American Mut. Liability Ins. Co. v. McCaffrey

• Decision Date: 07 March 1930
• Docket Number: No. 5622.,5622.
• Citation: 37 F.2d 870
• Parties: AMERICAN MUT. LIABILITY INS. CO. v. McCAFFREY et al.
• Court: U.S. Court of Appeals — Fifth Circuit

37 F.2d 870 (1930)

AMERICAN MUT. LIABILITY INS. CO. v. McCAFFREY et al.

No. 5622.

Circuit Court of Appeals, Fifth Circuit.

January 28, 1930.

Rehearing Denied March 7, 1930.

Y. D. Mathes and H. Malcolm Lovett, both of Houston, Tex. (Y. D. Mathes, of Houston, Tex., Benjamin Brooks, of Boston, Mass., and Baker, Botts, Parker & Garwood, of Houston, Tex., on the brief), for appellant.

Ralph K. Gillen, of Dallas, Tex. (Caldwell, Gillen, Francis & Gallagher and R. K. Gillen, all of Dallas, Tex., on the brief), for appellees.

Before WALKER and FOSTER, Circuit Judges, and DAWKINS, District Judge.

DAWKINS, District Judge.

The Chattanooga Boiler & Tank Company was a Tennessee corporation, engaged in the manufacture, among other things, of tanks, used by oil companies, which at times, under its contracts, it would erect for its customers. Having sold a tank to be erected at Engleside, Tex., on or about the 15th day of April, 1928, at Chattanooga, Tenn., it employed plaintiff, appellee herein, as a boiler maker to go to Engleside and assist in the erection of said tank. His salary was $40 per week, to begin from the time he boarded the train in Tennessee, and was furnished transportation to his destination in Texas. The evidence is somewhat in conflict as to whether he was to be supplied with transportation to return to Chattanooga. However, he did no work in Tennessee, and it was not contemplated in his employment that he should. He proceeded to Texas and while so employed, on May 10, 1928, received an injury to his eye for which this suit was brought under the Compensation Law (Rev. St. 1925, arts. 8306-8309, as amended) of that state.

The defendant is the insurer of his employer against such liability, both in Tennessee and Texas.

The first contention was that because the contract of employment was entered into in the state of Tennessee, plaintiff's right to recover was solely under the Compensation Law of that state. After the evidence was completed, defendant filed a plea of election, and in compliance with an order of the court below, plaintiff elected to stand upon his alleged rights under the law of Texas. The court below having charged the jury that plaintiff was entitled to recover under the Compensation Law of Texas for such injuries as he had received, the jury returned a verdict for permanent total disability in a lump sum, and from a judgment thereon the defendant has appealed.

We shall first dispose of the question of plaintiff's right to proceed under the Texas statute, as it appears at the threshold of the case.

The Employers' Liability Laws, both of Texas and Tennessee, contain provisions purporting to give them extraterritorial effect, in the sense that they should apply to injuries received in the course of employment thereunder, whether within or without the state. But we think such provisions as these must be construed with reference to the subject-matter with which the Legislature was dealing. At the present day, most states, under their police power, have adopted workmen's compensation laws for the benefit of the laboring classes, and to remove the uncertainties and economic suffering incident to injury and death in industry, by equalizing the burden between employer and employee. This policy has likewise been adopted by the national government with respect to interstate commerce and in the public service. However, it is fundamental that in doing so a state is confined to transactions and relations over which it has territorial jurisdiction, for it would seem clear that no one of them could conclusively declare what the rights of its own citizens or those of such citizens and nonresidents should be in matters arising wholly within another state, especially if the attempted provisions were in conflict with the positive law of the other state.

In the nature of things, there may be classes of employment falling under such laws which incidentally require the performance of duties beyond state lines, and which are so intimately connected with the main object as to make them in effect a part thereof. As an illustration, we might mention the hypothetical case of an industrial plant located so close to the line of another state that its employees would reside in a town or city located in the latter, and the employer, in the interest of its business, might see fit to transport them to and from their work. If one or more of them were injured while being so transported, but within the other state, we do not doubt but that the rights of the parties could be determined by the law of the state where they performed their duties. In such a case there would neither be employment in nor the performance of any work in the state where they were injured, yet the employer, under the decisions of most courts, would be liable because in legal contemplation they were in the course of their employment.

On the other hand, where the contract of employment is clearly for services to be wholly performed in another state, it would be going very far to say that the Legislature even intended that its regulations should govern liabilities arising therefrom. The possibilities of conflict between the authority of the two sovereignties at once suggest themselves, to say nothing of the abuses that might arise if the national courts should uphold the contention that because the contract was made in one state it must be construed according to its laws, regardless of those of another where the work was to be done and the matters out of which the controversy arose occurred. The laws of one state might be more favorable to the employer, and, wishing to be governed thereby, it might engage all of its employees therein and send them to the other state, regardless of distances or initial expense. Then, when the time came to respond to the claims of an injured employee or his heirs, it would insist upon being sued where the contract was made, with all of the incidental expense and inconvenience, such as complying with the requirement in some states, as a condition precedent to filing a suit, of having the cause investigated and the rights of the parties determined by an administrative board or commission, the employment of counsel to bring suit, the attendance by the employee at the trial, the obtaining of his evidence, etc., all of which could be held to a minimum if the cause could be prosecuted in the immediate locality where the injury or death occurred.

As against these considerations, it is urged that because of the diversity of statutory provisions of the various states, the employer and employee are entitled to make a contract under the laws of a particular state with which they are familiar, and to be governed thereby in their relations, without being subjected to the uncertainties of those of other states, of which they know nothing, merely because they may find it necessary to have their agreements performed somewhere else. We think a sufficient answer would be that such reasons are far outweighed by the questions of public policy which we have mentioned....