United States Fidelity & Guaranty Co. v. New York Rys. Co.

[1] On or about July 20, 1914, Philip Magrino sustained injuries in a collision between his employer’s truck, upon which he was riding, and one of defendant’s street railway cars. The employé subsequently elected to take compensation under the Workmen’s Compensation Law, and accordingly, pursuant to section 29 of that act, assigned his claim against the defendant to the plaintiff, the insurance corporation liable for the payment of the compensation. As assignee the plaintiff brought this action, and the trial court granted a nonsuit, for the sole reason that, in the opinion of the court, the plaintiff in an action of this character is entitled merely to- be indemnified for the compensation paid under the law to the injured employé; plaintiff having waived any such recovery and insisted upon the right to_ recover the same damages which the employé would have been entitled to if he had sued the defendant.

That part of the Workmen’s Compensation Law applicable is section 29, which reads:

“Subrogation to Remedies of Employé. 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 learned trial justice regarded the use of the word “subrogation” by the Legislature as controlling in the disposition made of the controversy. It is contended by the appellant that, while ordinarily the word “subrogation,” in technical parlance, connotes indemnification, the title of the section under consideration, being “Subrogation to Remedies of Employé,” indicates that subrogation is used in its primary sense of substitution, so that the state or private insurer is, after election made to resort to the act, put in the same place the employé would have been if he had not availed himself of the provisions of the statute, and that the further provision that the “cause of action” shall be assigned to the insurer carries with it the right to recover, under such

“The succession or substitution of one person or thing by or for another; in law, the putting of a person (as a surety) who has paid the debt of another in the place of the creditor to whom he has paid it, so that he may use for Ms own indemnification all the rights and remedies that the creditor possessed as against the debtor.”

“The insurer, upon paying to the assured the amount of a loss * * * insured, is doubtless subrogated in a corresponding amount to the assured’s right of action against any other person responsible for the loss.” St. Louis, etc., R. Co. v. Commercial Union Ins. Co., 139 U. S. 223 , 235, 11 Sup. Ct. 551 , 557 ( 35 L. Ed. 15 -1).

[2] The general purpose of the statute is to. establish a system of state insurance of employés engaged in hazardous employment, and to provide in connection therewith a system of indemnification of the state. That it does not contemplate an accumulation of surplus profits to be derived from assignments of causes of action for personal injuries is made evident by an examination of the provisions of sections 95 to 97, both inclusive. Section 95 provides that the premium rate shall be—

“the lowest possible rate consistent with the maintenance of a solvent state insurance fund and the creation of a reasonable surplus and reserve; and for such purpose [the Commission] may adopt a system of schedule rating in such a manner as to take account of the peculiar hazard of each individual risk.”

Section 96 permits the formation of employers’ associations for accident prevention, and provides that; ■

“Every sncii approved association may make recommendations to the Commission concerning tho fixing of premiums for classes of hazards, and for individual risks within such group.”

Section 97 provides for the keeping of a detailed system of accounts as to each group or class of employment, and for a readjustment, at certain fixed periods, of the rates for each particular class; and, where it appears that the payments in any particular class or group have, after appropriate credits to the surplus and reserve funds, exceeded the amount of disbursements for that particular class, vests in the Commission the discretion to credit each individual employer of such group or class with a proportionate amount of such excess upon the next payment of premiums which may become payable to him, and further provides, in subdivision 4, that where premiums are paid by the employer upon an estimated amount of wages, and it subsequently ap

Construing section 29 in the light of the general purpose of the statute, it is evident, therefore, that the provision for “Subrogation to Remedies of Employes,” and the assignment of the workmen’s •cause of action to the state, is for purpose of indemnification only; and it follows that the extension of the same provision to individual or corporate insurers is subject to the same limitation, namely, the full indemnification of the insurer, and no more. To hold otherwise would be to construe the act as requiring repayment by the state to employers of surplus funds derived from the prosecution of negligence •cases by the state as the absolute assignee of injured employés, and permitting the retention of the surplus obtained in such cases by individual or corporate insurers. The statute surely does not contemplate the granting to individual or corporate insurers of rights inconsistent with the rights vested in the state under like conditions and inconsistent with the general purpose of the statute to be so construed as to open the door for speculative profit to the insurer, through subsequent litigation.

[3] Under both the common law as recognized in this state, as well as under the Personal Property Law (Consol. Laws, c. 41, § 41, subd. 1, formerly Code of Civil Procedure, § 1910), a claim or demand to recover damages for personal injury is not transferable, and while there can be no question of the power of the Legislature, by subsequent enactment, to specifically or impliedly repeal such provision of the Personal Property Law, the rules of statutory construction require that, so far as possible, the later enactment shall be construed harmoniously with existing law, and so far as the later enactment modifies the existing law it shall be limited in its applicability to the particular purpose for which the later statute was enacted. Kirby v. State, 68 Misc. Rep. 626 , at page 633, 125 N. Y. Supp. 742 . See, also, Howe v. Peckham, 10 Barb. 656 .

“When the intention can be collected from the statute, words may be modified, altered, or supplied, so as to obviate any repugnancy or inconsistency with such intention.” Lewis’ Sutherland’s Statutory Construction (2d Ed.) vol. 2, § 347. “The intention of an act will prevail over the literal sense of its terms.” Id. § 348. “The presumption is that the lawmaker has a definite purpose in every enactment, and has adapted and formulated the subsidiary provisions in harmony with that purpose. * * * That purpose is an implied limitation on the sense of general terms.” Id. § 369. “Words or clauses may be enlarged or restricted to effectuate the intention or to harmonize them ■with other expressed provisions.” Id. § -376. “A thing which is not within ■the intent and spirit of a statute is not within the statute, though within the letter,” Id. § 379.

“The real intention, when accurately ascertained, will always prevail over She .literal sense of terms. * * * Statutes are likewise to be construed

in reference to the principles of the common law; for it is not to be presumed that the Legislature intended to make any innovation upon the common law further than the case absolutely required.” 1 Kent’s Commentaries (14th Ed.) 462.

The purpose of the statute now under consideration being the establishing of a self-supporting state insurance fund for the compensation of employes in certain classes of employment and for the fixing of the lowest possible premium rates for employers consistent with such purpose, section 29 must be construed to that extent as only impliedly repealing or modifying the existing law as to the non-transferability of claims of this character.

[4] It is also a significant feature supporting this construction of the statute that, notwithstanding the previous enactment of statutes in California, Connecticut, New Jersey, Massachusetts, and other states containing provision for part payment to the injured employe,, or for the retention in the state insurance fund of any surplus amount collected by the insurer in excess of indemnification, no such provision is found in the present statute.

The judgment should therefore be affirmed, with $25 costs. All concur.