Hart v. Thomasville Motors, Inc.

92 S.E.2d 673 (1956) 244 N.C. 84 F. T. HART, Employee, v. THOMASVILLE MOTORS, Inc., Employer, and The Travelers Insurance Company, Carrier. No. 383. Supreme Court of North Carolina. May 9, 1956. *676 Armistead W. Sapp, Greensboro, for Thomasville Motors, Inc., Employer, and The Travelers Ins. Co., Carrier, defendants, appellants. W. H. Steed, Thomasville, and Walser & Brinkley, Lexington, for plaintiff, appellee. PARKER, Justice. The plaintiff has challenged the jurisdiction over the subject matter of the Industrial Commission in making an award to him based upon prior agreements between him and the defendants, on the ground that he is not subject to the provisions of the North Carolina Workmen's Compensation Act, G.S. § 97-1 et seq., for the reason that at the time of his injury he was not an employee of Thomasville Motors, Inc., but was an independent contractor. The defendants contend that the Industrial Commission had no power or authority to hear and determine this challenge, because, one, there was no showing of a change of condition as set forth in G.S. § 97-47, and two, the plaintiff was bound by his prior agreements and receipt of compensation, and is estopped to attack the jurisdiction of the Commission. The North Carolina Industrial Commission has a special or limited jurisdiction created by statute, and confined to its terms. Viewed as a court, it is one of limited jurisdiction, and it is a universal rule of law that parties cannot, by consent, give a court, as such, jurisdiction over subject matter of which it would otherwise not have jurisdiction. Jurisdiction in this sense cannot be obtained by consent of the parties, waiver, or estoppel. State ex rel. Hanson v. Yandle, 235 N.C. 532, 70 S.E.2d 565; Anderson v. Atkinson, 235 N.C. 300, 69 S.E.2d 603; Chadwick v. North Carolina Dept. of Conservation and Development, 219 N.C. 766, 14 S.E.2d 842; Reaves v. Earle-Chesterfield Mill Co., 216 N.C. 462, 5 S.E.2d 305; Hollowell v. North Carolina Dept. of Conservation and Development, 206 N.C. 206, 173 S.E. 603; Dependents of Thompson v. Johnson Funeral Home, 205 N.C. 801, 172 S.E. 500; Burroughs v. McNeill, 22 N.C. 297; Hartford Accident and Indemnity Co. v. Thompson, 167 Ga. 897, 147 S.E. 50; Woolsey v. Security Trust Co., 5 Cir., 74 F.2d 334, 97 A.L.R. 1081; Gavin v. Hudson & Manhattan R. Co., 3 Cir., 185 F.2d 104, 27 A.L.R.2d 739; 14 Am.Jur., Courts, sec. 184; 19 Am.Jur., Estoppel, sec. 77. However, the doctrine has been announced that one who procures or gives consent to a decree, even though it is void as beyond the powers of the court to pronounce, is estopped to question its validity, at least where he has obtained a benefit from the act of the court. Dean v. Dean, 136 Or. 694, 300 P. 1027, 86 A.L.R. 79; 19 Am.Jur., Estoppel, sec. 77. The basis of this doctrine is that whether the court had jurisdiction either of the subject matter of the action or of the parties is not important, but that such practice will not be tolerated. While the defendants in their brief assert "plaintiff was bound by his agreements and estopped to attack the jurisdiction upon the grounds asserted," they have favored us with neither reason, argument nor citation of authorities in support of their statement. *677 These were the facts in Reaves v. Earle-Chesterfield Mill Co., supra. An agreement for compensation for plaintiff's disability was entered into by plaintiff and both defendants, supposedly in pursuance of the provisions of the North Carolina Workmen's Compensation Act. This memorandum was examined and approved by the Industrial Commission, which made an award. Compensation was paid for about 38 weeks. The defendants then ceased payment, and challenged the jurisdiction of the Industrial Commission on the ground that at the time of his injury the plaintiff was not a resident of this State. The plaintiff then applied to the Commission for the enforcement of the award. This Court denied plaintiff's application holding that the Industrial Commission did not have jurisdiction over the original claim, and the parties could not confer jurisdiction by consent or agreement, because the Commission's jurisdiction over contracts for the settlement of claims is limited to those made under and within the purview of the Workmen's Compensation Act. This Court in its opinion said [216 N.C. 462, 5 S.E.2d 306]: "We think it is clear that neither the agreement entered into by the plaintiff and the defendants nor the subsequent payments of the defendant thereupon amounted to a waiver of jurisdiction." A decision of the Industrial Commission is only conclusive when it is acting within its jurisdiction. Voehl v. Indemnity Ins. Co., 288 U.S. 162, 53 S.Ct. 380, 77 L.Ed. 676, 87 A.L.R. 245; Uphoff v. Individual Board, 271 Ill. 312, 111 N.E. 128, L.R.A. 1916E, 329, Ann.Cas.1917D, 1. The jurisdiction of the Industrial Commission in relation to the subject matter over which it may exercise authority is limited by the North Carolina Workmen's Compensation Act, and this jurisdiction can be enlarged or extended only by the General Assembly its creator. It is not necessary for us to decide whether under all circumstances a party to a proceeding before the Industrial Commission can, or cannot, be estopped to attack its jurisdiction over the subject matter, for the reason that under the facts of this case no such estoppel arises here. It is to be noted that this occurred during the hearing before the Hearing Deputy Commissioner. The Deputy Commissioner said to defendants' counsel: "Mr. Edwards, you say you will not hold the plaintiff to the agreement?" Mr. Edwards replied: "No, so far as getting a dismissal. If he wants to contend they are not bound by the Act, that is all right with us." At that time counsel for defendants made other statements of similar import. The defendants contend that the Industrial Commission could not hear and determine plaintiff's challenge to its jurisdiction over the subject matter, because "the only basis for reopening a matter before the North Carolina Industrial Commission is upon the ground of change of condition," and cite in support of their statement, G.S. § 97-47; Murray v. Nebel Knitting Co., 214 N.C. 437, 199 S.E. 609; Larson's Workmen's Compensation Law, Vol. 2, p. 330, sec. 81, et seq. The authorities cited are not in point. G.S. § 97-47 reads in part: "Upon its own motion or upon the application of any party in interest on the grounds of a change in condition, the Industrial Commission may review any award, and on such review may make an award ending, diminishing, or increasing the compensation previously awarded * * *." This statute applies where the Industrial Commission has jurisdiction. In Murray v. Nebel Knitting Co., supra, the Commission had jurisdiction. The defendants further contend that the plaintiff is barred from challenging the jurisdiction of the Commission over the subject matter by reason of Rule XV of the Commission, the pertinent part of which reads as follows: "No party to any agreement for compensation approved by the Industrial Commission shall thereafter be heard to deny the truth of the matters therein set forth unless it shall be made to appear to the satisfaction of the Commission that there was error due to fraud, misrepresentation, undue influence, mutual mistake, or other sufficient reason." Such a contention *678 is untenable. The Commission cannot enlarge its jurisdiction, or prevent a challenge to its jurisdiction over the subject matter, by one of its rules. Its limited jurisdiction is fixed by the Act. A challenge to jurisdiction may be made at any time. Baker v. Varser, 239 N.C. 180, 79 S.E.2d 757; Spaugh v. City of Charlotte, 239 N.C. 149, 79 S.E.2d 748; Anderson v. Atkinson, supra; Miller v. Roberts, 212 N.C. 126, 193 S.E. 286; Johnson v. Finch, 93 N.C. 205, 208. A judgment is void, when there is a want of jurisdiction by the court over the subject matter of the action, State ex rel. Hanson v. Yandle, supra, and Clark v. Carolina Homes, 189 N.C. 703, 708, 128 S.E. 20, and a void judgment may "be disregarded and treated as a nullity everywhere", City of Monroe v. Niven, 221 N.C. 362, 20 S.E.2d 311, 312. In Stafford v. Gallops, 123 N.C. 19, 31 S.E. 265, 266, the Court said: "A void judgment is, in legal effect, no judgment. No rights are acquired or divested by it. It neither binds nor bars any one, and all proceedings founded upon it are worthless." The plaintiff had a legal right to challenge the jurisdiction of the Industrial Commission over the subject matter, and, when such challenge was made, it was the duty of the Industrial Commission to hear and determine it. The jurisdiction of a court does not relate to the rights of the parties as between each other, but to the power of the court to hear and adjudicate. The question of its existence precedes the question of the rights of the parties to avail themselves of its jurisdiction, if it exists. A universal principle as old as the law is that proceedings of a court without jurisdiction over the subject matter are a nullity and its judgment without effect either on the person or property. City of Monroe v. Niven, supra; Downing v. White, 211 N.C. 40, 188 S.E. 815; Clark v. Carolina Homes, supra; Card v. Finch, 142 N.C. 140, 54 S.E. 1009; 14 Am.Jur., Courts, sec. 167. A court without jurisdiction over the subject matter of a proceeding or case cannot enter a judgment in favor of either party: it can only dismiss the proceeding or case for want of jurisdiction. New Orleans [Bayou Sara] Mail Co. v. Flanders (Fernandez), 12 Wall. 130, 20 L.Ed. 249; Corbett v. Boston & M. R. R., 219 Mass. 351, 107 N.E. 60, 12 A.L.R. 683. In Mail Co. v. Flanders (Fernandez), supra, the Court said: "Where the circuit court is without jurisdiction, it is in general irregular to make any order in the cause except to dismiss the suit; but that rule does not apply to the action of the court in setting aside such orders as had been improperly made before the want of jurisdiction was discovered." An injured person is entitled to compensation under our Workmen's Compensation Act only if he is an employee of the party from whom compensation is claimed at the time of his injury. G.S. § 97-2; Scott v. Waccamaw Lumber Co., 232 N.C. 162, 59 S.E.2d 425. An independent contractor is not a person included within the terms of the Act, and the Industrial Commission has no jurisdiction to apply the Act to a person who is not subject to its provisions. Hayes v. Board of Trustees of Elon College, 224 N.C. 11, 29 S.E.2d 137; Perley v. Ballenger Paving Co., 228 N.C. 479, 46 S.E.2d 298. The Superior Court reviews the rulings and decisions of the Industrial Commission. This Court reviews the decisions of the Superior Court, when alleged errors are properly presented to us. Worsley v. S. & W. Rendering Co. (Sugg v. S. & W. Rendering Co.), 239 N.C. 547, 80 S.E.2d 467. The Superior Court overruled all the defendants' exceptions to the findings of fact, conclusions of law and award of the Full Commission, except that it sustained their Exception VI to the award of the Full Commission which is addressed to the amendment made to the award of the Hearing Deputy as to the refunding of money by *679 plaintiff to defendants. Under this exception the defendants said: "The North Carolina Industrial Commission has jurisdiction over the parties and cannot avoid or evade the exercise of its jurisdiction upon the conditions as set out in this part of its award. A conditional award of this nature it void and of no legal effect." The Superior Court expressly rejected this argument of defendants, and stated in its judgment, "this exception is granted on the ground that the Commission having no jurisdiction was without authority to include the challenged provision in its award." This ruling of the Superior Court was correct. The Superior Court Judge being of the opinion that the question raised by the appeal involved the jurisdiction of the Industrial Commission over the subject matter of the proceeding struck out the findings of fact of the Commission that the plaintiff was not an employee, but was an independent contractor, and made his own findings of fact and conclusions of law, yet in doing so he copied in his judgment verbatim the findings of fact and conclusions of law of the Deputy Hearing Commissioner that the plaintiff was an independent contractor, and not an employee of Thomasville Motors, Inc., at the time of his injury. This the Judge had the right and power to do. Aycock v. Cooper, 202 N.C. 500, 163 S.E. 569; Francis v. Carolina Wood Turning Co., 204 N.C. 701, 169 S.E. 654; Miller v. Roberts, supra; Young v. Maryland Mica Co., 212 N.C. 243, 193 S.E. 285; Buchanan v. State Highway & Public Works Comm., 217 N.C. 173, 7 S.E.2d 382; Smith v. Southern Waste Paper Co., 226 N.C. 47, 36 S.E.2d 730; Aylor v. Barnes, 242 N.C. 223, 87 S.E.2d 269. The Judge, thereupon, made these conclusions of law: One, the employer-employee relationship did not exist between plaintiff and Thomasville Motors, Inc., and the Industrial Commission had no jurisdiction over plaintiff's claim, and it should be dismissed. Two, any agreements entered into by the parties should be set aside pursuant to motion of plaintiff. Third, the Industrial Commission does not have jurisdiction over the respective rights and liabilities of the parties concerning money already paid. The court, thereupon, dismissed the proceeding. The findings of fact of the Superior Court Judge that the plaintiff was not an employee of Thomasville Motors, Inc., while performing the work when he was injured, but was an independent contractor, are supported by competent evidence. The defendants at the hearing before the Deputy Commissioner offered no evidence to the contrary. At the hearing defendants' counsel in respect to plaintiff's contention that he was not an employee at the time of his injury, but an independent contractor said: "We won't object, but we are not going to consent: in other words, we just don't take any position." However, the Superior Court was in error in overruling the defendants' exception to the Industrial Commission's setting aside the prior agreements entered into by the parties. The Superior Court was also in error in holding that any agreements entered into by the parties should be set aside, pursuant to motion of the plaintiff. The Superior Court was right in its conclusions of law that the proceeding should be dismissed for lack of jurisdiction in the Industrial Commission over the subject matter of the proceeding, and that the Industrial Commission had no jurisdiction over the respective rights of the parties concerning money already paid. When the Industrial Commission held that it had no jurisdiction over the subject matter of the proceeding, all that it had the power to do was to set aside its approval of the agreements and its award for the payment of compensation and medical benefits, as improperly made before the want of jurisdiction was discovered, and to dismiss the proceeding. When the Superior Court made its own findings of fact and conclusions of law to the effect that the Industrial Commission had no jurisdiction over the subject matter of the proceeding, thereby affirming the Industrial Commission on that question, it dismissed the proceeding. That left standing in the *680 records of the Industrial Commission the Commission's approval of the agreements and its award for the payment of compensation and medical benefits. The Superior Court should have remanded the case to the Industrial Commission directing it to enter an order setting aside its approval of the agreements and its award for the payment of compensation and medical benefits, and dismissing the proceeding for lack of jurisdiction over the subject matter, on the ground that plaintiff was not an employee of Thomasville Motors, Inc., while performing the work when he was injured, but an independent contractor. The sole question of fact involved here is whether in performing the work at which he was injured, plaintiff was an employee of Thomasville Motors, Inc., or an independent contractor. The Deputy Commissioner, the Full Commission and the Superior Court have concluded, upon competent evidence, that the plaintiff, at the time he was injured, was doing work as an independent contractor, and that the Industrial Commission had no jurisdiction. There is no need to remand for the finding of any additional facts. The legal consequences that follow from such findings and conclusions are clear so far as the jurisdiction and power of the Industrial Commission is concerned. This proceeding is remanded to the Superior Court so that it can remand it to the Industrial Commission with direction to enter an order setting aside its approval of the agreements and its award for the payment of compensation and medical benefits and dismissing the proceeding on the ground of lack of jurisdiction. Error and Remanded. BOBBITT, Justice (concurring in result). The record contains findings that I.C. Form 21 and I.C. Form 26 were executed by the parties. However, these forms, executed or unexecuted, do not appear in the record. Upon approval thereof by the Commission, compensation payments were made by defendants to plaintiff in accordance therewith. Presumably, the executed forms embodied stipulations to the effect that the relationship subsisting between the parties was that of employee-employer-carrier. Apart from these executed forms, there were no stipulations that such relationships existed. Plaintiff, in challenging the jurisdiction of the Commission, moved that these agreements be set aside because executed by plaintiff "through mistake and lack of knowledge and understanding," on the ground that in fact plaintiff was not an employee of Thomasville Motors, Inc. Confronted by this motion, defendants' counsel stated: "Now, the defendants don't take any position one way or the other about this. We are just leaving it up to the Commissioner, because we don't contest it if he wants to set it aside. Doesn't matter to us one way or the other." Defendants' position was that plaintiff was not entitled to a modification of the award under G.S. § 97-47 otherwise than "on the grounds of a change in condition." In this setting, the inquiry proceeded; and, upon such inquiry, it appeared plainly from all the evidence that plaintiff was not an employee but an independent contractor. It is patent that the executed forms, if they contained stipulations that plaintiff was an employee, were executed by mistake. Therefore, I concur in the result. In my view, we need go no further in the disposition of this appeal. Whether the Commission has jurisdiction depends solely on the authority conferred on it by statute. If the case is not within its statutory jurisdiction, jurisdiction cannot be conferred by any agreement of the litigants, express or implied. Reaves v. Earle-Chesterfield Mill Co., 216 N.C. 462, 5 S.E.2d 305. There is no disagreement *681 as to this well established proposition. If, however, facts are stipulated, and the facts so stipulated, if true, bring a case within the statutory jurisdiction of the Commission, the Commission is authorized to exercise jurisdiction unless and until such stipulated facts are set aside. If, later in the proceeding, any party undertakes to challenge before the Commission the stipulated facts upon which the Commission's jurisdiction depends, Rule XV of the Commission, quoted in the Court's opinion, seems to be a just and reasonable rule. And when stipulated facts, upon which jurisdiction depends, are challenged in the superior court, it seems to me that a like rule should apply. Litigants should not be permitted to challenge their stipulations of fact without first showing substantial grounds why they should not be bound thereby. In my view, there is a marked distinction between conferring jurisdiction by agreement and making stipulations of fact which, if true, bring the proceeding within the statutory jurisdiction of the Commission. It is noted that in Reaves v. Earle-Chesterfield Mill Co., supra, the original stipulations, on the basis of which compensation was paid, did not include a stipulation to the effect that plaintiff was a resident of North Carolina when he received the injury. In the subsequent hearing, lack of jurisdiction was predicated on the then admitted fact that plaintiff at the time of injury was a citizen and resident of South Carolina. Hence, there was no conflict between the facts stipulated and the determinative jurisdictional fact established by plaintiff's admission at the subsequent hearing.