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Kraemer v. Nitroform Co.

Decided: November 12, 1954.


On appeal from the Workmen's Compensation Division.

Foley, J.c.c.


The petitioner's decedent was killed in an explosion in the respondent's plant. An award was entered in the Workmen's Compensation Division according dependency benefits on behalf of herself and two children. The primary question in controversy on this appeal is whether the decedent was an employee of the respondent at the time of his fatal accident or was gratuitously contributing his time and efforts in order to foster the growth of an enterprise of which he was a part owner. An understanding of the problem involved requires a brief discussion of the genesis and ownership of the respondent corporation and the relationship of the decedent to the prosecution of its objectives.

The respondent evolved from a four-man partnership that had been formed for the manufacture of chemicals, the partners becoming the four incorporators and officers of the corporation and the owners in equal amounts of all of its

capital stock. The capital and plant were a legacy from the partnership and the latter venture had been launched on a modest investment by the partners. The testimony reveals that the decedent and Tully, another officer, had other full-time employments from the time of the incorporation to the day of the accident. Tully was an associate professor of chemistry in the Newark College of Engineering, while Kraemer was in charge of the chemistry stockroom at the college and was supervised in that activity by Tully. A person named Mahoney was president of the corporation, Kraemer was secretary and treasurer, one Ross, vice-president in charge of sales, and Tully, vice-president in charge of research.

It was not until the trial was under way that the respondent took issue with the claim that Kraemer had been its employee. The answer to the claim petition admitted that the accident arose out of and in the course of decedent's employment and set forth that the statutory funeral allowance had been paid. Only the question of dependency was there raised, the reasons given being that respondent had no knowledge concerning the alleged dependency, and that since no wages or salary were paid during the period of employment there was no liability to make dependency payments. Preliminary to trial of the cause that position was again asseverated in a statement by counsel for respondent that only dependency and rate were in question. It was during the course of the testimony that respondent moved to withdraw any admissions of employment that had been made by answer or stipulation, thus reducing its concession to the bare facts that the decedent was working in the plant and came to his death in the explosion. The motion was granted.

In support of her claim that the decedent was a wage-earning employee of respondent, the petitioner relied on the testimony of Tully, one of the two surviving members of the incorporator group. The respondent introduced no evidence to counter her case.

Tully testified that the respondent was engaged in the manufacture of one chemical which was used in producing explosives and as a reagent in rocket propulsion. A backlog

of orders was on hand. Kraemer and Mahoney were the chief workers at the plant and up to the time of the explosion were the only ones who had done any considerable work for the company. Occasionally others were called in to help, but the witness was able to recall the names of only two such extra helpers, namely, Mahoney's father and a Donald Austin. Ross did very little work at the plant; he tock care of outside sales work. The witness did not describe his own activities. Kraemer discharged a variety of duties. He kept the books, looked after correspondence, did carpentry and other construction work in the factory, and assisted Mahoney in turning out batches of the chemical. During the lifetime of the corporation Kraemer spent 20 hours per week at the company's plant. The witness explained that this was an average figure, and that though slight variations upward might occur from time to time, it represented the amount of time generally required to take care of the business on hand.

His testimony further reveals that the four associates had entered into a verbal compact that all would be paid a reasonable wage for work done for the company, but that for the purpose of building up the operating capital the men agreed not to draw out their accrued wages for the time being. It was their common plan that if the business proved to be successful all of them would ultimately become full-time employees on a salary basis. He also stated that though no definite time had been agreed upon for the payment of wages, there had always been enough money on hand to pay Kraemer and Mahoney a reasonable wage.

The major attack made by the respondent on the judgment of the Workmen's Compensation Division is founded on the premise that Tully's account of an agreement made among the several stockholders to pay wages to Kraemer is entirely incredible. It is contended that the only plausible conclusion that can be drawn from the testimony is that an informal discussion among them had resulted in an expression of hope that, if prosperity ...

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