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NIAGARA FIRE INS. CO. v. UNITED STATES

March 22, 1948

NIAGARA FIRE INS. CO. et al.
v.
UNITED STATES. COMMISSIONERS OF STATE INSURANCE FUND v. SAME



The opinion of the court was delivered by: MEDINA

In each of the above-entitled cases, plaintiffs move to strike defenses that the court lacks jurisdiction over the subject matter of the action; and, by cross-motion to dismiss, the United States challenges the power of the court to proceed and the sufficiency of plaintiffs' statement of their claim for relief. The cases were argued together; and it will be convenient to dispose of them together, as in each case the substantial question presented for decision is whether or not the Federal Tort Claims Act, 28 U.S.C.A. § 931(a), may be availed of by subrogees. In the Niagara case, subsidiary questions relate to the applicability of the Anti-Assignment Act, 31 U.S.C.A. § 203, and whether of not plaintiffs are the real parties in interest.

The Government's contentions have been sustained in whole or in part in the following cases: Old Colony Insurance Company v. United States, D.C.S.D. Ohio 1947, 74 F.Supp. 723; Rusconi v. United States, D.C.S.D. Cal. 1947, 74 Supp. 669; McCasey and Michigan Fire & Marine Ins. Co. v. United States, Civil No. 5991, E.D. Mich. *fn1" ; Bewick v. United States, D.C., 74 F.Supp. 730; Home Insurance Co. v. United States, Civil No. 10418, D.C.D.N.J., October 27, 1947 *fn1" Aetna Casualty & Surety Co. v. United States, D.C.E.D.N.Y., 76 F.Supp. 333. A contrary view was taken in Grace v. United States, D.C.D. Md., 76 F.Supp. 174; Hill vl United States D.C.N.D. Tex. 1947, 74 F.Supp. 129, and Wojciuk v. United States, D.C.E.D. Wis. 1947, 74 F.Supp. 914

On July 28, 1945, prior to the enactment of the Federal Tort Claims Act, 28 U.S.C.A. § 921 et seq., a United States Army airplane, in non-combatant flight, while piloted by a commissioned Army officer acting within the scope of his employment, collided with the Empire State Building in New York City. The damage resulting from the impact and from fire was widespread and substantial. In the Niagara case we are concerned with property damage to the Empire State Building, owned by Empire State Inc., property damage to the building located at 10 West 33rd Street owned by Vicent Astor, and property damage to various tenants occupying the Vincent Astor Building. Each of the five assureds comprised within this group filed claims with the War Department under the Military Claims Act, 31 U.S.C.A. 223b, for the total damage sustained by them, both insured and uninsured. The War Department in each case recommended to Congress payment of the uninsured portions of such claims and payment has been effected by appropriation acts of the 79th Congress (see H.R.Rep. 2655, 79th Cong., 2d Sess. (1946), to accompany H.R. 6683, p. 3). With respect to the insured portion of such claims, these were in due course paid by the insurance companies and, claiming owner ship by subrogation, the insurance companies have brought this action against the United States, asserting liability under the Federal Tort Claims Act.

 As there was at the time no general legislation waiving immunity in such cases, the insurance companies followed the traditional course of seeking reimbursement by private act of Congress. In instances where, upon common law principles, the Government would have been liable but for the doctrine of sovereign immunity, it had long been the practice of the Congress to entertain and examine such claims whether by the original claimants or by subrogees, and to effect payment by appropriation.

 The procedure for the payment of claims against the Government differed in respect of many classes of cases, prior to the enactment of the Federal Tort Claims Act. It would serve no useful purpose to describe this procedure in any detail, except in so far as it provides a background to aid in the ascertainment of the intention of the Congress in the portion of the Federal Tort Claims Act now under consideration. Suffice it to say, that certain categories of claims, in amounts not to exceed $ 1,000, might be disposed of administratively. Others followed the course of submission to the Congress, for reimbursement by private act. In the course of such administrative proceedings, the question had arisen as to the propriety and legality of making payments to subrogees. Thus the Small Tort Claims Act, 31 U.S.C.A. § 215, which became law on December 28, 1922, authorized the head of each department and establishment acting on behalf of the Government to determine any claim 'on account of damages to or loss of privately owned property where the amount of the claim does not exceed $ 1,000,' where the damage or loss was caused by the negligence of any officer or employee of the Government acting within the scope of his employment; and it was provided that the amount should be certified to the Congress and paid out of appropriations to be made therefor.

 On June 29, 1932 the Attorney General issued an opinion, 36 Op.Atty.Gen. 553, to the effect that the statute covered claims by subrogees and that it was lawful and proper to certify claims of subrogees for payment. Similar rulings were made from time to time by the Comptroller General in connection with other statutes in pari materia, containing the language 'on account of damage to or loss of privately owned property.' 19 Comp.Gen. 503, 506-7, November 18, 1939; 21 Comp.Gen. 341, October 17, 1941; 22 Comp.Gen. 611, January 7, 1943. The significance of these rulings is not merely that they represent the considered views of law officers of the Government, but that these views were acted upon by the Congress in numerous instances by the making of appropriations for the payment of claims thus certified, in favor of subrogees.

 In due course the claims of the subrogees herein for the portion of the property damage resulting from the Empire State Building crash which was covered by insurance and which had been paid by the various insurance companies, were examined and passed upon by the Committee on Claims of the House of Representatives of the 79th Congress. The exhaustive report of the Committee has been referred to above. The entire matter was reviewed in great detail; the reasons were stated for reporting favorably on the claims of the subrogees and it was recommended that legislation be enacted to effect payment of the claims. In the course of the discussion, the Committee commented on the fact that the War Department had settled administratively claims arising out of this disaster where the amount did not exceed $ 1,000, pursuant to the terms of the Military Claims Act, 31 U.S.C.A. § 223, and that such administrative payments had been made to subrogees as well as others. It was pointed out (Report, supra, p. 4) that the position of the War Department relative to the claims by subrogees in amounts exceeding $ 1,000 was unjustified and unwarranted. In any event, even the War Department had felt impelled to construe Section 223 of the Military Claims Act, as authorizing some payments to subrogees.

 The Committee report is dated July 24, 1946, just nine days prior to the enactment of the Federal Tort Claims Act. The sequel is interesting. Thus having before it the favorable report of the Committee on Claims of the House of Representatives, recommending that these very subrogee claimants be paid, the Congress enacted the Federal Trot Claims Act, the provisions of which were made retroactive as to all claims accruing on or after January 1, 1945. The Federal Tort Claims Act became Title 4 of the Legislative Reorganization Act of 1946, Public Law 601, 60 Stat. at Large 812, Section 131 of which provided that no private bill should authorize the payment of money for property damages, for personal injuries or death, for which suit might be instituted under the Federal Tort Claims Act. And, thereafter, no private bill was submitted to the Congress providing for the reimbursement of these claimants.

 In view of the fact that one of the principal reasons given for the passage of this comprehensive and far-reaching legislation was the shifting from the Congress of the burdensome and expensive task of passing upon the increasingly large number of claims for damages on account of injury to person or property; and the undoubted fact that a substantial number of such claims were and had for many years been those of subrogees, which were evidently acted upon and paid pari passu with those of original claimants; it is hard to find in the history of this legislation any justification or basis for distinguishing between original claimants and subrogees. As well stated by Judge Duffy in Wojciuk v. United States, D.C., 74 F.Supp. 914, at page 916: 'Furthermore, the history of the tort claims legislation strongly indicates there is no proper basis for the narrow construction urged by the government. Congress was greatly burdened by the large number of claims, based upon alleged negligence by employees of the federal government, presented at every Congressional session. Senators and Representatives were forced to spend on these multitudinous claims an amount of time disproportionate to their relative importance. When the Legislative Reorganization Act of 1946, 60 Stat. 812, was passed, Title IV thereof was the Federal Tort Claims Act. Members of Congress undoubtedly sighed in relief over the shift of the burden of determining the merits of such negligence claims to the federal courts. It would be a strained and unwarranted interpretation of the intention of Congress to say it planned to give the district courts jurisdiction of cases brought by claimants originally suffering loss, but to reserve to itself the consideration of the claims of those standing in the shoes of original claimants by operation of law.'

 In the Commissioners' case plaintiffs are proceeding in behalf of three persons, Ann Carracio, Abe Gluck and Sarah Perkins, who allegedly sustained personal injuries in the Empire State Building crash. It is alleged that Empire State Inc., the owner of the building, carried Workmen's Compensation Insurance in the State Insurance Fund at the time of the accident, that Carracio, Gluck and Perkins were employed in different capacities in the building, that they were covered by this insurance, that each of them elected to take compensation but failed to sue the United States within one year from the accident, as a result of which their respective claims against the United States became subrogated to the State Insurance Fund. New York Workmen's Compensation Law, Consol.Laws, c. 67, Sec. 29, Subd. 2. The action was originally brought on behalf of four other persons (Mary Scannel, Samuel Watkinson, Betty Oliver and John Babjek) who had instituted separate actions, by their own attorneys. It was held that these individual claimants were the real parties in interest and defenses based on this claim were sustained, Commissioners of the State Insurance Fund v. United States, D.C.S.D.N.Y. 1947, 72 F.Supp. 549, Holtzoff, J., and the action as to them has apparently been informally withdrawn or abandoned.

 So much for background. The burden of the Government's position is that the statute is not in terms applicable to subrogees, that statutes in derogation of sovereignty are always strictly construed and that subrogees should not be included by implication or inference. The validity of this position depends upon the wording of the statute, 28 U.S.C.A. § 931:

 'Sec. 931. Jurisdiction; liability of United States; * * * .

 '(a) Subject to the provisions of this chapter, the United States district court for the district wherein the plaintiff is resident or wherein the act or omission complained of occurred, including the United States districts courts for the Territories and possessions of the United States, sitting without a jury, shall have exclusive jurisdiction to hear, determine, and render judgment on any claim against the United States, for money only, accruing on and after January 1, 1945, on account of damage to or loss of property or on account of personal injury or death caused by the negligent or wrongful act or omission of any employee of the Government while acting within the scope of his office or employment, under circumstances where the United States, if a private person, would be liable to the claimant for such damage, loss, injury, or death in accordance with the law of the place where the act or omission occurred. Subject to the provisions of this title, the United States shall be liable in respect of such claims, to the same claimants, in the same manner, and to the same extent, as a private individual under like circumstances, except that the United States shall not be liable for interest prior to judgment, or for punitive damages: Provided, however, That in any case wherein death was caused, where the law of the place where the act or omission complained of occurred, provides, or has been construed to provide, for damages only punitive in nature, the United States shall be liable for actual or compensatory damages, measured by the pecuniary injuries resulting from such death to the persons, respectively, for whose benefit the action was brought, in lieu thereof. Costs shall be allowed in all courts to the successful claimant to the same extent as if the United States were a private litigant, except that such costs shall not include attorneys' fees.'

 Whatever may be the case with legislation on other subjects, there is every reason to suppose that this particular statute was the result of the most skillful and deliberate draftsmanship and that in its final form it was the culmination of years of patient effort. Gellhorn and Schenck, Tort Actions against the Federal Government, 47 Columbia Law Rev. 722, 726 (1947); The Federal Tort Claims Act, 56 Yale L.J. 534, 535, and n. 10 (1947); ...


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