Camunas v. New York & P.R.S.S. Co.

• Decision Date: 03 June 1919
• Docket Number: 1369.
• Citation: 260 F. 40
• Parties: CAMUNAS et al. v. NEW YORK & P.R.S.S. CO.
• Court: U.S. Court of Appeals — First Circuit

260 F. 40

CAMUNAS et al. v. NEW YORK & P.R.S.S. CO.

No. 1369.

United States Court of Appeals, First Circuit.

June 3, 1919

Edward S. Bailey, of Washington, D.C. (Howard L. Kern, of San Juan Porto Rico, on the brief), for appellants.

Charles Hartzell, of San Juan, Porto Rico (Henry G. Molina, of San Juan, Porto Rico, on the brief), for appellee.

Before JOHNSON and ANDERSON, Circuit Judges, and ALDRICH, District judge.

ANDERSON Circuit Judge.

This is an appeal from a decree of the District Court of the United States for the District of Porto Rico, granting a permanent injunction restraining appellants, who constitute the Workmen's Relief Commission created by the act of the Legislature of Porto Rico approved February 25, 1918, known as the 'Workmen's Accident and Compensation Act,' from requiring the plaintiff below to file any statement or report as provided in said act, and from assessing any quota or premium to be paid by plaintiff into the Workmen's relief trust fund created by said act, or in any manner enforcing any orders against the complainant, and also restraining the defendant, Benedicto, as treasurer of Porto Rico, from attaching any of the plaintiff's property or otherwise proceeding against the plaintiff for the recovery of the insurance premium assessed against the plaintiff under the terms of the Workmen's Compensation Act.

The plaintiff is a New York corporation, and the amount in controversy is alleged to exceed $3,000. The jurisdiction rests on diverse citizenship.

The bill was filed September 13, 1918. The plaintiff is a common carrier of freight and passengers between Porto Porto and the United States, and operates a pier in the harbor of San Juan where it employs approximately 75 laborers, besides a number of other laborers in various other ports of Porto Rico.

The bill alleges that the defendants under the provisions of the act required the plaintiff to file certain statements under oath showing the number of its workmen and the amount of wages paid them during the fiscal year ending June 30, 1918 that the plaintiff, in order to avoid criminal proceedings filed said statements, but protested that it did not accept the benefits of the act, and was therefore neither required to file such statements nor to contribute to the fund referred to in section 28 of said act; that the defendants fixed the plaintiff's annual quota under the act at the sum of $7,639.68; that the defendant Benedicto, as treasurer of Porto Rico, claiming to act under the authority of said act, notified the plaintiff to pay one-half of said sum, otherwise attachment proceedings would be instituted against the plaintiff and its property for the collection of said sum, with interest at 1 per cent. monthly and costs.

That section 28 of the act provides as follows:

'That all employers accepting the benefits of this act and employing laborers under the conditions specified in this act shall contribute to the Workmen's Relief Trust Fund in the form and manner provided herein.'

That in consequence of plaintiff's election not to accept the benefits of said act the plaintiff was not liable for said payment, and ought not to be required by the defendants to file any of the statements, reports, or other documents referred to in said act; that the acts of the defendants in requiring the plaintiff to file such statements and reports and to make such payments were unwarranted and illegal, and caused irreparable damage to the plaintiff, for which it had no adequate and complete remedy at law. The prayer is that the defendants be enjoined generally from enforcing the act as against the plaintiff. The bill is supported by affidavits. The defendants appeared specially and moved to dismiss, on the ground that the suit was in reality against the people of Porto Rico, and that the people of Porto Rico had not consented to be sued; that the court was therefore without jurisdiction. This motion was denied. The parties agreed in open court that, if the court should rule against the motion to dismiss, the case should be considered as submitted on the merits, the facts to be taken as set forth in the bill. On September 19, 1918, the court sustained the plaintiff's contentions, and on September 24, 1918, a final decree was entered, permanently enjoining the defendants from enforcing the act in any particular as against this plaintiff.

The appellants' 15 assignments of error and their arguments raise not only the question of jurisdiction set up in the motion denied, but attack broadly the court's decision, claiming, inter alia, that the plaintiffs have a full, adequate, and complete remedy at law, and also that the Workmen's Compensation Act is not elective, but compulsory.

No question arises under the Constitution or laws of the United States, or under the Organic Act of Porto Rico. The equity jurisdiction asserted is based on diverse citizenship, and upon the claim that acts and threatened acts of interference with the plaintiff's property will do it irreparable damage. The District Court as a court of equity simply enjoined the defendants as officials of Porto Rico from acting pursuant to what the District Court held was an erroneous construction of the Porto Rico statute.

The gist of the District Court's decision was that the Porto Rican Legislature had enacted an elective and not a compulsory, Workmen's Compensation Act, so far as employers are concerned, and that therefore the Porto Rican officials should be enjoined from enforcing the act as against a rejecting employer.

In considering the problems thus presented, it is desirable to have in mind the legislative and constitutional status of compulsory Workmen's Compensation Acts when this act was passed. It is a matter of general knowledge that for many years courts, lawyers, and legislators were divided in their opinion as to the constitutionality of compulsory Workmen's Compensation Acts. See Ives v. So. Buffalo Railroad Co., 201 N.Y. 271, 94 N.E. 431, 34 L.R.A. (N.S.) 162, Ann. Cas. 1912B, 156; Jensen v. So. Pacific Co., 215 N.Y. 514, 109 N.E. 600, L.R.A.

1916A, 403, Ann. Cas. 1916B, 276; and cases and authorities therein cited; State v. Clausen, 65 Wash. 156, 117 P. 1101, 37 L.R.A. (N.S.) 466; State v. Mountain Timber Co., 75 Wash. 581, 135 P. 645, L.R.A. 1917D, 10.

This question finally reached the Supreme Court of the United States in the two cases of New York Central R.R. Co. v. White, 243 U.S. 188, 37 Sup.Ct. 247, 61 L.Ed. 667, L.R.A. 1917D, 1, Ann. Cas. 1917D, 629; and Mountain Timber Co. v. Washington, 243 U.S. 219, 37 Sup.Ct. 260, 61 L.Ed. 685, Ann. Cas. 1917D, 642, where they were originally argued on February 29 and March 1 and 2, 1916. They were reargued on January 30 and February 1, 1917, and decided on March 6, 1917. The decision was in favor of the constitutionality of compulsory Workmen's Compensation Acts.

Turning now to analogous legislation in Porto Rico: We find that by the act of April 13, 1916 (Laws of Porto Rico 1916, Act No. 19, p. 51), 'An act providing for the relief of such workmen as may be injured, or of the dependent families of those who may lose their lives while engaged in trades or occupations, and for other purposes,' the Porto Rican Legislature had provided for an elective compensation act. Section 23 is as follows:

'Sec. 23.-- Election by Employer. This act, except the section relating to defenses (section 25), shall apply to all employers or, as provided in section 4 of this act, unless prior to the injury they shall have rejected the benefits of this act in the manner hereinafter provided.

'The rejection by the employer of the benefits of this act shall be signified by filing with the Workmen's Relief Commission a written statement expressing such election. The said statement must be filed by the employer on or before the fifteenth day of June, 1916, and on or before the thirtieth day of April of each succeeding year.

'It shall be the duty of the Workmen's Relief Commission to keep official records showing all refusals made by employers.'

Section 24 is headed 'Election by Employes,' and provides an elaborate plan for signifying such election and the results thereof. Section 25 deals with 'defenses abolished in case employer rejects the benefits of this act,' and cuts off from such employer the defenses of contributory negligence, fellow servant, assumption of risk, and negligence of an uninsured independent contractor or subcontractor.

This act was amended in 1917 (Laws of Porto Rico, 1917, No. 9, approved April 12, 1917), by an act entitled 'An act to amend an act entitled 'An act providing for the relief of such workmen as may be injured, or the dependent families of those who may lose their lives, while engaged in trades or occupations and for other purposes,' approved April 13, 1916.'

This act simply amends sections 3, 4, 10, 13, 14, and 23 of the act of 1916. The amended section 23 is entitled 'Election by Employer' and contains explicit provisions for such election to be made in writing. Section 24 of the act of 1916, providing for 'Election by Employes,' is left unchanged.

Under section 1 of the act of 1916, which is left unchanged by the amendment of 1917, a trust fund is created, starting with an appropriation of $25,000 from the treasury of Porto Rico, and thereafter based upon insurance premiums levied upon employers who do not elect to reject the benefits of the act by filing with the Workmen's Relief Commission a written statement expressing such election.

But the next Porto Rican Legislature that convened after the Supreme Court of the United States had in the above-cited cases held compulsory Compensation Acts constitutional, passed the act in question of February 25, 1918. This is a new act. By ...