Court Opinion

ID: 5320780
Source: CourtListenerOpinion
Date Created: 2022-01-08 04:30:39.937905+00
Date Added: 2024-06-11T08:29:19.542505
License: Public Domain

Hill, J.
(dissenting). Harry Morris came to his death on January 8, 1925, through accidental injuries received on the *193premises where a mercantile business was conducted under the name of “ S. Morris & Son.” Decedent was survived by a widow and two infant children, the defendants in this case. He was the “ Son ” mentioned in the above business name; plaintiff, his father, is the “ S. Morris.” The divergent claims of the plaintiff that decedent was an employee, and of the widow that he was a partner, were adjusted by a written contract providing for the payment of a sum of money by the plaintiff to the widow, for the benefit of herself and the infants. Part payment was to be made immediately, the balance in weekly installments. The contract provided in substance that nothing therein contained should prevent the dependents of the decedent from applying for and obtaining an award under the Workmen’s Compensation Law. However, a release given by the widow to the plaintiff, executed on the same day, by its terms released plaintiff “ from any and all compensation which may be due or become due under the Workmen’s Compensation Law by reason of said death.” After the date of the contract an award against the plaintiff as an uninsured employer was obtained by the widow for herself and the dependent infants. The bi-weekly payments were commuted into a lump sum and judgment docketed and collected by execution against the plaintiff. He filed this suit in equity for, and a judgment has granted relief from future weekly payments under the contract to the amount of the commuted award and restrained the defendants from prosecuting an action or actions at law for the installments as they mature. Both the widow and the infants appeal.
During the negotiations that led up to the execution of the above instrument, plaintiff contended that decedent was his employee, receiving a fixed salary of thirty-five dollars a week, to be increased by the payment of a bonus equal to forty per cent of the net profits of the business, while the widow contended, until about the time the contract was made, that he was a partner with a drawing account of thirty-five dollars a week and the owner of forty per cent of the assets of the business, receiving the percentage of profits not by way of salary or bonus, but through such part ownership. The mercantile business was insured under the Workmen’s Compensation Law in the name of “ Solomon Morris & Son ” as a copartnership consisting of Solomon Morris and Harry Morris. The weekly payments of thirty-five dollars which had been made to decedent were not included in the payroll upon which the premium for this policy was computed. Plaintiff gave the usual employer's notice to the Industrial Commission on March 9, 1925, which recited the death of his son through falling down an elevator shaft. A hearing was held on May 7, 1925, whereat the *194claimant, the employer and the carrier were each represented by separate counsel. The hearing was adjourned without the talcing of proof, first to June second and later to June twenty-ninth following. On the latter date the Commissioner is reported as saying, “ this being the third hearing and the clerk in the office of the firm representing the claimant understanding that there is to be no claim made by Mrs. Morris and that the deceased was a member of the firm, the case is dismissed without prejudice.” About this time the negotiations which terminated in the contract were begun. Apparently the widow was convinced that her husband-had been an employee for the contract recites that decedent was “ employed by said Solomon Morris.” Plaintiff admitted that decedent’s unpaid salary amounted to $1,400, while the widow claimed a much larger sum, and that there had never been an adjustment in relation to the bonus. The contract purports only to adjust that question and in terms reserved to the widow and dependents the right to have recourse to the Workmen’s Compensation Law. The contract, but not the so-called release, was presented to the surrogate of Schenectady county for his approval. This must have been done on the assumption that it contained all the provisions incident to the settlement between the parties, for if it was necessary to the legality of the instrument, as these parties assumed, that it be approved by this official, he would not be asked to approve a settlement when the instrument presented did not correctly state its terms.
The only duty which this release should perform is to show that the differences between the parties have been settled by the terms of the contract; but in so far as it purports to change those terms, it should be disregarded. Assuming, without agreeing, that the two instruments must be read together, and that by so doing it discloses that the real agreement between the parties was that the • payments made and to be made by the plaintiff to the widow were in consideration of her agreement not to apply for an award under the Workmen’s Compensation Law, still such a provision should be expunged from the agreement, for an employer may not settle and adjust death benefits by dealing directly with the dependents and without having recourse to the Industrial Commission (Workmen’s Comp. Law, § 33) and the illegal part of the agreement is severable from the legal, and the latter may be upheld. (Leavitt v. Palmer, 3 N. Y. 19; Central N. Y. Tel. & Tel. Co. v. Averill, 199 id. 128; Saratoga State Waters Corp. v. Pratt, 227 id. 429, 441.) The beneficiary and employer who seek to make an illegal contract to evade the payment of death benefits are not in pari delicto. (Workmen’s Comp. Law, §§ 11, 26, 33, 52.) The defendant widow *195is not the wrongdoer under the assumption that the agreement was made with the intent of evading the Workmen’s Compensation Law. She may enforce the valid parts of the contract. (Saratoga County Bank v. King, 44 N. Y. 87; Irwin v. Curie, 171 id. 409.)
It has been suggested that the real purpose in the minds of the contracting parties and their attorneys was to draft instruments that would reflect the agreement between them to be that the plaintiff should make payments in accordance with the terms of the contract (that instrument being part 1 of the agreement and the release part 2 thereof), and that the decedent’s dependents might apply for and obtain an award for death benefits and have and enjoy the payments if they were made by the insurance company, but if perchance there was any slip so that the carrier was released, then the dependents would forego all right to award under the Workmen’s Compensation Law. Such proposition and agreement would be illegal. The liability of an employer for compensation to an injured employee or to the dependents of one who had died as a result of injuries is not lessened or abrogated by failure to insure or through failure to so contract with the carrier that the policy included and covered the risk. It may not be assumed that there was an intention of the parties to violate the law through the terms of the agreement (Lorillard v. Clyde, 86 N. Y. 384), and an agreement should be adjudged to be valid where there is a construction which will uphold it. The acts of the parties indicate a valid intention. The plaintiff had sought to comply with the Workmen’s Compensation Law by obtaining insurance. He was required to know that its terms should cover the risk as to each employee. Under the conditions claimed by him, this would include the decedent. He believed that the policy did cover his son. Agreeably he sent an employer’s notice of injury and death to the State Industrial Board indicating a belief that the carrier and himself were within the purview of the act. The widow, relying upon the statements of her father-in-law, presented a claim, which she ceased to prosecute at the time she came to believe that her deceased husband had been a partner and not an employee, and she and her counsel so stated, as reported by the Board. She entered into negotiations of settlement assuming a partnership, the plaintiff claiming the son was an employee (and incidentally that the assets of the business belonged to plaintiff). The contract indicated that the plaintiff was right as to the relations, and that the consideration for the payments was the accrued and accumulated unpaid salary. Under this assumption the widow, as stated in the contract, reserved, as she was required, her privilege to seek compensation for the benefit of herself and for the infants. The *196antagonistic statements in the release as to liability for compensation were inserted through a spasm of over-cautiousness on behalf of the plaintiff, and not with an intent to do an illegal act.
Plaintiff is seeking an equitable remedy because of the terms of the so-called release. From this document the court is invited to find that a wrong has been done which law cannot remedy, and that justice and public policy support the demand for relief. A document with its history, prepared for the purposes accredited by its friends, should not be the basis for equitable relief. At the time of its execution, plaintiff was told that he should keep it in his safe, and there' it remained impugning the terms of the contract which was shown to the surrogate as stating all the terms of the agreement which involved the rights of the widow and children of decedent. Assuming that it is to be given the effect asked by the plaintiff, the authority and power of the State Industrial Board has been flouted. Neither justice nor public policy demands that the provisions of this secret instrument should be read into the public contract.
I favor a reversal of the judgment and the findings in accordance with this opinion.
Judgment affirmed, with costs against the defendant Sadye R. Morris, as administratrix.
This court makes an additional finding of fact, as follows:
The future payments called for by the agreement of the parties were to cover the liability of the plaintiff under the Workmen’s Compensation Law and to be considered as payments on account of said liability to the extent that such liability might be established, and further that any application to the said Industrial Board should be directed at enforcing the liability of the insurance carrier only.
This court disapproves the first conclusion of law contained in defendants’ requests.