Commissioners of State Ins. Fund v. Crown
| Citation | 63 Misc.2d 552,312 N.Y.S.2d 954 |
| Parties | COMMISSIONERS OF the STATE INSURANCE FUND, Plaintiffs, v. Richard CROWN, Paul O'Dwyer and Oscar Bernstien, practicing law under the firm name and style of O'Dwyer & Bernstien, Mimi Lepper and Aetna Insurance Company, Defendants. |
| Decision Date | 10 April 1970 |
| Court | New York City Court |
Herbert Lasky, New York City, for plaintiffs.
O'Dwyer & Bernstien, New York City, for defendants Crown, O'Dwyer and Bernstien.
Lynch & Kelly, New York City, for defendants Lepper and Aetna Insurance Co.
Motions 23, 135 and 136 are considered together.
Plaintiff moves for summary judgment and for a dismissal of defendants' counterclaims. Defendants Crown, O'Dwyer and Bernstien move for summary judgment and for an order of preclusion.
The essential facts are not in dispute. Richard Crown as a result of injuries sustained in his employment received Workmen's Compensation benefits from plaintiff, his company's compensation carrier. He also retained O'Dwyer & Bernstien as his attorneys to bring a third party action for negligence against Mimi Lepper who was covered by defendant Aetna Insurance Company. After trial in the Supreme Court, Kings County, the jury on November 13, 1967, brought in a verdict in favor of Crown for the sum of $25,000.00. Mimi Lepper appealed to the Appellate Division and on June 18, 1969, the judgment was affirmed (32 A.D.2d 889, 302 N.Y.S.2d 745). The judgment was thereafter paid by Aetna for the full amount including costs, and interest from the date of entry of judgment.
The plaintiff claims that it paid Workmen's Compensation benefits to Crown in the amount of $2943.60 and the sum of $2163.47 for medical treatment making in all the sum of $5107.07. Under Sec. 29, Subd. 1, plaintiff had a lien for this amount.
In July 1969, after the checks in payment of the judgment were received by O'Dwyer and Bernstien, they questioned the amount of the lien but then decided that it would be more expedient to dispose of the matter by paying the face amount of the lien. They thereupon issued their check on July 21, 1969 to the plaintiff for the sum of $5107.07, the full amount of the lien. The check bore the inscription, 'Re: Richard Crown--In full payment of Lien and any and all claims.' The plaintiff in due course received the proceeds of this check.
Some time later it brought this action to recover interest on its lien of $5107.07. Plaintiff claims it is entitled to the interest from the date of entry of the judgment in the third party action.
Under Workmen's Compensation Law, Sec. 29, Subd. 1, where an injured employee brings a third party action against the one responsible for the compensable injuries the fund or carrier '* * * shall have a lien on the proceeds of any recovery * * * whether by judgment, settlement or otherwise, after the deduction of the reasonable and necessary expenditures including attorney's fees, incurred in effecting such recovery, to the extent of the total amount of compensation * * * and the expenses for medical treatment paid * * * and to such extent such recovery shall be deemed for the benefit of such fund * * * or carrier.'
The remarkable thing about this action is that there has never been one like it recorded in this State. It would be fair to assume that this situation has previously arisen in thousands of instances, yet no demand for, nor indeed a payment of, interest has ever been made. I have found no cases on this subject in New York and none has been called to my attention. One wonders why this has escaped previous attention.
Interest is neither due nor payable as a matter of right. On the contrary 'The general rule is that before interest can be awarded in any case it must be by virtue of contract, express or implied, or by virtue of some statute, or on account of the default of the party liable to pay, in which case it is allowed as damages for the default.' (32 N.Y.Juris. p. 18). See also New York State Thruway Auth. v. Hurd, 25 N.Y.2d 150, 303 N.Y.S.2d 51, 250 N.E.2d 335.
There is, of course, no contract, express or implied authorizing the payment of interest. We must look therefore to the statute itself.
Sec. 29 of the Workmen's Compensation Law merely provides for the lien. It does not provide for the lien and interest. There are some statutes, however, which do provide for 'a lien for the principal and interest.' (See Lien Law, Sec. 3). Sec. 29 has metamorphosed to its present form via a series of legislative changes over a period of many years. Not once, however, did the Legislature take up for consideration the question of interest on the lien. The intent of this section was clearly to reimburse the one making the compensation payments. It was obviously not intended to provide an increment to the fund or carrier.
In the Matter of Curtin v. City of New York, 287 N.Y. 338, 39 N.E.2d 903, the Court in referring to the lien portion of Sec. 29 said:
'In that provision the Legislature has, in plain words, given recognition to the principle that where one person without fault incurs expenses in creating a fund which inures to the benefit of another, he should be reimbursed from that fund for the expenses so incurred.'
Casualty Co. of America v. Swett El. L. & P. Co., 174 App.Div. 825, 162 N.Y.S. 107, involved an action brought under the then existing Sec. 29 which authorized an election of remedies. The widow of a deceased employee elected to take compensation under the Workmen's Compensation Law and thereby assigned the cause of action against the third party to the insurance carrier. Upon the trial of the third party action, the trial judge limited the recovery to the amount that had been paid by the carrier to the time of the commencement of the action. The Appellate Division disagreed with the Lower Court. In reversing, the Court said (p. 829, 162 N.Y.S. p. 110):
'Our suggestion is that the damages, when recovered, shall be regarded by the plaintiff as impressed with the trust to reimburse it for whatever moneys it may be called upon to pay to the widow and children, and, if in the end there shall be a surplus, to account for that surplus to the proper legal representatives of the deceased.'
U.S.F. & G. Co. v. N.Y. Railways Co., 93 Misc. 118, 156 N.Y.S. 615, was also an action brought under the then existing Sec. 29 which permitted an injured employee to make an election. The employee having elected to take compensation under the Workmen's Compensation Law, his third party claim was accordingly assigned to the plaintiff who brought an action against this defendant. The Appellate Term in construing Sec. 29 said (pp. 121--122, 156 N.Y.S. p. 617):
'The general purpose of the statute is to establish a system of state insurance of employe § engaged in hazardous employment, and to provide in connection therewith a system of indemnification of the state. That it does not contemplate an accumulation of surplus profits to be derived from assignments of causes of action for personal injuries is made evident by an examination of the provisions of sections 95 to 97, both inclusive.
And again, at page 123, 156 N.Y.S. at page 618, the Court said:
'Construing Section 29 in the...
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