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Caputo v. Best Foods Inc.

Decided: January 17, 1955.


On certified appeal from the Appellate Division of the Superior Court.

For modification -- Chief Justice Vanderbilt, and Justices Heher, Oliphant, Wachenfeld, Burling, Jacobs and Brennan. Opposed -- None. The opinion of the court was delivered by Heher, J.


[17 NJ Page 261] The questions here concern the statutory allowances for the services of counsel and reimbursement for "reparative payments" after the rendering of the prescribed compensation for total and permanent disability, where the workman's disabling injury was the result of a third person's negligence, and the recovery in tort from the

third-party tortfeasor exceeded the employer's liability under the Workmen's Compensation Act.

The consequence of the injury was total blindness. The accident occurred September 1, 1949. The employer acknowledged liability under the Compensation Act and, by its insurance carrier, Travelers Insurance Company, commenced payment of compensation at the established weekly rate and the provision of medical service which aggregated $3,000 for the former and $3,829.50 for the latter, in all $6,829.50, when the third-party tortfeasor, American Chain & Cable Co., settled the workman's tort action for $60,000. Under their agreement with the workman, Messrs. Milton, McNulty & Augelli, the attorneys who prosecuted the tort action to a mutually satisfactory settlement, were paid a fee of $10,000 for their services; and the employer's insurance carrier was reimbursed for the compensation paid and medical charges incurred.

Seeking the "protection of a judgment," the workman, notwithstanding the employer's assumption of its statutory obligation, brought a proceeding for compensation on December 14, 1951. The employer answered that there had been full compliance with the mandate of the Compensation Act until the settlement of the third-party tort action for an amount in excess of the "compensation value of this case and no compensation is forthcoming from the respondent to petitioner." There was judgment for "total temporary disability, as paid, or 89 weeks," and "100% permanent total disability or 450 weeks at $25 per week, amounting to $11,250," and a direction that "at the expiration of the 450 week period, that is on and after December 15, 1959, payments shall continue in accordance with the provisions of R.S. 34:15-12, subject to such physical or educational rehabilitation as may be ordered by the Rehabilitation Commission and subject to periodic modifications as provided" by the act. An attorney's fee in that proceeding was refused, as not permissible under R.S. 34:15-64; and there was no apportionment of the expenses incurred in obtaining the third-party settlement. On the workman's appeal, the Hudson

County Court affirmed the judgment, 27 N.J. Super. 571; and from the affirming judgment cross-appeals were taken.

The Appellate Division modified the judgment to allow the employer "reimbursement of its compensation liability in the amount of $17,304.50, less 33 1/3%," or $5,768.16, deemed payable by the employer to the workman for the services of his attorneys in the third-party recovery under the peremptory command of R.S. 34:15-40, as amended by L. 1951, c. 169, p. 646, even though the fee actually paid by the workman to his attorneys was at the rate of but one-sixth of the recovery. It was also adjudged, apropos of the subject matter of the employer's cross-appeal, that upon payment of the sum thus allowed the employer's liability for "further compensation payments for the statutory period of 450 weeks" should cease, "reserving to the petitioner, however, the right to make further claim not herein adjudicated for rehabilitation compensation payments by virtue of R.S. 34:15-12, upon the termination of the 450 week period." And the workman's counsel was given leave to apply to the County Court for "counsel fees for work done before" the Compensation Division, the County Court and the Appellate Division, "in accordance with R.S. 34:15-64 and 66." The opinion leading to this judgment is reported in 30 N.J. Super. 552 (1954).

The case is here by certification at the instance of the employer.

The basic contention is that R.S. 34:15-40, as amended in 1951, "does not authorize the tortfeasor to withhold one-third of the employer's exposure to compensation payment, but only up to one-third of the compensation theretofore paid and medical expenses incurred." The employer would limit the assessment of the attorney's fee to one-sixth of $6,829.50, the amount actually paid in reimbursement of compensation payments made and medical expenses incurred when the tort settlement was accomplished, or $1,138.25.

We are concerned here not with what the Legislature meant to say, but the meaning of ...

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