Kentucky State Journal Co. v. Workmen's Compensation Board

Opinion of the Court by Special Judge J. L. Dorsey* ■ — Reversing. This ease was brought to this court by appeal from a judgment of the Franklin Circuit Court to test the constitutionality of an act generally known as the Workmen’s Compensation Act, passed by the Legislature and approved by the Governor, March 21,1914. By the provisions of this act a Board of Commissioners is created, composed of the Attorney General, the Commissioner of Insurance, and the Commissioner of Agriculture, Labor and Statistics, and to be known as the “Workmen’s Compensation Board.” This act creates a Workmen’s Compensation Fund, which is maintained by the various classes of employers mentioned in the act, and such other employers, who, together with their employes, shall apply for the benefits and protection of the act. This fund is created by fixing a rate or premium, during the first year, of not to exceed $1.25 on each $100.00 of the gross annual pay roll of each employer in any class of employers coming within the purview of the act. The Compensation Board has charge — 564 — of this fund and may increase the rate if deemed necessary. All persons, firms and corporations regularly employing six or more persons for profit for the purpose of carrying on the class of business designated in the act in which such person, firm or corporation is engaged are employers. And persons, in the service of such employers, for the purpose of carrying on such class of business, are employes within the meaning of the act. It is made the duty of such employers to.report to the board the place of their business, the number of their employes, the amount of their pay roll, and such other information desired by the board, by filling out blanks furnished by the board, and returning the same to the board. These blanks were furnished by the board to the appellant, The State Journal Company, who was the defendant in the court below. But the appellant refused to fill out or return said blanks, and further refused to furnish the board with any information touching the place of its business, the amount of its pay roll, the number of men in its service, or anything else. Whereupon, the appellee brought this suit in the form of a mandatory injunction to compel the appellant to fill out and return the blanks containing such information as was therein mentioned. The appellant (defendant) demurred to this petition. This demurrer involves the constitutionality of the act. The court below entered a judgment overruling the demurrer, and directed appellant to file and make the report required, from which the appellant appealed. This act is of too great length to be embraced in this opinion. But the storm center of the fight gathers around Sections 29, 30, 31, 32, and 34, which sections read as follows: “Sec. 29. It shall be lawful for any employe subject to this Act, including persons under twenty-one years of age, to contract with any employer subject to this Act who elects to pay the premiums herein provided to be paid into said Workmen’s Compensation Fund, to accept the compensation provided to be paid to injured employes and the dependents of those killed, and to accept the benefits conferred on employes by this Act, in lieu of any cause of action which he might have, if injured, or that his representative might have if he was thereafter killed through the negligence of his agents, serv — 565 — ants, officers, or employes, and to waive all causes of action against such employer conferred by the Constitution or Statutes of this State or by the common law for his injury or death, occurring through the negligence of the employer or his agents, and such contract shall be binding upon the employer and upon the employe and upon his heirs, personal representatives, and all persons claiming under or through him. “Sec. 30. Such a contract between an employe and his employer shall be conclusively presumed to have been made in every case where an employer has elected to pay into the Workmen’s Compensation Fund, if said employe shall continue to work for said employer thereafter, with notice that the employer has elected to pay into said fund and the posting of printed or typewritten notices in conspicuous places about the employer’s place of business at the time of the elections of such employer to pay into the Workmen’s Compensation Fund that he has elected to pay into said Workmen’s Compensation Fund shall constitute sufficient notice to all such employer’s employes then or thereafter employed of the fact that he has made such an election, and the continuance in the service of such employers shall be deemed a waiver by the employe of his rights of action as aforesaid. Except as provided in Section 32. “Sec. 31. Any employer subject to this Act, electing to pay into the Workmen’s Compensation Fund the premiums provided for by this Act shall not be liable to respond in damages at common law or by statute for the injury or death or loss of service of any employe occurring through the negligence of such employer, or his agent, servants, officers or employes, during any period of time in which such employer shall not be in default in the payment of such premiums. Provided, that the injured employe has remained in his service after notice is posted as provided in Section 30, that his employer has elected to pay into the Workmen’s Compensation Fund the premiums provided by this Act. The continuance in the service of such employer, or accepting service after such notice shall have been posted, shall be deemed a waiver by the employe of his rights of action, as aforesaid. Except as in Section 32. ‘ ‘ Section 32. Any employe prior to receiving an injury may give notice to an employer who has elected to pay into said fund, that he will not accept the benefits of this Act and waive his right Of action as herein provided. — 566 — Such, notice shall he in writing and served on the employer as provided by the Civil Code for the service of notices, and a copy thereof shall be mailed by the employe to the Workmen’s Compensation Board. If thereafter such employe shall be injured or killed while employed by such employer who has elected to pay into the said Workmen’s Compensation Fund, and an action shall be instituted against such employer to recover damages for the injury or death of such employe, it shall be sufficient defense thereto and shall bar recovery if the injury of said employe was caused by or contributed to by the negligence of any other employe of said employer, or if the injury was due to any of the ordinary hazards or risks of employment, or if due to any defect in the tools, machinery, appliances, instrumentality or place of work, if the defect was known or could have been discovered by the injured employe by the exercise of ordinary care on his part, or was not known or could not have been discovered by the employer by the exercise of ordinary care in time to have prevented the injury, nor in any event, if the negligence of the injured employe contributed to such injuries. But nothing herein shall deprive such employer of any defense not herein mentioned. If the employer is not in default in payment of premiums and a recovery shall be obtained against him in such action, the said board shall pay on said judgment not exceeding a sum equal to the amount which the said injured employe or his dependents, in case of death, would have been entitled to recover if he had elected to accept the benefit of this Act, and the employer shall receive credit on said payment for the payment made by the board. Such employe, at any time, after he has elected not to accept the benefits of this Act and waive his right of action, as in this Act provided, may withdraw such election and come under the provisions of this Act and accept its benefits and waive his right of action as herein provided, by giving written notice to his employer and to the board; and shall thereafter occupy the same position as if he had originally elected to accept the benefits of this Act and waive his cause of action; provided, that such withdrawal of his election not to accept the benefits of this Act shall not affect the claims for damages against his employer on account of injuries theretofore received; nor entitles such injured employe to be paid anything out of the Workmen’s Compensation Fund on account of such prior injury. — 567 — “Sec. 34. All employers subject to this Act who shall elect not to pay into the Workmen’s Compensation Fund the premiums provided by this Act, or having elected to pay shall be in default in the payment of same shall be liable to their employes, within the meaning of this act, for damages by reason of personal injuries sustained in the course of employment caused, by the wrongful act, neglect or default of the employer, or any of the employer’s officers, agents or employers, and also to the personal representatives of such employe and in any action by any such employe or personal representative thereof, such defendant shall not avail himself of the following defenses: The defense of the fellow-servant; the defense of the assumption of risk; or the defense of contributory negligence. ’ ’ Appellant’s contention is that this act is invalid, and while counsel for appellant base their reasons for reversal on many grounds, this court will content itself with an examination and inquiry into the following three grounds: 1. It is claimed that the act is violative of Section 54 of the Constitution, which provides, “The General Assembly shall have no power to limit the amount to be recovered for injuries resulting in death, or for injuries to person or property.” 2. The act is compulsory in that both the employers and employes are compelled to accept its provisions, and, being compulsory, it deprives appellant of its property without due process of law, and violates Section 54 of the Constitution. 3. The act is in contravention of Section 241 of the Constitution, which reads as follows: “Whenever the death of a person shall result from an injury inflicted by negligence or wrongful act, then, in every such case, damages may be recovered for such death, from the corporation and persons so causing the same. Etc.” It is provided in Section 29 above that it shall be lawful for any employe (including persons under twenty-one years of age) to contract with any employer who has paid his premium into the fund, to accept the compensation provided in this act to be paid to persons injured and the dependents of those killed, and to accept — 568 — the benefits given employes by this act, in lieu of any cause of action which he might have, if injured, or that his representative might have if killed, and also to waive any cause of action he may have against his employer for injury or death occurring through the negligence of his employer or agent, and such contract shall be binding on the employer and employe and upon his heirs and representatives. : Under this section the compensation of the injured man is limited to the amount specified in the schedule of the act. This constitutes a limitation upon the amount of his recovery under Section 54 of the Constitution, providing that the Legislature “Shall have no power to limit the amount to be recovered for injuries resulting in death, or for injuries to persons or property.” But we think it is within the power and right of an employe to waive this limit of recovery for injury, by contract, if such contract is freely and voluntarily made. There may never have been a word or a syllable between the employer and the employe in regard to a contract for employment to labor, yet the act provides that such contract shall be conclusively presumed to have been made between the employer and employe, if the employe continues to work for the employer after the employer has posted notices in some conspicuous places about his place of business to the effect that he has paid his premiums into the fund and accepted the provisions of the act. We will go a little further and examine the provisions of Section 32 of this act. Suppose the employe, desiring to rely upon the causes of action given him by the Constitution and laws of this State, does not accept the so-called benefits of this act, then, in that event, under Section 32 of this act, the employe, prior to receiving an injury, is compelled to give notice to his employer and to the board that he will not accept the provisions of this act. This notice must be served as provided by the Civil Code for serving notices. So, if, after this notice has been served, the employe should be injured or killed while in the service of the employer, he or his personal representative may sue his employer to recover damages, then his right to recover is barred by the provisions of this act, if his injury was eaused by or contributed to by the negligence of any other employe of said employer, or if the injury was due to any of the ordinary hazards or risks of the — 569 — employment, or if due to any defect in the tools, machinery, appliances, instrumentality or place of work, if the defect was known or could have been discovered by the injured employe by the exercise of ordinary care on his part, or was not known or could not have been discovered by the employer by the exercise of ordinary care in time to have prevented the injury, nor in any event if the negligence of the injured employe contributed to such injuries. Now, when his right to recover is restricted by such qualifications and conditions as these, we think these qualifications and conditions constitute, within the meaning of Section 54 of the Constitution, not only a limitation upon the amount to be recovered, but practically destroy his right to recovery. When an injured employe elects to decline the compensation given him by this board, why should he be denied these causes of action — why' penalized in this way? To this there is but one answer, and that is, it was the purpose and intent of this act to compel an employe to accept its provision and take the compensation allowed by the board in lieu of any cause of action he might have against his employer for his injuries. When the employer accepts the provisions of this act, the employe is automatically drawn into this so-called contract and made subject to its provisions upon pain of being deprived of all his causes of action. It cannot then be said that he has voluntarily elected to accept the provisions of the contract, because he is told that unless he accepts the provisions of this act he will be deprived of all these causes of action. This certainly imposes a limitation upon his right to recover within the meaning of Section 54 of the Constitution. His election should be free, not even in the alternative. The law has no right to force him to accept the compensation fixed by this board by depriving him of his causes of action. The only remedy left to him is to accept what he can get from this Compensation Board. The action of the employer in paying into this fund his premiums and accepting the benefits of this act necessarily brings the employe within the act. The employe can go nowhere else, he has been legislated out of his causes of action, and all he can do is to accept such amount as it allowed him by this Board of Compensation. The Legislature has no right to say to one of its — 570 — citizens that “unless you accept the provisions of a law impairing your constitutional rights, it will take from you other rights more valuable.” In the light of Section 54 of the Constitution, we must treat the contract made by the employe under the provision of this act as compulsory and therefore void. If any employer should determine that he wanted to carry his own risk and make his own contracts instead of having the law to make a contract for him, he can do so. He can operate his industries and pursue his business, however hazardous, and ignore this act entirely. But what is the result? The law says to this employer: “You may go on with your business industries, but if one of your employes is injured, or killed, you shall not avail yourself of the following defenses— the defense of the fellow-servant; the defense of the assumption of risk; or the defense of contributory negligence. ’ ’ These are practically all the defenses the employer has, and they are taken from him 'unless he accepts the provisions of this act. He cannot, under these conditions, successfully defend any suit for personal injury. If he is sued by an injured employe, about the only question a jury will have td determine will be the amount of recovery. Under these conditions an employer has practically no choice, no volition. If he continues to operate his business, he is compelled to pay his premiums into the fund and accept the provisions of the act. It has been well said in one of the briefs: The employer is told, “You may refuse to accept the provisions of this act, but if any suit is instituted against you for injuries received by your employes, you are deprived of all defenses thereto, and to all intents and purposes a default judgment will be rendered against you.” We cannot subscribe to the proposition that this is a voluntary contract, even on the part of the employer. The act under consideration is further vigorously assailed because, as contended by appellant’s counsel, it contravenes Section 241 of the Constitution of the State of Kentucky. Section 241 reads as follows: “Whenever the death of a person shall result from an injury inflicted by negligence or wrongful act, then, in every such case, damages may be recovered for such death from the corporations and persons so causing same. — 571 — Until otherwise provided by law, the action to recover such damages shall, in all cases, be prosecuted by the personal representative of the deceased person. The General Assembly may provide how the recovery shall go and to whom belong; and until such provision is made, the same shall form part of the personal estate of the deceased person.” If an injury to an employe should result in his death, his personal representative is authorized to recover damages from the negligent person or corporation causing his death. This is an absolute right given by this section of the Constitution to his personal representative to recover damages for such negligence as has resulted in his death. And it is immaterial, under this section of the Constitution, whether the money recovered goes to the children or parents, or becomes a part of his personal estate. The disposition of the money after his death cannot affect the right of the personal representative to recover. It may go to his heirs, or it may become a part of his personal estate and go to his creditors. By Section 42 (and sub-sections thereunder) of this act, the wife and children under sixteen years of age are presumed to be dependents of the deceased employe. But Section 42 and its sub-sections further provide that no person shall be considered a dependent unless a member of the family of the deceased employe or bears to him the relation of widower or widow, lineal descendants, ancestors or brother or sister. Section 42 of this act also provides that, if the deceased employe had no descendants, the disbursements from the compensation fund shall be limited to his nursing, medical and funeral expenses. It then gives to this Compensation Board the sole right of action to recover from the employer (who has accepted the benefits of the act) for the death of this employe who had no dependents. And Section 43 of this act provides that no person except sole dependents of the deceased employe shall receive any benefit from this fund, and that, if such employe left no dependents surviving, the amount that would be due and payable to his dependents, had any survived him, shall be paid or credited to this compensation fund for the benefit of the class. to which such employe belonged. It seems clear to us that such parts of this act as take from the personal representative or estate of a — 572 — deceased employe, who left no dependents surviving Mm, any part of the compensation due such representative or Ms estate, and directs its payment into this fund for the benefit of other people, is a violation of the above Section 241 of the Constitution. The Legislature has no right to limit the damages recovered, for the death of an employe negligently killed, to Ms dependents. Nor do we think the Legislature has the right to take what is due the estate of one man and give it to another. While the Legislature may say how the recovery may go and to whom it shall belong, it cannot say this recovery may be had from the employer, then in the next breath give it to tMs fund. It then necessarily follows that such parts of this act under consideration as give to this Board of Compensation, without the voluntary contract of the employe the right to recover from the employer for the death of the employe leaving no dependents, and such other parts of the act as coerce the employe to consent or to make a contract that such compensation shall be paid into this compensation fund, are unauthorized and void. Many States in the Union have adopted a Workmen’s Compensation Act. And these acts, together with the decisions of the various courts construing them, have been discussed by counsel in their briefs. We have been referred to the Workmen’s Compensation Act passed by the Legislature of the State of Washington and construed by the Supreme Court of that State in an able and exhaustive opinion found in the case of State ex rel v. Clausen (65 Wash., page 156). This Washington act is strikingly similar to the Kentucky act now under consideration before us, except that if a party felt himself aggrieved he was given an appeal to the Superior Court of the county of his residence, and then given the right to call a jury. This Washington act was held by the court in the above cause not to be compulsory, although it took away from the employer the defenses of assumed risk, negligence of a co-employe and contributory negligence. There being no constitutional restrictions, the Legislature of the State of WasMngton had the power to enact the statute above referred to, and it was upheld by the State Supreme Court. — 573 — The Legislature of the State of Ohio adopted a similar Workmen’s Compensation Act. But here the injured employe had the right to have a jury fix his compensation within the limits and under the rules prescribed by the act. The Supreme Court of Ohio, in Taple v. Creamer (97 N. E., 602), upheld the act. The Wisconsin Supreme Court, in Borgnis v. Folk Co. (147 Wis., 327), held that a provision of the Workmen’s Compensation Act of that State which took away from the employer who refused to accept the provision of the act the defenses of assumed risk and negligence of a co-employe, was not compulsory. The same view was held in the case of Ives v. South Buffalo Ry. Co. (201 N. Y., page 271). These rulings were put upon the ground that these defenses were not constitutional guarantees, but could be abolished by the Legislature. Bfit the New York act was held invalid because it did not preserve to the employer the “due process” of law guaranteed by the Constitution. The State of New York now has a compensation act similar to the one before us, but it was especially authorized by an amendment to the New York Constitution. It will be observed here that there was no constitutional provision in the Constitution of Washington, Ohio, Wisconsin, or New York similar to Section 54 of the Kentucky Constitution, which denied to the Legislature of the State of Kentucky “the power to limit the amount to be recovered for injuries resulting in death or for injuries to person” or property. The Workmen’s Compensation Act in all of the States above named, as well as in New Jersey, Massachusetts and California, differ from the Kentucky act, in that there is an appeal granted to the State courts, or a jury is permitted to fix the amount of compensation. This is the first Workmen’s Compensation Act ever passed by our Legislature, consequently we have no decisions in this State to guide us, nor do the Compensation Acts of the other States furnish us very much light, because the Constitutions of these States materially differ from the Constitution of Kentucky. The Kentucky Constitution has limitations and restrictions above referred to that are not found in any of these States which have adopted Compensation Statutes. And, for this reason, a lengthy discussion of other compensation — 574 — acts -would be superfluous. This court is bound by the limitations contained in the Kentucky Constitution. The counsel for appellant fiercely assail the purpose and operation of this act for many other reasons. They complain of the meager compensation it gives to the injured employe; that it deprives him of a jury trial; that employers are compelled to pay into this fund $1.25 as a premium on each $100.00 pay roll, and, as a result, only employers doing an extra hazardous business will take under it; that corporations whose operations are not extra hazardous will carry their own risks by the • aid of indemnity companies, and by reason of which this compensation fund is liable to suffer depletion, and if an employe receives an injury, his compensation is doubtful. It is also claimed that, as this is a common fund, kept up by the contributions of employers, that they will grow careless in selecting their machinery, as well as in their operations, and that the lives and limbs of the employes will suffer greater risks and injuries. A sufficient answer to all this is, that these are matters addressed entirely to the wisdom of the Legislature and can be regulated as necessities may require. The right of the State to regulate the management of industries arises from the fact that their operation may affect injuriously the health, safety, morals or welfare of persons engaged in such employments. And these come within the police power of the State, a power sometimes difficult to understand, and usually more difficult to define. It is contended for appellee that the act in question grows out of the pursuit and control of industries, by reason of which its operations come within the police power of the State. This is perhaps true, and the Legislature has the right to create a compensation board and put it into operation free from the objectionable features of the present act. This court looks with great favor upon a Workman’s Compensation Act that would deal justly with the employer and employe, one that would permit both to voluntarily take shelter under its provisions. And it is not the purpose of the court or the intention of this opinion to lay down any rule that will preclude the Legislature from enacting a compensation act that will conform to the Constitution, as we are clearly of the opinion that the Legislature may, in conformity to the Constitution, adopt an effective compensation law. But this court cannot consent that the Legislature has the power to put — 575 — this compensation act in operation by means of compulsory contracts. Whether the constitutional restrictions herein above discussed are wise or unwise, this court is bound to obey them. It has been well said by an eminent judge that, •“The Constitution is the paramount law; the Judge, Legislature, and every citizen are' bound by it. The powers of legislation are limited by it; the rights of the citizen are guaranteed and protected by it; and the courts are bound by their oaths to enforce it. ’ ’ This court believes the act in question violates the Constitution of our State, and it must, therefore, be held invalid. The judgment of the lower court is reversed. Chief Justice Hobson and Justices Miller and Lassing dissent. Footnotes [*] Two of the regular judges, Judges Hannah and Nunn, having declined to sit in this case because of interest, pursuant to Section 117 of the Constitution, 1-Ion. J. L. Dorsey, of Henderson, and Hon. J. M. Lassing, of Newport, were appointed by the Governor as Special Judges.