Chicago, Burlington Quincy Railroad Company v. Charles Guire

• Decision Date: 20 February 1911
• Docket Number: No. 62,62
• Citation: 31 S.Ct. 259,219 U.S. 549,55 L.Ed. 328
• Parties: CHICAGO, BURLINGTON, & QUINCY RAILROAD COMPANY and Chicago, Burlington, & Quincy Railway Company, Plffs. in Err., v. CHARLES L. McGUIRE
• Court: U.S. Supreme Court

219 U.S. 549

31 S.Ct. 259

55 L.Ed. 328

CHICAGO, BURLINGTON, & QUINCY RAILROAD COMPANY and Chicago, Burlington, & Quincy Railway Company, Plffs. in Err.,

v CHARLES L. McGUIRE.

No. 62.

Argued and submitted December 5, 6, 1910.

Decided February 20, 1911.

Messrs. John J. Herrick and Chester M. Dawes for plaintiffs in error.

Messrs. A. J. Baker, C. F. Howell, and Howell & Elgin for defendant in error.

[Argument of Counsel from pages 550-559 intentionally omitted]

Page 559

Mr. Justice Hughes delivered the opinion of the court:

Charles L. McGuire, the defendant in error, while acting as a brakeman in the service of the Chicago, Burlington, & Quincy Railroad Company, in Iowa, in the year 1900, received injuries through negligence imputable to the company, and recovered judgment in the district court of that state for the sum of $2,000. By stipulation, the Chicago, Burlington, & Quincy Railway Company

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was joined in the judgment. It was affirmed by the supreme court of the state of Iowa, and the companies bring this writ of error.

The question presented is with respect to the validity of § 2071 of the Code of Iowa, as amended in the year 1898, which was held to preclude the railroad company from making the defense that recovery was barred by the acceptance of benefits under a contract of membership in its relief department.

The section in its original form was as follows:

'Every corporation operating a railway shall be liable for all damages sustained by any person, including employees of such corporation, in consequence of the neglect of the agents, or by any mismanagement of the engineers or other employees thereof, and in consequence of the wilful wrongs, whether of commission or omission, of such agents, engineers, or other employees, when such wrongs are in any manner connected with the use and operation of any railway on or about which they shall be employed, and no contract which restricts such liability shall be legal or binding.'

The amendment of 1898 added the following provision:

'Nor Shall any contract of insurance relief, benefit or indemnity in case of injury or death, entered into prior to the injury, between the person so injured and such corporation, or any other person or association acting for such corporation, nor shall the acceptance of any such insurance relief, benefit or indemnity by the person injured, his widow, heirs, or legal representatives, after the injury, from such corporation, person, or association, constitute any bar or defense to any cause of action brought under the provisions of this section; but nothing contained herein shall be construed to prevent or invalidate any settlement for damages between the parties subsequent to injuries received.'

The question arose upon demurrer to the defense in the

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answer of the railroad company, which asserted the bar denied by the statute. This defense, in substance, alleged that in November, 1900, and prior to his injury, the defendant in error had voluntarily become a member of the relief department of the railroad company, and thereupon had agreed that the acceptance of benefits payable to him in accordance with the regulations of the department should discharge the company from all liability for damages; that after he had sustained the injuries alleged in his petition, he had received benefits from the relief fund of the department, amounting to $822; and that the payment and acceptance of these benefits constituted, under the agreement, full satisfaction of the claim in suit.

The facts with regard to the organization, purpose, and management of the relief department, and the regulations governing it, were fully averred. The department was organized in 1889, as a part of the service of the railroad company, with the object of creating a fund out of which definite amounts of money should be paid to contributing employees in the event of disability from sickness or accident, or, in case of death, for their proper burial and the relief of their families. The various companies forming the Burlington, system organized similar departments, and by agreement these were associated in joint administration.

The regulations of the relief department provided that membership in the department should be voluntary, and defined the amount of contributions to be paid monthly, the members being classified for this purpose according to their monthly wages. The amount of benefits according to these classes was also specified. The relief fund consisted of the contributions of members, income from investments, interest paid by the railroad company on monthly balances, and appropriations made by the company when necessary to cover deficiencies. From the time of organization to December 31, 1900, there was paid

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in benefits out of the fund so constituted the sum of $2,671,510.54, of which $1,294,790.50 was paid by reason of sickness, and $1,376,720.04 for injuries and death.

The railroad company had general charge of the relief department, and guaranteed the fulfilment of its obligations. It was responsible for the safe-keeping of the moneys of the relief fund, paid into the fund interest at the rate of 4 per centum per annum on monthly balances, supplied without expense to the fund the necessary facilities for the business of the department, and defrayed from the moneys of the company the operating expenses. It was alleged that for these expenses the company had paid to December, 1900, $621,572.44. This sum did not include office rent for the department or of medical examiners or various sundry expenses; nor did it embrace the service of officers and of clerks who were not wholly concerned with the work of the department, and this service and incidental expenses were alleged to be worth approximately $50,000 a year. In addition, during the period mentioned, the railroad company paid to make up deficits in the fund the sum of $42,532.94, for which it had no right to reimbursement.

Among the regulations by which the members of the relief department agreed to be bound was the following:

'64. In case of injury to a member, he may elect to accept the benefits in pursuance of these regulations, or to prosecute such claims as he may have at law against the company or any company associated therewith in the administration of their relief departments.

'The acceptance by the member of benefits for injury shall operate as a release and satisfaction of all claims against the company and all other companies associated therewith, as aforesaid, for damages arising from or growing out of such injury; and further, in the event of the death of a member, no part of the death benefit or unpaid disability benefit shall be due or payable unless and until

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good and sufficient releases shall be delivered to the superintendent, of all claims against the relief department, as well as against the company and all other companies associated therewith, as aforesaid, arising from or growing out of the death of the member, said releases having been duly executed by all who might legally assert such claims; and further, if any suit shall be brought against the company or any other company associated therewith, as aforesaid, for damages arising from or growing out of injury or death occurring to a member, the benefits otherwise payable and all obligations of the relief department and of the company, created by the membership of such member in the relief fund, shall thereupon be forfeited without any declaration or other act by the relief department or the company; but the superintendent may, in his discretion, waive such forfeiture upon condition that all pending suits shall first be dismissed.

'The payment by the company, or any company associated therewith, as aforesaid, of any amount in compromise of a claim for damages arising from or growing out of an injury to, or the death of, a member, shall preclude any and all claims for benefits from the relief fund, arising from or growing out of such injury or death.'

In support of the defense based upon this regulation, the railroad company further asserted that the amended statute above quoted did not deprive it of the right to plead the contract with the defendant in error, and its satisfaction, as a discharge, for the reason that the statute was repugnant to the 14th Amendment of the Constitution of the United States, (1) as an unwarranted interference with liberty to make contracts, and (2) as a denial of the equal protection of the laws.

The district court overruled the demurrer, but its judgment was reversed by the supreme court of the state, which held the statute to be valid, and, in consequence, that the demurrer should have been sustained.

Page 564

McGuire v. Chicago B. & Q. R. Co. 131 Iowa, 340, ——L.R.A.(N.S.) , 108 N. W. 902. This ruling was adhered to when the question was again raised on the appeal to that court from the final judgment. 138 Iowa, 664, 116 N. W. 801. And to review this decision as to the constitutionality of the statute, the case has been brought here.

We pass without comment the criticisms which are made of certain details of the relief plan, for neither the suggested excellence nor the alleged defects of a particular scheme may be permitted to determine the validity of the statute, which is general in its application. The question with which we are concerned is nor whether the regulations set forth in the answer are just or unjust, but whether the amended statute transcends the limits of power as defined by the Federal Constitution.

The first ground of attack is that the statute violates the 14th Amendment by reason of the restraint it lays upon liberty of contract. This section of the Code of Iowa (§ 2071), as originally enacted, imposed liability upon railroad corporations for injuries to employees, although caused by the negligence or mismanagement of fellow servants. And it was held by this court that it was clearly within the competency of the...