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Naseef v. Cord Inc.

Decided: January 18, 1966.


Gaulkin, Labrecque and Brown. The opinion of the court was delivered by Gaulkin, S.j.a.d.


Petitioner's husband Michael died as a result of injuries sustained while he was operating a taxicab owned by Cord, Inc., a member of the 20th Century Taxicab Association. She was awarded workmen's compensation in the Division against both respondents. However, the County Court reversed and she appeals. We affirm the dismissal as against 20th Century Taxicab Association but we reverse the dismissal as against Cord, Inc.

Decedent entered into a written contract with Cord, the essential provisions of which are as follows:

"1. In consideration of the covenants and agreements hereinafter contained, the Owner does hereby lease and rent to the Lessee his Taxicab No. 160 for the conveying, transporting and carrying all persons in and about the streets of the City of Newark, New Jersey, together with the fares, charges and profits of said taxicab at a Daily rental of $10.00.

2. The Lessee hereby covenants and agrees that he will pay the rent herein provided in advance on or before the commencement of each rental period; that he will not transfer, assign, sell or sublet this lease without the consent in writing of the Owner; that he will not suffer any act to be done which may cause a forfeiture of the franchise, permit or license of said taxicab, and that he is not accountable for the fares collected, nor subject to the control and direction of the Owner, except that he will operate the taxicab in accordance with the rules and regulations of the Newark Twentieth Century Taxicab Association and the ordinance of the City of Newark, New Jersey.

3. The Lessee hereby covenants and agrees not to employ any person to drive or operate the said taxicab leased to the Lessee; it being specifically understood that the Lessee is an independent contractor and is so considered herein.

7. The Lessee agrees to and hereby assumes exclusive liability for the payment of any and all taxes imposed by the Federal Social Security Act and/or the New Jersey State Unemployment Insurance Law, and any and all Federal income taxes, State and Municipal taxes; to make and complete such records and reports as shall be required under the said laws and regulations; that if the Owner be called upon to pay the taxes, charges and penalties under said laws, then the Lessee is to immediately reimburse the Owner for the amount so paid.

8. The parties further agree that the provisions of Article II, Chapter 15, Revised Statutes of New Jersey 34:15-7 et seq., commonly known as the Workmen's Compensation Act, shall not apply to either of them or this contract."

Were it not for paragraph 8 of this contract, petitioner's right to compensation could not be questioned. Hannigan v. Goldfarb, 53 N.J. Super. 190 (App. Div. 1958). However, Cord contends that said paragraph 8 freed it of the obligation to pay workmen's compensation. The contract was entered into after Hannigan and it is admitted that paragraph 8 was inserted to avoid the effect of that case.

As we construe the opinion of the Judge of Compensation, it appears he held that paragraph 8 was not effective to bar compensation because it was too broad. He reasoned, in effect, that since, under Hannigan, Naseef was an employee within the purview of the Workmen's Compensation Act, he could not waive all of the benefits of the act but only the benefits under Article II; that it was Cord's duty to make it plain to Naseef that he still retained his rights under Article I, which the contract did not do; instead the contract in general and

paragraph 8 in particular were designed by Cord to mislead Naseef into believing that he was an independent contractor and that no part of the Workmen's Compensation Act applied to him; and that therefore Naseef did not waive the benefits of the act since an employee cannot make an intelligent choice to waive workmen's compensation benefits when he is told that he is not an employee. For the same reasons, if paragraph 8 is to be treated not as a waiver by Naseef but as unilateral notice by Cord that it elicited not to be bound by Article II, the notice was too ambiguous, involved, and lacking in the clarity required of such a notice. To be effective the notice must be clear and unambiguous. See John Hancock Mutual Life Ins. Co. v. Lieb, 11 N.J. Misc. 316, 165 A. 720 (Sup. Ct. 1933), affirmed o.b. 113 N.J.L. 34 (E. & A. 1934); Britten v. Berger, 18 N.J. Misc. ...

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