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Smart Summary

Factual and Procedural Background

The claimant, S.W. Bowne, was the president and majority stockholder of the S.W. Bowne Company, engaged in manufacturing cattle foods. Bowne, serving as the principal executive officer with a weekly salary of $70, suffered an accident on March 6, 1916, while performing manual labor assisting employees in handling lumber. The accident resulted in the loss of his left leg. Although his salary continued uninterrupted, he sought compensation under the Workmen's Compensation Law. The Industrial Commission found that Bowne was "employed as president," that the accident arose in the course of such employment, and awarded him the maximum compensation of $20 per week for 288 weeks. The company and other appellants challenged this award, leading to this appeal.

Legal Issues Presented

  1. Whether the president and principal executive officer of a corporation engaged in hazardous occupations qualifies as an "employee" entitled to benefits under the Workmen's Compensation Law when injured in the course of employment.

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Palmer v. Van Santvoord, 153 N.Y. 612, 615 Statutory interpretation: legislative intent is sought first in the words of the statute, then in occasion and policy. Guided the court to interpret the ambiguous terms of the Workmen's Compensation Law in light of legislative intent and policy.
Gurney v. Atlantic G.W. Ry. Co., 58 N.Y. 358 Definition of "employee" as one who receives salary or wages. Distinguished the broad and common meanings of "employee" and "workman," highlighting that higher officers are not commonly considered employees.
Matter of Stryker, 158 N.Y. 526 Officers of a corporation are not commonly regarded as servants or employees. Supported the distinction between higher officers and ordinary employees in the context of employment status.
Matter of Petrie, 215 N.Y. 335, 338 Workmen's Compensation Law aims to protect workmen injured in hazardous employment by providing compensation regardless of traditional negligence rules. Established the legislative purpose to protect manual laborers and workmen from loss of support due to injury.
Matter of Post v. Burger Gohlke, 216 N.Y. 544, 553 Legislative intent to protect workingmen and dependents from want due to injury in hazardous employment. Reinforced the policy focus on manual laborers and their dependents rather than corporate officers.
New York Central R.R. Co. v. White, 243 U.S. 188 Constitutionality and rationale of Workmen's Compensation Law as a means to prevent poverty and charity dependence of injured workmen. Supported the court's understanding of the law's social welfare purpose directed at manual laborers.
Bristor v. Smith, 158 N.Y. 157 Distinction between higher executive officers and workmen under labor laws. Used to justify maintaining the distinction between officers and workmen for compensation purposes.
Wakefield v. Fargo, 90 N.Y. 213 Similar recognition of the distinction between corporate officers and employees. Supported the court's conclusion that principal officers are not employees under the statute.

Court's Reasoning and Analysis

The court first identified the central question as whether a corporation's president and principal executive officer qualifies as an employee under the Workmen's Compensation Law. It analyzed the statutory language, noting the ambiguity in the definition of "employee" and "workman." While officers serve the corporation, they are not commonly regarded as employees or servants in the ordinary sense. The court examined the legislative purpose and policy underlying the statute, which aimed to protect manual laborers and workmen engaged in hazardous occupations from loss of support due to injury, based on a social welfare rationale.

The court emphasized that the statute’s title, definitions, and legislative history consistently distinguish between higher executive officers and manual labor employees. It found the claimant's status as president and majority stockholder inconsistent with the typical employee status contemplated by the law, especially given his substantial stock dividends and the nature of his control over the corporation.

Applying these principles, the court concluded that the claimant was not an employee under the statute, and thus not entitled to compensation benefits. It further noted the incongruity of awarding compensation at the statutory maximum based on loss of earning power to a principal officer with significant dividends and control. The court reversed the Industrial Commission’s order and dismissed the claim.

Holding and Implications

The court reversed the Industrial Commission’s order and dismissed the claimant’s compensation claim.

The decision directly affects the parties by denying workmen's compensation benefits to a principal executive officer of a corporation injured while performing manual labor. The court emphasized the legislative intent to limit such benefits to manual labor employees and not to higher corporate officers. No new precedent beyond this application was established, reaffirming the distinction between officers and employees under the Workmen's Compensation Law.

In the Matter of the Claim of S.W. BOWNE, Respondent, against S.W. BOWNE COMPANY et al., Appellants. STATE INDUSTRIAL COMMISSION, Respondent.

POUND, J.

The question presented on this appeal is whether the president and principal executive officer of a corporation which employs workmen in carrying on a hazardous occupation is entitled as such to the benefits of the Workmen's Compensation Law (Cons. Laws, ch. 67) as an employee if he meets with an accident.

The claimant was the president and majority stockholder of S.W. Bowne Company, which was engaged in the manufacture of cattle foods. (Group 29.) He was the principal executive officer. His salary was $70 a week. He met with an accident on March 6, 1916, while performing manual labor, assisting other employees of the corporation in handling lumber, which resulted in the loss of his left leg. His salary was not interrupted by the accident. His stock dividends in the preceding year amounted to $30,000. The industrial commission found he was " employed as president" of the company and that the accident arose out of and in the course of such employment and awarded him the maximum compensation of $20 per week for two hundred and eighty-eight weeks. The compensation payment for the loss of a leg shall not exceed $20 a week. (Workmen's Compensation Law, § 15, subd. 5.)

Conceding that a corporation may employ its officers as workmen, to handle lumber, operate lathes or set brakes, or to act as superintendents and foremen, it must also be conceded that the higher executive officers of a corporation are not, as such, its employees in the ordinary use of the word, nor are they expected to perform manual labor. The question is plainly presented whether the principal executive officer of a corporation is an employee within the definition of the word contained in the Workmen's Compensation Law. "The intention of the law giver is to be sought first in the words of a statute, and, if they are obscure, in the occasion of the enactment and in the policy which dictated it, when that can legitimately be ascertained." ( Palmer v. Van Santvoord, 153 N.Y. 612, 615.)

The title of the Workmen's Compensation Law is as follows: "An act in relation to assuring compensation for injuries or death of certain employees in the course of their employment and repealing certain sections of the Labor Law relating thereto, constituting chapter sixty-seven of the Consolidated Laws."

Section 1 provides that it shall be known as the Workmen's Compensation Law. Section 2 provides for compensation to employees. Section 3 defines employer and employee as follows:

"3. `Employer,' except when otherwise expressly stated, means a person, partnership, association, corporation, and the legal representatives of a deceased employer, or the receiver or trustee of a person, partnership, association or corporation, employing workmen in hazardous employments including the state and a municipal corporation or other political subdivision thereof (Subd. 3, amd. by L. 1914, ch. 316). 4. `Employee' means a person who is engaged in a hazardous employment in the service of an employer carrying on or conducting the same upon the premises or at the plant, or in the course of his employment away from the plant of his employer; and shall not include farm laborers or domestic servants."

The words of the statute are not clear. A workman in a broad sense is one who works in any department of physical or mental labor, but, in common speech, is one who is employed in manual labor, such as an artificer, mechanic or artisan, while an employee in a broad sense is one who receives salary or wages or other compensation from another ( Gurney v. Atlantic G.W. Ry. Co., 58 N.Y. 358), but in common speech the term is usually applied to clerks, laborers, etc., and not to the higher officers of a corporation. The statutory definition speaks of one " in the service" of an employer. In a broad sense the officers of a corporation serve it, but in common speech they are not referred to as its servants or employees. ( Matter of Stryker, 158 N.Y. 526.)

We turn to the occasion of the enactment and the policy thereof. In Matter of Petrie ( 215 N.Y. 335, 338) it was held that "The Workmen's Compensation Law was adopted in deference to a widespread belief and demand that compensation should be awarded to workmen who were injured and disabled temporarily or permanently in the course of their employment, even though sometimes the accident might occur under such circumstances as would not permit a recovery in an ordinary action at law. The underlying thought was that such a system of compensation would be in the interest of the general welfare by preventing a workman from being deprived of means of support as the result of an injury received in the course of his employment. The statute was the expression of what was regarded by the legislature as a wise public policy concerning injured employees." And in Matter of Post v. Burger Gohlke ( 216 N.Y. 544, 553) this court said: "The act was passed pursuant to a widespread belief in its value as a means of protecting workingmen and their dependents from want in case of injury when engaged in certain specified hazardous employments. It was the intention of the legislature to secure such injured workmen and their dependents from becoming objects of charity." In N Y Central R.R. Co. v. White ( 243 U.S. 188) Mr. Justice PITNEY, delivering the opinion of the court on the constitutionality of the Workmen's Compensation Law of this state, said: "In support of the legislation, it is said that the whole common law doctrine of employer's liability for negligence, with its defenses of contributory negligence, fellow servant's negligence, and assumption of risk, is based upon fictions, and is inapplicable to modern conditions of employment, that in the highly organized and hazardous industries of the present day the causes of accident are often so obscure and complex that in a material proportion of cases it is impossible by any method correctly to ascertain the facts necessary to form an accurate judgment, and in a still larger proportion the expense and delay required for such ascertainment amount in effect to a defeat of justice; that under the present system the injured workman is left to bear the greater part of industrial accident loss which because of his limited income he is unable to sustain, so that he and those dependent on him are overcome by poverty and frequently become a burden upon public or private charity; and that litigation is unduly costly and tedious, encouraging corrupt practices and arousing antagonisms between employers and employees."

The words of the statute, construed in the light of the legislative purpose, do not justify the conclusion that the distinction between the higher executive officers of the corporation and its workmen was obliterated. ( Bristor v. Smith, 158 N.Y. 157; Wakefield v. Fargo, 90 N.Y. 213; Matter of Stryker, 158 N.Y. 526.) The short title of the act, the limitation thereof to employers employing workmen, the evil to be remedied, the method of remedying the evil, the obvious incongruity of applying the law to the principal executive officer of a corporation as an accident insurance at the maximum rate of not to exceed $20 a week based on loss of earning power, all point conclusively to a distinction between such an officer and other employees which the court should not disregard.

The claimant in this case is willing, in order to collect a workman's allowance for himself from the insurance carrier, to assume a status that he might be the first to disclaim for any other purpose. Theoretically he was subject to the orders of his corporation and was liable to be discharged for disobedience. Practically he was the corporation and only by a legal fiction its servant in any sense. Section 30 of the act provides that "no benefits, savings or insurance of the injured employee, independent of the provisions of this chapter, shall be considered in determining the compensation or benefits to be paid under this chapter." But these words are appropriate to the meager advantages of a workman and not to the comfortable dividends of the stockholder. Upon the most liberal construction contended for consistent with the purpose of the law the order should be reversed, with costs in this court and in the Appellate Division against the industrial commission, and the claim dismissed.

HISCOCK, Ch. J., CHASE, HOGAN, CARDOZO, McLAUGHLIN and ANDREWS, JJ., concur.

Order reversed, etc.

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MATTER OF BOWNE v. BOWNE CO
(May 8, 1917)