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LONDON LANCASHIRE INDEM. CO. OF AMERICA v. REID

October 31, 1957

LONDON LANCASHIRE INDEMNITY COMPANY OF AMERICA, Statutory Subrogee of Maurice L. Leitch and Mary G. Leitch, individually and as husband and wife,
v.
William E. REID, individually and d/b/a Auto Parts and Radiator Co. and Dale F. Casseday



The opinion of the court was delivered by: EGAN

This case is before the Court on plaintiff's motion to strike the defense filed by the defendant, William E. Reid, individually and doing business as Auto Parts and Radiator Co. (hereinafter sometimes referred to as Reid).

Plaintiff's motion will be denied because to permit him to bring suit for the full amount would be contrary to the unequivocal language of the governing statute.

 At the time of the happenings hereinafter referred to, Maurice L. Leitch and his wife, Mary G. Leitch, resided at Pennlynn, in the Eastern District of Pennsylvania.

 The defendants, Reid and Casseday, both reside at the city of Chester, also in the same District.

 The named plaintiff, London Lancashire Indemnity Company of America (hereinafter referred to as London Lancashire), is a Connecticut corporation with offices at Hartford. It covers Mary G. Leitch's employer with workmen's compensation insurance. In this action it seeks, in its own name, as subrogee, to recover from the defendants for their alleged negligence which caused the injuries to Mrs. Leitch and resulted in the damages and loss suffered by her and her husband.

 On the afternoon of February 17, 1956, a truck owned by the defendant, Reid, which was operated by his employee, the defendant, Casseday, was in collision with a motor vehicle operated by Mrs. Leitch at a point in Marple Township, Pennsylvania.

 As a result, it is alleged that Mrs. Leitch suffered painful and permanent injuries of an extensive nature and that 'plaintiff's subrogor, Maurice L. Leitch, was deprived of the companionship and society of his wife to his great financial damage and loss.' Wherefore, plaintiff, London Lancashire, in its own name as statutory subrogee, demands judgment for $ 750,000.

 Defendant, in its answer, denied that the plaintiff is subrogee to the entire rights of the Leitchs and as a partial subrogee is limited in its recovery to the monies paid to or on behalf of the Leitches or are obligated so to pay under the terms of the Pennsylvania Workmen's Compensation Act, 77 P.S. § 1 et seq. Plaintiff moved that the defense as set forth be dismissed as being contrary to the provisions of said Act. Plaintiff's motion must be denied.

 In a case not founded on a federal substantive right, this Court sits as another court of Pennsylvania and is bound to apply the law of Pennsylvania as to any matters which substantively affect the outcome of the action. Erie R. Co. v. Tompkins, 1938, 304 U.S. 64, 58 S. Ct. 817, 82 L. Ed. 1188; Guaranty Trust Co. of New York v. York, 1944, 326 U.S. 99, 65 S. Ct. 1464, 89 L. Ed. 2079.

 Therefore, this action coming under The Pennsylvania Workmen's Compensation Act, it is to that statute which we must look to answer the problem. Section 319 of the Act, Pa.Stat.Anno. tit. 77, § 671, reads as follows: *fn1"

 'Where the compensable injury is caused in whole or in part by the act or omission of a third party, the employer shall be subrogated to the right of the employe, his personal representative, his estate or his dependents, against such third party to the extent of the compensation payable under this article by the employer; reasonable attorney's fees and other proper disbursements incurred in obtaining a recovery or in effecting a compromise settlement shall be prorated between the employer and employe, his personal representative, his estate or his dependents. Any recovery against such third person in excess of the compensation theretofore paid by the employer shall be paid forthwith to the employe, his personal representative, his estate or his dependents, and shall be treated as an advance payment by the employer on account of any future installments of compensation.' (Emphasis supplied.)

 There can be no question but that the insurance carrier is subrogated to the rights of the employee. How far this right extends is the question before the Court today. Plaintiff contends that it is entitled to sue as subrogee for the entire loss suffered by the Leitchs. Such an interpretation contradicts the plain language of the statute -- '* * * to the extent of compensation payable under this article by the employer.' Although it might be argued that the last sentence of the section creates an ambiguity and apparently permits the subrogee to bring the entire action, the courts have not so held. In Wilson v. Pittsburgh Bridge & Iron Works, 1925, 85 Pa.Super. 537, in interpreting this sections as originally passed, the Pennsylvania Superior Court said: *fn2"

 'If the injured employee refuses to institute suit against the negligent third person, the employer paying or liable to him for compensation, may bring such action in the name of the employee, in the manner above referred to, and prosecute it for the interests of both, and any verdict and judgment recoverable thereunder must be distributed in accordance with the provisions of section 319 above quoted. It was such a situation, probably, that the legislature had specially in mind in its use of the last sentence of the section: 'Any recovery against such third person in excess ...


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