Caputo v. Best Foods

• Decision Date: 17 January 1955
• Docket Number: No. A--66,A--66
• Parties: Joseph CAPUTO, Petitioner-Respondent, v. The BEST FOODS, Inc., Defendant-Appellant.
• Court: New Jersey Supreme Court

Page 259

17 N.J. 259

111 A.2d 261

Joseph CAPUTO, Petitioner-Respondent, v. The BEST FOODS, Inc., Defendant-Appellant.

No. A--66.

Supreme Court of New Jersey.

Argued Dec. 6, 13, 1954.

Decided Jan. 17, 1955.

Isidor Kalisch, Newark, for appellant (James J. Skeffington, Newark, attorney).

John A. Laird, Newark, for respondent (David L. Maltz, Jersey City, attorney).

The opinion of the court was delivered by

HEHER, J.

The questions here concern the statutory allowances for the services of counsel and reimbursement for 'reparative payments' after the rendering of the prescribed compensation for total and permanent disability, where the workman's disabling injury was the result of a third person's negligence, and the recovery in tort from the third-party tortfeasor exceeded the employer's liability under the Workmen's Compensation Act.

The consequence of the injury was total blindness. The accident occurred September 1, 1949. The employer acknowledged liability under the Compensation Act and, by its insurance carrier, Travelers Insurance Company, commenced payment of compensation at the established weekly rate and the provision of medical service which aggregated $3,000 for the former and $3,829.50 for the latter, in all $6,829.50, when the third-party tortfeasor, American Chain & Cable Co., settled the workman's tort action for $60,000. Under their agreement with the workman, Messrs. Milton, McNulty & Augelli, the attorneys who prosecuted the tort action to a mutually satisfactory settlement, were paid a fee of $10,000 for their services; and the employer's insurance carrier was reimbursed for the compensation paid and medical charges incurred.

Seeking the 'protection of a judgment,' the workman, notwithstanding the employer's assumption of its statutory obligation, brought a proceeding for compensation on December 14, 1951. The employer answered that there had been full compliance with the mandate of the Compensation Act until the settlement of the third-party tort action for an amount in excess of the 'compensation value of this case and no compensation is forthcoming from the respondent to petitioner.' There was judgment for 'total temporary disability, as paid, or 89 weeks,' and '100% Permanent total disability or 450 weeks at $25 per week, amounting to $11,250,' and a direction that 'at the expiration of the 450 week period, that is on and after December 15, 1959, payments shall continue in accordance with the provisions of R.S. 34:15--12, N.J.S.A. subject to such physical or educational rehabilitation as may be ordered by the Rehabilitation Commission and subject to periodic modifications as provided' by the act. An attorney's fee in that proceeding was refused, as not permissible under R.S. 34:15--64, N.J.S.A.; and there was no apportionment of the expenses incurred in obtaining the third-party settlement. On the workman's appeal, the Hudson County Court affirmed the judgment, 27 N.J.Super. 571, 99 A.2d 668; and from the affirming judgment cross-appeals were taken.

The Appellate Division modified the judgment to allow the employer 'reimbursement of its compensation liability in the amount of $17,304.50, less 33 1/3%,' or $5,768.16, deemed payable by the employer to the workman for the services of his attorneys in the third-party recovery under the peremptory command of R.S. 34:15--40, as amended by L.1951, c. 169, p. 646, N.J.S.A., even though the fee actually paid by the workman to his attorneys was at the rate of but one-sixth of the recovery. It was also adjudged, apropos of the subject matter of the employer's cross-appeal, that upon payment of the sum thus allowed the employer's liability for 'further compensation payments for the statutory period of 450 weeks' should cease, 'reserving to the petitioner, however, the right to make further claim not herein adjudicated for rehabilitation compensation payments by virtue of R.S. 34:15--12 (N.J.S.A.), upon the termination of the 450 week period.' And the workman's counsel was given leave to apply to the County Court for 'counsel fees for work done before' the Compensation Division, the County Court and the Appellate Division, 'in accordance with R.S. 34:15--64 and 66 (N.J.S.A.).' The opinion leading to this judgment is reported in 30 N.J.Super. 552, 105 A.2d 445 (1954).

The case is here by certification at the instance of the employer.

The basic contention is that R.S. 34:15--40, as amended in 1951, N.J.S.A., 'does not authorize the tortfeasor to withhold One-third of the employer's exposure to compensation payment, but only Up to one-third of the compensation theretofore paid and medical expenses incurred.' The employer would limit the assessment of the attorney's fee to one-sixth of $6,829.50, the amount actually paid in the reimbursement of compensation payments made and medical expenses incurred when the tort settlement was accomplished, or $1,138.25.

We are concerned here not with what the Legislature meant to say, but the meaning of what it did say. The reason and spirit of the correlated symbols of expression prevails over the strict letter. Once we have grasped the genius of the regulatory measure, we are in a fair way to assay the particular terms used to fulfil the legislative design. Here, the animating principle is beyond a peradventure the visitation upon the employer of his pro rata share of the burden of realizing the benefit of his statutory right of subrogation. Were there no third-party recovery, the primary obligation of compensation for the attendant disability would remain the employer's; and it would be manifestly inequitable and unjust to lay upon the injured employee the cost of a recovery that under the statute inured to the employer, not alone the reimbursement of payments actually made but also the extinguishment of the whole of the continuing liability. There can be no doubt that such is the principle of the statutory policy.

It is not 'the words of the law, but the internal sense of it that makes the law.' Eyston v. Studd, 2 Plowd. 459; 75 Eng.Repr. 695 (1574). The reason of the law, I.e., the motive which led to the making of it, is one of the most certain means of establishing the true sense of the words. Valenti v. Board of Review of Unemployment Compensation Commission, 4 N.J. 287, 72 A.2d 516 (1950); In re Roche's Estate, 16 N.J. 579, 109 A.2d 655 (1954). In early English language usage, this was deemed the construction and application of the law according to the 'equity of the statute'; but it will be seen from the case cited that, as is true of the present-day canons of interpretation, it was from the beginning a rule in aid of the legislative intention within the four corners of the expression, considered in the context of its socio-economic setting, I.e., the sense and reason of the law. Sutherland, Statutory Construction, (3d ed.), sec. 6001 et seq. The intention emerges from the spirit and policy of the statute rather than the literal sense of particular terms.

The statute under review, R.S. 34:15--40, prior to the amendment of 1951, N.J.S.A., was read in Savitt v. L. & F. Construction Co., 124 N.J.L. 173, 10 A.2d 728 (E. & A.1940), as placing upon the employer the 'burden of the counsel fee payable for service rendered in the third-party action to his ultimate profit,' and to that end the term 'reimbursement' had reference to 'the quantum of the employer's statutory liability for compensation, in the sense of indemnification, rather than the payments actually made in satisfaction Pro tanto of that obligation,' and thus a 'limitation of the fee for the benefit of the employer,' and so were it permissible to deduct the 'statutory percentage upon the full amount of the recovery had from the third party, where it exceeds the statutory compensation due the employee from the employer,' the employee would be unduly advantaged. And it was pointed out that the adoption of the employer's contention that the fee was calculable on the sum actually paid 'in release or in judgment' would put a premium on delay in the payment of the compensation due from the employer under the act, and thereby subvert the outstanding legislative policy. It was considered that the purpose of the statute then was the correction of 'a manifest and unintentional injustice in the earlier statute, under which the injured employee could recover substantially less compensation where there was a recovery from a third-party tortfeasor than where there was none.'

This case was followed by McClare v. Tasty Baking Co., 127 N.J.L. 492, 23 A.2d 275 (Sup.Ct.1941), affirmed 129 N.J.L. 98, 28 A.2d 118 (E. & A.1942), holding that in according the employer the benefit of the third-party recovery, the attorney's fee chargeable to him, as so measured, was deductible from the Quantum of the thirdparty recovery, and the remainder, less the allowance for medical expenses, credited to the employer in assessing his liability under the Compensation Act. And in the later case of Firemen's Fund Indemnity Co. v. Batts, 11 N.J.Super. 242, 78 A.2d 293 (App.Div.1951), where the third-party recovery was far in excess of the liability for compensation, the Appellate Division, in an opinion written by Judge Jacobs, held that 'as we read the express terms of R.S. 34:15--40, N.J.S.A., particularly paragraphs (b) and(d), the employer or his insurance carrier, under such circumstances, is entitled to a 'sum equivalent to the medical expenses incurred and the compensation paid,'' citing the McClare case as supporting that view. It was suggested that if by this construction of the statute the employer 'will inequitably receive the benefit of the...