Ocean Accident & Guarantee Corporation v. Industrial Commission of Arizona

• Citation: 32 Ariz. 275,257 P. 644
• Decision Date: 27 June 1927
• Docket Number: Civil 2625
• Parties: THE OCEAN ACCIDENT AND GUARANTEE CORPORATION, LIMITED, a Corporation, Petitioner, v. THE INDUSTRIAL COMMISSION OF ARIZONA and R. B. SIMS, BURT H. CLINGAN and H. S. McCLUSKEY, Members of Said THE INDUSTRIAL COMMISSION OF ARIZONA, Respondents
• Court: Supreme Court of Arizona

257 P. 644

32 Ariz. 275

THE OCEAN ACCIDENT AND GUARANTEE CORPORATION, LIMITED, a Corporation, Petitioner, v. THE INDUSTRIAL COMMISSION OF ARIZONA and R. B. SIMS, BURT H. CLINGAN and H. S. McCLUSKEY, Members of Said THE INDUSTRIAL COMMISSION OF ARIZONA, Respondents

Civil No. 2625

Supreme Court of Arizona

June 27, 1927

Original proceeding for writ of review to set aside award of The Industrial Commission in Injury No. M.-4896. Charles H Goodson, applicant. Award affirmed.

Messrs Kibbey, Bennett, Gust, Smith & Lyman for Petitioner.

Mr John J. Taheny for Respondents.

OPINION

LOCKWOOD, J.

Charles H. Goodson was injured while employed by the United Building & Finance Company, hereinafter called the contractor, in the construction of a building in the town of Yuma, state of Arizona, on the twenty-first day of August, 1926. It is admitted the injury which he suffered arose out of and in the course of the work which he was employed by the contractor to do. There is some question as to where Goodson was originally employed, it being contended by petitioner herein that the contract of employment was made in the state of California, while Goodson claimed it was made in Arizona. No findings on this point were made by the Industrial Commission, but for the purpose of the case we shall assume it was made in California.

Petitioner admitted that Goodson was entitled to compensation for his injury, but insisted the award should be made in accordance with the Workmen's Compensation Law of California (Stats. 1913, p. 279, as amended). Goodson's claim was made under the Arizona Workmen's Compensation Law (Laws 1925, chap. 83), and the Industrial Commission made its award and assessed its benefits in accordance with the terms of the latter statute. The sole question for our determination is, assuming the contract of employment to have been made in California, should compensation have been awarded under the terms of the California statute, or in accordance with the provisions of the Arizona law?

Petitioner's position is based on two propositions, which we will briefly summarize as follows: First, Workmen's Compensation Laws are based on the theory that when a contract of employment is entered into the parties have agreed that the law shall become a part of the contract. When the contract of employment was made between Goodson and the contractor, the Compensation Law of California became a part thereof. The right of an injured employee to recover compensation arising only from a contract of employment, any claim must be based on the contract, and in interpreting the latter the authorities of Arizona will necessarily include as a part thereof the provisions of the California compensation law. Second, even though the Arizona authorities are not bound under the rules of comity and as a matter of common law to adopt this theory, the Arizona Workmen's Compensation Act itself, in section 59, expressly limits the right to recover in cases like this to the Compensation Law of the state where the contract of employment was made. We will discuss these two contentions in their order.

A great deal of confusion in regard to the principle at the bottom of the various Workmen's Compensation Laws of the different states has arisen to some extent as a result of the famous case of Ives v. South Buffalo R. Co., 201 N.Y. 271, Ann. Cas. 1912B 156, 34 L.R.A. (N.S.) 162, 94 N.E. 431. The first Workmen's Compensation Acts were adopted in Europe, but the movement quickly spread to the United States, and among the earliest of our commonwealths to realize their value was the state of New York. In 1910 (Laws 1910, chap. 674) that state adopted a statute providing for compulsory compensation to workmen engaged in certain dangerous employments. The act gave no option to either employer or employee as to whether or not they should come under its provisions. The highest court of New York, in the case above cited, stated it wrote into the contract of employer and employee, "without the consent of the former, a liability on his part which never existed before and to which he is permitted to interpose practically no defense . . . " (italics ours), and held the act unconstitutional.

Many of the other states were engaged in discussing the advisability of adopting some form of Compensation Law, and in their natural desire to avoid the objections which caused the New York statute to be held unconstitutional, worded their acts accordingly. But of even greater influence on these acts was the fact that most men, and particularly most lawyers, were still governed by the old school of economics of which Adam Smith, Ricardo, Malthus, and Mills were shining lights, and in which the doctrine of laissez faire was considered to be the rule which the state should observe in regard to the relation of employer and employee. It was under the influence of these ideas that the fellow-servant rule and that of assumption of risk were applied to an industrial civilization for which they were utterly unfitted, and it was gravely insisted by bench, bar and the leaders of society that the individual working man, without money, friends or influence, must be "protected" in his right to contract freely with his employer, by this time generally a corporation with immense resources, and no personal touch with or interest in its employees; which considered labor as a mere commodity to be bought at the cheapest possible price, used till worn out, and then scrapped like any other worn-out tool. Our enlightened modern thought realizes that an equality of bargaining power between two such unequal parties is impossible, and has attempted to equalize the balance through the labor unions and state regulation of industry; but old ideas die hard, and the pathways of progress are strewn with the fragments of legislation designed for this purpose but wrecked on the insistence of court after court that the state must not interfere with the "free right of contract." The eight-hour day, protection for women and children in industry, and every reform which has lightened the burden and brightened the life of the workman has had to fight its way up against this insistence on applying a philosophy which was perhaps just enough at one time, to a civilization which has outgrown it as the grown man has the swaddling clothes of the babe.

Most of the Workmen's Compensation Acts of the second decade of this century show on their face an attempt to introduce a radical extension of the principle that the state may regulate the conditions of industry as it will in the interests of the public, under language which preserved the form of freedom of contract, while denying it in effect. Many, if not most, of the statutes which insisted they were entirely optional in character gave no more real choice than does the highwayman who presents a pistol at the head of his victim with the "choice" of "your money or your life." And many a court has, following the form, based its construction of these acts on the theory that they were essentially a part of a contract between the employer and employee, and from this premise, true in form, but false in substance, have flowed many results logical enough had the premise been true, but utterly false when the true theory of the laws is considered.

Following the reasoning above described, it has been repeatedly held, in states where the Workmen's Compensation Act and its application is optional and contractual in form, that where a workman was employed in one state but injured in another, the authorities of the latter state, in proceedings brought therein, would, if there were any right of recovery at all, apply the statute of the state where the contract of employment was made, and not of the state where the accident occurred, in determining the benefits to be awarded. Hopkins v. Matchless Metal Polish Co., 99 Conn. 457, 121 A. 828, and cases cited therein.

The state of New York amended its Constitution in 1913 to meet the objections of the court in the Ives case, and the new statute passed under such amendment was tested in the case of N.Y. Cent. R. Co. v. White, 243 U.S. 188, Ann. Cas. 1917D, 629, L.R.A. 1917D, 61 L.Ed. 667, 37 S.Ct. 247, which finally reached the Supreme Court of the United States and was determined by it early in 1917. The case of Mountain Timber Co. v. Washington, 243 U.S. 219, Ann. Cas. 1917D 642, 61 L.Ed. 685, 37 S.Ct. 260, decided the same term, involved another compensation statute compulsory in its nature. In both of these cases the law is upheld substantially on the ground that it is within the general police power of the state to provide a system of compulsory compensation for injuries, throwing the burden thereof upon the particular industry in which the injury occurred. The following quotation, taken from the last-cited case, shows clearly the reasoning of the court:

"We...