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Naseef v. Cord Inc.

Decided: December 5, 1966.


For affirmance -- Chief Justice Weintraub and Justices Jacobs, Francis, Proctor, Hall, Schettino and Haneman. For reversal -- None. The opinion of the court was delivered by Schettino, J.


This is a workmen's compensation case involving a cab company and one of its drivers. It is a sequel to Hannigan v. Goldfarb, 53 N.J. Super. 190 (App. Div. 1958), which held a taxicab leasing arrangement, almost identical to the one involved here, to be an "employment" for the purposes of the Workmen's Compensation Act and, hence, the owner of a cab was held liable to the employee for compensation benefits under the act.

Petitioner's husband, Michael Naseef, died as a result of injuries sustained while operating a taxicab owned by Cord, Inc. (Cord), a member of the 20th Century Taxicab Association (20th Century).

Naseef operated Cord's cab under a written agreement which was in form a "lease." It provided for the payment of $10 daily to respondent Cord from Naseef for the rental of a cab. This payment entitled the driver to the use of the cab for one twelve-hour shift per day. The driver could keep all the fares and tips and would not be subject to the control and direction of the owner. The agreement further provided that the driver was solely liable for income tax, social security, and unemployment insurance payments, and in addition, was required to purchase from 20th Century the gas and oil used in the cab. The driver was required to "operate the taxicab in accordance with the rules and regulations of the 20th Century Association and the ordinance of the City of Newark, New Jersey." Cord was obligated to pay for repairs, replacements, and public liability insurance for its benefit as well as for the driver's benefit.

20th Century is an association of individuals who either own taxicabs or control cabs. As the court pointed out in Hannigan, 20th Century on behalf of its members maintains a garage, offices, a two-way radio system to the member cabs nearest the customer, and also keeps up call boxes and open stands for the member cabs. All such cabs are painted with distinctive

"20th Century" colors, as well as the insignia of the association. Admittedly, the purpose is to lead the public to believe that 20th Century is a large organization.

Essentially, the terms of Naseef's contract were the same as the terms of the contract in Hannigan. After the decision in Hannigan and in an effort to avoid the burdens of Article II, Workmen's Compensation Coverage, N.J.S.A. 34:15-7 et seq., the taxi owners added to their "taxicab lease" contracts Paragraph 8, which provided:

"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."

Petitioner, despite Paragraph 8, filed a dependency claim petition for compensation in the Division of Workmen's Compensation on May 1, 1963, alleging that both Cord and 20th Century had been employers of her husband and that he had died while in the course of his employment. Cord denied that it was Naseef's employer and alternatively stated that, assuming an employer-employee relationship, workmen's compensation benefits had been barred to Naseef by Paragraph 8 in accordance with N.J.S.A. 34:15-9, which provides for presumptive coverage under Article II in the absence of an election by either the employer or employee or both not to be covered by Article II. In its answer 20th Century denied not only that it was responsible to compensate the cabdriver but also denied that it was engaged in the taxicab business.

The Division of Workmen's Compensation found that the accident was clearly the cause of the death, that, under Hannigan Naseef was an "employee" within the contemplation of the Workmen's Compensation Act, that the attempted bar of Article II benefits by Paragraph 8 failed because it was an unsuccessful attempt to contract around Article II as Paragraph 8 makes no reference to the parties being bound by Article I. The Division concluded that 20th Century should be treated, along with Cord, as an employer of Naseef.

The County Court reversed, holding that the agreement between Cord and Naseef provided for notice of an intention not to come under Article II, that N.J.S.A. 34:15-9 does not require there be in the agreement or notice an election of remedy under ...

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