Pan American Insurance Company, Petitioner v. Hi-Plains Haulers, Inc., Respondent, 163 Tex. 1

CULVER, Justice. This suit grows out of a claim under the Workmen’s Compensation Act against the compensation carrier, Pan American Insurance Company on account of injuries sustained by Albert W. Harris, an employee of Yellow Cab and Baggage Company. In a settlement of this claim Pan American paid to Harris the sum of $3500.00, plus $480.05 for medical and hospital expenses. Thereafter, Harris filed this suit against Hi-Plains Haulers, Inc., as a third-party tort feasor. Pan American intervened pursuant to Sec. 6a of Art. 8307, Vernon’s Ann. Civ.

Stat., to recover the amount paid by it to the employee, together with a reasonable attorney’s fee. During the pendency of the suit Hi-Plains settled with Harris by paying him $1750.00 and thereupon tendered an identical amount to Pan American, which tender was refused and the case proceeded to trial. The jury found Hi-Plains guilty of negligence, and assessed the damages sustained by Harris in the sum of $1500.00. The trial court rendered judgment for Pan American against Hi-Plains in accordance with that verdict.

On appeal the Court of Civil Appeals affirmed the judgment insofar as that recovery was concerned, but reversed and remanded the cause, directing the trial court to include in its judgment the sum of $480.05, the amount paid by Pan American for hospital and medical services rendered to Harris, plus such attorney’s fee as might be found to be reasonable. 341 S.W 2d 191. Both parties applied for writs of error. Hi-Plains contends that the Court of Civil Appeals erred in adjudging it liable to Pan American for the hospital and medical expenses and the attorney’s fee.

Pan American alleges that the judgment of the Court of Civil Appeals is erroneous for the reason that in addition to the $1500.00 awarded it by the trial court upon the jury verdict, it is entitled to the sum of $1750.00, the amount paid to Harris by Hi-Plains in the agreed settlement. In the alternative Pan American says that it is entitled as a matter of law to judgment against Hi-Plains to the full extent of the amount paid by it in the settlement of the claim for compensation, since the jury found that the negligence of Hi-Plains proximately caused the damages sustained by the employee, Harris.

Under the facts in this case we hold that Pan American is not entitled to recover the attorney’s fee as allowed by the Court of Civil Appeals. Its entire claim for recoupment is founded on Sec. 6a of Art. 8307, Vernon’s Ann. Civ.

Stat., the pertinent part of which reads as follows: “If compensation be claimed under this law by the injured employee or his legal beneficiaries, then the Association shall be subrogated to the rights of the injured employee insofar as may be necessary and may enforce in the name of the injured employee or of his legal beneficiaries or in his own name and for the joint use and benefit of said employee or beneficiaries and the Association the liability of said other person, and in case the Association recovers a sum greater than that paid or assumed by the Association to the employee or his legal beneficiaries, together with a reasonable cost of enforcing such liability, which shall be determined by the court trying the case, then out of the sum so recovered the Association shall reimburse itself and pay said cost and the excess so recovered shall be paid to the injured employee or his beneficiaries.” We think the statute clearly limits the carrier’s recovery to the amount assessed as damages but if on the other hand such damages may be in excess of that paid by the carrier to the employee the carrier may collect “a reasonable cost of enforcing such liability” out of that excess.

An attorney’s fee was allowed both in Fort Worth Lloyds v. Haygood, 151 Texas 149, 246 S.W. 2d 865, and in Traders & General Insurance Co. v. West Texas Utilities Co., 140 Texas 57, 165 S.W. 2d 713, but in each of those cases the settlement between the employee and the third party was in excess of the amount of compensation paid by the carrier. Our decision in Smith v. Henger, 148 Texas 456, 226 S.W. 2d 425, 20 A.L.R. 853, does not run counter to our holding here. In that case the objection to the allowance of an attorney’s fee was raised by the deceased employee’s beneficiary.

She complained because the allowance would be paid out of the excess over and above the amount of compensation paid to her. Thus, the implication in that decision is merely that the court reached the same conclusion as it did in the two foregoing cases. If this were only a suit by Harris against Hi-PIains there could be no contention that in addition to the damages recoverable, Harris would be allowed an attorney’s fee for bringing the suit. The intention of the Legislature, we think, was not to increase the third party’s liability by providing for the right of subrogation in favor of the compensation carrier.

On the trial it was stipulated that Pan American paid “on behalf of Albert W. Harris medical and hospital expense aggregating $480.05.” No issue concerning these expenses was stipulated to the jury and neither was any testimony offered to support the finding that they were reasonable and necessary. Before Harris could recover his medical expense he must have proved that it was reasonable and necessarily incurred. Dallas Railway & Terminal Co. v. Gossett, 156 Texas 252, 294 S.W. 2d 377.

This case was appealed without a statement of facts and we are of the opinion that the trial court did not err in refusing to include the amount of that expense in the judgment. Pan American argues that since the jury must not be informed of the amount of benefits paid to the employee by the insurer in settling the claim for compensation as held in Myers v. Thomas, 143 Texas 502, 186 S.W. 2d 811, therefore it would have been reversible error to have presented evidence as to the medical expense paid and the necessity for a reasonableness thereof. This assumption is not correct.

The point is that it is improper to introduce before the jury evidence as to the amounts paid by the insurance company, but it would not be erroneous to introduce evidence as to what the medical expense amounted to and whether it was reasonable and necessary for the treatment of the injuries sustained. This is as much an essential part of the damages that ¡Harris might recover from the third party as the physical injury and pain suffered by him.

We proceed now to the contention of Pan American that it should be awarded additionally the sum of $1750.00 which was the amount paid by Hi-Plains to Harris in settlement of his claim. It is now the law in this state that the third party’s negligence need not be judicially established before the compensation carrier is entitled to assert its claim for subrogation and where the employee and the third party entered into a settlement, both employee and the third party were liable to the carrier for the amount so paid up to the amount of compensation paid by the carrier to the employee.

Traders & General Insurance Co. v. West Texas Utilities Co., supra. Likewise it was held in Fort Worth Lloyds v. Haygood, supra, that the first money “paid or recovered by the employee, or his representatives, belongs to the compensation carrier paying the compensation, and until it is paid in full, the employee, or his representatives, have no rights to any funds; * * Under the law thus announced we are of the opinion and so hold that Pan American is entitled to a judgment against Hi-Plains for the sum of $1750.00 which was the first money paid in this case.

The contention made by Hi-Plains, however, is that this amount was tendered and refused and Pan American elected to proceed with its suit and therefore was entitled to recover only the sum of $1500.00 and no more, being the amount fixed as damages. We have found no case squarely in point but we are of the opinion that Pan American was entitled to collect the $1750.00 without being required to release Hi-Plains from any further demands. Pan American had the right to proceed to trial and have submitted to the jury the amount of damages.

If the amount so found was equal to or in excess of the compensation so paid then Pan American would have been entitled to collect from Hi-Plains in full. In this case, however, the jury found that the damages were only $1500.00, less than the amount paid by Hi-Plains in settlement. The limit of Hi-Plains’ liability, had there been no settlement, was the amount of damages occasioned by its negligence and no more.

On the face of things Hi-Plains made a rather unfavorable settlement, but it is not to be punished or penalized for that by having to suffer what would in effect be a double recovery or to have its liability increased by more than the sum it paid in settlement. Pan American’s alternate contention that, merely because the jury found Hi-Plains negligent, it thereby became liable to Pan American for the full amount of all sums paid to the employee, is not a sound theory nor is it founded on any authorities. No decisions to that effect are cited. It is therefore overruled.

We therefore hold that Pan American is entitled to a judgment against Hi-Plains Haulers, Inc., for the sum of $1750.00 and no more. The judgments of both courts are therefore reversed and the cause remanded to the trial court for the entry of judgment in accordance with this decision. It is so ordered. Opinion delivered October 18, 1961.