Ocean Accident & Guarantee Corp. v. Poulsen

• Decision Date: 07 December 1943
• Court: Wisconsin Supreme Court
• Parties: OCEAN ACCIDENT & GUARANTEE CORPORATION, Limited, v. POULSEN et al.

244 Wis. 286

12 N.W.2d 129

OCEAN ACCIDENT & GUARANTEE CORPORATION, Limited,

v.POULSEN et al.

Supreme Court of Wisconsin.

Dec. 7, 1943.

Appeal from a judgment of the Circuit Court for Recine County; Alfred L. Drury, Judge.

Affirmed.

This action was begun on June 27, 1942, by The Ocean Accident and Guarantee Corporation, Ltd., plaintiff, against Peter Poulsen and Paul Winther Poulsen, defendants, to recover the amount of an award paid by the plaintiff's assignor pursuant to an award of the industrial commission. There was a demurrer to the complaint and an order sustaining the demurrer was entered. Judgment was entered thereon on June 12, 1943, from which the plaintiff appeals.

The facts will be stated in the opinion.

L. A. Tarrell, of Milwaukee, for appellant.

Knoblock & Konnak, of Racine, for respondents.

ROSENBERRY, Chief Justice.

The material facts are as follows: On June 4, 1940, Paul Warner Poulsen was a loaned employee in the service of the partnership composed of Peter Poulsen and Paul Winther Poulsen. The partnership was a subcontractor under the Welling Construction Company, a general building contractor, which was the employer of Paul Warner Poulsen. On June 4, 1940, Paul Warner Poulsen while performing service growing out of and incidental to his employment, accidentally sustained injuries entitling him to benefits under the Workmen's Compensation Act. The partnership was not under the act and carried no insurance. Paul Warner Poulsen made claim against the principal contractor, the Welling Construction Company, and was awarded compensation in the amount of $2,252, which was paid to him by the plaintiff, the insurance carrier of the principal contractor.

On May 26, 1942, the Welling Construction Company assigned its claim under the provisions of sec. 102.06, Wisconsin Stats., to the plaintiff. The claim not being paid, this action was begun to recover the sum paid from Peter Poulsen and Paul Winther Poulson.

It firther appears that on the hearing before the industrial commission the partnership was made a party for the reason that it was claimed that it was an employer of three or more persons but upon the hearing the industrial commission dismissed the proceeding as against the partnership on the ground that it was not an employer of three or more persons and therefore not under the act. As alleged in the complaint the plaintiff seeks recovery as assignee under the provisions of sec. 102.06, which provides: ‘An employer shall be liable for compensation to an employe of a contractor or subcontractor under him who is not subject to this chapter, or who has not complied with the conditions of subsection (2) of section 102.28 in any case where such employer would have been liable for compensation if such employe had been working directly for him. The contractor or subcontractor shall also be liable for such compensations, but the employe shall not recover compensation for the same injury from more than one party. In the same manner, under the same conditions, and with like right of recovery, as in the case of an employe of a contractor or subcontractor, described above, an employer shall also be liable for compensation to an employe who has been loaned by him to another employer. The employer who shall become liable for and pay such compensation may recover the same from such contractor, subcontractor or other employer (whether or not such contractor, subcontractor or other employer is an employer as defined in section 102.04) for whom the employe was working at the time of the injury.’

The respondents contend that sec. 102.06, upon which the plaintiff relies, is unconstitutional and void. Plaintiff's first contention is that the constitutionality of the statute cannot be raised on a general demurrer. Defendants demurred on the general ground that plaintiff's complaint did not state facts sufficient to constitute a cause of action.

In some jurisdictions it is held that a general demurrer will not raise the constitutionality of a statute unless the alleged grounds of unconstitutionality are pointed out. State ex rel. Schuler v. Nolte, 1926, 315 Mo. 84, 285 S.W. 501. See 16 C.J.S., Constitutional Law, p. 227, § 96, and cases cited.

The rule is otherwise in other jurisdictions. As an example, it is held in State of Minnesota ex rel. Clinton Falls Nursery Co. v. Steele County, 1930, 181 Minn. 427, 232 N.W. 737, 71 A.L.R. 1190, that when a complaint states in form a cause of action resting upon a particular statute, the constitutionality of the statute may be raised by demurrer. The matter is thoroughly discussed and authorities cited in the opinion and in addition there is a note to the same case found in 71 A.L.R. 1194, entitled ‘May unconstitutionality of statute be raised by demurrer to pleading’.

Such authority as there is in Wisconsin supports the conclusion of the Minnesota Court. In Howland v. Board of Supervisors of Kenosha County, 1865, 19 Wis. 247, there was a demurrer to the complaint in which it was alleged that the statute under which the tax was levied was unconstitutional. On demurrer the Court held that the complaint stated a cause of action.

In Bonnett v. Vallier, 1908, 136 Wis. 193, 116 N.W. 885, 17 L.R.A., N.S., 486, 128 Am.St.Rep. 1061, an action begun to enjoin the enforcement of a statute on the ground that it was unconstitutional, there was a demurrer to the complaint for insufficiency. While the question was not specifically raised the Court proceeded without question to consider the constitutionality of the statute involved. No doubt an exhausive search would reveal other cases where the constitutionality of statutes has been considered upon demurrer to the complaint for insufficiency. It is considered that where a cause of action depends upon a statute, the constitutionality of that statute may be raised by a general demurrer. This conclusion is supported not only by the weight of authority but by the better reasoning.

There may be cases where the validity or invalidity of the statute is dependent upon facts other than those of which the Court may take judicial notice. It may be that in some cases of that class the rule would not apply.

The trial court considered the constitutionality of the statute and filed a carefully prepared and helpful opinion, holding the statute invalid, and pursuant to which an other was entered sustaining the demurrer.

Section 102.06 was originally ch. 624 of the Laws of 1917 and was as follows: ‘An employer subject to the provisions of sections 2394-3(102.3) to 2394-31(102.34) inclusive, shall be liable for compensation to an employe of a contractor or subcontractor under him who is not subject to sections 2394-3 to 2394-31, inclusive, or who has not complied with the conditions of subsection 2 of section 2394-24(102.28) in any case where such employer would have been liable for compensation if such employe had been working directly for such employer. The contractor or subcontractor shall also be liable for such compensation, but the employe shall not recover compensationfor the same injury from more than one party. An employer who shall become liable for and pay such compensation may recover the same from such contractor or subcontractor for whom the employe was working at the time of the accident.’

A case arose under that statute in which the facts were briefly as follows: One Clark as principal contractor had agreed to do certain work. He subcontracted this work to one Kloman. Prior to the time he undertook the work Kloman had not been engaged in business and had no employees but during the course of operations he employed two, one of whom, Tucker, sustained an accidental injury and death, whereupon his widow began proceedings for compensation under ch. 102. The commission found that Clark was subject to the act but had failed to comply with the provisions of sec. 2394-24(2) of the statutes; that Kloman was not subject to the compensation act; that the Woolen Mills, the general employer, and its insurance carrier, the Maryland Casualty Company, were liable for the death benefit to the applicant. The commission also held that Kloman, subcontractor, and the defendant Clark, principal contractor, were also liable. Upon review in circuit court, the court held that Clark and Kloman by entering into a contract to do the...