No. 12575
I N THE SUPREME COURT O THE STATE O M N A A
F F OTN
1974
DARLENE A . ( E h n i ) FISHER, GDN.,
FATAL, RICHARD D. E H N I ,
P l a i n t i f f and A p p e l l a n t ,
-vs -
MISSOULA WHITE PINE SASH COMPANY,
Employer,
-vs -
MICHIGAN M T A LIABILITY COMPANY,
UU L
Defendant and Respondent.
Appeal from: D i s t r i c t Court of t h e Fourth J u d i c i a l D i s t r i c t ,
Honorable J a c k L. Green, Judge p r e s i d i n g .
Counsel o f Record:
For Appellant :
L o b l e , P i c o t t e , L o b l e , P a u l y and S t e r n h a g e n ,
Helena, Montana
Gene A . P i c o t t e a r g u e d , H e l e n a , Montana
F o r Respondent:
Worden, Thane, Haines and W i l l i a m s , M i s s o u l a , Montana
S h e l t o n W i l l i a m s a r g u e d , M i s s o u l a , Montana
Submitted : J a n u a r y 1 7 , 1974
Decided : FEB - 7 1974
Filed :
FEB -7lSt4
Mr. Justice Frank I Haswell delivered the Opinion of the Court.
.
This is an action to determine the subrogation rights of
an employer's insurer under the Montana Workmen's Compensation
Act. Claimant was awarded workmen's compensation benefits for
the accidental death of her husband. Claimant also received a
compromise settlement of $18,000 from an alleged third party
tortfeasor in a wrongful death action.
The workmen's Compensation Division denied the employer's
insurer subrogation to any part of the $18,000 compromise settle-
ment proceeds received from the alleged third party tortfeasor.
On appeal, the district court of the fourth judicial district,
Missoula County, the Hon. Jack L. Green, district judge, reversed
and awarded subrogation to one-half of the net amount of settle-
ment proceeds with interest. Claimant appeals to this Court from
the district court's judgment.
On July 3, 1965, Richard D. Ehni, an employee of Missoula
White Pine Sash Company, was killed in the course of his employ-
ment when a fork lift being driven by him was struck by a Northern
Pacific train. At the time of his death he was married and had
three minor children. On July 19, 1965, the Industrial Accident
Board (now workmen's Compensation Division) issued its order awarding
compensation to the surviving widow and three minor children at
the rate of $46 per week for 500 weeks. Payments have been made
by the employer's Plan I1 insurer, Michigan Mutual Liability
Company, in an undetermined amount.
On or about October 18, 1965, the widow, as administratrix
of the estate of Richard D. Ehni, filed a wrongful death action
against the Northern Pacific Railway Company alleging its negli-
gence caused the decedent's death and seeking damages for funeral
expenses, loss of support, comfort and companionship. On July 10,
1969, the Northern Pacific Railway Company paid the sum of $18,000
as a compromise settlement for dismissal of the lawsuit and for
full and complete release of all claims.
Claimant, who remarried on October 18, 1969, and whose name
is now Darlene Fisher, refused to pay Michigan Mutual Liability
Company any subrogation share of the $18,000 compromise settlement
received from the Northern Pacific Railway Company. The employer
and its insurer then filed a petition with the ~orkmen's Compensa-
tion Division to determine the amount of its subrogation claim
therein. It was submitted on an agreed statement of facts to-
gether with the files and records of the workmen's Compensation
Division. The workmen's Compensation Division entered findings of
fact, conclusions of law, and an order denying the employer's
insurer any subrogation rights in the settlement proceeds received
by claimant from the Northern Pacific Railway Company.
The employer and its insurer appealed to the district court
of Missoula County, the Hon. Jack L. Green, district judge, where
the matter was submitted on the record before the workmen's Com-
pensation Division. The district court held that the employer's
insurer is subrogated to one-half the net amount received by
claimant and her minor children from the Northern Pacific Railway
Company less a prorata share of the fees and costs expended to
procure the settlement; a lien to secure the same; interest at
the rate of 6% per annum on such amount from July 10, 1969; and
an offset credit to such extent against future installments of
workmen's compensation benefits. Claimant appeals to this Court
from the district court's judgment.
The sole issue argued on appeal is whether the employer's
insurer is entitled to subrogation against the $18,000 compromise
settlement received by claimant from the Northern Pacific Railway
Company.
Claimant contends that any subrogation right the employer
or its insurer possesses is purely statutory under section 92-204,
R.C.M. 1947, of the Montana FJorkmen's Compensation Act. She
argues that this statute grants subrogation only on derivative
claims of the injured employee and has no application to wrongful
death actions involving claims for damages suffered by the survivors.
We agree that the subrogation rights of the employer and
its insurer are governed by the provisions of the Montana Workmen's
Compensation Act, Section 92-204, R.C.M. 1947, provides in per-
tinent part:
"Where both the employer and employee have elected
to come under this*a ; the pro;isions of this act
c,
shall be exclusive, and such election shall be held
to be a surrender by such employer and such employee,
as between themselves, of their right to any other
method, form or kind of compensation, or determination
thereof, or to any other compensation, or kind of de-
termination thereof, or cause of action, action at
law, suit in equity or statutory or common-law right
or remedy, or proceeding whatever, for or on account
of any personal injury to or death of such employee,
except as such rights may be hereinafter specifically
granted; and such election shall bind the employee
himself, and in case of death shall bind his personal
representative, and all persons having any right or
claim to compensation for his injury or death, as
well as the employer * *." (Emphasis added).
The extent of subrogation rights granted by the Workmen's
Compensation Act is governed by provisions of this statute set
out hereinafter. In view of the express provisions of this
statute, the statement in Hardware Mutual Casualty Co. v. Butler,
116 Mont. 73, 148 P.2d 563, suggesting that subrogation rights of
the employer and insurer against a third party tortfeasor may
exist independently of the workmen's Compensation Act is dictum
and should be disregarded.
We also recognize that a distinction exists between a
survival action which preserves after death a purely derivative
right through decedent for his damages, and a wrongful death
action which creates an independent right in designated survivors
for damages they sustain by reason of decedent's death. See Dillon
v. Great Northern Railway Co., 38 Mont. 485, 100 P. 960. In our
view this distinction is neither preserved nor differentiated
in providing subrogation rights under the Workmen's Compensation
Act.
Section 92-204, R.C.M. 1947, in pertinent part, provides
these subrogation rights:
"* * * Provided, that whenever such employee shall
receive an injury while performing the duties of
his employment and such injury or injuries, so
received by such employee, are caused by the act
or omission of some persons or corporations other
than his employer, then such employee, or in case
of his death his heirs or personal representatives,
shall, in addition to the right to receive compen-
sation under the Workmen's Compensation Act, have a
right to prosecute any cause of action he may have
for damages against such persons or corporations,
causing such injury. In the event said employee
shall prosecute an action for damages for or on
account of such injuries so received, he shall not
be deprived of his right to receive compensation
but such compensation shall be received by him in
addition to and independent of his right to bring
action for such damages, provided, that in the
event said employee, or in case of his death, his
personal representative, shall bring such action,
then the employer or insurance carrier paying such
compensation shall be subrogated only to the extent
of either one-half (1/2) of the gross amount paid
at time of bringing action and the amount eventually
to be awarded to such employee as compensation under
the workmen's compensation law, or one-half (l/2)
of the amount recovered and paid to such employee
in settlement of, or by judgment in said action,
whichever is the lesser amount. All expense of
prosecuting such action shall be borne by the em-
ployee, or if the employee shall fail to bring -
such
action or make settlement of his cause of action
within six ( ) months from the time such injury is
6
received, the employer or insurance carrier who pays
such compensation may thereafter bring such action
and thus become entitled to all of the amount re-
ceived from the prosecution of such action up to the
amount paid the employee under the workmen's Compen-
sation Act, and all over that amount shall be paid
to the employee. In the event that the amount of
compensation payable under this act shall not have
been fully determined at the time such employee shall
receive settlement of his action, prosecuted as afore-
said, then the industrial accident board shall deter-
mine what proportion of such settlement the insurance
carrier would be entitled to receive under its right
of subrogation and such finding of the board shall be
conclusive. Such employer or insurance carrier shall
have a lien on such cause of action for one-half (1/2)
of the amount paid to such employee as compensation
under the Workmen's Compensation Act or one-half (l/2)
of the amount recovered and paid to such employee in
settlement of, or by judgment in said action, whichever
is the lesser amount, which shall be a first lien thereon."
(Emphasis added).
Claimant contends the quoted language and particularly the
underlined words and phrases clearly indicate that subrogation
rights extend only to claims for damages sustained by the injured
employee himself and not to claims by his surviving kin for damages
they have suffered by reason of his death; to claims derived
through the employee and not independent claims of his surviving
kin; and to survival actions but not to wrongful death actions.
We reject such construction as inconsistent with the
statutory plan and purpose of the Workmen's Compensation Act.
The purpose of the subrogation provisions is to compensate the
employer and his insurer to some extent for the additional lia-
bility they assume under the Workmen's Compensation Act for
wrongful acts of independent third party tortfeasors. Koppang
v. Sevier, 101 Mont. 234, 53 P.2d 455. This purpose remains the
same whether compensation is paid to the employee or in case of
his death to his surviving dependents, or whether the injury-
producing damages are suffered by the employee himself or in the
case of his death by his surviving kin. In a wrongful death
action as well as a survival action, the liability of the third
party tortfeasor is derivative through the injured employee and
subject to such rights and defenses as exist between such employee
and the third party tortfeasor, Melville v. Butte-Balaklava Copper
Co., 47 Mont. 1, 130 P. 441; Northern Pacific Ry. Co. v. Adams,
192 U.S. 440, 24 S.Ct. 408, 48 L ed 513. Accordingly, the
claimed distinction between subrogation rights in survival actions
and wrongful death actions finds no support in the statutory plan
or purpose of the workmen's Compensation Act.
Policy considerations command a like result. The following
excerpt from 2 arson's Workmen's Compensation Law, 5 71:20,
summarizes the rationale:
"1t is equally elementary that the claimant should
not be allowed to keep the entire amount both of
his compensation award and of his common-law damage
recovery. The obvious disposition of the matter is
to give the employer so much of the negligence re-
covery as is necessary to reimburse him for his com-
pensation outlay, and give the employee the excess.
This is fair to everyone concerned: the employer, who,
in a fault case, is neutral, comes out even; the
third person pays exactly the damages he would nor-
mally pay, which is correct, since to reduce his
burden because of the relation between the employer
and the employee would be a windfall to him which he
has done nothing to deserve; and the employee gets
a fuller reimbursement for actual damages sustained
than is possible under the compensation system alone."
In Montana, subrogation rights have been heretofore allowed
without apportionment in a case involving counts of wrongful death
and a survival action. Hardware Mutual Casualty Co. v. Butler,
116 Mont. 73, 148 P.2d 563.
Finally, if claimant's construction of the statute is
correct there could be no subrogation rights even in survival
actions, no lien rights in any death case, and the personal re-
presentative would not be subject to any expense in prosecuting
the action against the third party tortfeasor, Such result is
clearly inconsistent with the subrogation provisions of section
92-204, R.C.M. 1947. Claimant's construction is predicated on the
reference to "his action" and to the absence of the word "heirs"
in parts of the statute. Although the statute might have been
more precisely drafted, its general intent is ascertainable and
its failure to specifically refer in each and every clause thereof
to death cases or actions prosecuted by or on behalf of heirs of
the deceased employee in their own right against independent third
party tortfeasors is not significant in our view.
Were we to adopt claimant's literal construction of section
92-204, R.C.M. 1947, standing alone without reference to the
statutory plan and purposes of the act as a whole, absurd results
would follow. Under such literal construction, the employer or
insurer would be subrogated only to the extent of a portion of
its payments of compensation I I to such employee" foreclosing re-
covery of any compensation paid to his surviving dependents in
death cases. Similarly, under such literal construction lien
rights would be limited to the amount "paid to such employee"
without reference to compensation paid to his surviving dependents
in death cases. Further, because the expenses of prosecution of
an action against a third party tortfeasor "shall be borne by
the employee", his personal representative or heirs in death cases
would not be chargeable with such expense were we to adopt the
literal construction urged by claimant. As these results are
squarely at cross purposes with the statutory plan and purposes
of the act and its subrogation provisions, we hold the legislature
intended no such results nor construction.
The judgment of the district court is affirmed. We remand
the case to the district court of Missoula County for determination
of the dollar amount the employer's insurer is entitled to receive
under its right of subrogation.
Justice
/
We Concur: .--4.
=
Chief Justice '