Fifield Manor v. Finston

Plaintiff brought this action to recover the cost of essential medical care rendered by it to George A. Boss, deceased, pursuant to a “life-care contract.” Boss’ injuries and death resulted from an automobile accident allegedly caused by defendants’ negligence. A general demurrer to the complaint was sustained without leave to amend. From the judgment of dismissal accordingly entered, plaintiff appeals.

The essential allegations of plaintiff’s complaint, accepted as true for purposes of this appeal (Terry v. Bender, 143 Cal. App.2d 198 , 201 [ 300 P.2d 119 ]), show the following situation: Plaintiff, a nonprofit corporation, had entered into a life-care contract with Boss whereby it had " expressly agreed to provide to . . . Boss all essential medical care.” (Welf. & Inst. Code, §§ 2350, 2353.) Thereafter, Boss was struck by an automobile negligently operated by defendant Sidney Finston and died some six weeks later as the result of his injuries. Pursuant to its contract, plaintiff provided essential medical services for Boss “including treatment by doctors, nursing care, medication and hospitalization” valued at $6,250. Plaintiff alleged its damage in that amount as a direct right of recovery from defendants; and it also alleged a right of subrogation, expressly assigned under the life-care contract, for “all expenses [it] incurred as the result of any injuries inflicted upon . . . Boss by reason of the negligence or carelessness of a third party. ’'

There is no question as to the validity of the life-care contract. (Welf. & Inst. Code, div. 3, ch. 3, §§ 2350-2360.) Defendants however contest their liability to plaintiff either (1) on the basis of plaintiff’s direct right of recovery for the financial loss it suffered in providing medical care for Boss because of defendants’ negligence or (2) on the basis of the subrogation agreement in the life-care contract.

1. Plaintiff's direct right of recovery.

The life-care contract between plaintiff and Boss made plaintiff responsible for furnishing Boss essential medical treatment, nursing care and hospitalization; and Boss had a right to these services when necessary. Therefore, plaintiff contends, when defendants’ negligent act necessitated plaintiff’s furnishing medical services to Boss pursuant to the life-care contract, plaintiff’s primary right to recover the resulting medical expenses sustains its direct cause of action against defendants as the wrongdoers responsible for plaintiff’s damage. (Civ. Code, § 3281.) As analogous situations, plaintiff argues that it was in no different position in its duty to Boss and its

In Follansbee v. Benzenberg, 122 Cal.App.2d 466 [ 265 P.2d 183 , 42 A.L.R.2d 832 ], plaintiff’s husband was fatally injured in an automobile accident caused by defendants’ negligence. Plaintiff had incurred hospital and medical expenses for her husband’s care and treatment. It was held that these expenses were not recoverable by decedent’s estate under section 956 of the Civil Code, for such expenses were incurred by plaintiff wife pursuant to her legal obligation to care for her husband, rather than by the husband; nor were they recoverable by the husband’s heirs under section 377 of the Code of Civil Procedure, the wrongful death statute, for such expenses were not sustained by reason of the death of the husband. It was therefore concluded that plaintiff wife had sustained the expenses in- her own right pursuant to her legal obligations to her husband and “as an individual,” she was entitled to recover them from the defendants as the persons whose negligence proximately caused the injuries necessitating the medical services and expenses.

Plaintiff argues that its position is similar to the wife’s in the Follansbee case: it was under a legal duty, pursuant to its life-care contract, to provide the medical care for Ross necessitated by defendants’ negligent conduct; the medical expenses so incurred were neither recoverable by Ross’ estate (Civ. Code, § 956) nor by his heirs under the wrongful death statute (Code Civ. Proc., § 377) ; and therefore defendants’ negligent act was a tort against plaintiff as well as against Ross, the physically injured person.

Plaintiff’s alleged direct right of recovery depends upon its contractual obligation to decedent. The courts in common-law jurisdictions have long recognized that an action will lie for the intentional interference by a third person with a contractual relation either by unlawful means or by means otherwise lawful in the absence of sufficient justification. (Im

In a comparatively recent opinion (1946) the Court of Appeals of Ohio in Stevenson v. East Ohio Gas Co., (Ohio App.) 73 N.E.2d 200 , refused recovery to a workman who claimed to have lost eight days wages under his contract with his employer because of conditions caused by a negligent gas explosion in defendant’s plant. The court, after noting that plaintiff had failed to find a single case supporting such a cause of action, and after citing and discussing many of the eases in which recovery for negligent interference with contract had been denied, concluded at page 204: “It is our opinion that the courts generally have reached a wise result in limiting claims for damages in this class of eases to who (sic) may have sustained personal injuries or physical property damage and in refusing to open their doors in such eases to claims of loss of wages and other economic loss based on contract. ’’ (Cf. Standard Oil Co. v. United States (1946), 153 F.2d 958 , 960.)

No ease has been cited to us which would support plaintiff’s contention that, because under its contract with the decedent plaintiff was compelled to expend sums for his medical care and treatment by reason of the injuries negligently inflicted upon decedent, plaintiff has a direct cause of

The analogy which plaintiff attempts to draw between this case and Follansbee v. Benzenberg, supra, 122 Cal.App.2d 466 , must fail because the wife’s recovery in Follansbee depended upon familial status and the duty of support of her husband imposed upon her by statutory law (Civ. Code, §§ 171, 176) while plaintiff’s claim for recovery is based solely upon a contractual liability between itself and the decedent. A similar attempted analogy between the obligation imposed by familial status and a strictly contractual obligation was made in Anthony v. Slaid, 52 Mass. (11 Metc.) 290. In that ease the plaintiff had a contract to support all the poor of a town and was compelled by defendant’s injury to one of the paupers to expend under his contract an increased amount for the pauper’s care. His right to recover from the tortfeasor was denied, the court saying at page 291: “It is not by means of any natural or legal relation between the plaintiff and the party injured, that the plaintiff sustains any loss by the act of the defendant’s wife, but by means of the special contract by which he had undertaken to support the town paupers. The damage is too remote and indirect.” (Cf. Dennis v. Clark, 56 Mass. (2 Cush.) 347 , 354 [ 48 Am.Dec. 671 ].)

Nor is it true, as plaintiff argues, that because it paid for the medical care and treatment under its contract, the decedent’s estate has no cause of action for the cost of such treatment against the defendants. The fact that either under contract or gratuitously such treatment has been paid for by another does not defeat the cause of action of the injured party to recover the reasonable value of such treatment from the tortfeasor. (Purcell v. Goldberg, 34 Cal.App.2d 344 , 350 [ 93 P.2d 578 ]; Reichle v. Hazie, 22 Cal.App.2d 543 , 547 [ 71 P.2d 849 ] ; cf. Gastine v. Ewing, 65 Cal.App.2d 131 , 143-144 [ 150 P.2d 266 ]; Bencich v. Market St. Ry. Co., 29 Cal.App.2d 641 , 647 [ 85 P.2d 556 ]; Loggie v. Interstate Transit Co., 108 Cal.App. 165 , 169 [ 291 P. 618 ].)

2. Plaintiff’s right on the theory of subrogation.

Plaintiff has pleaded in paragraph 9 of its complaint: * ‘ The life-care contract between plaintiff and George A. Ross expressly assigned to the plaintiff corporation a right of subrogation for all expenses incurred by the corporation as the result of any injuries inflicted upon said George

This statement is found in the Restatement of Restitution, section 162, comment h: “Where a person has discharged the obligation of another, his right to subrogation is somewhat similar to but somewhat different from the right of an assignee of the obligation. Like an assignee he can enforce against the obligor the rights which the obligee had against the obligor. But, although an assignee can ordinarily enforce the obligation only by a proceeding at law, a person entitled to subrogation ordinarily enforces his rights in equity. So also, a person who discharges the obligation of another officiously is not entitled to subrogation, whereas a person who has obtained an assignment from the obligee can enforce the obligation without regard to any question of his officiousness. On the other hand, a person discharging an obligation may be entitled to subrogation even though the obligation was such that it was not assignable.”

No example is given in the Restatement of an instance of subrogation to a nonassignable obligation, nor is the last quoted cryptic sentence further elaborated or explained in any way. Plaintiff has not cited to us any case in the California courts where a right of subrogation to a cause of action for tortious injury to the person has been recognized, except in cases where such right of subrogation has been expressly granted by statute. The Legislature where it has desired to give a right of subrogation in such cases, has done so in express language: e.g., Labor Code, section 3852, subrogating the employer who has paid workmen’s compensation to a cause of action against a tortfeasor responsible for the employee’s injuries (by definition this includes the employer’s insurer, Lab. Code, § 3850); Vehicle Code, section 17153, subrogating

While subrogation and assignment have certain technical differences, each operates to transfer from one person to another a cause of action against a third, and the reasons of policy which make certain causes of action nonassignable would seem to operate as forcefully against the transfer of such causes of action by subrogation. This court said in Offer v. Superior Court, 194 Cal. 114 ,121 [ 228 P. 11 ], in upholding a right of subrogation in a case of damage to property: “Section 954 of the Civil Code provides that ‘A thing in action, arising out of the violation of a right of property, or out of an obligation, may be transferred by the owner. ’ It is clear that in the ease at bar the cause of action of the insured arose out of the violation of a right of property and such right of action, or thing in action, is declared by the above code section to be assignable. In Dibble v. San Joaquin L. & P. Corp., 47 Cal. App. 112 , 117 [ 190 P. 198 ], the court held that the insurer merely had a cause of action arising by way of subrogation or equitable assignment which is declared to be an assignment by operation of law. If the right of the insured is assigned to the insurer by operation of law there is no necessity to go into equity to establish that right.”

Conversely in the earlier development of the law, assignment was regarded as one form of subrogation. (Branham v. Mayor Common Council of San Jose, 24 Cal. 585 , 607.) Whether the transfer be technically called assignment or subrogation or equitable assignment or assignment by operation of law its ultimate effect is the same, to pass the title to a cause of action from one person to another.

Two companion cases from Michigan have been cited to us which seem nearly in point to the question here presented: Michigan Hospital Service v. Sharpe, 339 Mich. 357 [ 63 N.W. 2d 638 , 43 A.L.R.2d 1167 ] and Michigan Medical Service v. Sharpe, 339 Mich. 574 [ 64 N.W.2d 713 ]. In the first ( 63 N.W. 2d 638 ), the plaintiff under a contract to furnish hospital service to Sharpe sought to recover, under the theory of legal

Plaintiff attempts to distinguish the Michigan cases on the ground that the Medical Service “apparently . . . did not assume direct responsibility for the patient's medical care but only reimbursed him for expenses incurred by him. ’ ’ The distinction would not seem to affect the question whether, in the absence of statute, there can be a right of subrogation to a nonassignable cause of action. In any event the Michigan court treated the contract as creating a direct liability to furnish the services. In the first Michigan case, the court said (63 N.W.2d p. 641) : “Plaintiff thus had a primary obligation to provide service in accordance with the terms of the contract.”

Plaintiff attempts an analogy to an attorney’s contingent fee contract in personal injury cases. Such contracts do not operate to transfer a part of the cause of action to the attorney but only give him a lien upon his client’s recovery. (Bartlett v. Pacific Nat. Bank, 110 Cal.App.2d 683 , 689 [ 244 P.2d 91 ].) Only if Ross’ personal representative had recovered a judgment against defendants and plaintiff was seeking to impose a lien thereon would the cases be analogous. That was exactly what the court did in the second Michigan ease (64N.W.2d713).

Montgomery Ward & Co. v. Furlong, 219 F.2d 726 , cited

In United States v. Aetna Casualty & Surety Co., 338 U.S. 366 [ 70 S.Ct. 207 , 94 L.Ed. 171 , 12 A.L.R.2d 444 ], the United States Supreme Court held that the act of Congress (B.S. 3477), which prohibits the assignment of claims against the United States, does not bar transfers by operation of law and hence does not bar subrogation by operation of law. The court followed “interpretation . . . for nearly a century” that “involuntary assignment was not thought to be an evil within the scope of a statute aimed at fraud and harassment.” ( 338 U.S. 376 .) The court considered the history of the legislation permitting the government to be sued for tort (pp. 376-380) and concluded that Congress had not intended to bar suits by subrogees in enacting the Tort Claims Act. This decision, construing the purpose and effect of congressional action in limiting the assignment of claims against the United States, has no particular relevancy to the problem which we are considering, since we must conclude that in enacting Civil Code, section 956, the Legislature intended that the established rule against assignability of claims based upon injuries to the person should apply to the claims therein enumerated.

We should perhaps notice, although not cited by the parties, Continental Cas. Co. v. Phoenix Constr. Co., 46 Cal.2d 423 [ 296 P.2d 801 , 57 A.L.R.2d 914 ]. In that case we held that an employer’s insurer who had paid a judgment against the employer for injuries caused by the unauthorized negligent act of his employee was subrogated to the employer’s cause of action for recoupment against the employee or the employee’s insurer. ( 46 Cal.2d 429 .) The employer’s cause of action against the employee in such circumstances is based upon the breach of the servant’s duty to his master and is one

We are satisfied that the principles of subrogation should not be here applied in view of the express reservation against assignment in Civil Code, section 956.

The judgment is affirmed.

Gibson, C. J., Traynor, J., Schauer, J., McComb, J., Peters, J., and White, J., concurred.