Home Indemnity Company of New York v. Poladian

• Decision Date: 27 August 1959
• Docket Number: No. 7871.,7871.
• Citation: 270 F.2d 156
• Parties: HOME INDEMNITY COMPANY OF NEW YORK and Louis E. Stultz, Appellants, v. J. H. POLADIAN and J. Harry Poladian, Jr., t/a J. H. Poladian & Son, Appellees.
• Court: U.S. Court of Appeals — Fourth Circuit

270 F.2d 156 (1959)

HOME INDEMNITY COMPANY OF NEW YORK and Louis E. Stultz, Appellants, v. J. H. POLADIAN and J. Harry Poladian, Jr., t/a J. H. Poladian & Son, Appellees.

No. 7871.

United States Court of Appeals Fourth Circuit.

Argued June 10, 1959.

Decided August 27, 1959.

James C. Gregg, Washington, D. C. (Hugh Lynch, Jr., and Macleay, Lynch & Macdonald, Washington, D. C., on the brief), for appellant.

Charles H. Duff, Arlington, Va. (Jesse, Phillips, Klinge & Kendrick, Arlington, Va., on the brief), for appellees.

Before SOBELOFF, Chief Judge, and SOPER and HAYNSWORTH, Circuit Judges.

SOBELOFF, Chief Judge.

Divergent provisions in the Workmen's Compensation laws of Virginia and the District of Columbia give rise to this controversy. Under the Virginia law¹ a general contractor is deemed the statutory employer of his subcontractor's employees; he is obligated to provide compensation insurance for them and is immune from common law actions by them for negligence. In the District of Columbia, where the Longshoremen's and Harbor Workers' Act² is applicable, there is no such provision. There the general contractor is a stranger to the subcontractor's employees, is not required to insure them, and remains liable to common law suits for negligence.

Louis E. Stultz, whose home is in the District of Columbia and who was employed by William Seltzer, a cement contractor also residing in the District, was injured while working as a cement finisher on an apartment building under construction in Alexandria, Virginia. Seltzer had taken a subcontract from J. H. Poladian & Son, a partnership doing business in Virginia and whose members reside there. The Poladian concern was both owner and general contractor, and the construction work was a part of Poladian's usual trade, business or occupation.

Subcontractor Seltzer had provided his employees with workmen's compensation insurance in the District of Columbia and the general contractor, as statutory employer, had done the same pursuant to the laws of Virginia. Thus there was provision in both jurisdictions to compensate the injured workman. Stultz elected to accept an award in the District of Columbia. Later, his direct employer's insurance carrier, The Home Indemnity Company of New York, as assignee, brought this common law action in the United States District Court for the Eastern District of Virginia against the general contractor. The sum claimed was $50,000, from which the plaintiff insurance company sought to reimburse itself for the compensation and medical expenses it had paid and would be required to pay. Any excess recovery was to go to the injured man.

The defendants claiming that the remedies provided by the Virginia statute are exclusive³ and that they are immune from common law actions, interposed a motion for summary judgment which the court granted.

In this Court the plaintiff insurance carrier denies that the Virginia statute is controlling. It stresses that Stultz entered into his contract of employment with Seltzer in the District of Columbia, and that compensation was awarded there. The District of Columbia law, it is therefore claimed, determines not only the employer-employee relationship between Seltzer and Stultz, but also whether there is a right of recovery against Poladian. The plaintiff concedes that as the accident happened in Virginia the law of that state is relevant, but asserts that that law governs "only the substantive aspects of the claim," explaining that it means thereby such questions as what constitutes negligence. The plaintiff insists, however, that the question of Poladian's liability in a third party action must be answered not according to Virginia, but District of Columbia, law.

This curiously restrictive definition of the "substantive aspects of the claim" is not warranted. It seems to us that nothing could be more directly related to substance than the question of liability. There are no Virginia or other cases recognizing the distinction contended for by the plaintiff. The well established general rule is that in an action for negligence the law of the locality where the negligence occurred controls. Ordinarily, in determining whether an actionable tort has been committed in Virginia we look to its laws, for it is within Virginia's competence to take away the common law right of action if it deems it more just to award fixed compensation irrespective of negligence. In three Federal Circuits this rule has been applied in bar of common law actions in situations similar to this. Jonathan Woodner Co. v. Mather, 1954, 93 U.S. App.D.C. 234, 210 F.2d 868, certiorari denied 1954, 348 U.S. 824, 75 S.Ct. 39, 99 L.Ed. 650; Williamson v. Weyerhaeuser Timber Co., 9 Cir., 1955, 221 F. 2d 5; Bagnel v. Springfield Sand & Tile Co., 1 Cir., 1944, 144 F.2d 65 certiorari denied 1944, 323 U.S. 735, 65 S.Ct. 72, 89 L.Ed. 589.

Directly in point is Restatement, Conflict of Laws, § 401 (1948 Supp.) which declares:

"If a cause of action in tort or an action for wrongful death either against the employer or against a third person has been abolished by a Workmen\'s Compensation Act of the place of wrong, no action can be maintained for such tort or wrongful death in any State."

Opposed to the decisions mentioned above the plaintiff cites Wilson v. Faull, 1957, 45 N.J.Super. 555, 133 A.2d 695, but on examination it readily appears that that case is likewise unavailing to the plaintiff. In Wilson, the defendant general contractor, the subcontractor and the employee-plaintiff all lived in New Jersey. While the injury occurred on a project in Pennsylvania, the contracts between the "general" and the "sub", and the "sub" and the plaintiff, were executed in New Jersey. Under the Pennsylvania statute a suit against the general contractor could not be maintained, but such a suit was permitted by the New Jersey law.

In its opinion, the court first pointed out that, for purposes of choosing a compensation remedy in an interstate situation, the theories most commonly used are those of tort, contract and employment relation. After discussing the features of each theory, the employment relationships were declared the most important element to consider. Applying that theory to the facts of the tort action before it, the court concluded that, since all the parties resided and contracted in New Jersey, that state had the more significant contacts with the employer-employee relationship and its law should therefore control in that instance, even though the accident happened in Pennsylvania.

However, to the extent that the Wilson case conflicts with those decided by the three circuits, supra, the present case does not require us to choose between them. Under either rationale the...