Staten Island Rapid Transit Ry Co v. Phoenix Indemnity Co

• Decision Date: 17 March 1930
• Docket Number: No. 307,307
• Citation: 50 S.Ct. 242,74 L.Ed. 726,281 U.S. 98
• Parties: STATEN ISLAND RAPID TRANSIT RY. CO. v. PHOENIX INDEMNITY CO
• Court: U.S. Supreme Court

281 U.S. 98

50 S.Ct. 242

74 L.Ed. 726

STATEN ISLAND RAPID TRANSIT RY. CO.

v PHOENIX INDEMNITY CO.

No. 307.

Argued March 7, 1930.

Decided March 17, 1930.

[Syllabus from pages 98-100 intentionally omitted] Mr. Frederick H. Wood, of New York City, for appellant.

[Argument of Counsel from pages 100-102 intentionally omitted] Mr. Chief Justice HUGHES delivered the opinion of the Court.

This case was submitted to the state court upon an agreed statement of facts, and presented the question of the validity of a provision of section 29 of the Workmen's Compensation Law of New York (Consol. Laws, c. 67) under the due process and equal protection clauses of the Fourteenth Amendment.

Joseph Perroth, in the course of his employment by one Anderson, was killed through the negligence of the appellant, the Staten Island Rapid Transit Railway Company. Perroth left surviving him a dependent, his widow. The administratrix of Perroth brought an action against the appellant to recover damages caused by his death, and the claim was settled by the payment of an amount in excess of that which the dependent would have been entitled to receive under the Workmen's Compensation Law. In these circumstances, there being no right of recovery by the dependent of Perroth against his employer, subdivi- sions 8 and 9 of section 15 of the Workmen's Compensation Law became applicable.¹

The scheme of these provisions was the creation of two special funds in the hands of the state treasurer, the one to be used in paying additional compensation to employees incurring permanent total disability after permanent partial disability; and the other, in the vocational education of employees so injured as to need rehabilitation. These special funds were to be maintained by payments by the insurance carrier, as defined in the act,² of $500 for each of the two funds in those cases of injury causing death where there were no persons entitled to compensation under the act, and the payments made out of these special funds for the benefit of employees of the described classes were to be over and above the compensation which the act required to be made by the respective employers of such employees.

In the present instance, the respondent, as the insurer of Perroth's employer, paid to the state treasurer the amount of two awards, of $500 each, made jointly against Perroth's employer and the respondent under subdivisions 8 and 9 of section 15. The respondent then brought this suit under section 29 of the Workmen's Compensation Law to recover this amount from the appellant which had wrongfully caused the death. That section provides:

'In case of the payment of an award to the state treasurer in accordance with subdivisions eight and nine of section fifteen such payment shall operate to give the employer or insurance carrier liable for the award a cause of action for the amount of such payment together with the reasonable funeral expenses and the expense of medi- cal treatment which shall be in addition to any cause of action by the legal representatives of the deceased.'

Two questions were submitted to the state court:

'First. Was the state treasurer entitled to the awards made in his favor and paid by the plaintiff?

'Second. If the first question is answered in the affirmative, is the plaintiff entitled to recover the amount of said awards from the defendant by reason of section twenty-nine of the Workmen's Compensation Law?'

The Appellate Division of the Supreme Court of the state answered both questions in the affirmative (224 App. Div. 346, 230 N. Y. S. 747), and the judgment entered accordingly for the respondent was affirmed by the Court of Appeals (251 N. Y. 127, 167 N. E. 194). That court decided that the provision of section 29 which was held to justify the recovery did not violate the Fourteenth Amendment as denying either due process of law of the equal protection of the laws.

The due process clause is invoked on the ground that there is no reasonable basis for the creation of a cause of action against the appellant, and that the statute arbitrarily takes the property of one person for the private use and benefit of another. It is recognized that the state may create new rights and duties and provide for their appropriate enforcement. Recovery for an injury causing death and employers' liability and workmen's compensation acts are familiar illustrations. But it is argued that the appellant committed no wrong against the respondent, and that, for the wrong against the deceased and his widow, the appellant has made full restitution. The fact of this restitution, however, is an inadequate basis for the conclusion sought. It cannot be said that, in providing for the recovery of the loss sustained by the dependents or next of kin of a deceased, the state has exhausted its authority to provide redress for the wrong. The state may permit the recovery of punitive damages in an action by the representatives of the deceased in order to strike effectively at the evil to be prevented. Pizitz Dry Goods Co. v. Yeldell, 274 U. S. 112, 116, 47 S. Ct. 509, 71 L. Ed. 952, 51 A. L. R. 1376. The state might also, if it saw fit, provide for a recovery by the employer for the loss sustained by him by reason of the wrongful act. The wrong may also be regarded as one against the state itself, in depriving the state of the benefit of the life of one owing it allegiance. For this wrong the state might impose a penalty. This is not contested. And it is well settled that the made in which penalties shall be enforced, and the disposition of the amounts collected are matters of legislative discretion. Missouri Pacific Railway Company v. Humes, 115 U. S. 512, 523, 6 S. Ct. 110, 29 L. Ed. 463.

But it is said that the Legislature cannot cause a liability to accrue to a stranger against whom the wrongdoer committed no breach of duty. If, however, the state might penalize the wrongdoer by requiring a payment to be made by him directly to the state treasury, there would seem to be no reason why the state cannot compel the wrongdoer to indemnify the employer, and his insurance...