The opinion of the court was delivered by: WEBER
This is an action of interpleader. A Pennsylvania employer and his workmen's compensation insurance carrier have paid into court the proceeds of an award made under the Pennsylvania Workmen's Compensation law [77 P.S. § 1 et seq.] and have impleaded the claimant, DeAngelis, and the Commonwealth of Massachusetts to assert their claims. The Commonwealth of Massachusetts demands the fund because of assignment of the claim to it made by the claimant in Massachusetts, valid under Massachusetts statutes. The claimant demands the fund because the Pennsylvania Workmen's Compensation law prohibits the assignment of any claim or the proceeds of any claim made under that law.
Both claiming parties have moved for summary judgment and it is admitted that there is no genuine issue as to any material fact and that summary judgment may be rendered as a matter of law.
What law does a United States District Court sitting in Pennsylvania apply? The validity of the assignment being determinative of the rights of the parties, the issue is substantive and not governed by the procedural law of the forum. However, the question having been raised in a federal court sitting in Pennsylvania we must apply the choice-of-law rules of Pennsylvania. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 61 S. Ct. 1020, 85 L. Ed. 1477 .
Under the modern dispensation now applied in Pennsylvania it appears that we are neither controlled by the law of the place where the contract right arose (Pennsylvania) nor by the law of the place where the assignment was made. (Mass.) The courts of Pennsylvania now say that in determining the applicable law we give to the place having the most interest in the problem paramount control over the legal issues arising out of a particular factual context. See Griffith v. United Airlines, Inc., 416 Pa. 1, 203 A. 2d 796 , citing Babcock v. Jackson, 12 N.Y. 2d 473, 481, 240 N.Y.S. 2d 743, 749, 191 N.E. 2d 279, 283, and Auten v. Auten, 308 N.Y. 155, 124 N.E. 2d 99 .
This is the rule of Restatement, Second, Conflict of Laws.
"§ 208. Assignability of Contractual Right.
Whether, and under what conditions, a contractual right, which is not embodied in a document, can be effectively assigned is determined by the local law of the state which has the most significant relationship to the contract and the parties with respect to the issue of assignability."
"§ 209. Assignment of Contractual Right as Between Assignor and Assignee.
The validity of an assignment of a contractual right not embodied in a document, which is assignable under the rule of § 208, and the rights created thereby as between the assignor and the assignee are determined by the local law of the state which, with respect to the particular issue, has the most significant relationship to the assignment and the parties."
The rule of Restatement, Second, is the choice of law rule applied in Pennsylvania both in tort actions, Griffith, supra, and in contract actions, Neville Chemical Co. v. Union Carbide Corporation, 422 F.2d 1205 [3rd Cir., 1970].
To determine the jurisdiction most intimately concerned with the outcome of this particular litigation requires a detailed examination of its factual background, which is not in dispute here.
The named plaintiff, Nicholas DeAngelis, was injured in Pennsylvania in 1964 in circumstances bringing him under the Pennsylvania Workmen's Compensation law, 77 P.S. § 1 et seq. He entered into an agreement under the Act with his employer and its insurance carrier (named defendants herein) and received medical and hospital expenses and periodic disability payments for a time. Some months later the employer and its insurance carrier filed a petition to terminate payments and also to set aside the agreement on the grounds that it was entered into in reliance upon alleged misrepresentations. Payment of disability benefits ceased while the matter was in litigation for about six years, going through the stages of a decision by a referee, an appeal to the Board, an appeal to the Court of Common Pleas, and an appeal to the Commonwealth Court of Pennsylvania. The litigation was terminated by an Order and Opinion of the Commonwealth Court on September 7, 1971, upholding DeAngelis' rights to payment, Scott et al. v. DeAngelis, 3 Pa. Cmwlth. 168, 281 A. 2d 172 . As a result of this order plaintiff was awarded the lump sum settlement of $15,782.81 for disability payments.
While this litigation was pending plaintiff DeAngelis moved to Massachusetts and applied for veteran's disability payments provided under Massachusetts law. In accordance with the provisions of Massachusetts law he executed an assignment of his workmen's compensation claim against his employer and its insurance carrier to the agency of the Commonwealth of Massachusetts providing the disability benefits on March 1, 1965. Notice of this assignment was promptly given by the Commonwealth of Massachusetts to the employer and its insurance carrier. The employer and its carrier have filed this action of Interpleader naming plaintiff DeAngelis and additional defendant Commonwealth of Massachusetts as claimants, and has paid the sum of $15,782.81 into the registry of this court, disclaiming all interests in the proceeds. The complaint in Interpleader alleges that the Commonwealth of Massachusetts asserts a claim against this fund in the ...