The issue presented for review is whether Maryland Casualty Company is entitled to full and complete reimbursement of benefits previously paid and to a release of future liability of sums to be paid under Code 1975, §
The attorney for the widow and minor children had a contingency fee contract of one-third of all sums recovered in the action against the third parties. Maryland Casualty does not question the reasonableness of this fee and agrees that, if it prevails here, it is obligated to pay one-third of the amount reimbursed to it and one-third of the future liability from which it is released аs its proportionate amount of this attorney fee, under §
In the case before us, the trial court ascertained that the settlement with the third parties was for an amount equal to only 20% of the value of the case. This ruling is unsupported by admissible evidence. With punitive damаges the case is "worth" whatever amount will "adequately punish and deter" — nothing more, nothing less. *471
This Court has recognized the special nature of an attempted settlement of a minor's claim. Before such a settlement can be approved, there must be a heаring, with an extensive examination of the facts, to determine whether the settlement is in the best interest of the minor. Large v. Hayes,
In Large and Abernathy, the following fromTennessee Coal, Iron R.R. Co. was quoted with approval:
"The court may upon being advised of the facts, upon hearing the evidence, enter up a valid and binding judgment for the amount so attempted to be agreed uрon, but this is not because of the agreement at all — that should exert no influence — but because it appears from the evidence that the amount is just and fair, and a judgment therefor will be conservative of the minor's interests."
We probably would not sustain as "just and fair" a trial сourt's order settling a minor's claim for 20% of its value if the damages were compensatory. Here, though, we are dealing only with punitive damages. This Court has written that " 'the plaintiff is without legal right to them [punitive damages], as [the right to damages] attaches to actual damages suffered.Comer v. Age-Herald Pub. Co.,
Since punitive damages are not to compensate a victim for loss but to punish and deter, the state alone is considered the true party plaintiff, and in seeking punitive damages, a plaintiff is an agent of the state and not a victim. Note,Apportionment of Punitive Damages, 38 Va.L.Rev. 71, 73 (1952).
Just as a trial judge would probably violаte his duty in permitting a minor's claim to be settled for 20% of its value if the damages were compensatory, a trial judge would probably violate his duty in allowing the state's interest to be compromised for 20% of the punishment and deterrent effect the state is entitled to.
Because the purpose of punitive damages is not to compensate the plaintiff but to punish the wrongdoer and to deter others from committing similar wrongs in the future, the amount of the damages rests largely in the sound discretion of the trier of fact. Dees v. Gilley,
The trial judge acknowledged that only punitive damages were recoverable in this action and approved a settlement of $200,000. We must assume that he determined that the settlement of $200,000 was adequate to punish the defendants and to prevent similar wrongs in the future. The trial judge's finding that the settlement was for 20% of its value is unsupported by *472 admissible evidence.1
"If the injured employee, or in case of his death his dependents, recover damages against [a party other than the employer whose act or omission caused the employee's injury or death], the amount of such damages so recovered and collected shall be credited upon the liability of the employer for compensation, and if such damages so recovered and collected should be in excess of the compensation payable under [Chapter 5, 'Workmen's Compensation,' Code 1975, §§25-5-1 through § 25-5-144], there shall be no further liability on the employer to pay compensation on account of such injury or death. . . . [T]he employer shall be entitled to reimbursement for the amount of such compensation theretofore paid on account of such injury or death. . . ." (Emphasis added.)
Code 1975, §
The term "employer" ". . . shall, if the employer is insured, include his insurer, such insurer being entitled to the employer's rights, immunities and remedies under [Chapter 5, Workmen's Compensation, Code 1975, §§
In a zealous attempt to protect the interests of the minors, in accord with the spirit of Large v. Hayes, supra,Abernathy v. Colbert County Hospital Board, supra, andTennessee Coal, Iron R.R. Co. v. Hayes, supra, the trial court held that since the plaintiffs were receiving only 19.3462% of the value of their case after expenses, other than attorney fees, Maryland Casualty should receive only 19.3462% of the amount it had paid and would have paid, but for the third-party settlement, less the attorney fee, under the common fund doctrine. This resulted in Maryland Casualty's having to pay $2,692.88, in addition to the $46,110 that it had paid to the plaintiffs.
In Lewis v. Railroad Retirement Board,
"As a result of the views which we have here expressed, the allowance of a fee cannot be sustained on a theory of services rendered for the common benefit of all the parties."
Judge Holmes, in Henley Clarke v. Blue Cross-BlueShield of Alabama,
"Generally, the 'common fund' doctrine is an equitable principle designed to compensate an attorney whose serviсes on behalf of his client operated to create, discover, increase, preserve, or protect a fund to which others may also have a claim. 7A C.J.S., Attorney Client § 334.
"The 'common fund' doctrine has traditionally been applied to certain well defined, limited areas; most commonly, in cases for the protection of trusts, for the protection of a decedent's estate, actions where one creditor acted to the benefit of other creditors, and actions by stockholders for corporate waste аnd the recovery of corporate property. The doctrine has also been applied in insurance subrogation cases. See
49 A.L.R. 1149 ; 107 A.L. R. 749;2 A.L.R.3d 1441 ; 20 Am.Jur.2d, Costs § 85."As a general rule, the application of the 'common fund' doctrine depends upon at least two requirements. Thеre must be a 'fund' from which to compensate the attorney, and the attorney's services must benefit that fund. 7A C.J.S., Attorney *473 Client § 334(b). In addition, the benefit rendered must be a direct benefit, either to the fund or the party to be charged with the fee. Lewis v. Railroad Retirement Board,
, 256 Ala. 430 (1951), cert. denied, 54 So.2d 777 , 343 U.S. 919 , 72 S.Ct. 677 (1952)." 96 L.Ed. 1333
Though attorney fees were denied in Henley Clarke
and Lewis v. Railroad Retirement Board, they were permitted in Smith v. Alabama Medicaid Agency,
"Consistent with the underlying philosophy of the common fund doctrine, an award of attorneys' fees from this fund spreads the costs and еxpenses of litigation among all those who benefit. The attorneys herein rendered their services not only for the litigant landowners, but also for all other members of the class. As this Court stated in Kimbrough v. Dickinson,
, 251 Ala. 677 684 ,(1949): 39 So.2d 241 " 'The rule rests upon the ground that where one litigant has borne the burden and expensе of the litigation that has inured to the benefit of others as well as himself, those who have shared in the benefits should contribute to the expense.' "
Code 1975, §
"In any settlement made under this section with a third party by the employee or, in the case of his death, by his dependents, the emplоyer shall be liable for that part of the attorney's fees incurred in the settlement with the third party, either with or without a civil action, in the same proportion that the amount of the reduction in the employer's liability to pay compensation bears to the total recovery had from such third party."
Therefore, there is a statutorily prescribed common fund doctrine involved in a third-party recovery in the workmen's compensation context. The plaintiffs' contingent fee contract with their attorneys provides that the attorneys shаll receive one-third of all sums recovered. Maryland Casualty is to pay one-third of all sums that it recovers from the common fund and one-third of all sums that it is relieved of paying due to the common fund. It agrees to do this. No more than that is required of it under §
Because of the dеference we extend to trial courts, we will affirm a judgment appealed from if it is supported on any valid ground, even though that was not the ground assigned by the trial court. Smith v. Equifax Services, Inc.,
Donna H. Tiffin, one of the appellees, argues that Maryland Casualty consented to the judgment entered by the trial court. We have reviewed the record and are not persuaded that there is any support for Ms. Tiffin's contention that Maryland Casualty consented to receive only 19.3462% of the amount paid by it.
Ms. Tiffin relies on State Farm Mutual AutomobileInsurance Co. v. Cahoon,
"The statutory right of subrogation created by the above provision is in favor of the employer when compеnsation is due an injured employee, and the injury is caused to the employee under circumstances also creating a legal liability for damages on the part of any party other than the employer."
Jackson v. Weaver, supra, also involved uninsured motorist coverage and medical benefits coverage. No attempt was made *474
to recover medical expenses from the employer. InJackson, the Court of Civil Appeals stаted, at 706, that " 'there must clearly be some sort of double recovery, i.e., a recovery from two sources that exceeds damages,' " for the employer to obtain the benefit of §
In Holder v. Weatherly, the Court of Civil Appeals, at 814, wrote:
"The primary goal of workmen's compensation legislation is to aid the injured рerson, but not to allow a double recovery. 'Double recovery' has been defined as recovering from two sources an amount that exceeds the damages. It could also mean any recovery from two sources whether or not the amount recovered exceeds the losses. 2A A. Larson, The Law of Workmen's Compensation § 71.23(h) (1983). The former definition is to this court the better view.
" 'There can be no conceivable policy objection to allowing an injured person to retain two recoveries that, when combined, still do not make him whole.' 2A A. Larson, The Law of Workmen's Compensation § 71.23(h) (1983). We agree."
In Holder, the Court of Civil Appeals concluded that since there was no proof offered of the employee's damages, it could not be asserted that the employee's estate was awarded a double recovery by receiving workmen's compensation deаth benefits after having received $14,000 from the tort-feasor whose negligence killed the employee and $10,000 from the employer's uninsured motorist coverage. The court held that the trial court did not err in disallowing a credit of the uninsured motorist coverage award agаinst the workmen's compensation benefits.
We do not agree that §
The attorney fees should be computed in accordance with the formula adopted in Fitch v. Insurance Co. of NorthAmerica,
Employer's = X Reduced Liability ------------------- ----------------- Third-Party Attorney's fees Recovery and expenses
When applied in this case, it yields the following result:
$ 87,000 = X -------- ------------------------- $200,000 $64,495.34 + $6,503.79
X = $30,884.62
Subtracting the attorney fees from the reimbursеment due Maryland Casualty ($46,110 — $30,884.62), the balance is $15,225.38. The portion of the trial court's order directing that Maryland Casualty pay $2,692.88 is reversed, and a judgment is rendered in favor of Maryland Casualty in the amount of $15,225.38.
REVERSED AND JUDGMENT RENDERED.
TORBERT, C.J., and MADDOX and BEATTY, JJ., concur.
ALMON, J., concurs in the result.