    OFFICE   OF THE    ATTORNEY’GENERAL     OF TEXAS3
                           AUSTIN




Hon. Julian Kontgomry
state Highway Engineer
Austin, Texas
Dear.Sir:
                   Opinion Ro. O-1714
                   Re: The resunption of
                       to XX-.A.
                       under the



the above mtter.




                                    , treatncnts and like ex-
                                     of $1,352.86. Reanwhile,

                                             of the Texas Hi&
                                            ituted in Rarrls



the reoove
paid to Rejssig as oolrpensationand expended in his behalr
for doctorts bills, treatments and like expense.- In the
petition of intervention it waB ppeolfically alleged that
such SW   had been paid out; that A Reissig was entitled to
compensation in an amount at least equal to such allowance paid
                                                              I




Hon. Julian Xontgoniery~Page 2


but 'that th, final amount of such compensation due the
said A. Reisslg had not, at that time, been determined
and settled, and that the petition in intervention was
not to be construed as an admission of the extent of
liability,of the Texas Righway Department to the said
A, Reiosig; There was no assumption'by the Texas High-
way Department, the compensation carrier, of any addi-
tional payments to A. Reissig.
          Upon the trial of the damage suit against the
Texas-Pipe Line Company';in which the Texas Highway Depart-
ment had intervened, udgment was rendered for the em-
ployee in the sum of 5'23,OOO.OO and forthe State of Texas,
for the use and benefit of the compensation funds of the
RighvzayDepartment of the State of Texas, in the sum.of
$1,352.86. The judgment made no provision for any future
compensation payments to A. Reissig by the Texas High-
way Department or for the subrogation rights of the de-
partment ehould such b8 done. Xotion for new trial has
been filedin this case.and it is probable that an appeal
will be perfec.ted. In anticipation of.suoh appeal, and
the delay incident thereto, the attorneysfor A. Reissig
hsve requested that the Texas Highway Department continue
tt.epayments of compensation to A. Reissig. It is pro--
I>sed that the department take anassignment from the
eriployeeof the proceeds of the judgment to the extent
or such payments.
          kay we say in the beginning that'the question
presented is without precedent and presents many diffi-
culties. The oontrolling statute, Article 8307, Seotion
6a, Vernon's Annotated Civil Statutes, provides:
          Where the injury for which compensation
     is payable under this law was oauned under
     circumstances creating a legal liability in
     some person other than the subsoriber to pay
     damages in respect thereof, the employee may
     at his option proceed either at law against
     that person to recover damages or against the
     association for compensation under this law,
     but not against both, and'if he elects to pro-
     ceed at law against the person other than the
     subscriber, then he shall not be entitled to
     compensation under this law. If compensation
Hon. Julian Eontgomery, Page 3


     be claimed under this law by the injured
     employee or his legal beneficl-.ries,then
     the association shall be subrogated to the
     rights of the injured enployee ih so far
     as may be necessary and nap enforce  in t.he
     nan;eof the injured employee or of his
     legal beneficiaries or in its own name and
     for the joint use and benefit& 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, to-
     gether with a reasonable cost of enforcing
     such liability, which shall be determined by
     the court trying t.hecase, t.henout of t.he
     sum so recovered the association shall re-
     imburse:itself:and.:‘$89 said cost.and the
     excess so recovered shall be paid to the
     Injured employee or his ~beneficiaries.The
     association shall not have the right to ad-
     just or compromise such liability against
     such third person without notice to the
     injured employee or his beneficiaries and
     the approval of the board, upon a hearing
     thereof.*
          In the first _;laoe,it is to be noted thrt the
statute provides that if the employee l’electeto proceed
at law against the person other than the subscriber,
then he shall not be entitled to compensation under this
law.” Kith reference to this provision of the statute,
the opinion by the Con;missionof Appeals, in the case of
Employers Indemnity Corporation vs. Felter, et al, 277
SY 376, reads:
          “But we are unable to find any case
     holding that the subrogation article does
     not bar compensation where suit for dan?ages
     has proceeded to final judgment upon the
     merits of the case. . . .
          n. . . The law makers, realizing that
     much larger recoveries could be had by in-
     jured people under the corononlaw than under
     compensation statutes, very wisely left it
     to the injured .~personto exercise an option
     in the premises and seek to recover what
     seems to him to be for his vest interests. . ,
.




    Hon. Julian Xontgon:ery,Page 4


              n. . . C’~ act requires an election.”
                     .~7..3
              mis hold~ingwas approved by the Commission
    of ‘Appeals in the case of Texas Employers Insurance
    Ass’n. Vs. hrahdon, 89 SW 2nd 982, in these v?oras:
              nEhilo an eleotion to proceed against
         the insurer for compensation does not al-
         together bar an action by the eclployeefor
         damages against a negligent third person,
         an election to proceed at law against such
         person is a bar to the employee’s right to
         compensation.” (Citing Employers Indemity
         Corp. vs. Felter, supra)
              Notioiri~g
                       the quoted statute further, it creates
    a right of subrogation in the compensation carrier against
    the negligent third party for reimbursement of sums paid
    or assumed by the association. It is significant that
    this right of;subrogation is purely a statutory one and
    arises only in a situation wkthin the purview of the stat-
    ute. Furthermore, such right does not spring into exist-~
    enoe until the insurer has paid or assumed to pay compensa-
    tion. ~&e-quote from the opinion in the case of Texas
    Employerls Insurance Ass’n. vs. T. & F. Ry.‘Co., et al, ,129
    S. W. (2d) 746, as follows:.
                               ,
              “Of course, there is but one cause of ao-
         tion involved and the right of subrogation.in
         suhh cases is not an absolute one,’but is oon-
         tingent upon the happening of a future event,
         and, as already held withrespect to the in-
         surance carrier , such event is the payment,
         or assumption of payment by it of compensation
         insurance. . . .
              *Of course, there could be no reimburse-
         ment unless something had been ‘paid or assum-
         ed’ and we are of tha opinion there could.,be
         no recovery at all, unless some amount had
         been paid or assumed. . . . But a consideration
         of the article as a whole makes it clear that
         that right does not mature.until the insurer
         has paid or assumed to pay compensation.”
Hon. Julian hont@c:ery, Page 5


          Turning now to the c,ase.
                                  before us, it is
ap$arent L,.derthe facts t:hat,by cgeration of law,
the employee, A. Reissig, has elected to proceed
against the negligent t,hirdparty for damages. Also,
his suit has cone to judgment in the trial court.
          Furthermore, .in,the suit against the negli-
gent third party,,the Texas Highway Department has
intervened in assertion of its subrogation rights to
recover the sums paid as compensation to tho employee,
and expended in his behalf for doctor’s bills, treat-
ment-s,and like expense. The .Highway Department did
not assume the payment of any additional sums to the
employee; it asserted its subrogation rights ,only to the
extent of thensums so paid, and such rights were liti-
gated and resolved in the judgment.
          Also, viewing the quoted statute .again, it
is seen that the employee, when he has elected to pro-
ceed against the third party for amages, can recover
of said party only the amount of darr,eges
                                         assessed, less
the compensation paid to him by the insurance carrier.
Upon this proposition, we quote from the case of Hanson
v3. Fonder, 300 SW 35, by the Commission of Appeals,
IIJ r0ii0ws:

           *In this situati’on,if Hanson sooures
      a verdict, the court, in rendering judginent,
      should deduct from the amount of da&ages found
      by a jury, the amount of ‘compensation paidt.n
          Accordingly, in the instant case, the amount
of damages recoverable by the employee from the third
party has been determined and the amount of compensation’
paid to the employee by the Texas Highway Department
has been deducted from.the damages receivable by the
employee; and the subrogation rights of the Texas Highway
Department, to the extent of the sum paid to the employee
as compensation, have-become fixed in judgment.
           Apart from the question of whether or not A.
 Reissig suffered an injury which is compensable in excess
-of.the sucialready paid him as’compensation, which we
 understand is a serious question, in our opinion there
 are other substantial legal objections to the resumption
 of compsnsation~payments to A. Reissig by the Texas High-
 way Department at this time.
Hon. Julian Montgomery, Fage’~
                             6


           If we,arti.correot in our conclusion announced
hereinabo-.; namely, that, under tl.-facts, by operation
of.law, the employee has elected to proceed against
.the negligent third party for damages, it is clear under.
the quoted statute ond the cases cited, such election
is a bar to the employee’s right to further compensation,
          Furthermore, a serious legal question is pre-
ti.&Lbdas to -.r:hethzr
                      or not t.haTexas Highway Cepartment
has exhausted its subrogation rights in the d.amagesuit
ca5e, and therefcre, would be precluded from asserting
such rights against the third party for the recovery
of additional sums paid to the employee as compensation,
subsequent to the rendition of the judgment in the damage
suit case. In this conneation, we quote from the opinion
of the Commission of Appeals in the case of Texas %%IIplOybrS
Insurance Association vs. Bandon, supra, as.follows:
            “In Employers Indemnity Corp. vs. yelter,
       supra, it was held that the widow of a deceased
       employee killed in tne course of his employment,
      who prosecuted unsucoesslully a suit to judgment
       against thiM parties for damages for the employee’s
       death, was thereafter barred from recovering oom-
      ~pensation. That holllng was based upon thb ground-
       that, as a result of the conduct of the widow, in
       prosecuting $0 judgmelt a claim for damages
       against the negligent third person, the insurer
      was deprived of its vdluable right to sue the al-
       leged tort feasor. It is definitely and specifi-
       cally held In t,hatcase that, in a suit for sub-
       rogation by the insurer against the negligent
       third person, th, latter could successfully plead
       the former judngzentas res adjudicata, and the
      “aecisionis based upon that reasoning.” (Under-
       scoring ours)
          To the same effoot, we quote from the opinion in
the case of Employers Indemnity Corp. vs. Felter, supra,
as follows:.
               *Furthermore, res adjudicata would un-
          questionably have be,enpleaded and also suo-
          cessfully. 30 it is quite olear that, as a
          result of the conduct of the Felters, (in suing
          the third party for damages) plaintiff in error
          has been deprived of its valuable rights, in
.



    Hon. Julian Montgomery, Page 7


         its own way, and through its own agents
         and attorneys, to sue the alleged tort
         feaso-s,and attempt to recoup .hb amount
         of compensation it was being called upon
         to pay." (parenthesis ours)
                              l.
              Again, as.pointed out above, the insurance
    carrier has a subrogation right only to the extent of
    sums of money "paid or assumed**.byit. The Highway
    Department, the insurance carrier, asserted its sub-
    rogation rights in the damage suit case to the extent
    of the sums paid by it, and assumed no additionalpiy-
    ments. In the event of an affirmance of a gudgment
    in the case, the Texas Pipe Line Company, the'alleged
    tort feasor, could, at least with some merit, urge the
    folio-fling
              propositions.
                First, that the employee can receive only
    'the amount of the judgment, less such sums as haVb been
     paid to him by the Texas Higm     Department; hence, the
    'sums paid him subsequent to the rendition of the judgment,
    which, of course, could not have been taken into consid-
     eration in the judgment, should be deducted from the
     sum payable to the employee under the judgment because
     of his having received such amount from the Highway De-
     partment as.oompensation. Second, that the Highwe! De-~
     partment would not be authorized to receive  from tie
     Texas Pipe Line Company, the tort feasor, an amount out
     of the judgment  equal tr the sum so paid by it (thi
     Highway Departmbnt) to the employee, pending thb appeal,
     for the simple reason that the right of subrogation of
     the Highway Department thereto had not been established,
     and further that it could not now be established because
     such subrogation rights were theretofore concluded in
     the trial court. The anomalous situation might be pre-
     sented whereby the third party, the Texas Pipe Line Com-
     pany could not be legally compelled topy the judgment,
     to the extent of the additional.payments made by the Texas
     Highway Department, to the employee, nor could it be
     compelled to pay such portion of the judgment to the Texas~
     Highway Department.
              Furthermore, if we are correct in any of the
    principles announced above, thesgreement of the Texas
    Highway Department to resume compensation payments to Ai
Bon. Julian kontgomerv, Page 8'


Reissig, and to take from A. Reisslg an assignment
of,the proceeds of the judgment to the amount of such
 sumspaid .,Jhim by the department, would be beyond
the authority of the Texas Highnay Department. In
'effect, such n procedure would be tantamount to a loan
 of sgrchmonies to the employee, pending the dotermina-
 tion of the dama&e suit on appeal, and would be clearly
 beyond the authority and powers of the TbXsS Highway
Department.
          Asstated In the beginning of our opinion, the
situation presented in this matter is novel and without
precedent. Looking, hOVibVer, .to the statute controlling
the situation and to the several principles announced by
our courts, we are of the opinion that your department
should not voluntarily resume the payment of compensation
to A. Reissig, under the facts and circumstances of this
case. You would be unquestionably warranted, from a legal
standpoint as well as  upon a consideration of policy, to
refuse such request, whereupon the employee may,.by proper
legal procedure, establish such rights as he may.have in
the premises.
          We recognize the equities .in this situation, the
good faith of the employee and his attorneys, and your
desire to cooperate with them, Notwithstanding which,
~3 believe it our duty, in,view of the legal difficulties
and uncertainties involved, to advise your departllbntto
a-t in the manner indicated above. Thereby, you will be
safely within the bounds of your powers and authority.
          We remain,

                                     Very truly yours
                                  ATTOREEY GEi'JERAL
                                                   OF TEXAS

                              By(Signed) ?:m,J. Fanning
                                          Wm. J. Fanning
                                               Assistan*.
ZCS:KW                        By (Signed) .Zollie C. Steakley
APPROVED DEC. 7, 1939               Zollie C. Steakley
(SIGNED) GERALD C. MANN
ATTORREY GE~RERALOF TEXAS
APPROVED OPINIW COhXITTEE
         B. CBAIRXAN
BY B. Vi'.
