Douglas County v. Industrial Commission
| Decision Date | 05 March 1957 |
| Citation | 81 N.W.2d 807,275 Wis. 309 |
| Parties | DOUGLAS COUNTY et al., Appellants, v. INDUSTRIAL COMMISSION and Eva Alenius, widow of Rudolph Alenius, Deceased, Respondents. |
| Court | Wisconsin Supreme Court |
Quarles, Spence & Quarles, Milwaukee, Edward H. Borgelt, Edmund W. Powell and Anton Motz, Milwaukee, of counsel, for appellants.
Stewart G. Honeck, Atty. Gen., Mortimer Levitan, Asst. Atty. Gen., for Industrial Commission.
Roberts, Roe, Boardman, Suhr & Bjork, Madison, for Eva Alenius.
The issue before us on this appeal is the validity of the retroactive repeal by ch. 397, Laws of 1953, of the right existing under sec. 66.908(2)(aa), Stats.1951, to offset against the workmen's compensation death benefits, due the widow, the amount of the benefits payable to her from the Wisconsin Retirement Fund. The appellant county and its insurance carrier contend that such retroactive repeal violates sec. 10, art. I of the United States constitution, prohibiting a state from passing any law impairing the obligation of a contract; the due process clause of the Fourteenth Amendment to the United States constitution; and the corresponding prohibitions of the Wisconsin constitution found in secs. 1 and 12 of art. I thereof. They base such contention upon the ground that such repeal impairs the obligation of a contract and deprives appellants of vested rights in the nature of property rights without due process of law.
It is the position of the appellants that the widow's rights to workmen's compensation benefits are grounded upon contract. Several past decisions of this court are cited in support of such contention, including Anderson v. Miller Scrap Iron Co., 1919, 169 Wis. 106, 115, 170 N.W. 275, 171 N.W. 935; and Sheban v. A. M. Castle & Co., 1924, 185 Wis. 282, 287, 201 N.W. 379. However, in the Anderson Case [169 Wis. 106, 170 N.W. 278] the court made clear the connotation in which the court employed the word 'contract', as applied to rights and liabilities arising under the Workmen's Compensation Act, by stating that the provisions of such act became a part of every contract of hire 'not as a covenant thereof, but to the extent that the law of the land is a part of every contract'.
If the right of the county to the offset here at issue arises not by reason of any covenant of the employment contract on the part of the employee, but solely from legislative fiat, the question arises as to whether the legislature cannot withdraw right of offset at any time without impairing the obligation of the employment contract. However, for the purposes of this opinion we find it unnecessary to pass on such issue. This is because of our conclusion that neither the impairment of contract, nor the due process of law, provisions of the federal and state constitutions have any application to the act of the legislature in retroactively taking away from the county its right of offset.
Counties, like other municipal corporations, are mere instrumentalities of the state, and statutes confer upon them their powers, prescribe their duties, and impose their liabilities. Frederick v. Douglas County, 1897, 96 Wis. 411, 417, 71 N.W. 798; and Board of Commissioners of Tippecanoe County v. Lucas, 1876, 93 U.S. 108, 114, 23 L.Ed. 822. Because of this, the legislature may, with the consent of the other party, revoke any contract entered into by a county or other municipal corporation in performance of a governmental function, and in so doing there is no violation of the constitutional prohibition against a state taking action to impair the obligation of a contract. This rule is stated in 37 Am.Jur., Municipal Corporations, pp. 699-700, sec. 89, as follows:
'A contract to which a municipal corporation is a party, relating to a public and governmental matter, may, however, be revoked by the legislature with the consent of the other party without thereby violating the right of the municipality.'
The foregoing rule was clearly enunciated by the United States supreme court in City of Worcester v. Worcester Consolidated Street Ry Co., 1905, 196 U.S. 539, 25 S.Ct. 327, 49 L.Ed. 591. In that case the question before the court was whether a state legislature could abrogate the provisions of a contract between a city and a railroad company with the assent of the latter, and provide for a different method for the paving and repairing of city streets through which the tracks of the railroad were laid. The city endeavored to enforce the original contract, contending that the act of the legislature in abrogating it violated the impairment of contract clause of the United States constitution. The court in its opinion held that the legislature had the power to abrogate the contract with the consent of the railroad company, and pointed out that municipal corporations are mere instrumentalities of the state. Therefore, the state had the same right to terminate the contract with the consent of the railroad company that the city itself possessed.
This court as recently as 1951 cited with approval City of Worcester v. Worcester Consolidated Street Ry. Co., supra, in Madison Metropolitan Sewerage District v. Committee, 260 Wis. 229, 247, 50 N.W.2d 424.
In City of Trenton v. State of New Jersey, 1923, 262 U.S. 182, at page 188, 189, 43 S.Ct. 534, at page 537, 67 L.Ed. 937, the United States supreme court made this significant statement:
'The power of the state, unrestrained by the contract clause or the Fourteenth Amendment, over the rights and property of cities held and used for 'governmental purposes' cannot be questioned.'
In keeping with this principle this court stated in Town of Holland v. Village of Cedar Grove, 1939, 230 Wis. 177, 189, 282 N.W. 111, 117, 282 N.W. 448:
The contract rights arising under an agreement entered into by a municipality, acting in a governmental capacity, and third persons, which are protected by the constitution against impairment by the legislature, are those of the third persons, not those of the municipality. City of Worcester v. Worcester Consolidated Street Ry. Co. supra. This is because whenever a municipal corporation makes a contract in its governmental capacity with a third party it is the same as if the state itself were one of the two contracting parties, the municipality being but an arm of the state.
The appellants further contend that irrespective of whether there has been any impairment of a contract by the repeal of the offset, the county possessed a vested right, as of the time that the fatal accident to the employee occurred, to pay only such workmen's compensation benefits as the statutes then in effect provided.
The extract hereinbefore quoted from the opinion of the United States supreme court in City of Trenton v. State of New Jersey, supra, makes it crystal clear that a municipality acting in its governmental capacity can possess no vested right as against the state. This court has on numerous occasions held to the same effect. Among cases so holding are Madison Metropolitan Sewerage District v. Committee, supra, and Town of Bell v. Bayfield County, 1931, 206 Wis. 297, 302, 239 N.W. 503.
Appellants advance no contention that the county here acted otherwise than in a governmental capacity. Any workmen's compensation benefits it might be required to pay directly, as well as any premiums due to provide workmen's compensation insurance coverage, would necessarily be payable from its tax revenues. Moneys acquired by a municipality from taxes collected are held in its governmental, and not its proprietary, capacity. Town of Bell v. Bayfield County, supra, and Will of Heinemann, 1930, 201 Wis. 484, 230 N.W. 698.
The appellants place great reliance upon Kleiner v. City of Milwaukee, 1955, 270 Wis. 152, 70 N.W.2d 662. A city of Milwaukee fireman was killed in the course of duty on November 8, 1952. Milwaukee has its own pension fund for its firemen, the 'Firemen's Annuity and Benefit Fund'. Sec. 102.07(2), Wis.Stats.1951, provided that there should be deducted from any workmen's compensation benefits due a fireman the benefits due under such a pension fund. An award of workmen's compensation death benefits was made by order of the commission dated April 23, 1953,...
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