Summary
In Matter of Woodward v. Conklin Son, Inc. (171 App. Div. 736, 738, 739), Mr. Justice COCHRANE writing, this court decided otherwise, saying that a claimant may pursue his remedy against a third party, who may be liable, without discharging his employer's carrier, unless he recovers what might be awarded under the act, and that a release or settlement is no bar to further prosecution by the carrier because it was ineffective.
Summary of this case from Matter of Beekman v. Brodie, Inc.Opinion
March 8, 1916.
William H. Foster, for the appellants.
Egburt E. Woodbury, Attorney-General [ Harold J. Hinman, Deputy Attorney-General, of counsel], for the State Industrial Commission.
The claimant was a driver and caretaker of mules and was injured while driving a mule across the tracks of the Binghamton Railway Company in the course of his employment by the appellant, E.W. Conklin Son, Inc. He executed a release to the railway company without compensation or any consideration whatever and without the consent of the insurance carrier. Thereafter he elected to take compensation under the act. The sole question on this appeal is the effect of such release on his right to an award which has been made by the Commission against the insurance carrier.
Section 29 of the Workmen's Compensation Law (Consol. Laws, chap. 67; Laws of 1914, chap. 41) is as follows:
"§ 29. Subrogation to remedies of employee. If a workman entitled to compensation under this chapter be injured or killed by the negligence or wrong of another not in the same employ, such injured workman, or in case of death, his dependents, shall, before any suit or claim under this chapter, elect whether to take compensation under this chapter or to pursue his remedy against such other. Such election shall be evidenced in such manner as the Commission may by rule or regulation prescribe. If he elect to take compensation under this chapter, the cause of action against such other shall be assigned to the State for the benefit of the State Insurance Fund, if compensation be payable therefrom, and otherwise to the person or association or corporation liable for the payment of such compensation, and if he elect to proceed against such other, the State Insurance Fund, person or association or corporation, as the case may be, shall contribute only the deficiency, if any, between the amount of the recovery against such other person actually collected, and the compensation provided or estimated by this chapter for such case. Such a cause of action assigned to the State may be prosecuted or compromised by the Commission. A compromise of any such cause of action by the workman or his dependents at an amount less than the compensation provided for by this chapter shall be made only with the written approval of the Commission, if the deficiency of compensation would be payable from the State Insurance Fund, and otherwise with the written approval of the person, association or corporation liable to pay the same."
The scheme of this statute is simple and comprehensive. Concisely stated, one of the purposes is to make the third party ultimately liable for the consequences of his negligence if such liability exists, and that the insurer under the act, if there be one, shall have the benefit of such liability of a third party to the extent of an award which may be made by the Commission. The term "elect," as used in section 29, does not have the meaning which it frequently has of indicating a choice between two inconsistent remedies against the same party, the exercise of which choice in one direction precludes action in another direction. That is apparent from the whole tenor of the section. The claimant may bring his common-law action against a third party, and if he does so he does not thereby discharge the insurer of his employer unless he recovers as much as he might be awarded by the Commission under the act, because the statute says that in such case "the State Insurance Fund, person or association or corporation, as the case may be, shall contribute only the deficiency, if any, between the amount of the recovery against such other person actually collected, and the compensation provided or estimated by this chapter for such case." On the other hand, if the claimant elects to take compensation under the act, his cause of action against the third party must be assigned to the insurance carrier who thereby becomes subrogated to such remedy of the claimant. And for the protection of the insurer the statute expressly provides that "a compromise of any such cause of action by the workman or his dependents at an amount less than the compensation provided for by this chapter shall be made only * * * with the written approval of the person, association or corporation liable to pay the same." Clearly, therefore, a compromise or release by an employee of his cause of action against a third party is ineffectual against the insurer without the written approval of the latter. The release in such case constitutes no obstacle in the way of the insurer prosecuting the assigned claim against the third party. One of the primary purposes of the statute is to protect the employee against his own improvidence, weakness, ignorance or shortsightedness in compromising his claim for injuries. And a reciprocal advantage or protection to the insurer is given in the form of a claim against any third party negligently causing the injury which cannot be destroyed by the act of the injured party without the written approval of the insurer. When a third party takes a release or settles a claim he does so with full knowledge of this statutory requirement that the compromise shall have the written approval of the person or corporation liable for compensation under the act, and that without such approval such release or compromise may not be asserted against the person or party whose approval is thus required. And the statute while protecting the workman does so without sacrificing or prejudicing the rights of either the insurer or the third party. The latter cannot be placed in any less favorable position because whatever he pays he cannot be called on to pay again, but if he compromises for less than his actual liability he remains liable to the insurer for such excess up to the amount allowed under the act unless the latter has consented in writing, as the statute provides, for the compromise at the less amount.
Furthermore, section 33 of the act provides that "claims for compensation or benefits due under this chapter shall not be assigned, released or commuted except as provided by this chapter." This of course means that claims for compensation under the act against the insurer may not be assigned, released or commuted, but if the employee without the approval of the person liable to pay the compensation under the act may release a third party and make such release effective against the insurer, then he is permitted to indirectly accomplish the defeat of this provision in section 33 and by settling with the third party release and discharge his claim for compensation under the act. This seems to constitute an additional argument why a release is ineffectual as against the insurance carrier unless it has the approval of the latter.
In the present case the claimant received nothing for the release in question, but if he had done so according to the views expressed it would make no difference except that the insurer would be liable only for the difference between the amount received and the compensation provided by the act.
The award should be affirmed.
WOODWARD, J., concurred in separate opinion.
The award made by the State Industrial Commission was correctly reached and should be affirmed. The fact that the claimant executed a release of the Binghamton Railway Company from liability to him for the injuries which he received while driving a mule across that company's tracks does not destroy or in this instance affect his right to recover the compensation provided by the Workmen's Compensation Law.
In this particular case it does not appear that the Binghamton Railway Company was guilty of any negligence which operated as a cause of the claimant's injuries, and it affirmatively appears that the release was executed and delivered without payment to the claimant of any money or other consideration whatsoever. I think, however, that our decision of this appeal may well proceed upon the broader ground which makes no assumption of the non-liability of the recipient of the release or the absence of consideration for its execution. The purpose in the enactment of the Workmen's Compensation Law was to secure and insure to injured workers and their dependents the continued payment of a stipulated portion of their weekly earnings. This was to be done in order that trade accidents might be made a trade liability — a charge against the cost of the trade product — and not left to fall harshly and exclusively upon the injured worker and his family. To this end it was deemed desirable that the employer, through one of specified methods, should become responsible for seeing to it that payment of compensation was promptly and regularly made in the amount authorized by the statute regardless of whether the injury was in fact caused by some third person and was not due to anything arising in the ordinary course of the employer's business and under his sole control. One of the chief ends in view was to protect the worker from being compelled to resort to protracted and uncertain litigation for the establishment of his right to reimbursement on the one hand and to protect him likewise from his own improvidence, shortsightedness, lack of knowledge and urgency of financial necessities as factors entering into compromise or settlement negotiations concerning claims for injury.
As this court has hitherto observed, the Workmen's Compensation Law should be remedially and beneficially construed to effectuate the obvious legislative purpose. The appellant employer and insurance carrier contend here for a construction of the statute which would seriously cripple its efficacy. It is altogether clear, whether or not the claimant was injured through negligence on the part of the railway company, and whether or not the claimant received any consideration from the company for the execution of the release, that the statute does not, and the rules which the Commission has adopted under the explicit authority of section 29 of the act do not, permit the execution of a release by the claimant in favor of a third person to be construed as an election by the injured person to proceed by suit rather than by taking compensation under the act. The claimant here concededly served no notice of election to proceed by suit, and neither the employer nor the insurance carrier consented to or approved the execution of the release to the railway company. Even the bringing of suit and the obtaining of judgment against the third party would not, under the statute, discharge the insurer unless his recovery in the action amounts to as much as the compensation provided for by the statute. In the event he recovers less than the statute provides may be granted as compensation, the insurer is liable only for the making up of the deficiency.
Where the injured person seeks compensation under the act his cause of action, if any, against any and all third persons in connection with the injuries is transferred to the insurance carrier, and the latter thereupon is subrogated to all the rights of the claimant by way of suit for damages by reason of the tort. In order that the insurer may be fully protected against the very thing which, perhaps, the injured man tried to do in this case, the statute explicitly provides that "a compromise of any such cause of action by the workman or his dependents at an amount less than the compensation provided for by this chapter shall be made only * * * with the written approval of the person, association or corporation liable to pay the same." (Consol. Laws, chap. 67 [Laws of 1914, chap. 41], § 29.) No release executed by the claimant at bar without the consent of the insurer could, therefore, have any effect upon an action by the insurer against the railway company, except that if the railway company paid anything to the claimant — as was not the case here — the railway company is liable to the insurer and the insurer to the claimant only for the difference between the amount paid and the total of compensation payable under the statute.
Award unanimously affirmed.