Morris v. Standard Oil Co.

The appellant herein, the Ocean Accident & Guarantee Corporation, hereinafter referred to as petitioner, has appealed from an adverse order made in a proceeding instituted by it under section 26 of the Workmen’s Compensation Act of 1917, as amended in 1919 (Stats. 1919, p. 920), to establish a lien against a judgment for damages theretofore recovered by plaintiff Milton Morris against the defendant Standard Oil Company as a result of personal injuries sustained by plaintiff through the negligent acts of one of the defendant’s employees. The lien sought was founded upon certain payments previously made by petitioner as insurance carrier for medical treatment of plaintiff.

[1] The following facts are not disputed: In September, 1920, plaintiff, who was then thirteen years of age, while performing duties as an employee of a newspaper publishing company in Calexico, California, was struck and injured by one of defendant’s trucks. The petitioner was the eom

Petitioner made no reply to this letter, and therefore said attorney, evidently believing that petitioner had decided to waive all claim against any judgment plaintiff might obtain, did not plead in his demand for damages any of the expenses incurred by petitioner for plaintiff’s medical or hospital treatment, nor did he offer any evidence to prove the same at the trial. As further indication of petitioner’s waiver of its claim under the section of the act above mentioned, petitioner in defending said action proposed and caused to be given to the jury an instruction as follows: ‘‘You are instructed that in determining the amount of damages to be awarded to plaintiff, if any, you must not consider or make any allowance for any medical treatment, care or hospital expenses that may have been incurred or paid in caring for and treating the injuries claimed to have been sustained by the plaintiff. Such expense for care, medical treatment and hospital expenses are no part of the plaintiff’s ease and are matters to be adjusted in other and separate proceedings from this. You must allow plaintiff nothing on that account and must limit your award entirely to compensation for physical injuries, detriment and loss of capacity sustained by plaintiff without any allowance to him for any supposed or rendered medical treatment, hospital expenses or care. You are instructed that the father is not a party to this action, but is a guardian ad litem only, and you must not allow anything for medical or hospital treatment or care to the boy, Milton Morris, because the father’s name appears in the title of this case.”

A verdict was rendered for plaintiff for the sum of $25,000. Defendant appealed and the judgment was affirmed as to the issue of negligence, but reversed and the cause remanded for new trial upon the question of damages, the court on appeal holding the damages to be excessive. (M orris v. Standard Oil Co., 188 Cal. 468 [ 205 Pac. 1073 ].) The second trial resulted also in a verdict in plaintiff’s favor for the sum of $25,000, but on motion

Section 26 of the Workmen’s Compensation Act, upon which petitioner bases its claim for a lien, provides in part that where the employee alone prosecutes the suit for damages against the tort-feasor, evidence of the amount of the disability indemnity paid by the employer shall not be admissible in evidence, but that proof of all other expenditures on account of the injuries may be established and be deemed part of the damages suffered. It further provided that “The court shall on application, allow as a first lien against any judgment recovered by the employee the amount of the employer’s expenditures for compensation,” which includes expenditures for doctors, nurses, medicines, hospital care, and other items connected with the treatment of the injured employee. Subdivision F of section 30 of the same act (Stats. 1917, p. 860), provides that where the employer is insured against liability for compensation and the in

The provisions of the act mentioned were doubtless designed to enable the employer or the insurance carrier, as the case may be, who has paid the expenses connected with the treatment of an injured employee, to recover the same through the suit instituted and maintained by the employee against the party causing the injury, and to provide a method whereby the employer or the insurance carrier may 'be protected in the collection of those expenditures out of any judgment obtained by the employee. But the evidence here shows beyond question that owing to the position taken by petitioner prior to and during the trial of the action plainly indicating an intention to waive any right to afterward collect said expenditures from any judgment which might be obtained by plaintiff, the matter of those expenditures was excluded entirely from the issues of the case and from the consideration of the jury. In fact, petitioner concedes that the same were not sued for by plaintiff, nor were they included in the verdict or the judgment obtained by him. Under these circumstances it would be grossly unjust to require respondent to pay said expenses- out of a judgment, the entire amount of which was rendered as compensation for damages accruing exclusively to him; and any lien that would be allowed in view of the facts stated would be based manifestly upon a false claim against plaintiff. It may be fairly inferred from the situation confronting petitioner before trial that- the reasons underlying petitioner’s desire to exclude the matter of said expenditures from the case were that if a judgment were recovered by plaintiff, petitioner, to the extent of those expenses, would be in effect both judgment creditor and judgment debtor, and consequently would be required to satisfy, with its own money, a judgment in its favor obtained against itself and after all be not reimbursed for the amount of said expenses. The peculiar situation brought about by the fact that petitioner was the insurer of both plaintiff’s employer and the defendant serves as no reason why plaintiff as an insured employee should be charged with and required to pay the expenses of his injury, which petitioner, under its contract with, plaintiff’s employer, was obligated to assume.

The conceded facts here are that after two unsuccessful attempts by plaintiff to obtain from the petitioner the items and amounts of said expenditures for the declared purpose of recovering the same from the party causing the injury, petitioner was finally notified that unless it furnished said items it would be considered that it “waived any claim” which it might make against the judgment under said section 26 of said act. The omission of petitioner under those circumstances to reply to that letter may be reasonably said to have led plaintiff to believe that it would waive such claim, and thereupon plaintiff, acting upon such belief, made no demand in his pleading or in the presentation of his evidence for those expenditures; and furthermore, in confirmation of such apparent waiver, petitioner caused instructions to be given to the jury which completely excluded the matter of those expenditures from any further consideration in the case. For these reasons stated we are of the opinion that under the code section last quoted appellant is now estopped from claiming such lien.

The order appealed from is affirmed.

Tyler, P. J., and Cashin, J., concurred.

A petition by appellant to have the cause heard in the supreme court, after judgment in the district court of appeal, was denied by the supreme court on July 1, 1926.