Opinion
October 27, 1967
Appeal by claimant from a decision of the Workmen's Compensation Board which disallowed his claim for deficiency compensation upon finding (1) that he settled his third-party action without the written approval of the carrier (Workmen's Compensation Law, § 29, subd. 5, as then constituted) and (2) that there was no fraud on the part of the carrier estopping it from asserting such failure of approval as a bar to any award. Claimant was injured on April 25, 1962 and made claim for compensation on February 1, 1965. At hearings on July 7, 1965 and November 5, 1965 the carrier raised the issue of coverage, stating that its policy had been canceled and that the dispute was as to the date of cancellation. At the November 5, 1965 hearing, claimant being present, claimant's attorney stated that the cancellation occurred two months after the accident and the carrier's attorney asserted without contradiction that the original policy was then in the possession of claimant, who was also the corporate employer's president. At the next hearing, held on December 13, 1965, claimant being present, without his attorney, the carrier's attorney admitted the carrier's error with respect to the date of cancellation and stated that the policy had in fact been canceled after the accident, just as claimant's counsel had contended at the November 5, 1965 hearing. There is some indication in the record that the confusion was due to difficulties in the transmittal of records, following the purchase of one carrier's assets by another. It subsequently appeared that the third-party action, of which the carrier had no prior knowledge, had been settled without the carrier's knowledge or approval, on November 16, 1965, just 11 days after the hearing at which claimant asserted that the workmen's compensation coverage was in force at the time of the accident. Under all the circumstances, the board was clearly entitled to discount claimant's contention that by reason of the carrier's denial of coverage he was not required to seek its approval of the settlement or even to give notice of his intention to effect a settlement. It should have been obvious to claimant that carrier's mistake was a factual one, subject to correction, inasmuch as claimant, in his capacity as an officer of the corporate employer, apparently had the policy in his possession and knew the true fact as to the date of cancellation — his knowledge evidently exceeding that of the carrier's attorney; and, significantly enough, claimant continued to press his workmen's compensation claim, following the compromise of his third-party cause of action, thus rather clearly indicating that he did not accept the carrier's disclaimer and hence had not placed complete reliance upon it when he effected the compromise. The board was entirely warranted in finding that the carrier practiced no fraud of the nature necessary to invoke estoppel. There was no indication of actual fraud, or so the board could properly find. So, too, the board had ample warrant to reject any claim of constructive fraud, which has been defined as that "resulting from gross negligence or from admissions, declarations, or conduct intended or calculated, or such as might reasonably be expected, to influence the conduct of the other party and which have so misled him to his prejudice that it would work a fraud to allow the true state of facts to be proved." (21 N Y Jur., Estoppel, § 26.) It is equally clear that claimant placed no substantial reliance upon the carrier's disclaimer within the intendment of the principle that one "is estopped only so far as his words or conduct has influenced another party", it being "essential to the existence of an equitable estoppel that the representation whether consisting of words, acts, or omissions of the party against whom the estoppel is asserted, shall have been believed by the party claiming the benefit thereof and that he shall have relied thereon in good faith." (21 N.Y. Jur., Estoppel, § 66.) Decision affirmed, without costs. Gibson, P.J., Herlihy, Reynolds, Aulisi and Gabrielli, JJ., concur in memorandum by Gibson, P.J.