
    Domenico Colaizzi, Respondent, v. Pennsylvania Railroad Company, Appellant.
    Fourth Department,
    March 8, 1911.
    Railroad—negligence—relief fund for employees—agreement that acceptance of benefits from fund shall bar action for negligence — agreement not against public policy — effect of acceptance of benefits from fund.
    An agreement between a railroad company and its employee, who paid a monthly sum of money in order to be entitled to share in a relief fund organized by the railroad, that the acceptance of benefits from the fund for injury or death shall operate to release all claims for damages against the railroad arising from such injury or death, is not void as against public policy on the theory that it releases the company from liability for its wrongful acts. An employee who, knowing the térras of the contract, accepted payments from the relief fund cannot recover against the railroad in an action for negligence. . This, because it was optional with the employee whether he would hold the company in an action for negligence, or accept the benefits from the fund.
    Such agreement is not within the prohibition of chapter 657 of the Laws of 1906 providing that persons intrusted with the authority of superintendence by a railroad are its vice-principals and that no contract between the employee and the railroad shall exempt or limit the liability of the railroad from the provisions of the statute. The employee'has the option to sue under the statute or accept the benefits of the relief fund..
    The act aforesaid is designed to prevent a railroad corporation from forestalling by contract an employee’s right to recover for injuries sustained, not to prevent him from compromising a claim after he has one.
    
      Such relief fund organized by a railroad company does not come within the condemnation of section 301 of the Insurance Law governing casualty insurance corporations upon the co-operative or assessment plan.
    Appeal by the defendant, the Pennsylvania Railroad Company, from an order of the Supreme Court, made at the Erie Trial Term and entered in the office of the clerk of the county of Erie on the 17th day of August, 1910, setting aside the verdict of a jury in favor of the defendant and directing a new trial.
    
      Frank Rumsey and H. J. Adams, for the appellant.
    
      Horace O. Lanza and Frank A. Miceli, for the respondent.
   Spring, J.:

The action is in negligence. The plaintiff was employed as one of a section gang by the defendant, and while engaged in his duties south of the village of East Aurora the handcar on which he was working was run into by a backing freight train. He and his fellow-workmen saw the train slowly approaching and the foreman, apprehending a collision, told the men to jump from the car platform, which was only two feet above the ground. All did as directed, and the plaintiff fell under the handcar and was run over by it and also by the caboose of the backing train, and his right leg was crushed and thereafter amputated above the knee. The trial judge very fairly submitted to the jury the questions of the negligence of the defendant and plaintiff’s contributory negligence, and they have been determined adversely to the plaintiff, and the verdict is sustained by sufficient evidence.

The trial judge set aside the verdict as matter of law in order that another question in the case might receive judicial construction by the appellate courts. The memorandum filed contained the following : “ It seems to be conceded by counsel on either side that the questions here raised have not been passed upon by any of the Appellate Courts of the State, and that contrary views have been expressed by the courts in other States where practically the same questions were, involved, and that there are at least four other cases having passed the initial court are now awaiting the decision in this one by the Appellate Division. Under these circumstances the rights of the parties to this case would be better served by the granting of this motion and thereby placing the burden upon the defendant company of the appeal.”

In February, 1886, the defendant, in connection with associated railroad companies, organized a voluntary relief fund society for its employees. Any employee under the age of forty-five years, upon passing a satisfactory physical examination, is permitted to become a member of this organization. An agreement, in writing, is entered into with him whereby he agrees that a stipulated sum is to be deducted monthly from his wages, and is to be his contribution to the fund. The members are divided into classes, and the sum paid by any member determines the class to which lie belongs, and the distribution of moneys is also graded and regulated: A book of rules is given to each member, clearly defining the plan and scope of the organization, including the benefits to be received by him in case either of sickness or personal injuries while in the employ of the defendant. The monthly sum to be paid is stated in the agreement, and the amounts to be received by the member are definitely set forth in the book of regulations given to the member at the time of the execution of the agreement. The plaintiff, in case of permanent injury, in pursuance of his agreement, was entitled to fifty cents a day for the first fifty-two weeks, and thereafter twenty-five cents a day.

Section 45 of the regulations contained this provision: “ If the injury is of a permanent character benefits will cease when the member shall be declared by the Medical Examiner as able to earn a livelihood in an employment suited to his capacity.” Section 5 of the regulations provides as follows: The Company will take general charge of the Department; guarantee the fulfillment of the obligations assumed by it in conformity with the regulations from time to time established-; take charge of the funds, and be responsible for their safe keeping; supply the necessary facilities for conducting the business of the Department, and pay all the operating expenses thereof.”

An advisory committee is also provided for, consisting of certain officers of the defendant, and of members of the relief fund chosen by ballot by the contributing employees. This committee is vested with “ general supervision of the operations of the Department, and see that they are conducted in accordance with the regulations.”

The membership of the relief fund is composed of from 100,000 to 110,000 employees of the defendant, and the aggregate of their contributions to the fund in 1907 was over $700,000. More than three-fourths of the entire fund was expended in payment of sick benefits to its members, and the residue on account of injuries received.

As has been seen, the appellant agrees to take charge of the fund and be responsible for its investment and safekeeping, and for its distribution in compliance with the scheme of' the contract. It agrees to provide free of cost whatever surgical attendance may be needed to the injured employee, to pay all the expenses of administering, investing and distributing the fund so that the entire amount which goes into the fund shall be used for the benefit of its members. The defendant’s interest, however, extends beyond these obligations. It agrees to make up any deficits which may occur in the fund in order that each member may receive the sums to which he may be entitled in the carrying out of the provisions for his benefit. The evidence shows that the contributions of the defendant to the fund in 1907 were the sum of more than $217,000, and during the year 1908 about $234,000. The company, however, is not making the contributions solely from a philanthropic standpoint. Undoubtedly the welfare of its employees and the development of the friendly relations between them and the officers and agents of the appellant and the prevention of strikes and labor troubles may have been an inducing motive for its participation in the enterprise.

Each member, upon applying for membership, agrees in the written application as follows ; “ And I agree that the acceptance of benefits from the said Eelief Fund for injury or death shall operate as a release of all claims for damages against said Company arising from such injury or death, which could be made by or through me, and that I or my legal representatives will execute such further instrument as may be necessary formally to evidence such acquittance.” If the employees of the defendant who are injured accept these benefits, thus relieving the defendant from defending actions for personal in juries and from judgments which may be recovered against it therefor, it to that extent has a pecuniary interest in this fund. In construing the application and agreement we must considei* that it affects an army of employees, that it had been in force more than twenty years when the plaintiff became a member, and that the presumption is by that time the employees understood fully the import of the agreement which they had entered into.

An employee of the defendant is not required to join the relief fund. As its name indicates, membership in it is voluntary. The plaintiff was in the employ of the defendant several years before he became a member of the fund in January, 1907. He could have terminated his membership at any time without interfering with or ending his service for the defendant. So acceptance of the benefits in case the member is injured and entitled to benefits is not obligatory upon him. He has the election to accept or refuse them. If received, his cause of action for damages for the injuries sustained is lost. If he declines to receive the sums which the agreement assures to him, his membership in the relief fund is no bar to the maintenance of any action which he may have to recover damages for injuries inflicted upon him.

The plaintiff was injured, as has been stated, June 13,1908. He was taken to a hospital, where he remained several weeks; returned to his home, and on the thirty-first of July of that year accepted from the relief fund department a check for eight dollars and fifty cents, the first payment for benefit for seventeen days on account of accident,” as the check or order provided. He received the money and signed the appended voucher. In a similar manner five other payments were made to him, extending down to December 28, 1908, about the time of the commencement of the action, and payments then ceased. The sums pajd amounted to eighty-five dollars.

The plaintiff testified that he did not understand the effect of the agreement, nor did he know of the clause in the application providing that acceptance of benefits from the relief fund for injuries should operate as a release of claims for damages against the defendant. He had a book of regulations in his possession for nearly a year and a half and knew that seventy-five cents a month were taken from his wages by reason of his membership in the organization. He had been an employee of the defendant for several years, during all of which time the organization had been in operation, and it probably was often the subject of conversation with his fellow-workmen.

Again, in response to the written or printed question of the physician who examined him, he stated tliat the regulations had been read to him. The physician, not at the time of the trial in the employ of the defendant or the relief fund, was a witness on behalf of the defendant. He testified that the plaintiff informed him he knew of the regulations and they had been explained to him.

The trial judge submitted this question of fact to the jury very clearly and fairly. He summarized the legal proposition for the benefit of the jury in this language : For all the purposes necessary to be considered by you in the discharge of your duties here, it is sufficient to say, and I charge you, that if the plaintiff became a member of this Voluntary Relief Fund .Department, as contended by the defendant, and subsequently received the benefits (which he admits he did receive), in fulfillment of this contract with the defendant, that it bars him from a recovery in this action. If he became a member of this Relief Department, permitted the defendant to deduct seventy-five cents per month from his wages each month and received these benefits with a conscious understanding of his relation to the defendant company, then I charge you that it become a bargain which he was authorized to make, and thereby waive upon his part, any claim for damages for an injury resulting from negligence upon the part of the defendant and he cannot recover.”

The verdict of the jury established this question of fact against the plaintiff, and we, therefore, on this appeal must start with the proposition settled that when the plaintiff became a member of this organization he knew the application contained the release provision quoted and comprehended its import. There is no claim that the plaintiff was induced or urged to accept the check or order from the relief fund department, or that any advantage was taken of him, or that he did not realize the payment was on account of his membership in it and by reason of the injuries he had sustained. There is no suggestion that he was not conscious when he accepted the check or signed the voucher accompanying it.

The chief claim of the plaintiff is that the release clause in the application renders the agreement void as against public policy. The research of the counsel and what investigation I have been able to make have not resulted in discovering any authority in any appellate court in this State on this proposition.

The counsel for the respondent relies upon Johnston v. Fargo (184 N. Y. 379, affg. 98 App. Div. 436). In that case the plaintiff upon entering the service of the defendant entered into an agreement in writing which contained this provision: “I do further agree, in consideration of my employment by said American Express Company, that I will assume all risks of accident or injury which I shall meet with or sustain in the course of such employment, whether occasioned by the negligence of said company, or any of its members, officers, agents or employees, or otherwise.” He was injured in the course of his employment, and the defendant interposed the agreement as a bar to the plaintiff’s cause of action. The trial court, and the appellate courts as well, held that the provision was void as against public policy. I do not regard the case as an authority for the respondent on this appeal. The provision there was made effective at the inception of the agreement. It relieved the defendant inevitably from a burden which the law justly imposed upon it to protect and safeguard its employees. If the plaintiff was injured without fault of his own and because of the flagrant negligence of the defendant, no liability to respond in damages existed and the defendant understood this when the agreement was executed. The employee was obliged to work to earn a livelihood. He was at the mercy of the defendant, and they did not contract on equal terms. If such an agreement were held valid there would be no restraint on the careless operation of machinery or appliances. The plaintiff had no choice in the matter. Acceptance of the service could only be obtained by the execution of the agreement which absolved the defendant from responsibility for its own carelessness.

In the present case, at the outset membership in the society was voluntary, although that fact is not significant on this vital proposition. The member knew when he joined the association that if he was injured, whether he accepted the benefits accruing to him by virtue of his membership or resorted to the courts, precisely the same as if he had not entered into the organization, rested entirely with himself. He might prefer to accept the sums inuring to his benefit rather than take the chances of uncertain litigation. He might realize that the injuries were the result of his own carelessness, or that the defendant was free from fault. In that event he had a certainty in accepting the benefits. On the other hand, he might decide that he had a good cause of action and the sums he was entitled to receive from the relief fund were inadequate compensation for the injuries sustained. Whatever conclusion he might' reach he was free to carry into execution, and was not hampered in his decision by the clause referred to.

The plaintiff was seriously injured. A jury have by their general verdict, however, held that the defendant is not liable to respond in damages. Whether because he executed the application, comprehending fully its import, or whether the defendant was not responsible for the injuries he sustained, we do not know. We are justified in assuming that all these material questions of fact were decided adversely to the claim of the plaintiff. (Smith v. Weston, 159 N. Y. 194, 198; Wolf v. Goodhue Fire Ins. Co., 43 Barb. 400 ; affd., 41 N. Y. 620; People ex rel. Hanrahan v. Board of Police, 35 Barb. 644; Card v. Duryee, 66 N. Y. 651.)

Serious as were his injuries, therefore, if he had no cause of action on the merits against the defendant, he relinquished nothing in accepting what he was entitled to in pursuance of his membership. The contract with the provision in it may not operate unfairly to the employees considered in their entirety. Of the 5,000 or 6,000 members injured annually by far the larger number were trivial injuries, and yet the members received payments from the relief fund. They received back more than they contributed.

There are many authorities in other States construing provisions similar to the one in controversy, and in several the precise one, and in nearly every instance upholding their validity. I will cite only a few of these. (Twaits v. Penn. R. R. Co., 75 Atl. Rep. 1010,1013; Johnson v. Philadelphia & R. R. R. Co., 163 Penn. St. 127,134; Ringle v. Penna. R. R. Co., 164 id. 529 ; Pittsburg, C., C. & St. L. R. R. Co. v. Moore, 152 Ind. 345, 353 et seq. ; Donald v. Chicago, B. & Q. R. Co., 93 Iowa, 284, 293 et seq. ; Petty v. Brunswick & Western R. Co., 109 Ga., 666, 670 et seq. ; Eckman v. Chicago, B. & Q. R. R. Co., 64 111. 444.) The decisions in the Federal court are to the same effect. (Owens v. Balt. & Ohio R. R. Co., 35 Fed. Rep. 715; Shaver v. Pennsylvania Co., 71 id. 931; Day v. Atlantic Coast Line R. Co., 179 id. 26.)

The Chancery Court of New Jersey in Twaits v. Perm. R. R. Co. (75 Atl. Rep. supra) used this language (at p. 1013) in giving validity to the same clause we are now considering: “ Succinctly stated, the theory and argument of the complainant are as follows: The law forbids, and therefore treats as invalid a contract between an employer and an employee which absolves the employer from responsibility for his own negligence. This contract, entered into between Twaits, an employee of the Pennsylvania Eailroad Company, and the Belief Department, would come under this ban and be invalid were it not for the fact that after an accident the employee is left free either to sue the company or accept the benefits accruing to him by reason of his membership in the Belief Department. Such is the construction placed upon this contract by our own and many other courts.”

In Johnson v. Philadelphia & R. R. R. Co. (163 Penn. St. 127 supra), a leading case, the Supreme Court of Pennsylvania in passing upon a like provision thus expressed itself (at p. 134): “ It is not the signing of the contract but the acceptance of benefits after the accident that constitutes the release. The injured party, therefore, is not stipulating for the future, but settling for the past; he is not agreeing to exempt the company from liability for negligence, but accepting compensation for an injury already caused thereby.”

Second. It is urged by the respondent that the provision in the application is within the prohibition of chapter 657 of the Laws of 1906 (adding to Railroad Law [Gen. Laws, chap. 39 ; Laws of 1890, chap. 565], § 42a), known as the Barnes act, and in pursuance of which this action is brought and which is now section 64 of the present Eailroad Law (Cpnsol. Laws, chap. 49; Laws of 1910, chap. 481). By that act persons intrusted with the authority of superintendence” by a railroad company are vice-principals of the corporation and not fellow-servants of the injured employee. A.t the close of the section appears this provision: And no contract, receipt, rule or regulation, between an employee and a railroad corporation or receiver, shall exempt or limit the liability of such corporation or receiver from the provisions of this section.” There is nothing in the clause in the application made by the plaintiff which exempts or limits the liability of the defendant. He has two remedies available to him. As in any case where a person has an opportunity of choosing one of two or more remedies, the eleption of one thereafter bars him from resorting to another. The right of selection in this case is not interfered with by his agreement. It is the voluntary act of the member after he has been injured which may exempt the defendant from liability. The clause in the Barnes act is designed to prevent a railroad corporation from forestalling by contract an employee's right to recover for injuries which he has sustained, not from permitting him to compromise a claim after he has made one. Any act which forbade an employee from exercising untrammeled his right to adjust his damages for injuries with his employer, or which debarred him from choosing which of two remedies available to him he will adopt, would be invalid. • .

The authorities in other jurisdictions, where statutory prohibitions prevail similar to that contained in the Barnes act, uphold the validity of a contract like the one in suit. (Donald v. C., B. & Q. R. R. Co., 93 Iowa, 284, 294; Hamilton v. S., K., N. & W. R. R. Co. 118 Fed. Rep. 92; Pittsburg, C., C. & St. L. R. R. Co. v. Moore, 152 Ind. 345; Day v. Atlantic Coast Line R. Co., 179 Fed. Rep. 26.)

Third. ¡Nor does the relief fund come within the condemnation of section 201 of the Insurance Law of the State. (Gen. Laws, chap. 38 [Laws of 1892, chap. 690], § 201, as amd. by Laws of 1907, chap. 273; now Consol. Laws, chap. 28 [Laws of 1909, chap. 33], § 201; Hunt v. Northern Central R. Co., 124 App. Div. 43; Johnson v. Philadelphia & R. R. R. Co. 163 Penn. St. 127,133; Donald v. Chicago, B. & Q. R. co., 93 Iowa, 284, 295, supra.)

The case of Chicago, Burlington & Quincy R. R. Co. v. McGuire (219 U. S. 549), recently decided in the United States Supreme Court, is not in conflict with the conclusion here reached. In that case the statute of the State of Iowa made every railroad corporation liable for all damages sustained by any employee “ in consequence of the neglect of the agents, or by any mismanagement of the engineers or other employees thereof, and in consequence of the wilful wrongs * * * of such agents, engineers or other employees.” An amendment to this statute in 1898 provided, among other things, that neither any contract of insurance relief ” between the employee and the corporation, nor “ the acceptance of any such relief, insurance, benefit or indemnity by the person injured, his widow, heirs or legal representatives after the injury, from such corporation, person or association, constitute any bar or defense to any cause of action brought under the provisions of this section.” But it specifically provided that any settlement for damages subsequent to the injuries received should not be invalidated by this section. The United States Supreme Court held that it was within the competency of the State Legislature to pass an act of this kind and that was the only question that was passed upon by that court.

The order should be reversed.

All concurred.

Order reversed, with costs of this appeal to appellant, and motion for new trial denied.  