Billy v. Consolidated Mach. Tool Corp.

• Citation: 412 N.E.2d 934,432 N.Y.S.2d 879,51 N.Y.2d 152
• Parties: , 412 N.E.2d 934 Mildred A. BILLY, as Executrix of Joseph M. Billy, Jr., Deceased, Appellant, v. CONSOLIDATED MACHINE TOOL CORPORATION et al., Respondents.
• Decision Date: 21 October 1980
• Court: New York Court of Appeals Court of Appeals

Page 879

432 N.Y.S.2d 879

51 N.Y.2d 152, 412 N.E.2d 934

Mildred A. BILLY, as Executrix of Joseph M. Billy, Jr. Deceased, Appellant, v. CONSOLIDATED MACHINE TOOL CORPORATION et al., Respondents.

Court of Appeals of New York.

Oct. 21, 1980.

Robert J. Michael and Jay M. Friedman, Rochester, for appellant

Thomas C. Burke, New York City, for respondents.

Robert Abrams, Atty. Gen. (Stanley Fishman and Shirley Adelson Siegel, Asst. Attys. Gen., of counsel), in his statutory capacity under section 71 of the Executive Law.

OPINION OF THE COURT

GABRIELLI, Judge.

As a general rule, when an employee is injured in the course of his employment, his sole remedy against his employer lies in his entitlement to a recovery under the Workers' Compensation Law (Workers' Compensation Law, § 11). In our previous decisions, we have adhered strictly to this basic rule and have declined to recognize exceptions, even when the liability is purportedly premised upon conduct of the employer acting in a capacity other than that of employer (e. g., Williams v. Hartshorn, 296 N.Y. 49, 69 N.E.2d 557; Winter v. Doelger Brewing Co., 175 App.Div. 796, 162 N.Y.S. 469, affd. without opn. 226 N.Y. 581). We have not previously been called upon to consider, however, a situation in which the employer's liability, if any, is alleged to have arisen solely from its independent assumption, by contract or operation of law, of the obligations and liabilities of a third-party tort-feasor. Having examined all of the relevant precedent as well as the firmly rooted policies underlying the Workers' Compensation Law, we conclude that, in such situations, the exclusivity provisions of that statute do not bar a common-law action against the employer for injuries sustained by an employee in the course of his employment.

Plaintiff's decedent, an employee of defendant USM Corporation, was killed when a 4,600-pound "ram" from a vertical boring mill broke loose and struck him. There was no doubt that the October 21, 1976 accident occurred "in the course of" the decedent's employment within the meaning of section 10 of the Workers' Compensation Law. Although the decedent's widow applied for and received workers' compensation benefits, she subsequently commenced a common-law tort action against USM Corporation seeking recompense for the decedent's personal injuries and wrongful death. Also named as party defendants were Emhart Corporation, the parent of USM, and Consolidated Machine Tool Corporation, Farrel-Birmingham Company and Farrel Corporation, all of which had been absorbed by USM through corporate mergers prior to the accident. In her complaint, plaintiff alleged that the accident had been caused by certain defects in the manufacture and design of the vertical boring mill and in the two moving parts that had been directly involved in the accident, a metal "lifting bar" and a 4,600-pound "ram".

After preliminary discovery had taken place, each of the five corporate defendants moved for summary judgment. USM Corporation, the decedent's employer, based its summary judgment motion primarily upon section 11 of the Workers' Compensation Law. That section provides that the employer's obligation to furnish workers' compensation benefits is "exclusive and in place of any other liability whatsoever" to employees or their dependents for injuries sustained in the course of employment.

Both Special Term and the Appellate Division, 71 A.D.2d 796, 419 N.Y.S.2d 29, concluded that section 11 constituted an absolute bar to the assertion of any common-law claim that plaintiff might have against USM Corporation, regardless of the theory of liability advanced. Accordingly, the causes of action asserted against USM were dismissed. We granted plaintiff's motion for leave to appeal on November 20, 1979 (48 N.Y.2d 608, 424 N.Y.S.2d 1025, 399 N.E.2d 1205). Because we find the principle of exclusivity embodied in section 11 to be inapplicable to the unique set of facts presented in this case, we now reverse this aspect of the lower courts' rulings and hold that the causes of action asserted against USM should be reinstated.

It is undisputed that the vertical boring mill which allegedly caused decedent's injuries was designed several decades ago and manufactured during the early 1950's by Consolidated Machine Tool Corporation and Farrel-Birmingham Company. It was also established through discovery that Consolidated Machine Tool Corporation had played a significant role in the design of the 4,600-pound "ram" that eventually broke loose from the machine and killed the decedent. Farrel-Birmingham Company was apparently responsible for the 1955 installation of the vertical boring mill in the plant now operated by USM.

Through a series of consolidations and mergers that took place during the 1950's and 1960's, Consolidated Machine Tool Corporation and Farrel-Birmingham Company were ultimately absorbed into USM Corporation. In 1954, Farrel-Birmingham, which had acquired a controlling interest in Consolidated three years earlier, dissolved that corporation and, concededly, assumed its assets and liabilities. In 1963, the name of the resulting corporate entity was changed from Farrel-Birmingham Company to Farrel Corporation. Farrel Corporation was finally merged into USM Corporation, the decedent's employer, in 1968, eight years before the accident in question occurred. It is not seriously disputed that this merger resulted in the assumption by USM, a New Jersey corporation, of the liabilities and obligations of Farrel, a Connecticut corporation, including those liabilities that Farrel had inherited from Consolidated (see Conn.Gen.Stats.Ann. § 33-371, subd. (d); N.J. Stats.Ann., § 14A:10-7, subd. (3); see, also, Business Corporation Law, § 906, subd. (b), par. (3)).

At the outset, we note our rejection of plaintiff's contention that, notwithstanding section 11 of the Workers' Compensation Law, she is entitled to maintain a common-law action against USM either in its capacity as a participant in the manufacture and design of the metal "lifting bar" which was involved in the accident or in its capacity as the owner of the premises on which the accident occurred. The theory advanced by plaintiff, commonly known as the "dual capacity" doctrine, has been described by one noted commentator as follows: "(A)n employer normally shielded from tort liability by the exclusive remedy principle (embodied in section 11 of the Workers' Compensation Law) may become liable in tort to his own employee if he occupies, in addition to his capacity as an employer, a second capacity that confers on him obligations independent of those imposed on him as employer" (2A Larson, Workmen's Compensation Law, § 72.80, at p. 14-112; see e. g., Reed v. The Yaka, 373 U.S. 410, 83 S.Ct. 1349, 10 L.Ed.2d 448; Duprey v. Shane, 39 Cal.2d 781, 249 P.2d 8; Smith v. Metropolitan Sanitary Dist., 77 Ill.2d 313, 33 Ill.Dec. 135, 396 N.E.2d 524; see, generally, Kelly, Workmen's Compensation and Employer Suability: The Dual-Capacity Doctrine, 5 St. Mary's L.J. 818). The doctrine is most frequently invoked when, as here, an employee or his dependents are seeking to hold the employer liable at common law as the owner of the property upon which a job-related injury has occurred (2A Larson, Workmen's Compensation Law, at p. 14-113). Although several jurisdictions have permitted maintenance of a common-law action under this theory (e. g., State ex rel. Auchter Co. v. Luckie, 145 So.2d 239 (Fla.App.); Marcus v. Green, 13 Ill.App.3d 699, 300 N.E.2d 512; Duplechin v. Pittsburgh Plate Glass Co., 265 So.2d 787 (La.App.); but see McCarty v. City of Marshall, 51 Ill.App.3d 842, 9 Ill.Dec. 541, 366 N.E.2d 1052), we have squarely rejected its use in our State (Williams v. Hartshorn, 296 N.Y. 49, 69 N.E.2d 557, supra; Winter v. Doelger Brewing Co., 175 App.Div. 796, 162 N.Y.S. 469, affd. without opn. 226 N.Y. 581, supra ; see Minsky v. Baitelman, 281 App.Div. 910, 120 N.Y.S.2d 86; see, also, Murray v. City of New York, 43 N.Y.2d 400, 401 N.Y.S.2d 773, 372 N.E.2d 560; cf. Volk v. City of New York, 284 N.Y. 279, 30 N.E.2d 596), as have several other jurisdictions (Kottis v. United States Steel Corp., 543 F.2d 22 (7th Cir.); Vaughn v. Jernigan, 144 Ga.App. 745, 242 S.E.2d 482; Jansen v. Harmon, 164 N.W.2d 323 (Iowa); Frith v. Harrah South Shore Corp., 92 Nev. 447, 552 P.2d 337; Billings v. Dugger, 50 Tenn.App. 403, 362 S.W.2d 49). In a similar vein, there has been a spate of cases in recent years in which employees have attempted to avoid the effects of the exclusivity rule by suing their employers in their capacities as manufacturers or designers of hazardous equipment causing injury on the job. While some courts have recognized and adopted this approach (Douglas v. E. & J. Gallo Winery, 69 Cal.App.3d 103, 137 Cal.Rptr. 797; Mercer v. Uniroyal, Inc., 49 Ohio App.2d 279, 361 N.E.2d 492), most have specifically refused to do so (Mapson v. Montgomery White Trucks, 357 So.2d 971 (Ala.); Profilet v. Falconite, 56 Ill.App.3d 168, 14 Ill.Dec. 16, 371 N.E.2d 1069; Winkler v. Hyster Co., 54 Ill.App.3d 282, 12 Ill.Dec. 109, 369 N.E.2d 606; Needham v. Fred's Frozen Foods, 359 N.E.2d 544 (Ind.App.); Atchison v. Archer-Daniels-Midland Co., 360 So.2d 599 (La.App.); Schlenk v. Aerial Contractors, 268 N.W.2d 466 (N.D.); Kottis v. United States Steel Corp., 543 F.2d 22, supra).

Having examined all of the pertinent precedent, we conclude that the "dual capacity" doctrine as it has been applied to permit common-law suits against employers in their capacities as property owners or manufacturers of plant equipment is fundamentally unsound. The Workers' Compensation Law was designed to spread the risk of industrial accidents through the vehicle of insurance coverage and, more specifically, to "provide a swift and sure source of benefits to the injured employee or to the dependents of (a) deceased employee" (O'Rourke v. Long, 41 N.Y.2d 219, 222, 391 N.Y.S.2d 553, ...