Bendler v. Bendler , 3 N.J. 161 ( 1949 )

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.]

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] This cause was certified for appeal by this court, et meromotu, to the Appellate Division of the Superior Court, where it was pending on appeal from the Hudson County Court, pursuant to Article VI, section V, paragraph 1 of the Constitution of 1947 and Rule 1:5-1 of this court.

The primary question is whether compensation is recoverable under the Workmen's Compensation Act (R.S. 34:15-7 et seq.) by a husband who was injured while serving his wife, at a stipulated weekly salary, in the operation by her of an embroidery business separate and apart from him. The issue was resolved in the negative by the Compensation Bureau and the Hudson County Court.

The husband had no proprietary interest in the enterprise; all the property and assets of the business were the sole and separate estate of his wife. It is conceded that the injury was the result of an accident arising out of and in the course of the service. The mishap occurred while the husband was operating an automobile in the pursuit of his work; and the inquiry is as to the existence of the relationship between the husband and wife which is made a sine qua non in the definition of the statutory class.

The question is fundamentally one of contractual capacity, for the obligations of the optional or elective compensation provisions comprised in Article II of the Compensation Act are thereby constituted an integral part of the contract of hire between a master and his servant, and so are contractual in nature. "Employer" is declared in Article 3 to be synonymous with master; and "employee" synonymous with servant, "and includes all natural persons who perform service for another for financial consideration, exclusive of casual employments," as therein defined. R.S. 34:15-36. In common usage, one cannot be an employee without a contract. Employment ordinarily presupposes a contractual relation. In re Humphrey's Case, 227 Mass. 166,116 N.E. 412 (1917). But there is more to render certain the statutory concept. The elective scheme becomes operative only upon its acceptance by mutual "agreement, either express or implied," as therein provided. R.S. 34:15-7. Such "agreement" constitutes "an acceptance of all the provisions" of the Article and a surrender by the parties of "their rights to any other method, form or amount of compensation or determination thereof than as" therein provided. R.S. 34:15-8. Barring "an express statement in writing" as "a part" of the "contract of hiring * * *, either in the contract itself or by written notice from either party to the other," that the provisions of Article II are not "intended" to apply, it is "presumed that the parties have accepted the provisions" of the Article, "and have agreed to be bound thereby." R.S. 34:15-9. The "contract for the operation of the provisions" of the Article is terminable by either party upon sixty days' notice in writing "prior to any accident." R.S. 34:15-11. The term "hire" has reference to the act of engaging the services of a person for compensation.

Compulsory compensation without regard to fault, in lieu of the common-law liability for negligence, confined to certain gainful occupations denominated "hazardous employments," has been treated as within the reserve police power of the State. The loss of earning power is considered an expense of the common enterprise, just as much so as the repair of broken machinery or other expense falling upon the employer; and the substitute compensatory scheme is sustainable as a reasonable measure grounded in natural justice to serve the general welfare. NewYork Central R.R. Co. v. White, 243 U.S. 188, 37 S.Ct. 247,61 L.Ed. 667 (1916); Mountain Timber Co. v. Washington,243 U.S. 219, 37 S.Ct. 264, 61 L.Ed. 685 (1917); Ward Gow v.Krinsky, 259 U.S. 503, 42 S.Ct. 529, 66 L.Ed. 1033 (1922);Madeira Sugar Pine Co. v. Industrial Accident Comm.,262 U.S. 499, 43 S.Ct. 604, 67 L.Ed. 1091 (1923).

There can be no doubt that the elective system of compensation provided by Article II is in essence contractual. This is so whether the provisions of that Article be deemed the subject of a true contract grounded in the will of the parties, either express or implied in fact, or an obligation which has its source in the statute irrespective of the will of the parties in the particular case, and so a quasi contract or a contract "implied by the law." Unless there be an affirmative rejection of the plan for the alternative common-law liability in tort as modified by the provisions of Article I of the Act, either at the outset or later, there is a conclusive presumption that the parties "have accepted the provisions" of the Article and "have agreed to be bound thereby;" and thus by operation of law, if not by the genuine assent of the parties, the provisions of Article II become engrafted into the basic contract of hire and so become a component part of it. It is not indispensable that there be reality of consent embracive also of the terms of Article II, expressed in words or implied by acts and circumstances; the whole constitutes the contract. But the requisite statutory relationship is non-existent unless it arises from a contract of hire, express or implied in fact. While there may not be a conditional acceptance of Article II, its provisions are in no real sense compulsory; the alternative is Article I, providing compensation for negligence and abolishing the defenses of contributory negligence and assumption of risk in the exercise of the general legislative jurisdiction to grant reliefs and remedies in substitution for those afforded for injuries attributable to the master's fault. Sexton v. Newark Dist.Telegraph Co., 84 N.J.L. 85 (Sup. Ct. 1913); affirmed,86 N.J.L. 701 (E. A. 1914); Winfield v. Erie Railroad Co.,88 N.J.L. 619 (E. A. 1916); Troth v. Millville BottleWorks, 89 N.J.L. 219 (E. A. 1916); Steinmetz v. Snead Co., 123 N.J.L. 497 (Sup. Ct. 1939); affirmed, 124 N.J.L. 450 (E. A. 1940); affirmed, 311 U.S. 605, 61 Sup. Ct. 12,85 L.Ed. 383; Miller v. National Chair Co., 127 N.J.L. 414 (Sup. Ct. 1941); affirmed, 129 N.J.L. 98 (E. A. 1942);American Radiator Co. v. Rogge, 86 N.J.L. 436 (Sup. Ct. 1914); affirmed, 87 N.J.L. 314 (E. A. 1915), error dismissed, 245 U.S. 630, 38 Sup. Ct. 63, 62 L.Ed. 520 (1917). It was the province of the Legislature in this manner to regulate contracts of hire and "to determine the incidents of such relationship under the statutory contract or obligation."Young v. Sterling Leather Works, 91 N.J.L. 289 (E. A. 1917).

Thus it is that the right of compensation under Article II is grounded in a true contract of hire as supplemented by the terms of that enactment. The contract of hire is a basic prerequisite; and unless it comes into being by the mutual assent of the parties, Article II does not become operative. There is in that circumstance no contract to which the terms of the Article can attach as a constituent element. The evident legislative design was the incorporation, in default of adverse action by the parties, of the compensatory system provided by Article II into the common-law contract of hire; and where, as here, there was no such relationship for want of contractual capacity, these provisions of the Compensation Act have no operative force whatever. It was not intended to alter the essential character of the relationship between master and servant, but rather to substitute, at the will of the parties, a method of compensation for injury without fault in lieu of the common-law rights and liabilities for all employees of the statutory class; and the corollary is that there be a conventional contract of hire, for without it the relation of master and servant does not subsist. The Act had its origin in the general experience that the common-law remedy for negligence did not afford adequate protection for the workmen, and that their welfare and the common interest as well would be served if indemnity for the risks of service, even without fault, should be made to fall upon industry as an incident of the operation and eventually upon the consumer. In a word, the Act provides "social insurance" superimposed upon a real contract of hire. Young v.Sterling Leather Works, supra.

But a contract of hire between spouses is utterly void and unenforceable at law. The acts empowering a married woman to bind herself by contract as if a feme sole, and to sue and be sued in her own name, apart from her husband, have not so far severed the unity of person and interest of husband and wife in the law as that their contracts inter se are enforceable at law and are no longer the subject of jurisdiction in courts of equity alone. The disablement of husband and wife to contract with and to sue each other continues "except as heretofore, and except as authorized" by the provisions of the chapter relating to married persons embodied in the Revision of 1937. P.L. 1852, p. 407;Revision of 1874, p. 468, §§ 5, 10, 11, 14; Revision of 1877, p. 638, §§ 5, 10, 11, 14; P.L. 1895, p. 821; Comp.Stat. 1910, p. 3226, §§ 5, 10, 11, 14; P.L. 1934, p. 490;R.S. 37:2-5, 37:2-6, 37:2-16. Vide Alpaugh v. Wilson,52 N.J. Eq. 424 (Ch. 1894); affirmed, Ibid., 589 (E. A. 1894); Turner v. Davenport, 61 N.J. Eq. 18 (Ch. 1900); reversed on other grounds, 63 N.J. Eq. 288 (E. A. 1901).

Yet it is said that contracts of husband and wife inter se are enforceable in equity if "shown to be fair;" and that "if enforceable in any forum they are valid rather than void." The acceptance of this view would nullify the express statutory incapacity cited supra. Contracts of husband and wife during coverture are void at common law; and they are void under the statute. Woodruff v. Clark Apgar, 42 N.J.L. 198 (Sup. Ct. 1880); Thomson v. Taylor, 66 N.J.L. 253 (E. A. 1901). In the former case, Chief Justice Beasley had this to say with respect to the cited disabling statutory provision: "This language is not uncertain, and the provision is perspicuous with respect to its policy. The object was to leave the husband and wife, touching their capacity to bargain together, on the ancient footing of the common law. The clause is virtually a legislative declaration that, as heretofore, they may enter, inter sese, into equitable agreements, but not into legal agreements. It was obviously intended that the court of equity should, as it had always done, prior to the amplification of the rights of the wife, exercise a supervision over the engagements of married persons. * * * Contracts of this class do not always rest, in point of validity, on fixed and palpable rules of law; sometimes they approach closely to the field of discretion."

It would seem that on principle a contract void at law for mutual disability is likewise without contractual force in equity, for otherwise the legislative policy could be set at naught by the exercise of the equitable function. It is not the province of equity to invade this fundamental policy of the law. The essential elements of a contract are the same in equity and at law. In general, the same rules prevail in both jurisdictions as to parties and their capacity to contract, as to consideration, and as to the assent or aggregatio mentium. Yet equity interposes in certain circumstances to prevent an unconscionable advantage by one party over the other; and it will enforce postnuptial agreements between husband and wife which are in the particular circumstances deemed binding in conscience.Pomeroy's Equity Jurisprudence (5th Ed.), § 1293. It recognizes equitable contracts by representations and acts, irrespective of a common intention to be bound. It takes cognizance of special rights grounded in conscience which are not noticed at law. Ibid., §§ 1294, 1295. And it is the rule that, while a married woman is incapable of binding herself personally in equity to the same extent as at law, her contracts relating to or made in view of her separate estate are so far valid and effectual as to be enforceable against her separate estate. Equity has never clothed married women with the capacity to bind themselves personally by contract. Their contracts, when void at law, are deemed in equity contracts sub modo only. The liability in such cases is not legal, but equitable only, enforceable against the wife's separate estate according to the dictates of equity and good conscience. The true rationale of the doctrine is that "the liability of a wife's separate property for her engagements is a mere equitable incident of her separate estate, which is itself a creature of equity." Wood v.Chetwood, 44 N.J. Eq. 64 (Ch. 1888); affirmed, 45 N.J. Eq. 369 (E. A. 1889); Healey v. Healey, 48 N.J. Eq. 239 (Ch. 1891); Demarest v. Terhune, 62 N.J. Eq. 663 (Ch. 1901); Woodruff v. Clark Apgar, supra; Pomeroy's EquityJurisprudence (5th Ed.), §§ 1121, 1122, et seq., 1293. The correlative equitable rights and duties which arise out of the transaction constitute the subject of equitable cognizance.Ireland v. Ireland, 43 N.J. Eq. 311 (Ch. 1888); Garwood v.Garwood, 56 N.J. Eq. 265 (Ch. 1897); Adoue v. Spencer,62 N.J. Eq. 782 (E. A. 1901); Lister v. Lister,86 N.J. Eq. 30 (Ch. 1916); Fike v. Fike, 3 N.J. Misc. 485 (1925); affirmed, 99 N.J. Eq. 424 (E. A. 1926). The reason of the rule was thus stated by Lord Justice James in Jones v. Grissell,L.R. 12, Ch. Div. 484 (1879): "In equity the liability is to have her separate estate taken from her for the benefit of a person with whom she had contracted on the faith of it. That was a special equitable remedy arising out of a special equitable right." And in Owens v. Dickenson, Craig Ph. 48, 53, Lord Cottenham said that "the separate property of a married woman being a creature of equity, it follows that, if she has a power to deal with it, she has the other power incident to property in general; namely, the power of contracting debts to be paid out of it; and inasmuch as her creditors have not the means at law of compelling payment of those debts, a court of equity takes upon itself to give effect to them, not as personal liabilities, but by laying hold of the separate property as the only means by which they can be satisfied." See, also, Sims v. Rickets, 35 Ind. 181 (1871).

But we have no occasion to pursue the inquiry. The principle thus invoked does not serve the husband here. Article II of the Compensation Act is not applicable where the relationship of master and servant does not subsist; and there is no such relation where the purported contract of hire is void at law. The Workmen's Compensation Bureau has no equitable jurisdiction. Indeed, this court has lately held that the Bureau is a mere administrative agency within the Executive Department of the State, and not a judicial tribunal. Mulhearn v. FederalShipbuilding Dry Dock Co., 2 N.J. 356 (1949). And chancery has no jurisdiction to enforce the provisions of the Compensation Act. Plainly, that was not within the legislative concept. These compensatory provisions are on well-settled principles enforceable only as ordained by the statute.

The opinion contra proceeds on the hypothesis that the Constitution of 1947 effected a merger of law and equity functions and that, by invoking the supposed rule that a contract between spouses is cognizable and enforceable in equity as written, if there be a consideration to support it, the legislative invalidation of such undertakings may be rendered wholly nugatory. The statement of the proposition carries its own refutation. The judicial authority may not thus usurp the legislative province. The wisdom of the policy is within the exclusive domain of the lawmaking body. The Constitution of 1947 has not altered the substance of equity. Its content and quality remain the same; it is the mode of administration that has been reconstituted.

The policy of the law as declared by the Legislature would not be served by a rule that would make a wife answerable to her husband for compensation for an injury sustained by accident arising out of his service to her, even though rendered in a business conducted by her separate and apart from him. There is no ground whatever for supposing that, byR.S. 37:2-5, the Legislature intended to provide for the enforcement of contracts of spouses inter se by equitable remedies only, without the medium of a trial by jury. Contracts between husband and wife have been deemed objectionable, not only because they are inconsistent with the common-law doctrine of unity of person and interest, "but because they introduce the disturbing influence of bargain and sale into the marriage relation, and induce a separation rather than a unity of interests." Wilder v. Brooks, 10 Minn. 50. The integrity of the marriage relation is of primary concern to society. That is the principle of the statutory provision that continues the common-law mutual disability of a husband and wife to contractinter se and to sue each other. Thompson v. Taylor, supra. The removal of the disability of spouses to enter into a co-partnership inter se was accomplished by the exercise of the legislative power. R.S. 37:2-16.1. And in so doing, the Legislature carefully limited the scope of the enabling provision. Contractual capacity involves substantive law within the exclusive competency of the legislative authority, rather than a mere rule of evidence subject to judicial control. Lest we forget, the legislative function is distinct from the judicial function, and neither branch may exercise the power granted to the other. Constitution of 1947, Article III, paragraph 1. "The judicial power involves the application of the law to concrete facts and, therefore, the investigation and establishment of the facts." Wigmore on Evidence (3rd Ed.), § 7.

It is no answer to say that the statute makes insurance coverage compulsory. The legislative command may not be observed; and the insurance carrier may become insolvent. The employer's liability for compensation is primary. R.S. 34:15-82, 34:15-86.Vide Brown v. Conover, 116 N.J.L. 184 (Sup. Ct. 1936).

And the inclusion of the husband's name on the payroll, and the acceptance of premiums calculated on the assumption that he was within the coverage of the Compensation Act, did not give rise to an estoppel in pais. Without necessarily implying that it is a decisive circumstance, the payroll did not disclose the relationship of husband and wife; and there is no suggestion that the insurance carrier had knowledge of the fact. The elements of estoppel are wanting. Estoppel arises only from words or conduct which have induced a harmful change of position and were reasonably likely to have produced that result. New JerseySuburban Water Co. v. Harrison, 122 N.J.L. 189 (E. A. 1939).

Judgment affirmed.