Gascoyne, J.c.c., Temporarily Assigned.
These four actions arise out of an industrial accident which occurred on April 30, 1971. Plaintiffs were employees of Metem Corporation (Metem) and all were injured while on their employer's premises. Sentry Insurance Co. (Sentry) is the workmen's compensation carrier for Metem and has paid plaintiffs benefits pursuant to its insurance policy. Plaintiffs instituted suit against Elox Division of Colt Industries (Elox) and General Electric Company (G.E.) charging that their injuries were proximately caused by the negligence of Elox and G.E. By leave of court, G.E. was permitted to file a third-party complaint joining Sentry as a statutory subrogee. G.E. alleges that to the extent that Sentry seeks reimbursement for payments made or to be made by it to the various plaintiffs, any judgment against G.E. should be reduced to the extent of such payments because of the concurrent negligence of Metem. To put it another way, G.E. argues that Sentry's right to reimbursement should be barred since it should not benefit from the concurrent negligence of its insured. G.E. vehemently argues that it does not seek to hold Metem and hence Sentry liable as a joint tortfeasor, and further contends that it does not seek to disturb the rights of plaintiffs regarding compensation benefits. It does seek to reduce its liability to plaintiffs to the extent that Sentry is liable to plaintiffs for compensation benefit, i.e., a pro tanto reduction of any judgment against it to the extent that Sentry has paid or will pay plaintiffs. Sentry moved for dismissal for failure to set forth a cause of action pursuant to R. 4:6-2(e).
While this argument is of novel impression in New Jersey, it has been decided and accepted in other jurisdictions, notably Pennsylvania, California and North Carolina.
To anyone who has had any dealings with a workmen's compensation carrier in seeking to dispose of third-party actions such as these, there is a certain practical appeal to G.E.'s argument. Too often a favorable disposition of such actions is frustrated by the carrier's refusal to compromise its lien, thus making disposition impossible. The matter must then proceed to trial, ofttimes to the detriment of the plaintiff-employee. These factors, together with the philosophy that a subrogee should not be allowed to profit by the wrongful acts of its subrogor, gives impetus to the position advocated by G.E.
Under the law of this State certain basic principles are firmly established.
When the employer and employee elect to have their rights adjudged and fixed pursuant to the terms of the compensation act then the common law remedy in tort falls by reason of the statutory contract for compensation, based not upon the principle of tort but on remuneration regardless of fault to the injured employee. [ Danek v. Hommer, 9 N.J. 56, 60 (1952)]
The Workmen's Compensation Act was intended
An employee cannot "lawfully maintain an action in tort against his employer, hence the employer is not liable in tort". Farren v. N.J. Turnpike Auth., 31 N.J. Super. 356, 361 (App. Div. 1954).
Historically, when the Workmen's Compensation Act was enacted in 1911 the act made no provision for the reimbursement of the employer or his insurance carrier out of any proceeds recovered by way of judgment against or settlement
with a third party who was responsible for the employee's injury or death. The employer had to continue payments pursuant to any award despite any recovery against a third party by the employee. The injured employee or his dependents could retain all compensation payments for which his employer was responsible under the act and at the same time recover and retain in full damages resulting from his common law right of action in tort against the third-party wrongdoer. To remedy this inequity, the Legislature, through a series of amendments, made provision for complete reimbursement to the employer or his insurance carrier as presently set forth in N.J.S.A. 34:15-40. As was noted by the court in United States Casualty Co. v. Hercules Powder Co., supra :
Obviously the purpose of this amendatory legislation was to set up a comprehensive plan within the structure of the Workmen's Compensation Act for regulating and marshaling the rights and responsibilities of the several parties concerned in compensation payments where, in the course of his employment, injury or death comes to a workman as the result of the fault of a third party. There is retained for the benefit of the injured employee or his dependents the benefit of his common law action against such third party in which the application of the common law rule for the assessment of damages may result in the recovery of an amount in excess of the total amount of the compensation awarded according to the statutory formula prescribed by the act. At the same time the evil of the old law ...