Mulder v. Acme-Cleveland Corp.

• Court: Wisconsin Supreme Court
• Writing for the Court: HEFFERNAN
• Citation: Mulder v. Acme-Cleveland Corp., 95 Wis.2d 173, 290 N.W.2d 276 (Wis. 1980)
• Decision Date: 01 April 1980
• Docket Number: No. 77-432,ACME-CLEVELAND,77-432
• Parties: Leo MULDER and Marie Mulder, Plaintiffs-Respondents, v.CORPORATION, Defendant and Third-Party Plaintiff-Respondent. GENERAL ELECTRIC COMPANY, Defendant-Appellant, v. KOHLER COMPANY, Third-Party Defendant-Respondent.

Page 276

290 N.W.2d 276

95 Wis.2d 173

Leo MULDER and Marie Mulder, Plaintiffs-Respondents, v. ACME-CLEVELAND CORPORATION, Defendant and Third-Party

Plaintiff-Respondent.

GENERAL ELECTRIC COMPANY, Defendant-Appellant, v. KOHLER COMPANY, Third-Party Defendant-Respondent.

No. 77-432.

Supreme Court of Wisconsin.

Argued Jan. 8, 1980.

Decided April 1, 1980.

John A. Kluwin (argued), Eric J. Van Vugt (argued), and Kluwin, Dunphy, Hankin & McNulty, Milwaukee, on brief for defendant-appellant.

Clayton R. Hahn (argued), Donald H. Piper and Borgelt, Powell, Peterson & Frauen, S. C., Milwaukee, on brief, for third-party defendant-respondent.

Gordon Samuelsen, Asst. Atty. Gen., with whom on the brief was Bronson C. La Follette, Atty. Gen., argued, for State of Wisconsin.

HEFFERNAN, Justice.

This third party action had its origin in a worker's compensation claim which arose out of an injury to Leo Mulder while he was in the course of his employment at the Kohler Company. Compensation payments were made by the Kohler Company. Subsequently Leo Mulder and his wife brought a third party action against Acme-Cleveland Corporation and General Electric Company alleging that Leo Mulder's injuries were the result of the negligence of Acme-Cleveland in designing and manufacturing a molding machine and that General Electric was negligent in respect to the design and manufacture of a photoelectric safety device. Acme-Cleveland brought a third party action against the Kohler Company, and General Electric filed a cross-complaint against the Kohler Company for contribution and indemnity because of the Kohler Company's alleged negligence in respect to the employee Mulder.

Because the Kohler Company paid worker's compensation to Mulder, as provided by ch. 102, Stats., Kohler moved to dismiss Acme's third party complaint and General Electric's cross-complaint, asserting the defense that sec. 102.03(2), Stats., ¹ gives it immunity from any liability other than worker's compensation. The trial court granted the Kohler Company's motion and dismissed the third party action brought by Acme and the cross-complaint of General Electric. General Electric brings this appeal. We affirm the order of the trial court.

The facts indicate that Mulder was injured on August 26, 1974, while operating a molding machine on the premises of the Kohler Company. Mulder's amended complaint states that a photoelectric safety device manufactured by General Electric failed to deactivate the molding machine when Mulder attempted to remove a broken casting; and, as a consequence, he was pinned against the hot dies in the machine and was badly burned. In addition, the amended complaint alleged that Acme-Cleveland and General Electric were liable for producing and marketing defective devices.

Both Acme-Cleveland and General Electric demanded contribution or indemnification from the Kohler Company. The trial court accepted the Kohler Company's argument that its exclusive responsibility was to pay worker's compensation. Accordingly, it dismissed the complaint and cross-complaint against the Kohler Company demanding contribution or indemnification. Only General Electric has appealed.

General Electric acknowledges that the trial court's dismissal of its claim for contribution against the Kohler Company is consistent with the uniform holdings of this court. General Electric argues, however, that the interpretation given to the statute by this court over a period of years, and the trial court in the instant case, deprives General Electric of property without due process of law in violation of the Fifth and Fourteenth Amendments to the United States Constitution and deprives General Electric of a remedy for a wrong in violation of art. I, sec. 9, of the Wisconsin Constitution. ²

As a sequel to this argument of unconstitutionality, General Electric urges that this court modify its long-standing construction of sec. 102.03(2), Stats., the exclusive-remedy provision, to reflect the principle underlying Wisconsin's comparative negligence scheme that losses should be allocated in proportion to fault. We decline to hold that the past construction placed upon the exclusive-remedy provision is unconstitutional, and we decline to modify our construction of that statute.

Nevertheless, the problem posed by General Electric's argument is real. Although sec. 102.03(2) Stats., makes it clear that an injured employee can only recover compensation payments against an employer, the employee may maintain a tort action against a third party whose negligence caused or contributed to the injury. Sec. 102.29(1). That same section of the statutes allows the employee to retain one-third of the recovery against the third party and reimburses the employee for out-of-pocket collection costs. In addition, it gives the employee the balance of the tort action award remaining after the employer is reimbursed for the full amount of the worker's compensation benefits originally paid the employee. Under that statute, both the employer and the worker's compensation insurer can join the employee's third party action or commence one on their own initiative.

This court has uniformly construed sec. 102.03(2), Stats., as denying any remedy of a third party tortfeasor against an employer, because the statute makes the payment of worker's compensation the employer's exclusive liability for work-related injuries. Thus, where a negligent third party is held liable to an injured worker, it cannot require contribution from an employer even though the employer was substantially more at fault than the third party. A. O. Smith Corp. v. Associated Sales & Bag Co., 16 Wis.2d 145, 113 N.W.2d 562 (1962); Wisconsin Power & Light Co. v. Dean, 275 Wis. 236, 81 N.W.2d 486 (1957); Buggs v. Wolff, 201 Wis. 533, 230 N.W. 621 (1930). This result is premised on the reasoning that, because an employee cannot bring a tort action against his employer, there is no common liability; and the employer cannot be impleaded for contribution as a joint tortfeasor. Because the employer's liability is determined by statute, which makes that liability exclusive, and not by principles of common law negligence, this court has reasoned that the common liability between third parties and the employer requisite for a joint tortfeasor status is absent. The same rationale bars an action for indemnification absent a specific and express agreement. Lampada v. State Sand & Gravel Co., 58 Wis.2d 315, 206 N.W.2d 138 (1973).

Federal courts, in applying the Wisconsin worker's compensation law, have also construed sec. 102.03(2), Stats., as barring third party tortfeasor's actions for contribution or indemnity against employers subject to the Wisconsin act. E. g., Schuldies v. Service Machine Co., Inc., 448 F.Supp. 1196 (E.D.Wis.1978).

It is clear that the rule prohibiting contribution or indemnity in a third party action arising out of a worker's compensation claim is not completely consistent with the general common law principles now accepted by this court. Generally, Wisconsin common law permits a plaintiff to collect the total damages from any of several parties whose negligence combined to cause the injury and also permits the operation of comparative-negligence principles for the allocation of contribution between joint tortfeasors. Bielski v. Schulze, 16 Wis.2d 1, 114 N.W.2d 105 (1962).

The United States District Court case of Schuldies, supra, provides an excellent example of a third party tortfeasor's situation where an action is brought against an employer who has paid compensation. The jury in Schuldies found the employer 70 percent negligent, the employee 5 percent negligent, and the third party 25 percent negligent. The District Court, applying Wisconsin law as construed by this court, rejected the third party tortfeasor's claim that it was inequitable for it to pay 95 percent of the damage verdict when it was found to be only 25 percent negligent.

Under the facts set forth in Schuldies, the operation of sec. 102.03(2), Stats., barring a third party from contribution against the employer in conjunction with the third party liability statute, sec. 102.29, would allow an employer who was found to be 70 percent contributorily negligent to recover the full amount of its worker's compensation payments out of the plaintiff employee's recovery from the third party tortfeasor. Under this scheme, then, the compensation paid in lieu of damages by an employer who is subsequently found negligent must be repaid to it from damages collected from a third party tortfeasor whose concurrent negligence may be relatively inconsequential. 2A Larson, Workmen's Compensation Law, sec. 75.23, pp. 14-269-71, states:

"(I)t is admittedly rather an odd spectacle to see a negligent employer reimbursing himself at the expense of a third party . . . ."

Nevertheless, Larson has typified the situation which arises out of the operation of third party actions and the exclusive-remedy provisions of worker's compensation acts as being "(p)erhaps the most evenly-balanced controversy in all of compensation law." Larson, supra, sec. 76.10, p. 14-287.

The pros and cons of the controversy were succinctly summarized by the Minnesota Supreme Court in Lambertson v. Cincinnati Corp., 312 Minn. 114, 120, 257 N.W.2d 679, 684 (1977):

"The essence of the controversy is this: If contribution or indemnity is allowed, the employer may be forced to pay his employee through the conduit of the third-party tortfeasor an amount in excess of his statutory workers' compensation liability. This arguably thwarts the central concept behind workers' compensation, i. e., that the employer and employee receive the benefits of a guaranteed, fixed-schedule, nonfault recovery system, which then constitutes the exclusive liability of the employer to his employee. . . . If contribution or indemnity is not allowed, a third-party stranger to the workers' compensation system is made to bear the...