0. EXTRA-TERRITORIALITY

Large employers owning manufacturing plants in New York and in other States shift employees from their New York plants to their plants in other States. Contractors in New York undertake jobs in other States and send workmen from New York to the jobs. Vessels owned by New York city employers carry their employees to distant United States waters. New Jersey and Pennsylvania factory owners, hotel keepers, etc., run in to New York City to hire help. The duties of New York employees, especially those near the state boundary, occasionally and temporarily carry them over the line. Such are the origins of extra

territorial compensation cases.

The right of an employee hired in New York by an employer carrying on in New York a business covered by the New York Workmen's Compensation Law to compensation when sent by his employer outside of the State and injured outside of the State upon his employer's business has been established by the decisions of the Court of Appeals in Post v. Burger & Gohlke, Klein v. Stoller & Cook Co., and Fitzpatrick v. Blackall & Baldwin Co.

The Klein and Fitzpatrick cases have also decided that an employee hired in New York by such an employer need not have worked for his employer in New York at all, but may have been hired for work to be done wholly without the State. The employers in these two cases were doing business in New York and so were amenable to the New York Workmen's Compensation Law. They had taken out insurance under its provisions.

The State Industrial Commission, in Lloyd v. Power Specialty Co. and Carlson v. Ogden Co., took the ground that non-residents of New York hired in New York and injured outside of New York were not entitled to compensation. The Appellate Division disapproved of this denial of compensation in the Carlson case (181 App. Div. 963) and the Commission later made an award to Carlson. The Appellate Division held that the Court of Appeals decision in Post v. Burger & Gohlke governed Carlson's award. Though Carlson's employer was a New Jersey corporation, the corporation did business in New York and Carlson

had worked for it in New York prior to his injury. The corpo

ration made pier shed doors.

he was installing in Texas.

Carlson was hurt by a door that

The opinions and decisions in the Post, Carlson and other precedent cases have been presented in Bulletin 81, pages 153159, 236-248; and Bulletin 87, pages 283-290.

But though the employee need not be a resident of New York in order to get compensation, the employer must be carrying on business within New York in order that the New York Commission may have jurisdiction. A contract of employment made in New York for work to be done outside of New York is not a basis for compensation under the New York Workmen's Compensation Law for an accident to the contracting employee occurring outside of New York, if the employer does not carry on his hazardous business within New York. In short, foreign employers are not subject to the New York Workmen's Compensation Law, even though they procure employees in New York. This phase of extra-territoriality has been developed by the New York Court of Appeals in its opinion in Smith v. Heine Safety Boiler Co. and by the Appellate Division in its opinion in Perlis v. Lederer.

In the Smith case, the Appellate Division affirmed death benefits to the widow of an employee because his contract of employment had been made in New York, though such contract had been made and the employer had moved his business out of New York long before the New York Workmen's Compensation Law had come into existence. The facts of Smith's employment are stated in the opinion upon which the Court of Appeals has based its reversal of the Appellate Division's order and its reversal of the claim. The Court of Appeals holds that "The duty to insure does not outlast the existence within our borders of the business or relation which calls it into life." It holds that an employer doing no business in New York is subject to no duty to insure his employees under the New York Workmen's Compensation Law, but excepts the case of such employees as such employer may send into New York. It finds no conflict between its decisions in the Smith and Post cases. Its opinion in full is as follows:

SMITH V. HEINE SAFETY BOILER Co., 224 N. Y. 9, May 28, 1919. CARDOZO, J.: This is a claim for death benefits under the Workmen's Compensation Law.

The employer, the Heine Safety Boiler Company, is a Missouri Corporation. It has factories in Missouri and Pennsylvania. Warren H. Smith, the decedent, entered its service in 1900 under a contract of employment which was made in New York city. Mr. Smith was a traveling engineer. He was sent all over the United States, and took his orders from the employer's superintendent of construction. At first, the employer maintained engineering and construction offices in New York. In 1904, the construction office was moved to Phoenixville, Pennsylvania. After that, Mr. Smith reported there and received his orders there. Some years before the accident, the engineering office was moved to the same place. All that was left in New York was a selling agency. On December 10, 1916, Mr. Smith was sent from Pennsylvania to Biddeford, Maine, to install a boiler, and while working there was killed. The question is whether the New York statute applies to such a case.

No hazardous business was transacted by the employer in New York when this accident occurred in Maine. The factory, the construction department, and the engineering department were in Missouri and Pennsylvania. The argument is that liability attaches under our statute because the contract of employment was made in our state. But that is not enough. At the date of that contract (1900) there was no Workmen's Compensation Act in New York. Long before any such act became a law, the employer moved its business away. In 1916 it was subject to no duty to insure its employees under our law, except, indeed, such employees as it might send within our state. The Workmen's Compensation Act involves an exercise of the police power (Mountain Timber Co. v. Washington, 243 U. S. 219, 238). It does not attempt to regulate the duty of foreign employers in the conduct of their business within foreign jurisdictions.

Nothing to the contrary was held in Matter of Post v. Burger & Gohlke (216 N. Y. 544). There the hazardous business was conducted in New York. The decision was that a workman employed in that business was under the protection of the New York act though injured in New Jersey. Reading into the contract of employment the provisions of the statute, we held that a liability quasi ex contractu was imposed on the employer. Contractual in a strict sense, of course, the liability is not (People ex rel. Dusenbury v. Speir, 77 N. Y. 144; Matter of Post v. Burger & Gohlke, supra, at p. 549; Ralli v. Troop, 157 U. S. 386, 396; Angell, Recovery under Workmen's Compensation Law for Injury Abroad, 31 Harvard Law Review, p. 619). If the parties were to agree that it should not attach, the courts would disregard their agreement. A duty is imposed by law on employers conducting a hazardous employment in New York to insure their workmen against injury, and the insurance covers injuries incidental to that employment though suffered in another state. The contract creates the relation to which the law attaches the duty, and the same law which imposes the duty defines its orbit and its measure.

A different problem is before us here. The duty to insure, when read into the contract, is as broad as the statute, but no broader. It comes into being only when the statute intends that it shall arise, and comes to a close when the statute intends that it shall end. This contract of employment, when made, was not subject to the act because the act had not been passed. It did not become subject to the act afterwards, because the plant had then been moved, and there was no employment to be regulated. That the employment had its origin in this state is not decisive (Matter of Gardner v. Horseheads Const. Co., 171 App. Div. 66). That casual circumstance did not subject the parties, regardless of changed conditions of performance, to the continuing burden of local legislation. The duty to insure does not outlast the existence within our borders of the business or relation which calls it into life.

The order should be reversed and the claim dismissed, with costs against the state industrial commission in the Appellate Division and in this court. HISCOCK, Ch. J., CHASE, COLLIN, CUDDEBACK, HOGAN and McLaughlin, JJ., concur. Order reversed, etc.

In the Perlis case, the Appellate Division interprets the opinion of the Court of Appeals in the Smith case to mean that “A contract made within the State of New York for services to be performed wholly within a sister State is without the police power of the State of New York." Its opinion in full is as follows:

PERLIS V. LEDERER, 189 App. Div. 425, Nov. 21, 1919.

WOODWARD, J.: The claimant entered into a contract of employment with the defendant through an agent at an employment office in the city of New York, the services to be performed at Forest Park, Penn. She was to perform the duties of a waitress at a summer hotel at the place mentioned, and no other services were contemplated or contracted for. She was injured in a laundry connected with the hotel, and the State Industrial Commission, on the supposed authority of Matter of Post v. Berger & Gohlke (216 N. Y. 544), has made an award for such injuries. In that case the hazardous business was conducted in the State of New York and the employee was injured while temporarily employed away from the plant of the employer in New Jersey but it was not held that the mere fact that the contract was made in New York was the controlling factor. It was based upon the proposition that the hazardous employment carried on by the employer was within the State of New York, the employment within the State of Pennsylvania away from the plant of the employer being merely incidental. The recent case of Matter of Smith v. Heine Boiler Company (224 N. Y. 9) puts the matter clearly, and there is no doubt that a contract made within the State of New York for services to be performed wholly in a sister State is without the police power of the State of New York, and does not give a right to compensation under our Workmen's Compensation Law.

The award should be reversed and the claim dismissed. All concurred. Award reversed and claim dismissed.

In connection with the Perlis opinion attention may be called to Justice Kellogg's dissenting opinion in the earlier case of Thompson v. Foundation Co., below, page 222. Justice Kellogg finds "some life remaining" in Gardner v. Horseheads Construction Co.

On the day of the Perlis decision, and in line with it, the Appellate Division, without opinion and all concurring, reversed the award and dismissed the claim in McCaffery v. Du Pont De Nemours & Co., S. D. R., vol. 20, p. 273, Apr. 4, 1919; - App. Div., Nov. 21, 1919.

Nine days previously, without opinion and all concurring, it had reversed the award and dismissed the claim in Kiernan v. Hughes-Faulkrod Co.. Case No. 276030, Apr. 21, 1919; App. Div., Nov. 12, 1919; and had remitted the proceedings in Benkert v. Cornell Steamboat Co., Death Case No. 43676, Feb. 10, 1919; - App. Div., Nov. 12, 1919, "the evidence not being satisfactory as to the facts relating to the terms and conditions of the employment, and the place where the services were to be rendered." In the McCaffery case a waitress hired in New York by a New Jersey employer had been run down in a street of her employer's New Jersey premises by an automobile belonging to a third party; in the Kiernan case an advertisement for bricklayers to go to Potsdam, Pennsylvania, appearing in a New York city paper, had led to an interview in New York city between a bricklayer and the advertiser and the bricklayer had gone to Potsdam and there incurred injuries through collapse of a scaffold; in the Benkert case a deckhand on a tugboat had been precipitated overboard and drowned in New Jersey waters, the body afterward having been found in New York waters; Benkert's employer was a New York corporation with its principal office in New York; the corporation's representatives testified that the tugboat operated only in New Jersey waters; Benkert resided in New Jersey.

The relations of the Smith, Post and Gardner opinions were considered by the Municipal Court of the city of New York in the following opinion which upholds a judgment for the plaintiff in an action to recover the amount of an award for an accident in