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Olson v. Blesener9/4/2001
on his lost wages during the period of his disability, it conferred a direct benefit on appellant. "Subrogation rests on the maxim that no one should be enriched by another's loss." Medica, Inc. v. Atlantic Mut. Ins. Co., 566 N.W.2d 74, 77 (Minn. 1997) (citation omitted).
Similarly, indemnity
is a right which inures to a person who has discharged a duty which is owed by him but which, as between himself and another, should have been discharged by the other, so that if the second does not reimburse the first, the second is unjustly enriched to the extent that his liability has been discharged. American Mut. Liab. Ins. Co. v. Reed Cleaners, 265 Minn. 503, 508-09, 122 N.W.2d 178, 182 (1963).
he principle of indemnity is more limited in application than that of subrogation, since not only must a benefit be conferred on defendant by a discharge of his duty or obligation, but the discharge must have occurred under circumstances in which plaintiff was, t the same time, discharging a personal obligation coextensive with that of defendant. Id. at 509, 122 N.W.2d at 182.
"The doctrine of indemnity applies only where the identical duty owed by one is discharged by another." Id.
Ordinarily, if an employee receives workers' compensation benefits for injuries sustained in the course of employment, the employer or its insurer is entitled to recover the benefits paid to the employee from the third-party tortfeasor. Minn. Stat. § 176.061, subd. 3 (2000). Here, workers' compensation benefits were not paid. The district court correctly concluded that Olson was not required to be insured under workers' compensation because he was a 50% shareholder in respondent. Minn. Stat. § 176.041, subd. 1(g) (2000). Under Minn. Stat. § 176.041, subd. 1a(d) (2000), respondent had the option to elect workers' compensation coverage. Id. respondent elected not to insure Olson.
There are no Minnesota appellate cases that address the subrogation or indemnity rights of employers voluntarily paying injured employees lost wages in the absence of workers' compensation benefits. Appellant argues that Minnesota "recognizes no common law action between an employer and a third-party wrongdoer for an injury to an employee" except for payments required under the Workers' Compensation Act. We disagree.
Generally, one who is compelled to pay the debt of a third party to protect his own rights or to preserve his own property is entitled to subrogation. Bursell v. Morgan, 181 Minn. 462, 466, 233 N.W. 12, 13 (1930). The right of subrogation extends to parties who pay a debt in self-protection when that obligation is in dispute, because they may suffer a loss if the obligation is not discharged. Northland Ins. Co. v. Ace Doran Hauling & Rigging Co., 415 N.W.2d 33, 39 (Minn. App. 1987) (citing 73 Am.Jur.2d, Subrogation § 25 at 615 (1974)). "Equitable subrogation is a product of the common law and its purpose is 'to place the charge where it ought to rest, by compelling the payment of the debt by him who ought in equity to pay it.'" Medica, 566 N.W.2d at 77 (citations omitted).
Here, respondent was protecting its interests when it paid wages to Olson while he was disabled. Respondent was a third-party defendant and potentially faced some amount of liability for Olson's injuries. Added to this potential liability was the company's concern about the continued viability of the business if it failed to pay Olson his lost wages during his period of disability. Olson was a key employee of respondent and a 50% shareholder in the company. If he was unable to support himself or his family for an extended period of time, this would clearly threaten the company's continued
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