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Wilson v. Faull

Decided: May 19, 1958.


For reversal -- Chief Justice Weintraub, and Justices Heher, Wachenfeld, Burling, Jacobs, Francis and Proctor. For affirmance -- None. The opinion of the court was delivered by Proctor, J. Weintraub, C.J. (concurring). Weintraub, C.J., concurring in result.


The primary issue presented on this appeal is one of choice of law between the workmen's compensation acts of New Jersey and Pennsylvania which deal differently with the right of an injured employee of a subcontractor to maintain a common law negligence action against a general contractor, where each state has a legitimate interest in the work-injury.

The plaintiff, William F. Wilson, was employed in New Jersey, where he resided, by J. W. Tragle of Haddonfield, New Jersey. The defendant, Andrew Faull, who resides in and maintains a place of business in New Jersey, entered into a contract in Pennsylvania with the owner of a building in Philadelphia to make certain repairs and improvements upon the building. The defendant then subcontracted with Tragle, by an agreement made in New Jersey, for the latter to supply and install a cornice on the building, the defendant agreeing to erect a scaffold on the job-site for Tragle's employees. The plaintiff while working at the Philadelphia job-site was injured when he fell from the scaffold erected by defendant. The defendant provided workmen's compensation

insurance for plaintiff's benefit under the Pennsylvania compensation law. Tragle carried workmen's compensation insurance for plaintiff's benefit under the New Jersey act.

Under the Pennsylvania workmen's compensation act "an employer who permits the entry, upon premises occupied by him or under his control, of a laborer or an assistant hired by an employer or contractor [the word contractor being defined in section 25 of the act as to include a subcontractor to whom a principal contractor has sublet any part of the work which such principal contractor has undertaken], for the performance upon such premises of a part of the employer's regular business entrusted to that employee or contractor, shall be conclusively presumed to have agreed to pay such laborer or assistant compensation" in accordance with the act, and such laborer or assistant is "conclusively presumed to have agreed to accept [it]" unless the employer posts upon the premises a notice of intention not to pay such compensation or the laborer elects not to accept such compensation by written notice to the employer. Purdon's Pa. Stat. Annot., Tit. 77, section 462 (1952). Acceptance of the provisions of section 462 by the parties operates as a surrender of their rights "to any form or amount of compensation or damage for any injury or death occurring in the course of the employment, or to any method of determination thereof," other than as provided in the act. Purdon, op. cit., supra, sec. 481. It is undisputed that none of the parties took any action designed to prevent the provisions of section 462 from applying and that the injury occurred in the performance of a part of defendant's regular business upon premises under his control. It is clear, therefore, that the plaintiff was a statutory employee and the defendant was a statutory employer within the provisions of the Pennsylvania statute.

Under the Pennsylvania statute the general contractor is substituted for the subcontractor for compensation purposes and is deemed to enter into an employer-employee relationship with the employees of a subcontractor who are working on premises under the general contractor's control.

The general contractor, as such a statutory employer, then becomes absolutely liable for the payment of compensation benefits to a subcontractor's employees, and in return is granted employer's immunity from common law liability for negligence. Swartz v. Conradis, 298 Pa. 343, 148 A. 529 (Sup. Ct. 1929). This immunity continues even in the event a subcontractor expressly consents to assume compensation liability. Capozzoli v. Stone & Webster Engineering Corp., 352 Pa. 183, 42 A. 2 d 524 (Sup. Ct. 1945).

The New Jersey compensation law treats the problem of the general contractor's liability in a somewhat different manner. A general contractor is liable for the payment of compensation to employees of a subcontractor only in the event that the subcontractor has failed to secure workmen's compensation insurance. In the event the general contractor becomes liable for compensation payments he is granted a right of reimbursement from the derelict subcontractor. N.J.S.A. 34:15-79. Where the subcontractor takes out compensation insurance, as in the present case, the general contractor is treated as a third party and is not granted immunity from a common law negligence suit by an employee of a subcontractor. Corbett v. Starrett Bros., 105 N.J.L. 228 (E. & A. 1928). Under the provisions of N.J.S.A. 34:15-40 the employee's common law right to maintain a suit for damages against third-party tortfeasors is preserved. The employee's right to compensation benefits does not operate as a bar to such an action. This section also subrogates the employer or his insurance carrier to the employee's claim against a third-party tortfeasor to the extent of medical expenses incurred and compensation benefits paid to the employee. Thus, under the New Jersey act a general contractor is treated as a third party subject to a common law tort action by the employees of a subcontractor, at least where the subcontractor has taken out compensation insurance. See Corbett v. Starrett, supra.

Plaintiff obtained an award of workmen's compensation benefits in New Jersey, pursuant to the New Jersey compensation act, against Tragle, his immediate employer. [27 NJ Page 114] Plaintiff then instituted the present common law action in New Jersey, seeking to recover damages for the injuries sustained as a result of the defendant's alleged negligence in the construction and maintenance of the scaffold. The defendant interposed the defense that the law of Pennsylvania, the state of the injury, was applicable and that under the law of that state the plaintiff was barred from maintaining a suit for damages against the defendant. The defendant contended that under the circumstances in which plaintiff was injured the defendant was a "statutory employer" who, under the Pennsylvania compensation act, is granted immunity from common law suits for negligence by "statutory employees" such as plaintiff, in exchange for the imposition of absolute liability for the payment of workmen's compensation benefits to such "statutory employees." Upon the filing of an agreed stipulation of facts, including those recited above, the defendant moved for summary judgment. The trial court granted the defendant's motion after finding that the law of Pennsylvania, the place of the injury, controlled plaintiff's right to maintain a tort action against defendant. Upon appeal, the Appellate Division reversed the judgment holding that the law of New Jersey, which permits the plaintiff's action, applied. The court stated that from a choice of law viewpoint the substantive field involved was not tort law, but rather "that of the regulation of employment relations," and that since "the significance of the situs of the accident here in question is substantially outweighed by the significance of the contacts with [New Jersey] wherein contractor, employer-subcontractor and employee resided, where the first two had their regular place of business, where the employment relationship was originally created and where the contractor and the plaintiff's employer contracted for the doing of the work at which plaintiff sustained his injury," New Jersey is the state "whose law should be applied here as the state having the preponderance of significant contacts with the employment relationship involved." 45 N.J. Super. 555 (1957). We granted certification on defendant's motion. 25 N.J. 53 (1957).

On this appeal the defendant contends that since the plaintiff's suit is a common law tort action "it is axiomatic that the law of the place of the injury governs the substantive aspects of a tort action" and that the full faith and credit clause of the Federal Constitution requires New Jersey to recognize the applicable law of Pennsylvania. He points out that the imposition upon him of absolute liability for the payment of compensation benefits to a subcontractor's employees under the Pennsylvania statute forms the quid pro quo for his purchase of immunity from common law actions by a statutory employee, such as the plaintiff. He concludes that when the plaintiff "asserts a tort claim against the defendant for a work injury received in Pennsylvania, he takes his cause of action as it exists in Pennsylvania, together with the defense of immunity to negligence actions which the laws of that state provide." On the other hand, the plaintiff asserts that tort principles are not apposite to his claim, since the defense raised to bar his action springs from Pennsylvania's compensation act and not from the substantive tort law of that state. He argues that the Pennsylvania compensation act is not controlling since compensation law is a law of status and as such must be deemed to be in the substantive field of "employment relations" rather than tort law. He concludes that a proper application of conflict of laws rules would give controlling weight to the law of New Jersey, which is the state which has "the preponderance of significant contacts" with the employment relation.

The problem presented here where the compensation statutes of two states deal differently with the plaintiff's right to maintain a common law tort action is not simply one of classification of the substantive field involved. The classification of the plaintiff's claim as one involving "tort law" or "contract law" or "employment relations law," with the consequence that the court need then only mechanically apply the respective choice of law rule, i.e., the law of the state of the injury, or of the state where the employment contract was entered into, or of the state with the most

significant contacts with the employment relation, does not in our opinion provide a satisfactory choice of law rule where the employee is not claiming compensation benefits but is instead seeking to maintain a common law tort action.

Workmen's compensation laws were designed to provide an expeditious and certain remedy for employees who sustain work injuries by the statutory imposition of absolute but limited and determinate liability upon the employer, Cardillo v. Liberty Mutual Insurance Co., 330 U.S. 469, 67 S. Ct. 801, 91 L. Ed. 1028 (1947); Sexton v. Newark District Telegraph Co., 84 N.J.L. 85 (Sup. Ct. 1913). These laws generally provide that the compensation remedy is exclusive. The theory behind this exclusiveness is that the laws provide predictable compensation for any on the job injury. They represent a compromise that inures to the ultimate benefit of both employer and employee. The employee surrenders his right to seek damages in an action at law in return for swift recovery independent of proof of fault. The employer gives up common law defenses to negligence suits ...

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