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Hartford Accident & Indem. v. D.f. Bast

OPINION FILED NOVEMBER 23, 1977.

HARTFORD ACCIDENT & INDEMNITY COMPANY, PLAINTIFF-APPELLEE,

v.

D.F. BAST, INC., ET AL., DEFENDANTS-APPELLANTS.



APPEAL from the Circuit Court of Cook County; the Hon. DANIEL P. COMAN, Judge, presiding.

MR. PRESIDING JUSTICE SULLIVAN DELIVERED THE OPINION OF THE COURT:

Mr. PRESIDING JUSTICE SULLIVAN delivered the opinion of the court:

Defendants appeal from an order granting summary judgment and awarding $26,350 to plaintiff in an action brought by it to enforce a lien created by section 5(b) of the Workmen's Compensation Act (the Act). Ill. Rev. Stat. 1973, ch. 48, par. 138.5(b).

The following issues are raised on appeal: (1) whether defendant waived or is estopped from asserting a lien by its conduct; (2) whether the amount of the judgment is excessive; and (3) whether the pendency of another action is inconsistent with the entry of summary judgment.

In July 1971, Lonnie Wilbon was struck by a truck owned by D.F. Bast, Inc. (Bast). He received injuries which resulted shortly thereafter in his death. Surviving him were two common-law wives, Blonzie Mae Traylor and Stella Wilson, and eight children — with Traylor being the mother of six and Wilson of two. At the time of his death, the two children of Wilson were minors, as were three of the Traylor children. Their mothers, as guardians, filed Workmen's Compensation claims with the Industrial Commission on behalf of the five minor children against Wilbon's employer. In December 1971, Hartford Accident & Indemnity Company (Hartford), insurer of Wilbon's employer, by letter notified Home Indemnity Company (Home), the liability carrier for Bast, of the Workmen's Compensation claims and of its "subrogation interest" under section 5(b) of the Act to recover the amount of any compensation benefits it might be required to pay from any monies paid by Bast. In its February 13, 1972, letter of reply, Home acknowledged receipt of Hartford's "lien."

In September 1972, Home obtained liability releases from the six children of Traylor, including her three minor children whose settlements were approved by a probate court in Arkansas, where they resided, for the total payment of $16,500. The releases relinquished each of their claims against Bast because of the wrongful death of their father. Home then sent Hartford copies of the releases with a letter suggesting that Hartford use the $16,500 as a setoff against any award of the Industrial Commission. No settlements were made on behalf of the two minor children of Wilson.

In January 1973, an arbitrator of the Industrial Commission awarded $26,350, of which $25,200 went to the five minor children for whom claims for benefits under the Act had been filed — with each child receiving $5,040. The balance of $1,150 was for funeral expense and a required payment to the State Treasurer. The award was sustained on review in February 1974.

In November 1974, 26 months after Home notified Hartford of its settlement with the six children of Traylor and 40 months after Wilbon's death, Hartford filed a complaint alleging that defendants had breached its Workmen's Compensation lien by entering into the settlement without the consent of Wilbon's employer or his personal representative — as required by section 5(b) of the Act. Summary judgment was entered in favor of plaintiff for $26,350 for breach of its lien, and this appeal is from that judgment.

OPINION

Defendants have admitted during oral argument that Hartford possessed a valid lien under section 5(b). They contend, however, that Hartford waived the lien and is estopped from asserting it, because of its failure to pursue any of the remedies provided for in section 5(b).

• 1 The defense of waiver applies when a party intentionally relinquishes a known right or his conduct warrants an inference of such relinquishment. Pantle v. Industrial Com. (1975), 61 Ill.2d 365, 335 N.E.2d 491; Slavis v. Slavis (1973), 12 Ill. App.3d 467, 299 N.E.2d 413.

• 2 Similarly, equitable estoppel applies to preclude a party from asserting a right which might otherwise have existed as against another person when the other person relies in good faith on the party's conduct and is led thereby to change his position for the worst. Johnson v. Johnson (1975), 26 Ill. App.3d 64, 324 N.E.2d 450; Atwater v. Atwater (1974), 18 Ill. App.3d 202, 309 N.E.2d 632.

• 3, 4 But to be available as a defense, both waiver and estoppel must be specifically pleaded in the initial pleadings. (See Johnson; Pinkley v. Allied Oil Corp. (1945), 325 Ill. App. 326, 60 N.E.2d 106.) Furthermore, since estoppel is an affirmative defense which seeks to avoid the legal effect or defeat the cause of action set forth in the complaint, it must be set forth in the answer or reply (Ill. Rev. Stat. 1973, ch. 110, par. 43(4)) to be available as a ground for appeal (Johnson; Rodenkirk v. State Farm Mutual Automobile Insurance Co. (1945), 325 Ill. App. 421, 60 N.E.2d 269). Here, defendants did not allege waiver or estoppel in their answer to plaintiff's complaint, nor does it appear from the record that it was alleged at any other time, and therefore this contention is barred from being raised on appeal. (See Johnson; Government Employees Insurance Co. v. Dennis (1965), 65 Ill. App.2d 365, 212 N.E.2d 759.) However, even if waiver or estoppel had been raised, the record discloses that neither was established.

Defendants' contention in that regard is based on two alleged failures on the part of plaintiff to protect its lien. First, it is asserted that plaintiff should have filed a wrongful death action. They point out that under section 5(b) of the Act, the releases they obtained and the settlements were not valid without the consent of decedent's employer or personal representative. Because no such consent was obtained, they argue that the settlements did not impair the right of the employer, under section 5(b), to bring a wrongful death action against a third party tortfeasor in the name of the personal representative if the latter did not do so within 21 months after decedent's death. We note, however, that section 5(b), in providing this right to sue, states as follows: "[P]rior to three months before such action would be barred the employer may in his own name or in the name of the employee, ...


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