Danek v. Hommer

• Decision Date: 27 October 1953
• Docket Number: No. A--488,A--488
• Citation: 100 A.2d 198,28 N.J.Super. 68
• Parties: DANEK v. HOMMER et al. (NEW JERSEY MFRS. CAS. INS. CO., third-party defendant asrespondent). . Appellate Division
• Court: New Jersey Superior Court — Appellate Division

Page 68

28 N.J.Super. 68

100 A.2d 198

DANEK v. HOMMER et al. (NEW JERSEY MFRS. CAS. INS. CO., third-party

defendant asrespondent).

No. A--488.

Superior Court of New Jersey Appellate Division.

Argued Oct. 5, 1953.

Decided Oct. 27, 1953.

Joseph Weintraub, Newark, for appellants (McGlynn, Weintraub & Stein, Newark, for third-party plaintiffs as appellants).

Robert Shaw, Newark, for respondent (Shaw, Hughes & Pindar, Newark, for third-party defendant as respondent).

Before Judges EASTWOOD, JAYNE and FRANCIS.

The opinion of the court was delivered by

FRANCIS, J.A.D.

Appellants Julius J. Hommer and Katheryn Hommer, trading as Hommer Tool Manufacturing Co., sued respondent insurance carrier to recover counsel fees and costs incurred in defending a damage action brought against them, which action, they claimed, respondent was obligated to defend under certain policies of insurance. The trial court concluded that the action in question was not within the coverage extended by the policies and consequently the carrier had no such duty. Accordingly, an adverse summary judgment was entered.

The Hommers operated a factory at 45 McWhorter Street, Newark, N.J. In connection therewith, respondent insurance carrier issued two policies of insurance to them, one a combination standard workmen's compensation and employers liability insurance policy, and the other a public liability policy. In view of the disposition of the matter, as hereinafter set forth, it is not necessary to consider the public liability policy.

The combination insurance contract covered the Hommers' liability as employers to employees under the Workmen's Compensation Act, R.S. 34:15--1 et seq., N.J.S.A., and also their common law liability on account of injuries to their employees. More specifically with respect to the latter undertaking, the carrier agreed 'as respects personal injuries sustained by employees':

'One(b). To indemnify this employer against loss by reason of the liability imposed upon him by law for damages On account of such injuries to such of said employees as are legally employed * * *.'

By indorsement it stipulated also:

'To indemnify this employer against loss by reason of the liability imposed upon him by law for damages on account of disease, including death at any time resulting therefrom, suffered by any of his employees * * *, whether regular or casual, arising out of a business operation of this employer covered by this policy * * *.'

The company further agreed:

'Three. To defend, in the name and on behalf of this employer, Any suits or other proceedings which may at any time be instituted against him On account of such injuries, including suits or other proceedings Alleging such injuries and Demanding damages or Compensation therefor, although such suits, other proceedings, allegations or demands are Wholly groundless, false or fraudulent.'

Appellants had one Anna Danek in their employ in the business described in the policy; she was a machine operator. On October 27, 1947, she suffered a compensable accident when her right hand was caught in the machine on which she was working. The hand was amputated. Thereafter she filed a petition for compensation under the Workmen's Compensation Act and the respondent paid her claim.

Subsequently, on August 25, 1950, John Danek, the husband of Anna, instituted a common law action against the Hommers. The complaint charged them with negligence in failing to furnish her with a reasonably safe place in which to work and in failing to have the machine on which she worked equipped with the necessary guards and protective devices, as the result of which she sustained the amputation of her hand. The husband then claimed, among other things, that because of his wife's injury, he had lost her society and services, and he sought damages therefor.

The suit papers were forwarded to the carrier which refused to defend. Appellants engaged personal counsel and, after obtaining leave of the court, filed a third-party complaint against respondent seeking a declaration of its duty to defend the negligence action and to pay the judgment, if Danek was successful.

Various motions and counter-motions were made and the parties agreed the Hommers' motion for summary judgment against Danek should be disposed of first, it being predicated on the ground that the sole remedy for Mrs. Danek's injuries was under the Workmen's Compensation Act and that this act had been substituted not only for any common law tort action which she might have had previous to its enactment but for the Per quod claim of her husband as well. The motion was granted (Danek v. Hommer, 14 N.J.Super. 607, 82 A.2d 659 (Cty.Ct.1951)), and the trial court was affirmed by the Supreme Court, 9 N.J. 56, 87 A.2d 5 (1952), the Chief Justice dissenting.

Danek's action appears to be the first time the question was raised squarely as to whether an award of workmen's compensation to a wife barred a Per quod action of the husband against her employer based upon a charge of negligence. Undoubtedly it was fostered by the recent decision of the Court of Appeals of the District of Columbia Circuit in Hitaffer v. Co., 87 U.S.App.D.C. 57, 183 F.2d 811, 23 A.L.R.2d 1366 (decided May 29, 1950, about three months earlier), certiorari denied 340 U.S. 852 71 S.Ct. 80, 95 L.Ed. 624 (1950). That court declared that the Federal Longshoremen's & Harbor Workers Compensation Act, 33 U.S.C.A. §§ 901, 905, the language of which with respect to substitution of remedies is very much like our own Compensation Act, did not bar the Per quod claim of a wife. The theory of the preservation of the claim was that consortium is an independent right growing out of the marital relation and not subject to extinction unless through express legislative declaration or clear repugnancy to the compensation legislation. Substantially the same view was the theme of the dissent in our Supreme Court. However, the majority of the court felt that even though the precise problem was making its first appearance in New Jersey, it was not new or novel because the language of the Workmen's Compensation Act and the decisions construing it had made clear that the compensation benefits supplied were in subtitution for the preexisting common law remedy for torts of the character involved.

Further research reveals the following earlier and later cases which are specifically opposed to the Hitaffer rule: McVey v. Chesapeake & Potomac Telephone Co., 103 W.Va. 519, 138 S.E. 97 (Sup.Ct.App.1927); Holder v. Elms Hotel Co., 338 Mo. 857, 92 S.W.2d 620, 104 A.L.R. 339 (Sup.Ct.1936); Bevis v. Armco Steel Corp., 156 Ohio St 295, 102 N.E.2d 444 (Sup.Ct.1951); Nelson v. A. M. Lockett & Co., 206 Okl. 334, 243 P.2d 719 (Sup.Ct.1952).

Our discussion of the principle of law, which was debated in the litigation between Danek and the Hommers, is not engaged in to revive or reconsider that controversy. We regard that as set at rest by the determination of the Supreme Court. It is engaged in simply to note the state of the law in New Jersey and the conflict elsewhere on the subject, at the time of institution of the Danek common law action.

With this background, we are brought to the consideration of the duty of the carrier to defend the common law action. The trial court seems to have concluded that since the policy protected the assured against the liability imposed by law and since the law, as established in the case by the Supreme Court, imposed no such liability, because Article Two of the act substituted compensation for the entire common law remedy in the particular case, no coverage existed for the risk presented by the complaint and therefore there was no duty to defend even as a groundless suit. Such a view, in our judgment, overlooks the coverage extended under paragraph one(b) and produces a result not compatible with the security provided by the insurer's contract.

When the insurer agreed to indemnify the Hommers 'against loss by reason of the liability imposed * * * by law for damages on account of' injuries sustained by employees, and agreed 'to defend * * * Any suits on account of such injuries, including suits * * * alleging such injuries * * * although such suits * * * are Wholly groundless, false or fraudulent,' what was the extent of the obligation assumed?

On the common law aspect of the coverage, that is for the liability imposed by law, obviously the protection intended was against judgments arising out of common law negligence actions emanating from injuries to, or occupational diseases suffered by, employees, to the extent that such liability is not within the scope of the Workmen's Compensation Act. Cf. N.J.S.A. 34:15--31.

Manifestly there is no right of recovery for loss of consortium under Article II of the Workmen's Compensation Act. And plainly no such risk was contemplated under paragraph One (a) of the policy which covered the employer's liability under that act. If the right to recover for loss of consortium survived the enactment of the Workmen's Compensation Act, it would have to be enforced by a common law action in tort predicated upon the negligence of the employer in injuring the wife. To determine if coverage exists under the policy for the risk of a judgment in such an action, we must pass over into the language of paragraph One (b) and decide whether a judgment arising out of the Per quod claim would constitute a liability imposed by law within its contemplation.

In connection with the coverage for negligence actions, a preliminary question presents itself as to whether the Per quod claim of a husband is included. For example, if a wife sued at law as a casual employee or for damages resulting from non-compensable occupational disease, which was produced by the negligence of the employer, would the husband's consortium claim be insured against? That it would be covered has long been settled. The decisive words appear in the undertaking of the carrier to...