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Frank C. Sparks Co. v. Huber Baking Co.

Supreme Court of Delaware

April 28, 1953

FRANK C. SPARKS CO.
v.
HUBER BAKING CO. et al.

Action by employer against third party tort-feasors to recover medical expenses and wages paid by employer to injured employees during incapacity and damages on behalf of injured employees for injuries suffered as a result of alleged negligence of defendants. Judgment was entered for defendants on both causes of action, and plaintiff appealed. The Supreme Court, Wolcott, J., held that employer's insurance carrier, having paid compensation benefits, was subrogated to rights of injured employees against third party tort-feasors, and that employer could not maintain action against tort-feasors to recover damages for injuries sustained by employees.

Tunnell, J., dissented.

See also, Del.Super., 84 A.2d 413.

Page 457

[48 Del. 11] Stewart Lynch, of Wilmington, for appellant.

William Prickett, of Wilmington, for Huber Baking Co.

Thomas J. Healy, Jr., of Wilmington, for West T. Lamborn and Robert W. Lamborn.

William Poole, of Berl, Potter & Anderson, of Wilmington, and Howard L. Williams, of Hering, Morris, James & Hitchens, of Wilmington, for McCormick Const. Co., Inc.

Before WOLCOTT and TUNNELL, Justices, and CAREY, Judge.

WOLCOTT, Justice.

The principal question for decision is whether an employer, or the employer's insurance carrier which has paid compensation under the Workmen's Compensation Law is subrogated to the rights of an injured employee who has elected to take compensation under the Workmen's Compensation Law, 19 Del.C. § 2101 et seq.

The facts are briefly as follows:

In the fall of 1948, Frank C. Sparks Company (hereafter referred to as ‘ Sparks') contracted with Huber Baking Company (hereafter referred to as ‘ Huber’ ) to construct a cement second floor in a proposed addition to Huber's premises.

At about the same time, Huber contracted with West T. Lamborn and Robert W. Lamborn (hereafter referred to as ‘ the [48 Del. 12] Lamborns') for the preparation of plans and furnishing of structural steel, and contracted

Page 458

with McCormick Construction Co., Inc. (hereafter referred to as ‘ McCormick’ ) for the erection of the structural steel.

All the parties with whom Huber contracted proceeded with the fulfillment of their respective contracts. While the employees of Sparks were engaged in laying the cement second floor of the addition, the center steel beam furnished by the Lamborns and erected by McCormick collapsed, injuring five of Sparks' employees.

Liberty Mutual Insurance Company (hereafter referred to as ‘ Liberty’ ), not a named party to this action, was the workmen's compensation insurance carrier of Sparks. Liberty was also the public liability insurance carrier of Huber.

After the injuries, the employees of Sparks elected, under 1935 Code, § 6108,[1] to take workmen's compensation benefits. As a result of that election, Liberty paid compensation benefits in the amount of $1,029.00 and medical expenses in the amount of $2,294.60. In addition, Sparks paid as wages to its injured employees the sum of $3,258.00 and additional medical expenses in the amount of $223.75.

Liberty claiming to be subrogated to the rights of the injured employees with respect to their cause of action for personal injuries against third parties other than their employer, brought suit in the names of the injured employees against the Lamborns and McCormick. Liberty did not join Huber, for which it was public liability insurer, as a party defendant.

Thereafter, Sparks in its own name instituted the cause now before us, also claiming to be subrogated to the rights of its injured employees. Sparks named as defendants Huber, the Lamborns [48 Del. 13] and McCormick. In its complaint Sparks sets out various particulars of negligence-several, joint and concurrent-alleged to have been committed by each of the defendants severally and in concert. The complaint sets forth two separate causes of action.

The first cause of action seeks to recover from the defendants the amounts paid by Sparks as wages and for medical expenses. The second cause of action seeks to recover on behalf of its injured employees damages for the personal injuries suffered as a result of the alleged negligence of the defendants.

Counsel stipulated that the question of whether Sparks or Liberty was subrogated under 1935 Code, § 6108, to the employees' rights of action for personal injuries should be decided first by the trial court. After argument, it was held, 84 A.2d 413, that Liberty, as the compensating insurance carrier, was subrogated to the right of the injured employees to sue for their personal injuries and, therefore, alone was entitled to bring suit. Judgment was entered in the second cause of action in favor of the defendants. From this judgment, Sparks has appealed.

The defendants then moved for summary judgment in Sparks' first cause of action on the ground that the payments made by Sparks to and for its injured employees were made voluntarily and without any legal liability to its employees. Without opinion, the court entered summary judgment in favor of the defendants. From this judgment, Sparks has appealed.

We will first take up the appeal of Sparks from the summary judgment for the defendants entered in the first cause of action. In this cause of action, Sparks seeks to recover as damages the payments made by Sparks as wages during incapacity and for medical expenses. It appears that a dispute arose between Liberty and Sparks as to the amount of medical benefits that Liberty was required to pay for the injured employees of Sparks. Liberty took the position that under 1935 Code, § 6078,[2], [48 Del. 14] it was required to pay only ‘ reasonable’ medical expenses amounting to ward hospital care, while Sparks took the position that an implied condition of its contracts with its injured employees required the payment of greater medical expenses. Sparks

Page 459

did not submit pursuant to 1935 Code, § 6078 the dispute over medical payments to the Industrial Accident Board for settlement, nor did it obtain approval pursuant to 1935 Code, § 6100[3] for the wage payments made by it.

Presumably, therefore, the amounts paid as benefits by Liberty were the benefits required to be paid by the Workmen's Compensation Law and, accordingly, if Sparks is entitled to maintain its first cause of action, it must be upon some theory other than that its payments were required by the Workmen's Compensation Law.

Sparks argues that impliedly incorporated in every work contract it has with its employees is its custom to pay for the highest type of medical care and to pay the wages of its employees during incapacity caused by injuries received in the course of their employment. It argues that an employer required by contract to pay such amounts may recover them as damages from a person tortiously injuring the employee and thus directly causing the employer's liability. Sparks, in reality, is seeking indemnity for sums of money it allegedly paid by reason of contracts with its employees. We think that this must be Sparks' theory of its first cause of action because of its reliance upon Jones v. Waterman S. S. Corp., 3 Cir., 155 F.2d 992.

We think it doubtful that Jones v. Waterman S. S. Corp., supra, relied upon by Sparks, was correctly decided if it held that the right of indemnification under such circumstances was a common-law right. Cf. The Federal No. 2, 2 Cir., 21 F.2d 313, and Crab Orchard Imp. Co. v. Chesapeake & Ohio Railway Co., 4 Cir., 115 F.2d 277.

[48 Del. 15] However, we do not have to decide the question. The defendants, in support of their motion for summary judgment, took the deposition of an officer of Sparks. This evidence permits only the conclusion that the payments made by Sparks for the benefit of its employees were gratuities, and were not made because of any contractual obligation. The evidence adduced by the defendants refutes the allegation in the complaint that Sparks was required to pay the amounts it now seeks to recover. In such a situation, a duty is cast upon the plaintiff to disclose evidence which will demonstrate the existence of a genuine issue of fact for submission to the jury, if summary judgment for the defendants is to be denied. Murphy v. T. B. O'Toole, Inc., Del.Super., 87 A.2d 637. The mere assertion in the complaint to the contrary will not suffice to show a plausible ground for the claim asserted. The plaintiff elected not to controvert the evidence offered in support of the motion for summary judgment. It must, therefore, be taken as true. Of necessity, in this state of the record, summary judgment properly was entered for the defendants because there was no basis in fact for the first cause of action. 3 Barron and Holtzoff, § 1235, p. 85; Gifford v. Travelers Protective Ass'n, 9 Cir., 153 F.2d 209; Engl v. Aetna Life Insurance Co., 2 Cir., 139 F.2d 469; Seward v. Nissen, D.C., 2 F.R.D. 545.

We turn now to Sparks' second cause of action. In this cause of action, Sparks seeks to maintain by right of subrogation under the Workmen's Compensation Law an action for personal injuries to its employees. Two sections of that law, 1935 Code, § § 6108, 6112[4], are pertinent. These two sections are as follows:

‘ 6108. Sec. 38. Injury, Liability Of Third Person For; Employer May Elect; Subrogation Of Employer:-Whenever an injury for which compensation is payable under this chapter shall have been sustained under circumstances creating in some other person than the employer, a legal liability to pay damages in respect thereto, the injured employee may, at his option, [48 Del. 16] either claim compensation under this chapter or obtain damages from, or proceed at Law against such other person to recover damages, but he shall not proceed against both; and if compensation is awarded under this chapter, the employer having paid the compensation or having become liable therefor, shall be subrogated to the rights of the injured employee, or of

Page 460

his dependents to recover damages against such third person, and may recover in his own name or that of the injured employee from the other person in whom legal liability for damages exists, the indemnity paid or payable to the injured employee. Any recovery against such third person in excess of the compensation theretofore paid and thereafter payable by the employer (less the cost of securing and collecting same) shall be paid forthwith when collected, to the employee or the dependents.’

‘ 6112. Sec. 42. Employers, Who Are:-The following shall constitute employers subject to the provisions of this chapter: The State of Delaware, the County of New Castle, every corporation (private, public, municipal or public quasi), every association, every firm and every person (excepting the employers mentioned in Section 48 and ...


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