Case ID: f_221/html/1010-01.html
Source: Caselaw Access Project
Author: {"author": "HAIGHT, District Judge.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

WOOD et al. v. CAMDEN IRON WORKS.
    (District Court, D. New Jersey.
    February 15, 1915.)
    Master and Servant <®=s>25(>94 New, vol. 16 Key-No. Series—Receivers—Liability for Payments Due under Workmen’s Compensation Act.
    Under the New Jersey Employers’ Liability Act (P. L. 1911, p. 134), which provides that when an employer and an employs shall by agreement, express or implied, accept the provisions of section 2 thereof, compensation for personal injuries or for the death of an employs shall be made according to the schedule contained therein, without regard to the employer’s negligence, and section 2, par. 8, providing that such agreement shall bind the employs and his personal representatives as well as the employer and those conducting his business during bankruptcy or insolvency, the receiver of an insolvent corporation authorized to continue its business' was bound to make weekly payments for which, under such act, the corporation had become liable prior to his appointment, such payments constituting operating or administrative expenses, as under the construction of the act by the state courts the obligations and rights thereby created are contractual, and the payments required to be made are part of the compensation of the employé for services rendered, and in legal effect are indistinguishable from ordinary wages.
    In Equity. Suit by Walter Wood and others against the Camden Iron Works, in which a receiver was appointed for the defendant corporation. On petition by the receiver for instructions.
    Receiver instructed.
    Joseph H. Gaskill, of Camden, N. J., and Nelson B. Gaskill, of Trenton, N. J., for receiver.
    Walter H. Bacon, of Bridgeton, N. J., for certain holders of bonds secured by mortgage.
    otüer cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes
   HAIGHT, District Judge.

On October 22, 1914, a receiver was appointed for the defendant corporation, and was authorized, to continue the business. Before the appointment of the receiver the defendant corporation had become liable to make certain weekly payments to some injured employés and to the representátives of some who had been killed, in accordance with the provisions of the New Jersey Employers’ Liability Act (P. L. 1911, p. 134). As respects one employé, payments were required to he made pursuant to a judgment of the common pleas court of Camden county, N. J.; but no suits, had been instituted for the others. ■ The defendant corporation made the payments to which the persons were respectively entitled, until the recéiver was appointed. The receiver has now petitioned the court for instructions as to whether he should continue to make these payments.

It is urged, on behalf of the receiver, that as long as he continues to run the business of the defendant he is obligated, under the provisions of the above-mentioned statute, to continue to make the weekly payments. I think his contention is correct. The act provides that, When an employer and an employé shall, by agreement, either express or implied (as therein provided), accept the provisions of section 2 of the act, compensation for personal injuries, or for the death of an employé, shall be made by the employer without regard to the negligence of tlie employer, according to the schedule contained in the act. The schedule provides for weekly payments, based on the amount of the employé’s wages and the extent of the injury received. It has been held by the Supreme Court of New Jersey, in Interstate Telegraph & Telephone Co. v. Public Service Electric Co., 90 Atl. 1062, that the obligations and rights, thus created are contractual, and that the payments which the act requires to be made to the injured employé, or to his representatives in the event that he is killed, are part of the compensation of the employé for services rendered, and, in legal effect, are indistinguishable from ordinary wages. Mr. Justice Swayze, in writing the opinion of the Supreme Court, said (on page 1063):

“It [the compensation provided for in the act] is none the less compensation for labor done because the statute directs that its payment shall be distributed over a certain number of weeks in the future.”

I think that the logical result of such construction is that the contract of employment, provided for in the statute, is to pay, in consideration of work to be done, so much during the time the employé is working, and, if he shall be injured, his wages shall be considered to have been increased in the proportions allowed by the statute for the time therein provided, the excess to be payable at certain designated periods in the future.

Paragraph 8 of section 2 of this act provides that:

“Such agreement * * * shall bind the employs himself, and for compensation for his death shall bind his personal representatives, his widow and next of kin, as well as the employer, and those conducting his business during bankruptcy or insolvency.”

As before shown, one of the terms of the agreement is that, if the employé shall be injured, the employer, in consideration of the work which the employé has done, shall make the deferred payments at specified times. The act specifically provides that the agreement shall bind “those conducting the employer’s business during bankruptcy or insolvency.” It therefore follows that a receiver, who is conducting the business of the original employer during insolvency, as in this case, is, by the terms of the act, bound to make the payments which the employé (or his representatives) was entitled to- receive from the original employer during the time that he conducts the business. It is thus a burden placed upon the continuance of the business. If, in any given case, it is deemed proper that the business of the employer should be continued during bankruptcy or insolvency, or any part thereof, the law provides that the agreement which was originally entered into between the employer and tlie injured employé, and every part thereof, must be fulfilled by the receiver to the same extent as the employer would have been compelled to fulfill it. It therefore follows that, as the requirement to make the weekly payments to the employé, or his representatives, is a burden cast by the law upon those who continue the business, the' payments to be made by the receiver must be classed as operating or administrative expenses.

The receiver will therefore be instructed to continue to make the payments as long as he continues to conduct the business, such payments to be considered operating expenses, and paid in the same waj as wages of other employés are paid.