Deaney v. Linen Thread Co., A--25

• Decision Date: 07 November 1955
• Docket Number: No. A--25,A--25
• Citation: 118 A.2d 28,19 N.J. 578
• Parties: Charles L. DEANEY, Plaintiff-Respondent, v. The LINEN THREAD CO., Inc., a corporation. Defendant-Appellant, and Board of Review, Division of Employment Security, Department of Labor and Industry, State of New Jersey, Defendant-Respondent.
• Court: New Jersey Supreme Court

Page 578

19 N.J. 578

118 A.2d 28

Charles L. DEANEY, Plaintiff-Respondent, v. The LINEN THREAD CO., Inc., a corporation. Defendant-Appellant and Board of Review, Division of Employment Security, Department of Labor and Industry, State of New Jersey Defendant-Respondent.

No. A--25.

Supreme Court of New Jersey.

Argued Oct. 3, 1955.

Decided Nov. 7, 1955.

Gerald E. Monaghan, Hackensack, for appellant (Morrison, Lloyd & Griggs, Hackensack, attorneys; Gerald E. Monaghan, Hackensack, of counsel).

George J. Miller, Trenton, for respondent Board of Review.

The opinion of the court was delivered by

WILLIAM J. BRENNAN, Jr., J.

The question is whether disability benefits for which an employee is eligible under the Temporary Disability Benefits Law are to be reduced by the amount of old age insurance benefits he is concurrently receiving under Title II of the Federal Social Security Act, 42 U.S.C.A. § 401 et seq.

The Temporary Disability Benefits Law provides protection against wage loss suffered because of inability to work due to illness. Deaney, aged 74, for 18 years an employee of the Linen Thread Co., Inc., was hospitalized in January 1955 for the removal of an eye cataract. The Chief of State Plan Disability Benefits held him to be eligible for disability benefits of $30 weekly, less, however, the federal old age insurance benefits he was concurrently receiving as an eligible individual over 72 years of age. On Deaney's appeal the Board of Review held that he was entitled to the benefits without deduction. The employer sought review in the Superior Court, Appellate Division, under R.R. 4:88--8, and we certified the proceeding here on our own motion.

The Board of Review questions whether the employer is entitled to judicial review when, although given due notice, the company did not appear at the hearing before the Board nor apply for a rehearing pursuant to Board Rule 4.02(d) after the Board announced its disagreement with the holding of the Chief of State Plan Disability Benefits. Under our rule, R.R. 4:88--14, where it is manifest that the interests of justice require, proceedings in lieu of prerogative writ under R.R. 4:88 may be maintained despite the fact that administrative remedies have not been exhausted. The policy of the rule not to entertain a proceeding in advance of the exhaustion of administrative remedies is firmly adhered to in our practice, but an exception is recognized when, as here, the question presented is solely one of law raising an important question of statutory construction. Nolan v. Fitzpatrick, 9 N.J. 477, 89 A.2d 13 (1952).

The Temporary Disability Benefits Law was enacted by L.1948, c. 110, N.J.S.A. 43:21--25 et seq. The last sentence of section 6 of the original act, N.J.S.A. 43:21--30, provided expressly for the reduction of benefits in the amount of any primary insurance benefits being paid to the claimant as federal old age insurance benefits. The sentence read:

'Disability benefits otherwise required hereunder shall be reduced by the amount of any primary insurance benefits which are being paid to such individual under Title II of the Federal Social Security Act, and by the amount of any payments of annuities, pensions or permanent disability benefits or allowances under a policy or program of an employer from whose service he has been retired, in accordance with such regulations as the commission shall prescribe.'

But a 1952 amendment of section 6, L.1952, c. 190, replaced that sentence with a new sentence which provides:

'Disability benefits otherwise required hereunder shall be reduced by the amount paid concurrently under any governmental or private retirement, pension or permanent disability benefit of allowance program to which his most recent employer contributed on his behalf.'

Appellant argues that, although mention is not made in the new sentence of federal old age insurance benefits, they are included in 'any governmental * * * retirement, pension or permanent disability benefit or allowance program to which his most recent employer contributed on his behalf.'

It is clear that both new and old provisions have in view the older worker who is supplementing his old age insurance benefits, or his retirement benefits from an employer from whose service he was retired, with earnings from new employment. Old age benefits are not payable until age 65, and up to age 72 and individual may earn up to $1,200 annually without diminution of those benefits, and at age 72 and thereafter receives full benefits however much he may earn. 42 U.S.C.A. §§ 402, 403(e)(1), 403(e)(2)(C). Retirement from private or public employment may be at different ages, according to the provisions of the employer's retirement plan (a legislative plan in the case of public employment), and the benefits may take any of several forms. The more usual forms, retirement, pension, permanent disability or allowance, are mentioned in the new and the old sentences of section 6.

Obviously the federal old age insurance benefits program is not a 'permanent disability' program; and we entertain great doubt that, in precise nomenclature, it can be properly classified as either a 'retirement,' a 'pension,' or an 'allowance' program. It does not provide benefits for long service in a particular employment, or with a single employer, but is, as is explicit in its name, an insurance program. Employment is its basis, but employment without regard to any relation of the employee with a particular employer. The benefits are paid from the 'Federal Old Age and Survivors Trust Fund' created on the books of the Treasurer of the United States. The Social Security Act, 42 U.S.C.A. § 401, appropriates to the Fund 'amounts equivalent to 100 per centum of * * * the taxes imposed' by a separate and distinct act, The Federal Insurance Contribution Act, 26 U.S.C.A. § 1400 et seq., Internal Revenue Code of 1939, now § 3101 et seq., of the Internal Revenue Code of 1954. There is imposed on the income from wages of every individual employee covered by the act a tax, deductible by his employer for the time being, and there is imposed on the employer an excise tax measured by the wages he pays, not to particular employees, but to the aggregate of employees in his employ in a calendar year. Internal Revenue Code of 1954, §§ 3102, 3111. The benefits paid out to an employee after age 65 are thus the proceeds of the insurance purchased in that way during his employment before reaching that age. The distinction between them and the benefits received for long service with a particular employer is apparent.

Our task here, however, is to determine whether the Legislature had the distinction in mind in substituting the new for the old provision of section 6. It is abundantly clear that the old provisions made the distinction, for it dealt separately with old age insurance benefits and retirement benefits; reductions in the amount of temporary disability benefits were to be made in (1) the amount of any primary insurance benefits which are being paid to such individual under Title II of the Federal Social Security Act,' and (2) in the 'amount of any payments of annuities, pensions or permanent disability benefits or allowances under a policy or program of an employer (the word is not qualified and necessarily means either a private employer or a governmental employer) from whose service he has been retired.'

In reaching the meaning of the amendatory language 'the court must look to the prior law,' Hasbrouck Heights Hospital Association v. Borough of Hasbrouck Heights, 15 N.J. 447, 453, 105 A.2d 521, 524 (1954), and of controlling significance here, in our view, is the fact that the Legislature carried into the amendment substantially the same words from the prior law which were solely descriptive of employer retirement benefits, viz., 'retirement, pension or permanent disability benefit or allowance program.' This is strong evidence that the Legislature intended the amendment to apply only to benefits under employer retirement programs and to exclude old age insurance benefits. In that view, the prescription in the amendment of 'any governmental or private' program simply makes more explicit what was true of the prior law, that is, that benefits under retirement programs of both governmental and private employers were included.

The amended statute now limits reductions, however, to benefits concurrently paid to the claimant under programs 'to which his most recent employer contributed on his behalf.' Under the prior law reductions were made without regard to whether such contributions were being made by the claimant's most recent employer; the amount of any pension being received, for example by a retired policeman or a retired railroad engineer who took a job with a manufacturer, would reduce the temporary disability benefit to which he would be entitled if he suffered a disability while in the manufacturer's employ. Under the amendment that would probably not be the case, as it is hardly likely that the manufacturer, the claimant's 'most recent employer,' would be contributing to a municipal or railroad pension. Except for the rare situation of the claimant who has returned to the service of his former employer after being retired by him, it is difficult to think of a retirement benefit which will qualify for reduction under the amendment. But does this mean that the amendment must be interpreted to embrace old age insurance benefits, or be meaningless? We think not. We will not impute to the Legislature the incongruous procedure of dropping the express reference to the Social Security Act from the old law only to say the same thing indirectly and obscurely in the new. Rather, the substantial contraction of employer retirement benefits which now result in reductions under the amendment is itself cogent evidence that the Legislature was drastically limiting the benefits occasioning reductions, and as part of that plan...