Court Opinion

ID: 3620902
Source: CourtListenerOpinion
Date Created: 2016-07-06 00:02:42.413896+00
Date Added: 2024-06-11T13:53:22.876927
License: Public Domain

The Workmen's Compensation Law was enacted by the Legislature, pursuant to authority expressly conferred by the Constitution of the State, article 1, section 19. Every employer subject to its terms must secure compensation to his employees and pay or provide compensation for their disability or death arising out of and in the course of the employment. The industrial relations created by the employment justified the Legislature in substituting a more complete and equitable system of compensation for the inadequate remedy afforded at common law or by earlier statute for injury or death caused by an employer. Because of these industrial relations a new form of liability, though constituting a new burden, might be imposed upon the employer, perhaps to be borne ultimately by the public at large as an expense of the industry. (N.Y. Central R.R. Co. v. White,243 U.S. 188; Matter of Jensen v. Southern Pacific Co., 215 N.Y. 514. )
The Legislature, instead of imposing upon each employer the entire responsibility for losses occurring in *Page 140 
his own plant or work, might impose the burden upon the industry through a system of occupational taxes or enforced payments to an industrial fund required of persons connected with the industry. (Mountain Timber Co. v. Washington, 243 U.S. 219.) In this State the Legislature has provided that for certain disabilities payment of compensation or extra compensation should be made out of special funds created for that purpose, rather than by the individual employer. (Workmen's Compensation Law, § 15, subds. 8 and 9.) Into each of such funds "the insurance carrier shall pay to the State Treasurer for every case of injury causing death in which there are no persons entitled to compensation the sum of five hundred dollars." Under identical conditions all employers are required to contribute to these special funds and "the payments thus required are not unfair and unreasonable in amount. The aggregate for the two funds is one thousand dollars. This is much less than the maximum payment which may be required according to the scales in case the employee leaves survivors entitled to death benefits, and seems not to exceed, if it equals, the average amount of the payments required in such cases." For these reasons the constitutionality of these provisions has been sustained both in this court and in the Supreme Court of the United States. (Sheehan Co. v. Shuler,265 U.S. 371, affg. State Treasurer v. Sheehan Co., 236 N.Y. 579;  Matter of State Industrial Commission v. Newman,222 N.Y. 363; N.Y. State Railways v. Shuler, 265 U.S. 379.)
Where the employee's disability or death resulted from the wrongful act of a party not in the same employ the liability of such party remained substantially unchanged. The injured employee or, in case of his death, his dependents, might elect to pursue any remedy afforded by law against such party. If the employee, or his dependents, elect to take compensation under the Workmen's Compensation Law, then it is provided that the awarding of *Page 141 
compensation shall operate as an assignment of the cause of action against such other party "to the state for the benefit of the state insurance fund, if compensation be payable therefrom, and otherwise to the person, association, corporation, or insurance carrier liable for the payment of such compensation, and if he elect to proceed against such other, the state insurance fund, person, association, corporation, or insurance carrier, 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." (Workmen's Compensation Law, § 29.)
It is true that, as we have construed the section, it provides "that a party who negligently kills an employee under the act shall be liable to the dependents of the employee, * * * and not to his next of kin," and to that extent creates a new action in substitution for the action for causing death by negligence as defined by section 1902 of the Code of Civil Procedure. Since, however, the Legislature might have originally created a cause of action for the death of an employee in favor of the dependents rather than the next of kin of the deceased, the wrongdoer has no substantial ground for complaint. (Travelers Insurance Co. v.Padula Co., 224 N.Y. 397.) There the Legislature exercised its undoubted power to create and define the liability and the remedy for causing the death of a human being. That power is not based upon its right to provide compensation for the disability or death of an employee as a liability on the part of his employer or a burden upon the industry. The considerations which have led the courts to sustain the legislation creating such a right to compensation have no application to legislation creating a liability against a wrongdoer, not in the same employ as the employee who has been injured or killed.
In 1922 the Legislature amended section 29 of the Workmen's Compensation Law by providing that "In *Page 142 
case of the payment of an award to the state treasurer in accordance with subdivisions nine and ten of section fifteen such payment shall operate to give to 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 medical treatment which shall be in addition to any cause of action by the legal representatives of the deceased." As stated in the majority opinion, "it is an attempt to remove the burden from one who has not committed a wrong and to place it upon one who, by his wrongful act, has made the payment into the funds necessary."
That statement seems, as a matter of first impression, persuasive that the Legislature must have power to place ultimate liability upon the person but for whose wrongful act no payment would have been required of the employer. Analysis, however, demonstrates, I think, that its persuasive force is illusory. The defendant has already paid to the dependent of the deceased more than the compensation provided by the Workmen's Compensation Law. If recovery or settlement had been less the dependent would have been entitled to receive payment of the deficiency from the employer or insurance carrier. In such case the employer or insurance carrier would not have been entitled to any repayment of the deficiency from the wrongdoer nor would such employer or insurance carrier have been compelled to make any payment to the State insurance fund. The wrongful act of the defendant has not caused any depletion of the insurance fund.
The employer or insurance carrier is compelled to make a payment to such a fund only because the Legislature has so decreed as part of its scheme of making payment of compensation to employees a burden on the industry as a whole. The defendant is not in the same employ as the deceased or as the persons who may subsequently be entitled to receive compensation from the fund for other injuries. The liability of the employer to make payments *Page 143 
to such a fund is not in any true sense a damage flowing from the defendant's wrongful act. It is a payment in the nature of an industrial tax which the Legislature has imposed upon employers for the purpose of creating an industrial fund for the benefit of those who are part of the industry. The contingency upon which such liability is imposed is an injury of an employee "causing death in which there are no persons entitled to compensation." The defendant's wrong has caused the death. It has paid to the dependents and next of kin of the deceased the full compensation or damages allowed to them by statute for such death. Only because that payment was adequate to meet all claims for compensation which would otherwise have been a liability of the employer has the employer become subject to the tax, the required payment into the insurance fund. The question before us is not whether the Legislature may compel a wrongdoer to make good all damages caused by his wrongful act, but whether the Legislature may shift to the defendant the ultimate liability for the payment, in the nature of an industrial tax, imposed upon the employer.
Since the defendant stands in no industrial relation to the deceased or to the employee or to those who may receive compensation from the insurance fund, it seems to me quite clear that the liability which the Legislature has attempted to impose may not be sustained upon analogy to an industrial tax. The additional cause of action in favor of an employer who has been compelled to make a payment into the insurance fund may be sustained, if at all, only as the result of the exercise of a legislative power to create a new cause of action for a penalty or damages for causing death by negligence. These powers are undoubtedly broad, yet they are not, I think, unlimited. Some reasonable basis must be found, I think, for the imposition of the penalty, or for the creation of a cause of action for damages and there must be some reasonable basis for the classification upon *Page 144 
which the creation of the new cause of action for damages or penalty is based. I fail to find such a basis in the present case.
The cause of action for a penalty or damages which the Legislature has attempted to create, arises not in every case where death is caused by wrongful act, nor even in every case where death is so caused and the deceased left no dependents or next of kin entitled to damages. Indeed in this case a dependent survived but the surviving dependent is not entitled to compensation under the Workmen's Compensation Act because she has already received adequate payment from the defendant. In other words, here a cause of action for a penalty or damages has been created by the Legislature because the defendant has paid to the surviving dependent full compensation for the injury caused by its wrong. If the defendant had failed to pay such damages and consequently the dependent had been entitled to the compensation from the employer, the defendant would not have been liable for any penalty or damages beyond those which the dependent or next of kin might have recovered in an action against the defendant.
It is true that in such case the employer also would have been compelled only to pay compensation to the surviving dependent and would not have been compelled to pay an additional sum into the State insurance fund. If this factor were absent I assume that no one would seriously contend that the Legislature ever would or could have created an additional liability against a wrongdoer causing death in the contingency that the wrongdoer had already made full payment in damages to the dependents or next of kin of the person killed.
As I have already pointed out, the provision of the statute for payment by the employer into the insurance fund has been sustained on the ground that it is in the nature of an industrial tax imposed on all employers in the contingency of the death of an employee where the *Page 145 
employer cannot be called upon to make any payment of compensation to any dependent of the person killed. It bears equally upon all employers under the same circumstances and is reasonable in amount, since it "seems not to exceed, if it equals, the average amount of the payments required" if a deceased left surviving dependents entitled to death benefit. Here, on the contrary, the additional liability does not bear equally upon all wrongdoers causing death where no dependent or next of kin survive, and it is not reasonable in amount, for it is imposed in those cases where the damages already paid by a defendant exceed the rate of compensation to which a dependent survivor would be entitled under the statute. It seems to me that the Legislature could not, after such payment, impose upon the defendant an additional liability in order to shift to the wrongdoer the ultimate burden of repaying to the employer the amount which the employer was required to pay into the insurance fund. None of the grounds upon which the courts have sustained the statute requiring such payment from the employer applies to the liability for repayment imposed upon this defendant. The Legislature could not have imposed upon the defendant a liability to make a direct payment into the insurance fund in the contingency that it had fully paid compensation to all survivors of the person whose death defendant caused. Such a classification would be so clearly unreasonable that it would not even bear any analogy to any reported cases. The Legislature has, I think, attempted to do by indirection what it could not do directly. That, I think, is equally beyond its powers.
For these reasons the judgment should be reversed and the complaint dismissed.
CARDOZO, Ch. J., POUND, CRANE and O'BRIEN, JJ., concur with HUBBS, J.; LEHMAN, J., dissents in opinion in which KELLOGG, J., concurs.
Judgment affirmed. *Page 146