The opinion of the court was delivered by: LORD
This matter comes before the Court upon Defendant's Motion for Summary Judgment as renewed at several stages of the proceedings, most recently since the remand of the cause by the United States Court of Appeals for the Third Circuit for further proceedings. Johnson v. Sword Line, 1957, 240 F.2d 954.
Plaintiff Edward Johnson, a longshoreman employed by Lone Star Stevedoring, Inc., was injured on June 28, 1950, while working in the hold of a ship owned by defendant Sword Line, Inc. Johnson did not elect to recover damages against Sword Line according to the procedure prescribed in § 33 of the Longshoremen's and Harbor Workers' Compensation Act, 33 U.S.C.A. § 933(a), but instead filed a claim for compensation under the act against Lone Star Stevedoring, Inc.
In due course the Deputy Commissioner for the Third Compensation District ordered Lone Star and its carrier, American Mutual Insurance Company, to pay compensation to plaintiff. The award, as subsequently amended, may be assumed to have been paid in full to Johnson on October 4, 1951, when he commenced the suit at bar against Sword Line, alleging that its negligence had caused his injuries.
As the opinion of the Court of Appeals heretofore cited explains, Sword Line denied liability and raised the statutory assignment of Johnson's cause of action to Lone Star and to its insurer as a bar to the suit; § 33(b) and (i) of the Longshoremen's and Harbor Workers' Act, 33 U.S.C.A. § 933(b) and (i). Johnson admits that he has received the amount required to be paid to him under the amended compensation award, and that no election to sue a third party was filed by him as required by § 33(a) of the Act, 33 U.S.C.A. § 933(a).
Sword Line filed a motion for summary judgment. Its grounds were that the statutory assignment and the acceptance of the compensation award barred Johnson's action. A grace period of 30 days was granted to Johnson to enable him to secure reassignment of the action, if possible, from Lone Star and its insurance carrier, American Mutual Insurance Co. When Johnson failed to secure such reassignment, summary judgment for Sword Line was granted, D.C., 146 F.Supp. 940.
The Court of Appeals reversed and remanded, holding that the Court below erred in not giving Johnson an opportunity to show conflict of interest, saying (240 F.2d at page 956):
'The language of the statute, if taken literally, would provide an absolute defense to the third party in a damage suit brought directly by the injured longshoreman where the latter has accepted compensation and has not obtained a reassignment of the cause of action from his employer or the employer's compensation insurance carrier. Sections 33(b) and 33(i). But in Czaplicki v. The Hoegh Silvercloud, 1956, 351 U.S. 525, 76 S. Ct. 946, 100 L. Ed. 1387, the Supreme Court rejected a literal interpretation of the Act.'
In the Czaplicki case the employer's insurance carrier, the statutory assignee, likewise did not bring suit after payment of compensation. That assignee, the Traveler's Insurance Company, however, was also the insurer of the independent contractor who erected the steps whose collapse caused Czaplicki's injury. Faced with the situation wherein the assignee would have to sue itself in order to enforce the assigned cause of action -- a manifest absurdity -- the Supreme Court held that the conflict of interest required relief from the literal terms of the statute, but added (351 U.S. at page 532, 76 S. Ct. at page 950):
'* * * All we hold is that, given the conflict of interests and inaction by the assignee, the employee should not be relegated to any rights he may have against the assignee, but can maintain the third-party action himself * * *.'
The Czaplicki case was decided by the United States Supreme Court on June 11, 1956, four days after the United States District Court which heard the prior proceedings in the instant case had granted the defendant's motion for summary judgment. The appeal to the Court of Appeals followed, and the cause has now been remanded to this Court for an inquiry as to whether the present case involves such conflict of interest. Inaction on the part of the assignee might point toward such conflict -- although it would not necessarily be a basis for such a finding. Johnson v. Sword Line, 3 Cir., 1957, 240 F.2d 954, 956. The opinion pointed out that under § 33(e) of the Act, Johnson has an interest in his right of action even after it has been assigned, and cautioned that (at page 956):
'* * * The circumstances which govern the failure of the assignee to bring suit must be the subject of thorough inquiry in the trial court and a reasonable latitude must be allowed to Johnson in the presentation of his case. The statutory assignee or its insurance carrier may not be permitted to stand pouting in a corner like a sulky milkmaid at a barn dance and simply refuse to bring suit without adequate reason. * * *'
The inaction of the assignee in the instant case is patent. The questions we are to determine are whether that inaction is caused by a conflict of interest and, if not, whether it is motivated by some good reason. 'The Congressional intent that the statutory assignee shall bring suit unless there be good reason why it should not be instituted is obvious.' Johnson v. Sword Line, 240 F.2d at page 957.
There is no conflict of interest in the Czaplicki sense; it has been conceded by all concerned in the current proceedings that American Mutual is not the insurer for the Sword Line.
As to the possible absence of good reason for the assignee's forbearance, counsel for plaintiff has assumed the burden of making that showing. Before this Court are certain interrogatories served on American Mutual; the oral deposition of Winfield M. Brown, Philadelphia District Claim Manager for American Mutual given at the behest of the plaintiff; ...