Heagney v. Brooklyn Eastern Dist. Terminal ( 1951 )

CLARK, Circuit Judge.

This is an appeal from a summary judgment dismissing plaintiff’s action against his employer under the Employers’ Liability and other Federal Acts, 45 U.S.C.A. §§ 1, 51 et seq., on the ground that he had waived the federal remedies by acceptance of awards under the New York Workmen’s Compensation Law. It is undisputed that plaintiff accepted payments under the orders of the New York Workmen’s Compensation Board, and made no claim under the Federal Acts, until upwards of two years after his injury. The issue considered in some detail below, both on hearing and on rehearing in extensive memoranda by the district judge, D.C.S.D.N.Y., 91 F.Supp. 775, was whether plaintiff could deny waiver under the circumstances shown, including his representation by counsel over a considerable portion of the time, upon his present assertion that he had not understood his federal rights. The greater part of the argument on this appeal has concerned this same issue; but since plaintiff raises the issue of “no accord without satisfaction,” we shall examine directly the validity of New York Workmen’s Compensation Law § 113, McK.Consol.Laws, c. 67, which gave authority to its Board to proceed in cases of injuries subject to federal laws “in case the claimant, the employer and the insurance carrier waive their admiralty or interstate commerce rights and remedies.”

Plaintiff was injured on January 21, 1947, while working as a hostler atop one of defendant’s locomotives in the latter’s Kent Avenue Yard in Brooklyn, New York. He slipped on some grease, fell to the ground, and was injured. He was hospitalized for twelve days on account of the accident. A few days after he went home he signed a statement for defendant describing the accident and saying: “I have no intention of suing my employer but going to take voluntary compensation.”

On February 17, 1947, compensation payments began at the maximum rate allowed by New York law, $28 a week. A clerk of the New York Workmen’s Compensation Board concluded from the papers filed that there might be a question of voluntary compensation, since the defendant was perhaps engaged in interstate commerce. So the carrier was notified of the question and a hearing was set by the Board for May 14, 1947. In the notice given plaintiff it was stated that the “Purpose of Hearing” was “Question of Jurisdiction.” At the hearing the Board’s referee announced that it concerned the “question of jurisdiction.” Defendant’s representative then said: “No, we waive that. We are paying the man $28.” Defendant also asked plaintiff if he was working, to which the reply was “No,” also that he had not filed a claim or written up any papers. Thereupon the referee made a record in usual form entitled “Notice of Decision and Award,” which under the section marked “Decision” stated: “Accident, notice, causal relation established. Case continued.” The meaning of “continued” as noted on the form was in substance that there would be a continuance of payments at the same rate, with the possibility of later hearing to determine the extent of further disability, if any. Plaintiff received a copy of this notice, as of the others from the Board.

Defendant continued the maximum payments after the hearing until July 15, 1947, when it requested another hearing upon being informed that plaintiff was able to work. Accordingly a finding was made by the Board on July 21 stating that compensation had been paid in full for 23-5/6 weeks, or a total of $667.33, with payments stopped because “claimant able to work.” On September 25, plaintiff informed the defendant that he had retained a lawyer, the counsel who continued to represent him up to and through this appeal. Counsel sought another hearing from the Board, which on October 15 rendered a decision ordering the payments to continue at the reduced rate of $25.08 a week. On March 24, 1948, it was again found that compensation had been paid in full and no award was then made “due to failure of claimant to attend hearing.” But this was reopened and payments ordered from March 23 to June 18, 1948, at $18 a week, with the direction “carrier to continue payments.” A further hearing was held on June 17, with plaintiff and his counsel both present, when one Todd, defendant’s master mechanic, testified to the kind of work plaintiff was doing for defendant at the time of the accident. At this time counsel was allowed an attorney’s fee of $25. A still later hearing occurred on October 28, 1948, with date of Notice of Decision and Award, November 4; the latter contains the statement, “Continued to early calendar.” Plaintiff asserts that his counsel learned of the possibility of the federal claim through casual conversation with another attorney on December 10, 1948. At any rate on January 6, 1949, he notified defendant that he was making claim under the federal law and had the case closed “without prejudice” before the Board, thus saving to his client the opportunity to reappear if for any reason further payments should be required. There appéar to have been at least six hearings by the Board— four after the appearance of counsel — and four orders of award, all carried out according to their terms

’ Defendant Dy interrogatories asserted, and plaintiff substantially agreed, that it had paid him — through its insurance carrier, Fireman’s Fund Indemnity Co. — a total of $2,729.02, of which $2,296.57 was in the form of compensation and the remaining $432.45 for medical expenses and hospitalization.¹ In one of its affidavits defendant also suggests that plaintiff’s change of position was because of his observation of “the handwriting on the wall,” since it was about to challenge the payments, as plaintiff had been “regularly employed for years since his recovery from this accident,” and yet was still claiming compensation “despite his recovery.” Defendant further alleges its willingness to make any and all further payments which may he required by any orders of the State Board.

In his complaint herein plaintiff claimed damages in the amount of $80,000 for injuries sustained from his fall. The answer admitted that defendant was engaged in interstate commerce; but, in addition to the usual defenses of denial of negligence and plea of contributory negligence, it asserted waiver under the New York statute. After answer and upon a deposition of the plaintiff taken before trial, the answers to interrogatories, and numerous affidavits, including a transcript of the proceedings before the State Board, all on file, the Judge granted the defendant’s motion for summary judgment as indicated above. In addition to the facts as to the participation of plaintiff’s counsel in the proceedings from September 25, 1947, until closing of the case before the Board on January 6, 1949, it was established 'by answers to interrogatories that on September 29, 1947, plaintiff’s counsel requisitioned the Board’s file containing, inter alia, the information as to the hearing on jurisdiction of May, 1947. Counsel asserts by affidavit that he did not examine the file on this point and additionally that even if he did his client should not be bound. We agree with the trial judge, however, who was willing to accept plaintiff’s own claim that he did not understanding^ waive his federal rights before he was represented by counsel, but thought that claim no longer tenable once counsel appeared. When •counsel came into the casé and conducted its prosecution over many months, with obvious success signalized by increased or additional awards, only to raise this issue at a late date when the end of state compensation was apparently approaching, there should no longer be any possible doubt as to the waiver. If there is ever to be any settlement of legal claims we feel that it must be in a case such as this where a claimant before an administrative board is adequately represented by counsel over a long period, during which the rights, potential and actual, of the client are perfectly obvious to anyone with the slightest legal training, and where there is no suggestion of fraud or concealment from the lawyer on the part of the employer. Hence there was no genuine issue as to the fact of waiver, and the only question which remains is as to its validity.

Plaintiff’s claim on this pqint is that in any event waiver is insufficient; there must be an “accord and satisfaction,” meaning thereby a “final award” by- the Board duly paid and accepted. And he contends that the last act of the Board, closing the case “without prejudice” to further proceedings, does not meet this requirement. For this he cites some cases — hereinafter discussed — more pertinent under the earlier state law. But before we consider New York precedents, we should turn to federal authority, because, after all, that must be prevailing in a matter of federal right.

This is, indeed, made explicit in the Federal Employers’ Liability Act § 5, 45 U.S. C.A. § 55, which makes void any “contract, rule, regulation, or device whatsoever” to exempt a carrier from liability. In construing the Act the Supreme Court has held that nothing in the Act, and in particular in this section, operates to prevent an otherwise valid release of a claim by a railroad employee. Callen v. Pennsylvania R. Co., 332 U.S. 625, 68 S.Ct. 296, 92 L.Ed. 242. The Court said: “It i; obvious that a release is not a device to exempt from liability but is a means of compromising a claimed liability and to that • extent recognizing its possibility. Where controversies exist as to whether there is liability, and if so for how much, Congress has not said that parties may not settle their claims without litigation.” 332 U.S. at page 631, 68 S.Ct. at pages 298, 299. And, while there was dissent in that case the division in the Court was not over the question whether a release should be upheld at all, but as to how the fairness of the release or possible fraud in it should be tested and who should have the burden of proof. That question in itself can hardly arise here when the provisions for the employee’s benefit were those set as fair by the statutory law of the state. This case was expressly recognized in the later case of Boyd v. Grand Trunk Western R. Co., 338 U.S. 263, at page 266, 70 S.Ct. 26, 28, 94 L.Ed. 55, where the Court said: “We there distinguished a full compromise enabling the parties to settle their dispute without litigation, which we held did not contravene the Act,” from the restriction on venue of the action, which was held invalid. It is thus clear that “a full compromise enabling the parties to settle their dispute without litigation” is appropriate and valid.

It is desirable to note, too, the continued stress of the Court upon “compromise” in view of the contention here that before we can have some valid adjustment of rights, we must find some sort of satisfaction beyond the many months’ payment under Board awards as actually made. Quite in point, therefore, is Professor Corbin’s enlightening discussion of compromise agreements and their connection with executory accords. Thus he says: “By thinking and speaking in terms of ‘compromise,’ the existing befuddlement in regard to ‘executory accords’ is avoided.” 6 Corbin on Contracts § 1268 (1951). Hence, as he points out, there may be a compromise furnishing an agreed-upon substitute for performance which, in turn, may require specific performance, although generally it may be reasonably clear that the parties intend a discharge “only when the compromise performance is rendered.” What we must look for, therefore, is a fair compromise whereby the parties settle their dispute in substitution for the litigation permitted by the Federal Acts; there is no mystic- significance to be accorded a “satisfaction” upon some assumed “final award.” When a state procedure accomplishes just- that by agreement of all concerned, it should therefore be at least as valid as a formal release secured on payment of a few hundred dollars. And certainly no invidious distinction should be made so that only a purely temporary injury can be settled in this way, and that any permanent injury is excluded from settlement just because -the state process requires continuing payments for the good of the injured employee.

Analysis of the New York cases, we think, re-enforces these conclusions. The statutory addition to § 113 supra adding the provision for waiver came in 1922 and is considered in Fitzgerald v. Harbor Lighterage Co., 244 N.Y. 132, 135, 136, 155 N.E. 74, per Cardozo, J. Discussing the prior cases, he points out that in Brassel v. Electric Welding Co. of America, 239 N.Y. 78, 145 N.E. 745, a final award accepted by the claimant was held an accord and satisfaction, extinguishing a maritime cause for damages for the same injuries, while in Larscy v. T. Hogan & Sons, 239 N.Y. 298, 146 N.E. 430, acceptance of an award not final was at most an accord and not a satisfaction, leaving the cause for damages unextinguished. The latter case would be binding unless the new statute changes the previously existing rule; but “we find it unnecessary to determine whether waiver in accordance with this section would supersede the remedy in admiralty” because a complete waiver involving claimant, employer; and insurance carrier had not been shown. Three judges concurred; Judge (later Chief Judge) Crane filed a dissenting opinion, in which Chief Judge Hiscock and Judge McLaughlin concurred, upholding the validity of the statute in full.

This is the only case in the Court of Appeals considering the statute; it has been accepted, not unnaturally, by later cases, as not impugning the statute. It has been upheld in several cases within admiralty jurisdiction but for the payments made of state compensation awards. Kane v. Morse Dry Dock & Repair Co., 250 App.Div. 888, 295 N.Y.S. 118, appeal dismissed 277 N.Y. 533, 13 N.E.2d 460, motion to amend remittitur denied 277 N.Y. 652, 14 N.E.2d 205; Turner v. Morse Dry Dock & Repair Co., 255 App.Div. 896, 7 N.Y.S.2d 456; Haglund v. Morse Dry Dock & Repair Co., 255 App.Div. 895, 7 N.Y.S.2d 465; Agne v. Morse Dry Dock & Repair Co., 255 App.Div. 897, 7 N.Y.S.2d 467; Ahern v. South Buffalo Ry. Co., 277 App.Div. 1067, 100 N.Y.S.2d 639. In these cases, as in the one before us, there had been long continued payment and acceptances of awards made by the Board; the courts had no occasion, as we have none, to determíne how much less than the continuous acceptance of officially adjudicated awards actually shown might- be sufficient to satisfy the state statute and the federal law. . ' ■

Our case of Wyatt v. New York, O. & W. R. Co., 2 Cir., 45 F.2d 705, 708, certiorari denied New York, O. & W. R. Co. v. Wyatt, 283 U.S. 829, 51 S.Ct. 353, 75 L.Ed. 1442, is not at all opposed. There we had to deal with an agreement of waiver, which in itself after providing for future payments — in addition to the four weeks already covered — went on to state that the payments should constitute a full and complete accord. Further, no award was made, since the claimant repudiated the agreement before any action was taken by the Board. In construing the agreement Judge Swan said: “Ordinarily an executory contract constituting an accord is not a bar to an action upon the original claim; ‘satisfaction,’ that is, full performance of the contract of accord, is also necessary. If the parties so intend, the contract of accord may itself be taken as a satisfaction and discharge of the original claim; but the intention must be clear, and the presumption is otherwise.” To this he cited Williston, Contracts §§ 1846, 1847; now the reference to Corbin on Contracts supra should be added. And stressing that the presumption should be the stronger where the employer draws the document and presents it to an employee little versed in the making of contracts, he held that the contract could not there be construed as itself sufficient to operate as a discharge. Thus the court did not pass upon the effect of a series of awards by the Board fully complied with by the employer and the insurance carrier and accepted by the employee.

Affirmed.

1 . Since the Board’s records show that at the time of the June hearing defendant had then paid plaintiff a total compensation of $1,828.57 for 73-1/3 weeks, this would suggest that payments at $18 a week continued' until the final hearing. In asking for a rehearing below, however, plaintiff asserted that there were no payments after June 18, 1948, and the court accepted that, view, page 778 of 91 F. Supp.