Alaska Packers Ass v. Industrial Accident Commission of California 8212 11, 1935

• Decision Date: 11 March 1935
• Docket Number: No. 465,465
• Citation: 79 L.Ed. 1044,55 S.Ct. 518,294 U.S. 532
• Parties: ALASKA PACKERS ASS'N v. INDUSTRIAL ACCIDENT COMMISSION OF CALIFORNIA et al. Argued Feb. 8—11, 1935
• Court: U.S. Supreme Court

294 U.S. 532

55 S.Ct. 518

79 L.Ed. 1044

ALASKA PACKERS ASS'N

v INDUSTRIAL ACCIDENT COMMISSION OF CALIFORNIA et al.

No. 465.

Argued Feb. 8—11, 1935.

Decided March 11, 1935.

Messrs. Francis Gill and Frank D. Madison, both of San Francisco, Cal., for appellant.

[Argument of Counsel from pages 533-536 intentionally omitted] Messrs. Everett A. Corten and George C. Faulkner, both of San Francisco, Cal., for appellees.

Mr. Justice STONE delivered the opinion of the Court.

This is an appeal under section 237 of the Judicial Code (28 USCA § 344) from a judgment of the Supreme Court of California, 34 P.(2d) 716, upholding an award of compensation, by the state Industrial Accident Commission, to appellee Palma against appellant, his employer, and holding that the award does not infringe prohibitions of the Federal Constitution. The award was made in conformity to the statutes of California, where the contract of employment was entered into, rather than those of Alaska, where the injury occurred.

On May 13, 1932, Palma, a nonresident alien, and appellant, doing business in California, executed at San Francisco a written contract of employment. Palma agreed to work for appellant in Alaska during the salmon canning season; the appellant agreed to transport him to Alaska, and, at the end of the season, to return him to San Francisco where he was to be paid his stipulated wages, less advances. The contract recited that appellant had elected to be bound by the Alaska Workmen's Compensation Law¹ and stipulated that the parties should be subject to and bound by the provisions of that statute. Section 58 of the California Workmen's Compensation Act (St. Cal. 1917, p. 870, § 58)² was then in force, which provides:

'The commission shall have jurisdiction over all controversies arising out of injuries suffered without the territorial limits of this state in those cases where the injured employee is a resident of this state at the time of the injury and the contract of hire was made in this state. * * *'

At that time the California Supreme Court had held in Quong Ham Wah Co. v. Industrial Accident Commission, 184 Cal. 23, 36—44, 192 P. 1021, 12 A.L.R. 1190 (writ of error dismissed, 255 U.S. 445, 41 S.Ct. 373, 65 L.Ed. 723), that this section was applicable to nonresidents of California, since the privileges and immunities clause of the Federal Constitution prevented giving any effect to the requirement that the employee be a resident. The California Workmen's Compensation Act also provides, section 27(a), St. Cal. 1923, p. 855, § 27(a), as amended by St. Cal. 1931, p. 1950:

'No contract, rule or regulation shall exempt the employer from liability for the compensation fixed by this act. * * *'

In August, 1932, after his return from Alaska to California, the employee applied for and later received an award by the California Commission in compensation for injuries received by him in the course of his employment in Alaska. On petition for review by the state Supreme Court, appellant assailed the California statute, as he does here, as invalid under the due process and the full faith and credit clauses of the Federal Constitution. In so far as the California statute denies validity to the agreement that the parties should be bound by the Alaska Workmen's Compensation Act, and attempts to give a remedy for injuries suffered by a nonresident employee without the state, it is challenged as a denial of due process. Petitioner also insists that as the Alaska statute affords, in Alaska, an exclusive remedy for the injury which occurred there, the California courts denied full faith and credit to the Alaska statute by refusing to recognize it as a defense to the application for an award under the California statute.

In refusing to set aside the award of the state commission, the Supreme Court of California ruled, as in Quong Ham Wah Co. v. Industrial Accident Commission, supra, that section 58 of the California compensation act was applicable to Palma, although a nonresident alien; that, as the contract of employment was entered into within the state, the stipulation that the Alaska act should govern was invalid under section 27(a). It concluded that the Alaska statute afforded a remedy to the employee in Alaska and held that by setting up the defense of the Alaska statute in California the two statutes were brought into conflict, and that in the circumstances neither the due process clause nor the full faith and credit clause denied to the state the power to apply its own law, to the exclusion of the Alaska act in fixing and awarding compensation for the injury.

1. The question first to be considered is whether a state, which may constitutionally impose on employer and employee a system of compensation for injuries to the employee in the course of his employment within the state, New York Certral R. Co. v. White, 243 U.S. 188, 37 S.Ct. 247, 61 L.Ed. 667, L.R.A. 1917D, 1, Ann. Cas. 1917D, 629; Moun- tain Timber Co. v. Washington, 243 U.S. 219, 37 S.Ct. 260, 61 L.Ed. 685, Ann. Cas. 1917D, 642, is precluded by the due process clause, in the special circumstances of this case, from imposing liability for injuries to the employee occurring in Alaska.

The California statute does not purport to have any extraterritorial effect, in the sense that it undertakes to impose a rule for foreign tribunals, nor did the judgment of the state Supreme Court give it any. The statute assumes only to provide a remedy to be granted by the California Commission for injuries, received in the course of employment entered into within the state, wherever they may occur. Compare Bradford Electric Light & Power Co. v. Clapper, 286 U.S. 145, 153, 52 S.Ct. 571, 76 L.Ed. 1026, 82 A.L.R. 696. We assume that in Alaska the employee had he chosen to do so, could have claimed the benefits of the Alaska statute, and that if any effect were there given to the California statute, it would be only by comity or by virtue of the full faith and credit clause. Bradford Electric Light & Power Co. v. Clapper, supra.

The due process clause denies to a state any power to restrict or control the obligation of contracts executed and to be performed without the state, as an attempt to exercise power over a subject matter not within its constitutional jurisdiction. New York Life Insurance Co. v. Head, 234 U.S. 149, 162—164, 34 S.Ct. 879, 58 L.Ed. 1259; New York Life Insurance Co. v. Dodge, 246 U.S. 357, 377, 38 S.Ct. 337, 62 L.Ed. 772, Ann. Cas. 1918E, 593; Home Insurance Co. v. Dick, 281 U.S. 397, 407, 408, 50 S.Ct. 338, 74 L.Ed. 926, 74 A.L.R. 701; compare National Union Fire Insurance Co. v. Wanberg, 260 U.S. 71, 75, 43 S.Ct. 32, 67 L.Ed. 136. Similarly, a state may not penalize or tax a contract entered into and to be performed outside the state, although one of the contracting parties is within the state. Allgeyer v. Louisiana, 165 U.S. 578, 17 S.Ct. 427, 41 L.Ed. 832; St. Louis Cotton Compress Co. v. Arkansas, 260 U.S. 346, 348, 43 S.Ct. 125, 67 L.Ed. 297; Compania General de Tabacos de Filipinas v. Collector, 275 U.S. 87, 48 S.Ct. 100, 72 L.Ed. 177.

But where the contract is entered into within the state, even though it is to be performed elsewhere, its terms, its obligation, and its sanctions are subject, in some meas- ure, to the legislative control of the state. The fact that the contract is to be performed elsewhere does not of itself put these incidents beyond reach of the power which a state may constitutionally exercise. Selover, Bates & Co. v. Walsh, 226 U.S. 112, 123, 33 S.Ct. 69, 57 L.Ed. 146; Mutual Life Insurance Co. v. Liebing, 259 U.S. 209, 214, 42 S.Ct. 467, 66 L.Ed. 900; Manhattan Life Insurance Co. v. Cohen, 234 U.S. 123, 136, 34 S.Ct. 874, 58 L.Ed. 1245; compare AEtna Life Insurance Co. v. Dunken, 266 U.S. 389, 397—400, 45 S.Ct. 129, 69 L.Ed. 342.

While similar power to control the legal consequences of a tortious act committed elsewhere has been denied, Western Union Telegraph Co. v. Brown, 234 U.S. 542, 547, 34 S.Ct. 955, 58 L.Ed. 1457; Western Union Telegraph Co. v. Chiles, 214 U.S. 274, 278, 29 S.Ct. 613, 53 L.Ed. 994; compare Western Union Telegraph Co. v. Commercial Milling Co., 218 U.S. 406, 31 S.Ct. 59, 54 L.Ed. 1088, 36 L.R.A.(N.S.) 220, 21 Ann.Cas. 815, the liability under Workmen's Compensation Acts is not for a tort. It is imposed as an incident of the employment relationship, as a cost to be borne by the business enterprise, rather than as an attempt to extend redress for the wrongful act of the employer. See Bradford Electric Light & Power Co. v. Clapper, supra, pages 157, 158 of 286 U.S., 52 S.Ct. 571. The California court has declared: 'The contract creates a relationship under the sanction of the law and the same law attaches as an incident thereto an obligation to compensate for injuries sustained abroad, amounting to a sort of compulsory insurance.' Quong Ham Wah Co. v. Industrial Accident Commission, supra, page 36 of 184 Cal., 192 P. 1021, 1025. Obviously, the power of a state to effect legal consequences is not limited to occurrences within the state if it has control over the status which gives rise to those consequences. That it has power, through its own tribunals, to grant compensation to local employees, locally employed, for injuries received outside its borders, and likewise has power to forbid its own courts to give any other form of relief for such injury, was fully recognized by this Court in Bradford Electric Light & Power Co. v. Clapper, supra, page 156 of 286 U.S., 52 S.Ct. 571. Objections which are founded upon the Fourteenth Amendment must, therefore, be directed, not to the existence of the power to impose liability for an injury outside state borders, but to the manner of its exercise as being so arbitrary or unreasonable as to amount to a denial of due process.

We cannot say that the statutory requirement of California, that the provisions for compensation shall extend to injuries without the state when the...