Michigan Mut. Liability Co. v. State

• Decision Date: 31 March 1967
• Docket Number: No. 44851,44851
• Citation: 278 N.Y.S.2d 689,53 Misc.2d 408
• Parties: MICHIGAN MUTUAL LIABILITY COMPANY, Claimant, v. The STATE of New York, Defendant. Claim
• Court: New York Court of Claims

Page 689

278 N.Y.S.2d 689

53 Misc.2d 408

MICHIGAN MUTUAL LIABILITY COMPANY, Claimant, v. The STATE of New York, Defendant.

Claim No. 44851.

Court of Claims of New York.

March 31, 1967.

Hancock, Dorr, Ryan & Shove, Syracuse, by John Varney, Syracuse, of counsel, for claimant.

Louis J. Lefkowitz, Atty. Gen., by William O'Brien, Asst. Atty. Gen., of counsel, for the State.

DECISION

HENRY W. LENGYEL, Judge.

This is a claim filed pursuant to § 29 of the Workmen's Compensation Law to recover payments which the claimant became obligated to pay to the Vocational Rehabilitation Fund and to the Fund for Reopened Cases, pursuant to § 15(9) and § 25-a(3) of the Workmen's Compensation Law. Claimant was the workmen's compensation carrier for Frank Tartaglia, Inc.

One, Michael Mahan, an employee of the claimant's assured, died as a result of injuries sustained in an automobile accident occurring on August 23, 1961. His administratrix instituted an action for wrongful death in the Supreme Court which was terminated prior to any judgment. She also filed a claim against the State of New York for wrongful death which resulted in a judgment in favor of the estate of the decedent on July 17, 1964 in the Court of Claims. Thereafter, as a result of a hearing held on December 22, 1964, the Workmen's Compensation Board ordered the claimant herein, as compensation carrier, to pay $500.00 to the Vocational Rehabilitation Fund and $1,500.00 to the Fund for Reopened Cases, because there were '* * * no persons entitled to compensation.' (The Court of Claims recovery was in excess of the amount which the dependent widow would have been entitled to receive as compensation under the provisions of the Workmen's Compensation Law.) The claimant filed a C--9 with the Board and did not controvert the original Workmen's Compensation claim. No appeal was taken from the Referee's order directing the payments pursuant to the statute as described.

When an insurance carrier becomes obligated to make payment into said funds, Section 29(5) of the Workmen's Compensation Law gives such carrier a cause of action, for the amounts paid, against the third party whose negligence caused the death of the employee.

The State contends that we cannot require it to indemnify the claimant for payments made pursuant to § 29 of the Workmen's Compensation Law. It takes the position that such payments are in the nature of a penalty to which it may not be subjected. See Nephew v. State of New York, 178 Misc. 824, 36 N.Y.S.2d 541; McCandless v. State of New York, 6 Misc.2d 391, 166 N.Y.S.2d 272, mod. in part 3 A.D.2d 600, 162 N.Y.S.2d 570, affd. 4 N.Y.2d 797, 173 N.Y.S.2d 30, 149 N.E.2d 530. However, we do not consider that this question has been as irrevocably and sharply determined as does the State's counsel. As stated in Eifert v. Bush, 51 Misc.2d 500, 501, 273 N.Y.S.2d 557, 558, 'The authority of both McCandless and Nephew is put in doubt by the decision in Snyder v. State of New York (20 A.D.2d 827, 247 N.Y.S.2d 757) * * *.' The Appellate Division stated, in the Snyder decision, that: 'While the Attorney-General argues that under no circumstances can the State ever be held liable for punitive damages, we do not reach that question, as the proof here does not, in any event, warrant an award of punitive damages against the State. * * *.'

It is our opinion that, in a particular situation, the State can be held to liability under statutory provisions even though same are in the nature of penalties and despite the fact that the State is not specifically named in said statute.

Granted the courts have characterized the payment required by said § 29 as a penalty. See Phoenix Ind. Co. v. Staten Island R.T. Ry. Co., 251 N.Y. 127, 167 N.E. 194, affd. 281 U.S. 98, 50 S.Ct. 242, 74 L.Ed. 726; Liberty Mutual Ins. Co. v. George Colon & Co., 260 N.Y. 305, 183 N.E. 506. However, as stated in Sicolo v. Prudential Sav. Bank, 5 N.Y.2d 254, 258, 184 N.Y.S.2d 100, 103, 157 N.E.2d 284, 286. 'It is the intrinsic nature of the exaction that counts * * *.'

We find that, even though the payments required by said §§ 15(9) and 25-a(3), for which the cause of action is created, by said § 29(5), may be in addition to the payments required by the trial court in the third party action, said payments are not '* * * arbitrary exactions, unrelated to actual loss * * *'. Said cause of action has been created as part of the social program embodied in the Workmen's Compensation Law and, in our opinion, the thrust of the statutory requirement is compensatory in nature and not exculpatory. The claim against a third party removes the burden from the one who has not committed a wrong and places it upon the party whose wrongful act has caused the payment into said funds to be required. As stated in New York Jurisprudence Vol. 44 at page 166: 'Since the term is of equivocal meaning and import, 'penalty' may also be used to refer to statutory exactions which are of a purely remedial nature, free of the punitive criminal element, and designed primarily as a safeguard for the protection of private rights * * *.'

We consider that said statute protects the private rights established by the workmen's compensation program; and, although the State is not included by name in the statute, it must by implication be considered subject to the terms of said statute. See, Carey v. Standard Brands, 12 A.D.2d 233, 210 N.Y.S.2d 849, affd. 12 N.Y.2d 855, 236 N.Y.S.2d 962; Peters v. State of New York, 41 Misc.2d 980, 247 N.Y.S.2d 811, affd. 22 A.D.2d 764, 253 N.Y.S.2d 260; Di Santo v. State of New York, 41 Misc.2d 601, 245 N.Y.S.2d 234, affd. 22 A.D.2d 289, 254 N.Y.S.2d 965. Cf. Gould v. State of New York, 196 Misc. 488, 92 N.Y.S.2d 251; Pennbild Realty Company v. People, 208 Misc. 825, 145 N.Y.S.2d 129.

Claimant contends that the State cannot in this action relitigate the question of its negligence; and, further, that the State is collaterally estopped by the decision of the Workmen's Compensation Referee, from litigating the question of whether or not Mr. Mahan's death arose out of or in the course of his employment.

Clearly, the decision of the Court of Claims that the State was negligent and that said negligence was the proximate cause of Mr. Mahan's injuries and death, estops the State from relitigating this identical issue. See, B.R. DeWitt, Inc. v. Albert Hall, 19 N.Y.2d 141, 278 N.Y.S.2d 596, 225 N.E.2d 195, decided 2/21/67; Israel v. Wood Dolson Co., 1 N.Y.2d 116, 151 N.Y.S.2d 1, 134 N.E.2d 97; Hires v. New York Central Railroad, 24 A.D.2d 1075, 265 N.Y.S.2d 895.

However, we do not believe that the decision of the Workmen's Compensation Referee is Res judicata on the question of employment; or, that the State is in any way collaterally estopped from litigating said issue in this trial. It would appear that this question has been so decided by Liberty Mutual Ins. Co. v. George Colon & Co., supra, where it was stated, 260 N.Y. at page 308, 183 N.E. at page 507, that:

'If by denial or defense interposed in the proceedings under the Workmen's Compensation Law the carrier could have defeated the claim of payment to the state treasurer--if the award was invalid-- then the carrier is not entitled to indemnification and has no cause of action against a third party. * * *

'No adjudication can be made that a third party is liable upon a cause of action for indemnification without opportunity afforded to the third party to contest the cause of action asserted against it in regard to every element that enters into that cause of action.'

See also, Indemnity Insurance Co. of North America v. Buckley, 270 App.Div. 603, 62 N.Y.S.2d 112; Department of Taxation and Finance v. City of New York, 272 App.Div. 407, 71 N.Y.S.2d 572.

Claimant seeks to avoid the effect of the Colon case by an ingenious argument. Claimant points out that, if there had been an appeal from the decision of the Referee that Mr. Mahan's death arose out of or in the course of employment, the Attorney General of the State would have had the burden of representing the Workmen's Compensation Board and seeking to legally substantiate such ruling. See, § 23 of the Workmen's Compensation Law. Ergo, claimant contends that the State, through the Attorney General, cannot now contest a...