{
  "id": 1650415,
  "name": "Winfrey & Carlile v. Nickles, Admr.; St. Paul-Mercury Indemnity Company v. Nickles, Admr.",
  "name_abbreviation": "Winfrey v. Nickles",
  "decision_date": "1954-06-28",
  "docket_number": "5-454; 5-455",
  "first_page": "894",
  "last_page": "902",
  "citations": [
    {
      "type": "official",
      "cite": "223 Ark. 894"
    },
    {
      "type": "parallel",
      "cite": "270 S.W.2d 923"
    }
  ],
  "court": {
    "name_abbreviation": "Ark.",
    "id": 8808,
    "name": "Arkansas Supreme Court"
  },
  "jurisdiction": {
    "id": 34,
    "name_long": "Arkansas",
    "name": "Ark."
  },
  "cites_to": [],
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  "last_updated": "2023-07-14T21:02:33.600099+00:00",
  "provenance": {
    "date_added": "2019-08-29",
    "source": "Harvard",
    "batch": "2018"
  },
  "casebody": {
    "judges": [],
    "parties": [
      "Winfrey & Carlile v. Nickles, Admr. St. Paul-Mercury Indemnity Company v. Nickles, Admr."
    ],
    "opinions": [
      {
        "text": "G-eorge Rose Smith, J.\nThese are two companion appeals, one from a circuit court judgment reversing an order of the Workmen\u2019s Compensation Commission and the other from an allied circuit court order distributing certain funds in the registry of the court. The only issue is whether the court was correct in directing that from the funds in question the sum of $3,031.35 be paid, to the firm of Hardin, Barton & Hardin as an attorney\u2019s fee.\nOn August 4,1952, Will Roy Nickles, an employee of Winfrey & Carlile, was killed in a traffic collision while acting in the scope of Ms employment. In due course his employers and their compensation insurance carrier, St. Paul-Mercurv Indemnity Company, admitted liability under the Workmen\u2019s Compensation Act and began making weekly payments to the dependent parents of the decedent. .\nJennings J. Stein and his wife, occupants of the car which collided with the truck being driven by Will Roy Nickles, were both injured in the collision. Shortly after the accident they brought suit for damages against the appellee, Bill Nickles, as administrator of the estate of his son, Will Roy Nickles. Bill Nickles employed the Hardin law firm to defend the case and to file a cross-complaint against Stein for damages for the death of Will Boy. The contract provided for a contingent fee of fifty per cent of any amount recovered, after the payment of court costs and other expenses.\nThe Workmen\u2019s Compensation Act provides that when a tort action for the injury or death of an employee is brought against a third person, the employer or his compensation insurance carrier may intervene and assert a lien, up to two-thirds of the net recovery, for amounts paid and to be paid as workmen\u2019s compensation. Ark. Stats. 1947, \u00a7 81-1340. Accordingly St. Paul, as insurance carrier for Will Boy Nickles\u2019 employer, retained attorney G-. Byron Dobbs to file an intervention in the Stein-Nickles litigation for the purpose of claiming a lien upon any recovery obtained by Bill Nickles as administrator.\nIt happened that St. Paul had also issued an automobile liability policy to Stein and was thereby obligated to defend the cross-complaint for him and to pay any adverse judgment, up to the policy limit. Thus St. Paul was asserting a lien upon the proceeds of Bill Nickles\u2019 cause of action and at the same time was required to defend against that cause of action. In an effort to be impartial St. Paul employed another law firm, Shaw, Jones & Shaw, to defend the case for Stein. The Shaw firm and St. Paul\u2019s other attorney, Dobbs, did not exchange information or make their files available to each other.\nThe case was tried on March 23, 1953, and resulted in a verdict for Nickles in the sum of $6,433.10. Dobbs took no active part in the trial, the case being handled by the Shaw firm for Stein and by the Hardin firm for Nickles. Judgment having been entered upon the verdict, St. Paul, as Stein\u2019s liability insurer, paid the amount of the judgment into the registry of the court.\nThere then arose the question of the correct distribution of the money. All parties agreed to a court order by which this question was referred to the Workmen\u2019s Compensation Commission for determination. After taking testimony the Commission delivered an opinion holding that the contract between Nickles and the Hardin firm was binding only as to that part of the recovery that belonged to Nickles. The opinion further indicated that the Hardin firm could have applied to the Commission for a reasonable fee to be taxed against St. Paul\u2019s two-thirds interest in the recovery, but since no such application had been made the Commission did not charge any attorney\u2019s fee against St. Paul. Upon this reasoning the Commission first deducted the court costs and other trial expense incurred by Nickles and then directed that two-thirds of the remaining net recovery be paid to St. Paul and that the other one-third be divided equally between Nickles and his counsel.\nUpon appeal from the Commission\u2019s order the circuit court set aside the Commission\u2019s action and held that, after the deduction of costs and expenses, the Hardin firm was entitled to half of the entire net recovery, with the other half to be distributed in the ratio of two-thirds to St. Paul and one-third to Nickles. Thus it will be seen that the appellee Nickles has no pecuniary interest in the present controversy, for both the Commission and the circuit court awarded him exactly one-sixth of the net proceeds. The issue is whether the Hardin firm is entitled to share in St. Paul\u2019s part of the net recovery.\nThis question centers entirely upon a construction of \u00a7 40 of the Compensation Act, Ark. Stats., \u00a7 81-1340, and really involves three distinct inquiries. First, was the Hardin-Nickles contract binding upon St. Paul? We agree with the Commission\u2019s view that it was not. In a third-party action of this kind \u00a7 40 quite plainly recognizes separate causes of action in the compensation beneficiary and in the compensation carrier. By subsection (a) the compensation beneficiary is permitted to institute the action, with notice to the carrier so that it may intervene. By subsection (b) the carrier itself may institute the action, joining the compensation beneficiary so that all issues may be settled in one case. There is nothing in the Act to indicate that either plaintiff may force his own attorney upon the other. As a practical matter we know that the beneficiary is apt to have a lawyer of his own and that an insurance company almost always has counsel that are regularly retained. Hence the Hardin firm, in making its contract with Nickles, must be taken to have known that it did not thereby assume a contractual relationship with St. Paul. The Commission was correct in concluding that Hardin, Barton & Hardin\u2019s claim against St. Paul does not rest upon the contract with Nickles.\nSecond, does subsection (c) of \u00a7 40 require that in a case like this one the Commission must approve any allowance of attorneys\u2019 fees or other costs of collection? It will be remembered that subsection (a) allows the beneficiary to begin the action, subject to intervention by the carrier, and that subsection (b) allows the carrier to take this initiative, subject to joinder of the beneficiary. Both these subsections provide that the beneficiary is entitled to one-third of the recovery in any event, that the carrier is entitled to the other two-thirds or so much thereof as does not exceed its compensation liability, and that any excess above the latter goes to the beneficiary. Both subsections provide that the division is to be made after the deduction of \u201creasonable costs of collection.\u201d Then follows subsection (c), which reads:\n\u201c(c) Settlement of such claims under subsections (a) and (b) of this section must have the approval of the Court or of the Commission, except that the distribution of that portion of the settlement which represents the compensation payable under this act must have the approval of the Commission. Where liability is admitted to the injured employee or his dependents by the employer or carrier, no cost of collection shall be deducted from that portion of the settlement under subsections (a) and (b) of this section, representing compensation, except upon direction and approval of the Commission. \u2019 \u2019\nSt. Paul stresses the second sentence of subsection\n(c) in arguing that since it admitted compensation liability to the dependents of Will Boy Nickles it cannot be charged with any costs of collection except by direction of the Commission. In making this argument St. Paul insists that the word settlement, as used in the second sentence, means any recovery. The appellees answer that the word settlement means a compromise settlement, and since the Stein-Nickles case proceeded to a jury ver diet subsection (c) has no application.\nOur study convinces us that subsection (c) is decidedly vague, that neither construction of the word settlement leads to consequences entirely logical. But we must take the statute as we find it, and in our opinion the legislature meant compromise settlements only. In reaching this conclusion we are influenced by the legislative history of subsection (c) and by the practical results of the two differing interpretations.\nIn the original Compensation Law, Act 319 of 1939, \u00a7 40 contained substantially the present third-party arrangement, in that the proceeds, after the deduction of reasonable costs of collection, were divided between the compensation beneficiary and the carrier in a similar one-to-two ratio. But what is now subsection (c) of the 1948 revision of the law was originally a single sentence: \u201cSettlement of such claims and the distribution of the proceeds therefrom must have the approval of the court or of the Commission.\u201d Ark. Stats., \u00a7 81-1340, as it read prior to the 1948 amendment.\nIt cannot be doubted that the 1939 statute, in the sentence quoted, referred only to compromise settlements. When a case is brought to trial and results in a verdict for the plaintiff, there is no conceivable reason for the award to be specially approved by either the court or the Commission. There is, however, good reason to require that a compromise settlement be so approved, for it is a basic theory of workmen\u2019s compensation legislation that neither the injured employee nor his dependents are to be allowed to sacrifice their rights by improvident set tlements.\nOur present subsection (c) is a revision and an enlargement of tbe original sentence. It, too, however, requires that the settlement be approved by the court or the Commission, and for the reasons already stated we think the language refers to compromise settlements alone.\nIn practical effect this construction is desirable. Here we have a contested tort action, involving a trial that lasted for two days. The Commission is certainly in no position, without a hearing, to determine what is reasonable compensation for the plaintiffs \u2019 counsel. For it to make that determination in a case of this kind the record might have to be transcribed and submitted to the Commission. What began as one lawsuit might easily become two.\nThe circuit judge, on the other hand, is obviously the person best able to fix the fee. Not only has he presided over the trial but he is qualified by training and by experience to assess reasonable compensation for legal services. It would be manifestly illogical to require the circuit judge to surrender jurisdiction over \u00e1 matter in which his own judgment is peculiarly valuable.\nOn the second question we conclude that subsection (c) of \u00a7 40 does not apply to a contested case. It was therefore unnecessary for the circuit court to refer the matter to the Commission, and we treat that reference as surplusage. The appeal to the circuit court merely reinstated jurisdiction that already existed, and we review the court\u2019s action without regard to the Commission\u2019s decision.\nThird, was the court correct in allowing the Hardin firm fifty per cent of St. Paul\u2019s two-thirds interest in the net recovery? We think it was. This phase of the case is more easily understood if we disregard for the moment the fact that St. Paul was also Stein\u2019s insurer and was therefore in the position of suing itself.\nHad it not been for St. Paul\u2019s dual liability the employment of counsel would have come about in this fashion: Nickles, as administrator, retained the Hardin firm as his attorneys, for an agreed fee of half of his interest in the recovery. St. Paul would then have had a genuine interest in the case, since it stood to recoup its entire compensation liability from the third-party tortfeasor. Accordingly St. Paul might either have retained the Hardin firm as its counsel, for a compensation mutually agreed upon, or have employed another attorney of its own choice. In either event the present question would not have been likely to arise, for ordinarily the court would simply have apportioned the recovery between the two plaintiffs, leaving each to pay his own counsel. Thus in the normal situation St. Paul would incur liability for an attorney\u2019s fee in the course oPpursuing the tortfeasor.\nHere, however, St. Paul was pursuing itself, and its pecuniary interest lay entirely in defeating Nickles\u2019 claim. That is, its compensation liability was fixed regardless of the outcome, but at least one-third of any judgment against Stein would have to be paid by St. Paul to the administrator, in addition to the compensation payments. In these circumstances it was to St. Paul\u2019s interest to intervene on Nickles\u2019 side of the case, just to be certain that all of its own money did not go to Nickles, and then to resist the claim as strenuously as possible in behalf of Stein. Thus there was never any real possibility either that St. Paul would employ the Hardin firm or that St. Paul\u2019s own counsel would be of any assistance to that firm.\nAccordingly it was entirely through the efforts of the Hardin firm that Nickles recovered a judgment for $6,433.10. That St. Paul stood to lose rather than to win by their services had no bearing upon the time, effort, and skill required in the preparation and trial of the case. Nor should this law firm be penalized by reason of St. Paul\u2019s unhappy predicament. Not infrequently it must happen that a casualty insurer finds itself bound to defend both sides of an automobile collision case, so that it pays one attorney for winning the case and another for losing it, in addition to paying the judgment. This is simply one of the hazards that attend the business of writing liability insurance. The circuit court was right in assessing this attorney\u2019s fee upon the basis of what would have been fair had St. Paul been a wholehearted and enthusiastic cross-complainant in the litigation, and it is not contended that in that situation the sum allowed would be excessive.\nAffirmed.",
        "type": "majority",
        "author": "G-eorge Rose Smith, J."
      }
    ],
    "attorneys": [
      "G. Byron Dobbs and Goodwin <& Riffel, for appellant.",
      "Rose, Holland, Holland & Smith, Robinson d> Edwards, J. H. Loohadoo and Hardin, Barton, Hardin & Garner, for appellee."
    ],
    "corrections": "",
    "head_matter": "Winfrey & Carlile v. Nickles, Admr. St. Paul-Mercury Indemnity Company v. Nickles, Admr.\n5-454 5-455\n270 S. W. 2d 923\nOpinion delivered June 28, 1954.\n[Rehearing denied October 4, 1954.]\nG. Byron Dobbs and Goodwin <& Riffel, for appellant.\nRose, Holland, Holland & Smith, Robinson d> Edwards, J. H. Loohadoo and Hardin, Barton, Hardin & Garner, for appellee."
  },
  "file_name": "0894-01",
  "first_page_order": 916,
  "last_page_order": 924
}