Roberts v. All Am. Engineering Co.

• Decision Date: 10 December 1968
• Docket Number: No. A--1197,A--1197
• Citation: 104 N.J.Super. 1,248 A.2d 280
• Parties: Mary Evelyn ROBERTS, Petitioner-Respondent, v. ALL AMERICAN ENGINEERING CO., Respondent-Appellant.
• Court: New Jersey Superior Court — Appellate Division

Page 1

104 N.J.Super. 1

248 A.2d 280

Mary Evelyn ROBERTS, Petitioner-Respondent, v. ALL AMERICAN ENGINEERING CO., Respondent-Appellant.

No. A--1197.

Superior Court of New Jersey Appellate Division.

Argued Nov. 12, 1968.

Decided Dec. 10, 1968.

William G. Freeman, Haddonfield, for respondent-appellant (Freeman & Freeman, Haddonfield, attorneys).

Charles J. Casale, Jr., Hasbrouck Heights, for petitioner-respondent (Pellettieri & Rabstein, Trenton, attorneys).

Before Judges CONFORD, KILKENNY and LEONARD.

The opinion of the court was delivered by

LEONARD, J.A.D.

In this workmen's compensation case All American Engineering Co. (hereinafter employer) appeals from an adverse judgment entered against it by the Ocean County Court. This judgment affirmed a determination of the Division which awarded death benefits to petitioner and her children upon petitioner's dependency claim petition.

Petitioner's husband (hereinafter employee), now deceased, had been employed by the employer for a considerable period of time up until December 10, 1957. It is not disputed that while so employed he contracted a seriously disabling occupational disease, retrobular neuritis and polyneuritis, by reason of his constant exposure to massive inhalations of ethylene glycol. This disease totally and permanently disabled him and ultimately caused his death on June 16, 1966.

On April 4, 1958 the employee filed an original compensation petition, and on March 20, 1962 an amended petition for increased disability payments. Judgment was entered in the Division on July 31, 1962, based upon a finding of total and permanent disability, in the sum of $18,000, which represented 450 weeks at $40 per week running through September 6, 1966.

In addition to the compensation claim, the employee, as sole plaintiff, on December 23, 1958 also filed a third-party tort action in the United States District Court against Union Carbide Corporation, the company that manufactured the ethylene glycol. On May 26, 1961 a judgment was entered in that action in favor of plaintiff in the sum of $210,000, and that judgment was affirmed by the Third Circuit Court of Appeals on April 18, 1963.

The Insurance Company of North America, the compensation carrier for the employer was permitted to intervene in the third-party tort action in order to preserve its right of subrogation under N.J.S.A. 34:15--40, and its attorneys associated themselves as 'of counsel' with plaintiff's counsel therein.

Following the affirmance of the judgment in the third-party tort action, the liability insurance carrier for Union Carbide, on July 2, 1963, issued its draft in payment thereof in the sum of $237,883.98. From that sum the Insurance Company of North America first received its actual trial expenses. Then it was reimbursed for the total amount of compensation payments made to the employee as of June 18, 1963, less the statutory one-third counsel fee on the entire amount of its liability. After the deduction of these items, other miscellaneous trial costs and the attorney's fee of the employee's personal counsel, the employee received on July 25, 1963 the net sum of $105,450.89. Thereafter no further compensation payments were made to the employee by the employer or its carrier.

On December 6, 1966 petitioner filed a dependency claim petition on her own behalf as a widow and on behalf of their three children. In answer thereto, the employer asserted, among other things, that under the circumstances here present, and pursuant to N.J.S.A. 34:15--40, it was completely and fully discharged from all liability for any additional compensation payments. It pointed out that the total amount of its liability under the original compensation judgment, plus the amount that could be legally awarded on the dependency claim, was considerably less than the third-party recovery. The Division determined that the employer was 'not entitled to any credit whatsoever for any monies received by decedent during his lifetime from the judgment against the third party' as a set-off against petitioner's dependency claim and accordingly awarded petitioner on her own behalf and on behalf of the children the total sum of $18,830.40. The County Court reached the same conclusion and affirmed the judgment of the Division.

The employer now first contends, as it did below, that pursuant to N.J.S.A. 34:15--40 the 'Employer's Insurance Carrier is entitled to be released of all of its liability for compensation where the third-party recovery (regardless of the fact that it was by the employee alone and not his dependents) exceeds all of its liability for compensation under the statute either to the injured employee and/or to his dependents in case of death.' In support of this contention appellant points to the uncontradicted fact that the employee recovered the net sum of $105,450.89 from his third-party tort action, which is substantially greater than the total of the sum awarded to him as compensation for total and permanent injuries ($18,000) and the sum awarded to his widow and children for compensation dependency death payments ($18,830.40). Thus, it argues that N.J.S.A. 34:15--40(b) bars the widow and children from recovering the sums so allowed to them by the trial court.

Petitioner, on the other hand, asserts that a proper construction of the statute, in the light of the overall purposes of the act, is to subrogate the employer to third-party tort recovery by the employee himself only with respect to compensation awards made to the employee himself, and that there is no subrogation in respect to dependency compensation awards other than as against recovery in wrongful death actions brought by the employee's dependents against the third person.

N.J.S.A. 34:15--40 in its pertinent parts reads as follows:

'* * * In the event that the employee or his dependents shall recover and be paid from the said third person or his insurance carrier, any sum in release or in judgment on account of his or its liability to the injured employee or his dependents, the liability of the employer under this statute thereupon shall be only such as is hereinafter in this section provided.

(b) If the sum recovered by the employee or his dependents from the third person or his insurance carrier is equivalent to or greater than the liability of the employer or his insurance carrier under this statute, the employer or his insurance carrier shall be released from such liability and shall be entitled to be reimbursed, as hereinafter provided, for the medical expenses incurred and compensation payments theretofore paid to the injured employee or his dependents * * *.'

The pertinent language of N.J.S.A. 34:15--40 does not compel the result urged by appellant. As to the specific problem here raised, the statutory expression is ambiguous. Therefore, we must look to the spirit, object and purposes of the act as a whole and not merely to the letter of the particular section under construction. Giordano v. City Commission of Newark, 2 N.J. 585, 594, 67 A.2d 454 (1949).

Preliminarily, we first consider the relationship of the sum awarded to the employee during his lifetime for his permanent and temporary disability and the sum awarded to the widow and children upon their dependency claim petition. Under our Workmen's Compensation Act, when an injury or disability is caused to an employee by accident or disease arising out of and in the course of his employment, the employee is entitled to compensation for temporary and permanent disability in accordance with the schedule of payments set forth in N.J.S.A. 34:15--12. If death results from the accident or occupational disease, the employee's dependent (widow and children) are entitled to compensation benefits as provided in N.J.S.A. 34:15--13. The rights of these dependents to compensation are independent and separate rights flowing to them from the act itself. They are not rights to which they succeed as the representatives of the deceased husband and father. Eckert v. New Jersey State Highway Department, 1 N.J. 474, 480, 64 A.2d 221 (1949). These new rights accrue at the time of the employee's death. McAllister v. Board of Education, Town of Kearny, 42 N.J. 56, 59--60, 198 A.2d 765 (1964).

Keeping in mind the distinct independence of the respective types of claim, we return to a consideration of N.J.S.A. 34:15--40. Prior to the enactment of this section 'the employee or his dependents had (1) a right of action for compensation under the statute, and (2) an action in tort against the third-party wrongdoer, and the amendments to the statute were made to meet a mischief where an Injured employee could retain both the compensation payments and full damages from His common law right of action against a third party.' New Amsterdam Casualty Co. v. Popovich, 18 N.J. 218, 225--226, 113 A.2d 666, 669 (1955) (Emphasis added). The amendments gave the employer or its insurance carrier a right to reimbursement for compensation paid by them to the injured employee or his surviving dependents from any sums which might be recovered from the third-party tort-feasor liable for the employee's injuries or resultant death. This right to reimbursement from such third-party recovery is derived from the employer's (or his insurance carrier's) 'statutory subrogation' under N.J.S.A. 34:15--40. United States Casualty Co. v. Hercules Powder Co., 4 N.J. 157, 166, 72 A.2d 190 (1950).

Under our compensation law the employer was obligated only to the employee for temporary and permanent disability payments. It was not obligated to the wife and children for any such payments. The July 31, 1962 compensation award was payable solely to the employee. Upon payment of this obligation the employer was entitled to be subrogated to all of the rights that the employee had against the third-party tortfeasor who caused these disabilities. Thus, when the employee recovered a judgment against the third-party tortfeasor, the...