Opinion ID: 2081133
Heading Depth: 1
Heading Rank: 5

Heading: The Basis at Common Law

Text: In re-assessing the soundness of a common law rule, our task is to determine whether there [exist] any reasons which still justly undergird the doctrine   . Merenoff, supra, 76 N.J. at 549; see Immer, supra, 56 N.J. at 488. As Chief Justice Vanderbilt explained in State v. Culver, 23 N.J. 495 (1957), cert. den., 354 U.S. 925, 77 S.Ct. 1387, 1 L.Ed. 2d 1441 (1957), and cert. den. sub nom. Culver v. Goodman, 359 U.S. 975, 79 S.Ct. 884, 3 L.Ed. 2d 842 (1959): The nature of the common law requires that each time a rule of law is applied it be carefully scrutinized to make sure that the conditions and needs of the times have not so changed as to make further application of it the instrument of injustice. [ Id. at 505] We thus turn to re-examine the reasons behind the common law rule against interspousal contracts: the theory of spousal unity of person and interest, and the preservation of marital harmony. See Bendler, supra, 3 N.J. at 172. Little need be said with regard to the former. This Court has previously recognized the artificial and technical nature of the doctrine, see Long v. Landy, supra, 35 N.J. at 50, and concluded that this metaphysical concept cannot be seriously defended today. Immer, supra, 56 N.J. at 488. The complete erosion of this theory is evidenced in judicial decisions, see, e.g., Merenoff, supra (abolishing interspousal immunity in personal injury actions); In re Gaulkin, 69 N.J. 185 (1976) (wife of judge may engage in political activity); see also Trammel v. United States, 445 U.S. 40, 100 S.Ct. 906, 63 L.Ed. 2d 186 (1980) (defendant in criminal proceeding has no right to prevent spouse from testifying), and statutory law, see, e.g., N.J.S.A. 37:2-10 (married woman liable for debts contracted in own name); N.J.S.A. 37:2-12 (married woman has right to own property independently); N.J.S.A. 37:2-6 (married woman may sue or be sued without joining husband); N.J.S.A. 37:2-16.1 (married woman may contract with husband alone or with third parties to form a partnership). The realities of the marketplace also belie the notion that spouses are specialized members of a single, indivisible enterprise. Jersey Shore Medical Center-Fitkin Hospital v. Baum, 84 N.J. 137, 146-149 (1980); Lepis v. Lepis, 83 N.J. 139 (1980); see U.S. Dep't of Labor, Bureau of Labor Statistics, Marital and Family Characteristics of Workers, 1970 to 1978 (Special Labor Force Report #219) 50 at Table 1 (in 1977, both spouses were wage earners in 48.8% of two-spouse families); see also Orr v. Orr, 440 U.S. 268, 99 S.Ct. 1102, 59 L.Ed. 2d 306 (1979). It is therefore no longer open to question that the marital couple is an association of two individuals rather than an independent entity. Eisenstadt v. Baird, 405 U.S. 438, 453, 92 S.Ct. 1029, 1038, 31 L.Ed. 2d 349, 362 (1972); see In re Gaulkin, supra, 69 N.J. at 194; Bendler, supra, 3 N.J. at 173 (Ackerson, J., dissenting). We next consider the notion that marital discord will be fostered by allowing spouses to contract with each other. We have rejected this contention in abrogating interspousal tort immunity. In Immer v. Risko, supra , we expressed doubt that marriages would be more disturbed by allowing tort suits between spouses: A person would not sue his spouse if there were perfect harmony, and it is unlikely that adjudication of the rights will worsen the relationship. 56 N.J. at 488. [7] The availability of insurance coverage for tort liability also undermined domestic harmony as a justification for immunity. Merenoff, supra, 76 N.J. at 550-551; Immer, supra, 56 N.J. at 489. Most significant, however, were Justice Handler's observations on the role of the courts in attempting to preserve marital harmony: There is, in addition to all else, a certain mischief in the unspoken assumption at the heart of the domestic harmony rationale for the immunity doctrine, namely, that in this context courts are somehow fit to monitor marital morality. Courts can claim no penetrating insight by which to fathom the impact of an interspousal law suit or gauge its effect upon the strength or fragility of a marriage. The threat to domestic harmony posed by a legal action between spouses is an imponderable; the cohesiveness of a marriage may be jeopardized as much by barring a cause of action as by allowing it. [ Merenoff, supra, 76 N.J. at 551] However, the weaknesses of relying on marital harmony to justify tort immunity do not necessarily carry over to contract claims. The observation in Immer that [a] person would not sue his spouse if there were perfect harmony has no counterpart regarding the execution of a contract. It is one thing to permit judicial aid to a tortiously injured plaintiff by abandoning the guise of promoting marital harmony; it is quite another to say that in permitting parties to seek their own personal happiness, see Merenoff, supra, 76 N.J. at 552, the power of a court of law should be available to enforce a specific arrangement. Although not an independent entity, a marriage is still a partnership that is more than the sum of its members. For that reason the State has an interest in treating contractual agreements within a marriage more flexibly than agreements between persons who are not married to each other. Cf. Carlsen v. Carlsen, 72 N.J. 363, 370 (1977) (interspousal contract enforceable in equity to the extent fair and equitable); Koplik, supra, 27 N.J. at 16 (property and contract actions between spouses may be brought in equity). In spite of the genuine interests served by the common law rule against enforcement of interspousal contracts, it could become an instrument of injustice were we to accept uncritically the assumption that any enforcement would promote discord. Thus, in assessing the continued vitality of the common law rule we must apply the asserted justification of marital harmony to the particular type of contractual relationship for which recognition is sought. Here petitioner seeks recognition of an employment relationship. Bendler, supra, refused recognition on the ground that it would introduce the disturbing influence of bargain and sale into the marriage relation   . 3 N.J. at 172. This conclusion has been criticized as an anachronistic holdover from a time when the only services that could be affected by such a rule were domestic services which the spouse was bound in any case to perform by the obligations of the marriage relation. 1C A. Larson, Workmen's Compensation Law § 47.20 at 8-238 (1980 Rev.). [8] We consider the common law rule to have a broader basis than an obsolete model of domestic relations. Lepis, supra, 83 N.J. at 156. However, there are several reasons why the State's interest in protecting marital harmony does not support a denial of workers' compensation coverage. First is the observation that the terms of workers' compensation coverage cannot be negotiated by the parties. The scheme is provided entirely by statute and is not subject to bargain and sale or modification. The financial security provided by the prompt and certain recovery inherent in workers' compensation would probably enhance marital harmony rather than detract from it. Further, since the employer is required to insure its employees, both the suit and any recovery would effectively be against an insurance company rather than the spouse. See Immer, supra, 56 N.J. at 489. As we observed in Merenoff, [t]he danger of marital disruption becomes almost academic where liability insurance is available. 76 N.J. at 551. The same is true regarding the workers' compensation insurance required to be carried by employers. See N.J.S.A. 34:15-71. These factors distinguish the present case from one in which remedies are sought for the breach of an interspousal employment contract. Since the latter action would involve elements of domestic relations as well as contract law, it might be better left to the flexible powers of a court of equity. See Merenoff, supra, 76 N.J. at 555. We are not here required to resolve that issue, however. The question before us is whether the common law rule against interspousal contracts, despite its demonstrated weaknesses in the workers' compensation setting, will be allowed to stand as a bar to recovery under the Workers' Compensation Act. We believe that to do so would permit the rule to become an instrument of injustice. [I]t is to be borne in mind that the act we are considering is one of social insurance   , Young v. Sterling Leather Works, 91 N.J.L. 289, 295 (E & A 1917), designed to place the cost of work-connected injury on the employer who may readily provide for it as an operating expense. Hornyak v. The Great Atlantic & Pacific Tea Co., 63 N.J. 99, 100 (1973); see Renshaw v. U.S. Pipe & Foundry Co., 30 N.J. 458, 465 (1959); Tocci v. Tessler & Weiss, Inc., 28 N.J. 582, 586 (1959); Morris v. Hermann Forwarding Co., 18 N.J. 195, 197-198 (1955); Nagy v. Ford Motor Co., 6 N.J. 341, 350 (1951). The fundamental principle underlying workers' compensation is that of compensating an injured employee. The statutory scheme was designed [t]o overcome the harsh common law rules which often resulted in a denial of recovery to injured workmen or their dependents where death or injuries occurred from the work-connected accidents   . Stellmah v. Hunterdon Coop. G.L.F. Serv., Inc., 47 N.J. 163, 169 (1966). The strength of this public policy lies not only in the imposition of liability on the employer without regard to fault, N.J.S.A. 34:15-7, but also in the operation of the elective compensation provisions. The compensation scheme enters by operation of law into every contract of hiring made in this State unless there be an affirmative rejection of the plan for the alternative common-law liability for negligence as modified by the provisions of article I [ N.J.S.A. 34:15-1 to -6] of the act. [ New Amsterdam Casualty Co. v. Popovich, 18 N.J. 218, 226 (1955)] See Cureton v. Joma Plumbing & Heating Co., 38 N.J. 326, 331 (1962); Estelle v. Board of Educ., 14 N.J. 256, 259-260 (1954); Gotkin v. Weinberg, 2 N.J. 305, 308 (1949). Any attempt to reject the elective compensation provisions is strictly construed against the employer. See Naseef v. Cord, Inc., 48 N.J. 317 (1966). Respondent argues that this compensation policy is outweighed by the increased risk of fraud and collusion presented by recognizing interspousal employment contracts. This Court has consistently rejected the argument that an entire class of potentially well-founded claims should be denied because of such a possibility. See Merenoff, supra, 76 N.J. at 553; Immer, supra, 56 N.J. at 493-495; France v. A.P.A. Transport Corp., supra, 56 N.J. at 505; Cohen v. Kaminetsky, 36 N.J. 276, 283 (1961). We entertain no doubt that a compensation judge has ample means  and the expertise  to weed out fraudulent claims of employment relationships. We are equally confident that the employer's insurer will not hesitate to bring to light any such scheming on the part of its insured. See Merenoff, supra, 76 N.J. at 554. We therefore conclude that our strong State policy to provide social insurance for work-related injuries should not be thwarted by continued application of the common law rule against interspousal contracts. [9] The unjust effects of the rule in the present case are highlighted by the fact that spouses of majority shareholders in close corporations, see Howard v. Harwood's Rest. Co., 25 N.J. 72 (1957), and spouses of members of partnerships, see Felice v. Felice, 34 N.J. Super. 388 (App.Div. 1955), are entitled to coverage under the act. Thus, the only area where the common law's incapacity presently operates to deprive a spouse and dependents of benefits, see N.J.S.A. 34:15-13, is where the employer is a sole proprietorship. Our reassessment of the rationales for the rule against interspousal contracts convinces us that we should not continue to apply the rule so as to deprive spouses who wish to employ each other of the benefits of workers' compensation coverage.