Statement of the Case.

"No action shall lie against the company to recover for any loss as described in this policy, unless brought within two years from the date of the entry of a final judgment against the assured after a trial of the issues on the merits in a suit duly instituted within the period limited by the statute of limitations awarding damages on account of a casualty covered hereby; and then only provided that such action against the company be brought by the assured personally for damages sustained by the assured in paying and satisfying such final judgment."

The defendant further avers that this policy is a policy of indemnity enforceable only by Ensminger Brothers after the payment and satisfaction of final judgment - and that the amount recoverable under this policy is only that amount which has been expended by Ensminger Brothers in paying and satisfying the final judgment against them.

The common pleas court entered judgment for the defendant, which judgment was affirmed by the court of appeals. This proceeding in error is prosecuted in this court to reverse the judgment of the common pleas court and that of the court of appeals affirming the same.

Messrs. Payer, Winch & Rogers, for plaintiff in error.

Messrs. Ford, Snyder & Tilden, for defendant in

error.

Opinion, per DONAHUE, J.

DONAHUE, J. If Section 9510-1, General Code, is to be given any force or effect whatever, then the question of equitable subrogation is of no importance in the disposition of this case. That section provides that an employe who recovers against his employer for injuries sustained while in his employ, and because of negligence of the employer, or negligence for which he or it is liable, shall be subrogated to all the rights of the employer under any contract or policy of insurance against loss or damage resulting to the employer for injury or death of an employe while in the service of such employer whether the person, copartnership or corporation contracting or issuing such policy of insurance has been made a party to the action for damages sustained or not.

If this section confers no right of subrogation upon the injured workman until the judgment he has secured against his employer has been paid and discharged, then it is a monumental folly, that can serve no purpose in any case; for, when the judgment is paid, the injured workman has no further interest in the litigation, and no need of subrogation to the rights of his employer.

It is contended by counsel for the defendant in error that Section 9510-1, General Code, is in conflict with the provisions of Section 1, Article XIV, of the Federal Constitution.

In answer to this contention it is sufficient to say that under the decisions of this court the right of the state to regulate and control the business of insurance and contracts of insurance is no longer an open question in Ohio. The National Fire In

Opinion, per DONAHUE, J.

surance Co. v. Dennison, 93 Ohio St., 404; Robbins v. Hennessey et al., 86 Ohio St., 181, and State, ex rel., v. Ackerman, 51 Ohio St., 163.

The same question, while not directly presented to the court, was necessarily involved in the case of State, ex rel. Turner, Atty. Gen., v. Employers' Liability Assurance Corporation, Ltd., 95 Ohio St., 289.

The authority of the defendant in error to issue a contract of indemnity is based upon the provisions of Section 9510, General Code. Section 9510-1, General Code, specifically applies to the contract of insurance authorized by Section 9510, General Code, "to indemnify employers against loss or damage for personal injury, or death resulting from accidents to employes." The state, having the authority to grant or withhold the right to make indemnity contracts, may impose terms and conditions upon which the right so granted may be exercised. Whoever seeks to avail himself of the benefits conferred by statute must observe the conditions imposed.

Section 9510-1, General Code, becomes a part of every contract of indemnity as fully as if written therein. Its provisions must control, regardless of the terms and conditions written into the policy by the contracting parties.

Sections 9510 and 9510-1, General Code, relate to the same subject-matter and must be construed together. If by the provisions of Section 9510, General Code, authority is granted to write contracts of indemnity without limitations or restrictions as to terms, Section 9510-1 limits that au

Opinion, per DONAHUE, J.

thority to the writing of contracts of indemnity which contain terms consistent with its provisions. State, ex rel. Turner, Atty. Gen., v. Employers' Liability Assurance Corporation, Ltd., supra.

In view of the fact that Section 9510-1 subrogates the injured workman to all the rights of the employer under any contract or policy of insurance of this character, the contracting parties cannot provide in the contract that no suit can be brought upon the policy except by the employer himself. It is equally clear that the further provision in the contract, that action cannot be brought thereon by the employer until after the judgment is satisfied and paid in full, is also void, for such a provision would likewise defeat the right of the employe to subrogation, and deprive him of all the benefits intended to be conferred by this statute.

This contract of indemnity provides in terms that when suit is brought by an injured workman against the employer, the employer shall cause every summons, process and other paper relating to such suit to be delivered to the insurance company as soon as served on the employer; that thereafter the company will, at its own cost, defend the suit in the name of and on behalf of the employer; and that the employer shall not interfere in any legal proceedings relative to or growing out of any casualty covered in whole or in part by the policy of insurance, nor with the negotiations for the settlement of any claim arising from such casualty, nor shall such employer settle any such claim or incur any expense in connection with such casualty save such as may be necessary in providing at the

Opinion, per DONAHUE, J.

time of the accident imperatively needful surgical relief.

If under the provisions of Section 9510, General Code, a contract of indemnity may contain a binding agreement that a stranger to the litigation may for a price assume the entire burden of the defense, including costs, and deprive the real party in interest of the right to settle the litigation at terms satisfactory to himself, certainly the other party to the suit should be compensated in some way for the increased burdens of litigation that such a contract necessarily imposes upon him.

Section 9510-1, General Code, recognizes the justice of this situation by subrogating the injured employe to the rights of his employer under the contract of indemnity, whenever he has reduced his claim for damages to judgment.

Under this contract the insurance company had its day in court, with full opportunity to defend against the claim for which it is ultimately liable. It prevented the possible settlement and adjustment between the real parties to the controversy; it controlled the litigation and compelled the injured workman to establish by proof the justice of his claim and the amount of damages he had suffered by reason of the injuries received in the course of his employment, through the fault or negligence of his employer. It is but fair that the contract should then inure to his benefit for the satisfaction of the judgment he has obtained, notwithstanding the intervention and activities of the insurance company in the defense of the suit.