Federal Mut. Liability Ins. Co. v. Locke, 412.

• Decision Date: 04 August 1932
• Docket Number: No. 412.,412.
• Parties: FEDERAL MUT. LIABILITY INS. CO. v. LOCKE, Deputy Com'r.
• Court: U.S. Court of Appeals — Second Circuit

60 F.2d 895 (1932)

FEDERAL MUT. LIABILITY INS. CO. v. LOCKE, Deputy Com'r.

No. 412.

Circuit Court of Appeals, Second Circuit.

August 4, 1932.

Alexander, Ash & Jones, of New York City (Lawson R. Jones and Edward Ash, both of New York City, of counsel), for appellant.

Howard W. Ameli, U. S. Atty., of Brooklyn, N. Y. (Herbert H. Kellogg and George H. Beaubian, Asst. U. S. Attys., both of Brooklyn, N. Y., of counsel), for appellee.

Kirlin, Campbell, Hickox, Keating & McGrann, of New York City (Vernon S. Jones and Raymond Parmer, both of New York City, of counsel), for Bay Ridge Operating Co., as amicus curiæ.

Before L. HAND, AUGUSTUS N. HAND, and CHASE, Circuit Judges.

AUGUSTUS N. HAND, Circuit Judge.

This appeal is from a decree of the District Court dismissing the bill of complaint in a suit brought to review a decision of the deputy commissioner of the United States Employees' Compensation Commission who had made a compensation order directing payment of $1,000 to the Treasurer of the United States pursuant to section 44 (c) (1) of the Longshoremen's and Harbor Workers' Compensation Act, 33 USCA § 944 (c) (1).

On November 9, 1927, Marcel Deveau received fatal injuries while in the employ of Russell Dry Docks, Inc. He was survived by his widow, Gertie Deveau, who was dependent upon him for support. His employer was insured as to workmen's compensation by the complainant Federal Mutual Liability Insurance Company, termed in the statute the "carrier."

The widow filed with the deputy commissioner notice of an election to pursue her remedy against Cornell Steamboat Company, the third party which had caused Deveau's death. She recovered a judgment against Cornell Steamboat Company that was some $3,600 in excess of the maximum amount she could have obtained under the act. After this judgment was paid, the deputy commissioner made an order under date of September 16, 1929, providing that the employer and its carrier pay to the Treasurer of the United States $1,000, on the ground that no persons were entitled to compensation under the act and that in such a case that sum was so payable under section 44. It is the validity of this order that is now before us.

Section 44 of the act (33 USCA § 944) established in the Treasury a special fund for the purpose of making payments under section 8 (f) and (g), of the act (33 USCA § 908 (f,g), in certain specified cases. This fund was to be made up of fines and penalties collected under the act and the items of $1,000 which each employer must pay under section 44 (c) (1) "as compensation for the death of an employee * * * where the deputy commissioner determines that there is no person entitled under this chapter to compensation for such death." In the present case the deputy commissioner made such a finding, though Deveau left a widow who was entitled to compensation when his death occurred. Was the finding that there was no person entitled to compensation justified under a fair reading of the statute?

The finding was made on the theory that after the judgment against Cornell Steamboat Company was paid there was then no person entitled to compensation. Yet it seems clear that the words of section 44 (c) (1) requiring the payment of $1,000 into the special fund where the deputy commissioner determines "that there is no person entitled * * * to compensation" for the death of the employee relate only to cases where there is no such person when death occurs and when "questions of dependency" are determined under section 9 (f) of the act (33 USCA § 909 (f).

Section 33 of the act (33 USCA § 933) deals with cases where compensation is payable under the act and persons other than the employer are liable for the disability or death of an employee:

(1) Where the person entitled to compensation elects to receive it instead of suing the third person. Section 33 (a), 33 USCA § 933 (a).

(2) Where the person entitled to compensation elects to sue the third person. Section 33 (a).

(3) Where no person is entitled to compensation and $1,000 is payable into the special fund established by section 44 of the act as compensation for death of an employee.

Every case where a third person is affected by the provisions of the act seems to fall into one of the above categories. In (1), where compensation is payable to a dependent, and in (3), where it is payable into the special fund, the statute expressly makes the payment operate as an assignment to the employer of the right to recover damages from the third party. If in either case the employer recovers more than the amount paid out under the Compensation Act to the dependent, or to the special fund, he must distribute the excess, after recouping his expenses, to the dependent or to the legal representative of the deceased, as the case may be. This shows that the provisions which make the payments operate as assignments to the employer are protective provisions to enable him so far as possible to transfer his liability for compensation to the person at fault for the injury. When section 44 (c) (1) required employers to pay $1,000 into the special fund in cases where there was "no person entitled * * * to compensation," it could hardly have referred to a dependent who was entitled to compensation had she chosen to take it, but had received full satisfaction from a third person. To regard the widow of Deveau as a person not "entitled to compensation" merely because she had been paid her damages is to disregard the assignment provisions of section 33 (c) of the act (33 USCA § 933 (c) and to give the employer no benefit from them. After Mrs. Deveau had collected her judgment, no claim remained against Cornell Steamboat Company for the assignment to operate upon. The satisfaction extinguished any claim against Cornell, and there was no basis for imposing a lien, because of the assignment provisions of section 33 (c), against any proceeds passing to Mrs. Deveau. Under section 33 (c) she had been given an election whether to recover compensation from the employer or to "recover damages" against the third person. It could never have been intended to reduce these damages by a compulsory contribution to the special fund.

It is to be observed that section 33 (c) confers upon an employer who pays $1,000 into the fund nothing more than the right of the legal representative of the deceased to recover damages against the third party. It is not like section 29 of the New York Workmen's Compensation Act (Consol. Laws, c. 67), where the employer is given a right to recover from the third person the amount of his payment into a fund in the hands of the state treasurer "in addition to any cause of action by the legal representatives of the deceased." There he can pass on this liability to the ultimate tort-feasor as a separate item. Here he can recover it, if at all, out of the cause of action of the legal representative of the deceased to which he is subrogated. In the case at bar that cause of action has been...