation to an insurer of the employer for saving him harmless from loss under the compensation law. The United States circuit court of appeals for the Eighth circuit, in considering the rights- of persons covered by the provisions of the Nebraska compensation act under circumstances similar to those involved here, expresses the view that the cause of action of the emplbyer against such third person under such a subrogation must be treated as if it were prosecuted by the injured employee or his personal representative. Otis E. Co. v. Miller & Paine, 240 Fed. 376. Another aspect of the case is presented by the fact that the insurance carried by plaintiff in the Ben Eranklin Mutual [70] Casualty Company to protect itself against loss arising out of or resulting from injuries to its employees in the coufse of their employment, is in its nature accident insurance. Under insurance contracts of this class the insurer is not subrogated to the rights of the insured against third persons whose negligence caused the injury for which the insurer has been held liable under such policy. In Gatzweiler; v. Milwaukee E. R. & L. Co. 136 Wis. 34, 116 N. W. 633, this court, speakiüg on this subject, declared: | “We . . . hold that such a policy is an investment contract giving to the owner or beneficiary an absolute right, independent of the right against any third party responsible for the injury covered by the policy; . . . that in the absence;of a feature expressly making the policy of insurance an indemnity contract, it should not be regarded as such, but held to be an investment contract in which the only parties concerned are the insurer and the assured or the beneficiary.’j In Suttles v. Railway M. Asso. 156 App. Div. 435, 141 N. Y. Supp. 1024, it is held that such insurance contracts are not contracts of indemnity only, and that the right, of subrogation as contended for by the defendants here does not apply. McAdow v. K. C. W. R. Co. 96 Kan. 423, 151 Pac. 1113. See, also, note to the Galziueiler Case, supra in 18 L. R. A. n. s. 211. It follows upon the foregoing considerations that the plaintiff is the proper party to prosecute this action under the Illinois compensation act and that it can enforce the rights of the personal representative of the injured employee against the defendants under the facts and circumstances stated in the pleadings,, and that the trial court erred in overruling the plaintiff’s demurrer to the part of the defendants’ answer embraced in the demurrer. By the Court. — The order appealed from is reversed, and the cause remanded to the circuit court with directions to enter an order to sustain the plaintiff’s demurrer to the paragraph numbered “I” of 'the defendants’ answer to the amended complaint.