This matter involves the construction and interpretation of N.J.S.A. 44:10-4, the repayment provision of the act entitled "Assistance for Dependent Children", (ADC), N.J.S.A. 44:10-1 et seq., and specifically deals with the question whether the Essex County Welfare Board may seek reimbursement for aid granted to a dependent child from the proceeds of a recovery in tort for personal injuries suffered by the child.
On September 21, 1962, Vernon Francis, also known as Vernon Witt, was struck by an automobile. He was then 12 year old and was living with his grandmother, Mrs. Marie Francis. He was treated at Newark City Hospital for about a month and was discharged on October 23, 1962. On December 1, 1962, he began receiving assistance as a dependent child under the above statute and he has continued to receive such aid up to the present time. The assistance payments for his benefit were made to Mrs. Francis and on November 21, 1962, prior to the commencement of payments, the Essex County Welfare Board, pursuant to the provisions of N.J.S.A. 44:10-4(a), took from Mrs. Francis the customary form of repayment agreement under the terms of which, in consideration of the granting of such assistance, she promised to repay the Welfare Board to the extent of any assistance granted and specifically agreed that "the purpose of this promise and agreement is to assure repayment to the County Welfare Board of the amount of such financial assistance
as may be granted during the period pending my receipt of certain funds which are anticipated by virtue of a claim against State of New Jersey Unsatisfied Claim and Judgment Fund, A.S.R. 25225-N, Code W, arising out of accident involving Vernon Witt who was hit by an automobile on 9/21/62."
Thereafter Mrs. Francis, acting as Vernon's guardian ad litem, instituted suit against the uninsured driver of the car which struck him. As is apparent from the formal agreement with the Welfare Board, prior notice had been given to the Unsatisfied Claim and Judgment Fund Board as required by law to perfect a claim against the Fund. See N.J.S.A. 39:6-65. On June 30, 1967, a judgment was rendered in favor of Vernon by his guardian ad litem, Mrs. Francis, against defendant Joseph Samuel Williams, the driver of the car, in the amount of $8,000, which was subsequently paid by the Fund. By the terms of the order for judgment, Vernon's attorney, Robert B. Turk, Esq., was designated as his guardian for the limited purpose of preserving, maintaining and disbursing the funds received and, after payment of hospital and medical expenses and attorney's fees in accordance with the judgment, a balance of $4,943.25 remained on hand. In the interim, the Welfare Board had given notice of its claim under the repayment agreement for reimbursement of the sum of $3,561.66, for assistance given to Vernon from December, 1962 through June, 1967, and the order for judgment directed Mr. Turk, as Vernon's attorney and guardian, to direct an order to show cause to the Welfare Board to seek a determination as to why the entire balance of recovery in his hands as guardian should not remain Vernon's funds, free from any claim by the Welfare Board for reimbursement for payments made for Vernon's benefit.
The guardian's claim is that funds recovered by a child for personal injuries are inviolate and cannot be used to buy ordinary necessities of life nor to reimburse welfare agencies for assistance granted. His argument is based primarily
upon the holdings in the New York case of Application of Woods, 32 Misc. 2 d 745, 222 N.Y.S. 2 d 903 (Sup. Ct. 1961) and the recent decision in Essex County Welfare Board v. Hellams, 98 N.J. Super. 181 (Cty. Ct., Probate Div. 1967), which is now being appealed. Although, as is demonstrated hereinafter, both of these decisions are distinguishable, the rationale of the guardian's argument is set forth in the following quotation from the Hellams case where the court, adopting the reasoning and philosophy of the Woods case, said (98 N.J. Super., at p. 185):
"The court held that the damages could not be used to reimburse welfare, noting that:
'The infant's money was awarded to compensate for his pain, his suffering, and his incapacity occasioned by the accident, not to purchase necessaries for him during his minority. * * * When that money is withdrawn to purchase necessities, it is being misapplied. (DeMarco v. Seaman, 157 Misc. 390, 283 N.Y.S. 697.) * * * [T]he communal responsibility in the sense of public welfare, should not be permitted to be shifted to this infant, because, fortuitously, he was gravely physically injured and was successful in now having on hand what the family might consider a financial windfall. (Leon v. Walker, 1 Misc. 2 d 219, 147 N.Y.S. 2 d 331.)' (at p. 906)
Even when such a child reaches 21 he has a right to expect to receive the money awarded to him for his injury with interest and 'not a bundle of court orders showing that his funds were spent for the ordinary necessities of life which others were obligated to furnish him.' Gaffney v. Constantine, 87 N.Y.S. 2 d 131, 132 (Sup. Ct. 1949)."
Although the guardian's argument evokes sympathy, this court is compelled to conclude that it ignores the policy adopted by our legislature which is plainly expressed in the repayment statute and it accordingly holds that the Essex County Welfare Board is entitled to the reimbursement sought in this case.
Our statute providing for assistance to dependent children is designed, as are similar statutory programs in other states, to take advantage of federal funds available to the states for such programs under the federal Social Security Act. Although state plans must meet certain standards and conditions
prescribed by federal law and must be approved by the Secretary of Health, Education and Welfare in order to qualify for federal grants-in-aid (see 42 U.S.C.A. § 601, et seq.,), each state has wide latitude in deciding how the programs are to be organized and administered, who is eligible for aid, how much shall be granted to eligible persons, and what provisions shall be made for repayment and reimbursement from those receiving assistance. There are differences as well as similarities within the state programs, which reflect economic conditions in the individual states and the desires of the citizens thereof as expressed by their legislative representatives in state law and policy. There is considerable variety among the states in the provisions for repayment and reimbursement and, as stated above, this is a matter for each state to determine. See Characteristics of State Public Assistance Plans Under the Social Security Act (Public Assistance Report No. 50, U.S. Department of Health, Education and Welfare, 1964 Edition.)
Subsections (a) and (b) of N.J.S.A. 44:10-4 provide in specific terms for repayment from recipients of ADC payments. Subsection (a) is directly involved here. The statute provides:
"(a) Whenever any parent or relative with whom a child is living applies for or is receiving assistance for such child pursuant to this act, and it appears that there is pending a payment to the child or to either or both his parents of funds arising from a claim or interest legally or equitably owned by such child or by either or both his parents, the county welfare board may, as a condition of eligibility or continuation of eligibility for such assistance, require such parent or parents to execute a written promise to repay, from the funds anticipated, the amount of assistance to be granted. Upon any refusal to make repayment in accordance with such promise, the county welfare board may take all necessary and proper action under the laws of this State to enforce such promise, and the granting or continuing of assistance, as the case may be, shall be deemed due consideration therefor.
(b) Whenever any child with respect to whom assistance has been paid pursuant to this act shall die prior to the attainment of his twenty-first birthday, and shall leave an estate, the total amount of assistance paid with respect to such child pursuant to this act
and pursuant to any of the acts hereby repealed, shall be a valid and enforceable claim against such estate, with priority over all other unsecured claims except reasonable funeral expenses and terminal medical and hospital expenses, and the county welfare board shall take all necessary and proper action under the laws of this State to enforce such claim.
(c) The county welfare board may, with the consent and approval of the bureau of assistance, compromise and settle any claim for repayment ...