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Roberts v. All American Engineering Co.

Decided: December 10, 1968.


Conford, Kilkenny and Leonard. The opinion of the court was delivered by Leonard, J.A.D.


In this workmen's compensation case All American Engineering Co. (hereinafter employer) appeals from an adverse judgment entered against it by the Ocean County Court. This judgment affirmed a determination of the Division which awarded death benefits to petitioner and her children upon petitioner's dependency claim petition.

Petitioner's husband (hereinafter employee), now deceased, had been employed by the employer for a considerable period of time up until December 10, 1957. It is not disputed that while so employed he contracted a seriously disabling occupational disease, retrobular neuritis and polyneuritis, by reason of his constant exposure to massive inhalations of ethylene glycol. This disease totally and permanently disabled him and ultimately caused his death on June 16, 1966.

On April 4, 1958 the employee filed an original compensation petition, and on March 20, 1962 an amended petition for increased disability payments. Judgment was entered in the Division on July 31, 1962, based upon a finding of total and permanent disability, in the sum of $18,000, which represented 450 weeks at $40 per week running through September 6, 1966.

In addition to the compensation claim, the employee, as sole plaintiff, on December 23, 1958 also filed a third-party tort action in the United States District Court against Union Carbide Corporation, the company that manufactured the ethylene glycol. On May 26, 1961 a judgment was entered in that action in favor of plaintiff in the sum of $210,000, and that judgment was affirmed by the Third Circuit Court of Appeals on April 18, 1963.

The Insurance Company of North America, the compensation carrier for the employer was permitted to intervene in the third-party tort action in order to preserve its right of subrogation under N.J.S.A. 34:15-40, and its attorneys associated themselves as "of counsel" with plaintiff's counsel therein.

Following the affirmance of the judgment in the third-party tort action, the liability insurance carrier for Union Carbide, on July 2, 1963, issued its draft in payment thereof in the sum of $237,883.98. From that sum the Insurance Company of North America first received its actual trial expenses. Then it was reimbursed for the total amount of compensation payments made to the employee as of June 18, 1963, less the statutory one-third counsel fee on the entire amount of its liability. After the deduction of these items, other miscellaneous trial costs and the attorney's fee of the employee's personal counsel, the employee received on July 25, 1963 the net sum of $105,450.89. Thereafter no further compensation payments were made to the employee by the employer or its carrier.

On December 6, 1966 petitioner filed a dependency claim petition on her own behalf as a widow and on behalf of their three children. In answer thereto, the employer asserted, among other things, that under the circumstances here present, and pursuant to N.J.S.A. 34:15-40, it was completely and fully discharged from all liability for any additional compensation payments. It pointed out that the total amount of its liability under the original compensation judgment, plus the amount that could be legally awarded on the dependency claim, was considerably less than the third-party recovery. The Division determined that the employer was "not entitled to any credit whatsoever for any monies received by decedent during his lifetime from the judgment against the third party" as a set-off against petitioner's dependency claim and accordingly awarded petitioner on her own behalf and on behalf of the children the total sum of $18,830.40. The County Court reached the same conclusion and affirmed the judgment of the Division.

The employer now first contends, as it did below, that pursuant to N.J.S.A. 34:15-40 the "Employer's Insurance Carrier is entitled to be released of all of its liability for compensation where the third-party recovery [regardless of the

fact that it was by the employee alone and not his dependents] exceeds all of its liability for compensation under the statute either to the injured employee and/or to his dependents in case of death." In support of this contention appellant points to the uncontradicted fact that the employee recovered the net sum of $105,450.89 from his third-party tort action, which is substantially greater than the total of the sum awarded to him as compensation for total and permanent injuries ($18,000) and the sum awarded to his widow and children for compensation dependency death payments ($18,830.40). Thus, it argues that N.J.S.A. 34:15-40(b) bars the widow and children from recovering the sums so allowed to them by the trial court.

Petitioner, on the other hand, asserts that a proper construction of the statute, in the light of the overall purposes of the act, is to subrogate the employer to third-party tort recovery by the employee himself only with respect to compensation awards made to the employee himself, and that there is no subrogation in respect to dependency compensation awards other than as against ...

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