U.S. Supreme Court
Chapman v. Hoage, 296 U.S. 526 (1936)
Chapman v. Hoage
Argued December 13, 16, 1935
Decided January 6, 1936
296 U.S. 526
1. The question whether an employer and his insurance carrier, in the District of Columbia, were released from their obligation to an injured employee under the Longshoremen's and Harbor Workers' Compensation Act through the voluntary discontinuance by the employee of his action against a third person, alleged to have caused the injury, when no compromise with the third person took place but the discontinuance occurred after the statute of limitations had run against the claim sued upon, and the employer and insurance carrier were thereby deprived of an opportunity to pursue the third person as subrogees, held a question to be determined by the general principles of suretyship. P. 296 U. S. 528. chanroblesvirtualawlibrary
2. The rule that any modification of the principal obligation releases the surety is abated in the case of a compensated surety or indemnitor. He is discharged only so far as his right is shown to be in fact prejudiced by action of the indemnitee. P. 296 U. S. 531.
3. An insurance company which, under the above-mentioned compensation act, receives premiums from an employer for insuring the performance of his duty to compensate his employees for injuries, and which is entitled to be subrogated to any claim that an injured employee may have against a third person, is not released from its obligation to pay the prescribed compensation because the employee, after bringing suit on such a claim, dismissed it when the statute of limitations had run upon it, if the claim had been demonstrated to be groundless, so that the insurer was not prejudiced by the loss of its right of subrogation. Pp. 296 U. S. 529, 296 U. S. 532.
4. An indemnitor is given the right of subrogation not to enable him to avoid his undertaking, but in order that it may not be enlarged beyond that of indemnity. P. 296 U. S. 531.
64 App.D.C. 349, 78 F.2d 233, reversed.
Certiorari to review the affirmance of a decree dismissing a petition for a mandatory injunction requiring the respondent, as Deputy Commissioner, etc., to make an award of compensation to the petitioner.