Philadelphia, Baltimore Washington Railroad Company v. Theodore Schubert

• Citation: 224 U.S. 603,56 L.Ed. 911,32 S.Ct. 589
• Decision Date: 13 May 1912
• Docket Number: No. 549,549
• Parties: PHILADELPHIA, BALTIMORE, & WASHINGTON RAILROAD COMPANY, Plff. in Err., v. THEODORE A. SCHUBERT
• Court: United States Supreme Court

224 U.S. 603

32 S.Ct. 589

56 L.Ed. 911

PHILADELPHIA, BALTIMORE, & WASHINGTON RAILROAD COMPANY, Plff. in Err.,

v THEODORE A. SCHUBERT.

No. 549.

Argued April 29, 1912.

Decided May 13, 1912.

Messrs. Frederic D. McKenney, John S. Flannery, and William Hitz for plaintiff in error.

[Argument of Counsel from pages 604-606 intentionally omitted] Messrs. John A. Kratz, Jr., M. J. Fulton, and Joseph W. Cox for defendant in error.

Mr. Justice Hughes delivered the opinion of the court:

This action was brought by Schubert, the defendant in error, against the Philadelphia, Baltimore, & Washington Railroad Company, to recover damages for personal injuries. He received the injuries on May 13, 1908, while in its service as a brakeman within the District, and they were dut to the negligence of a fellow servant.

The company pleaded the general issue, and in addition filed a special plea that Schubert was at the time a member of its 'relief fund,' under a contract of membership made in 1905, in which it was agreed that the company should apply, as a voluntary contribution from his wages, $2.10 a month for the purpose of securing the benefits described in certain regulations. These contributions continued from October 18, 1905, to May 13, 1908, the date of the accident. Among the regulations, by which he agreed to be bound, was the following:

'58. Should a member or his legal representative make claim, or bring suit, against the company, or against any other corporation which may be at the time associated therewith in administration of the relief departments, in accordance with the terms set forth in regulation No. 6, for damages on account of injury or death of such member, payment of benefits from the relief fund on account of the same shall not be made until such claim shall be withdrawn or suit discontinued. Any compromise of such claim or suit, or judgment in such suit, shall preclude any claim upon the relief fund for benefits on account of such injury or death, and the acceptance of benefits from the relief fund by a member or his beneficiary or beneficiaries, on account of injury or death, shall operate as a release and satisfaction of all claims against the company and any and all of the corporations associated therewith in the administration of their relief departments, for damages arising from such injury or death.'

A stipulation that the acceptance of benefits should constitute a release from all claims for damages was also incorporated in the application for membership.

The plea further set forth that the relief fund was formed by voluntary contributions from the employees of the defendant company and other companies in association with it for the purpose, appropriations by the company whenever necessary to make up any deficit, the income or profit derived from investments of the moneys of the fund, and such gifts or legacies as might be made for its use. The companies took general charge of the department, guaranteed the fulfilment of its obligations, became responsible for the safe-keeping of its funds, supplied the necessary facilities for conducting the business of the department, and paid all its operating expenses. On December 31, 1908, the total number of employees of the defendant company was 8,458, of which 6,909 were members of the 'relief fund;' during the year 1908 the company contributed, as the cost of administration, the sum of $21,557.02, and during the period of the plaintiff's membership its total contribution for this purpose was $57,610.51. In addition, the company furnished the facilities of its mail, express, and telegraph departments free of charge.

It was also alleged that after his injury Schubert (between June, 1908, and August, 1908) had voluntarily accepted benefits amounting to $79; that he had subsequently presented his claim for damages, in view of which no further payments were made, and that the acceptance of the benefits above mentioned was a bar to his action.

The court sustained a demurrer to the special plea, and Schubert recovered judgment for $7,500, which was affirmed by the court of appeals.

The questions presented by the assignments of error relate to the validity of the employers' liability act of April 22, 1908, chap. 149 (35 Stat. at L. 65, U. S. Comp. Stat. Supp. 1911, p. 1322), under which the action was maintained; and particularly, both to the applicability, and to the validity, if applicable, of § 5 of that act, upon which the court below based its ruling as to the insufficiency of the special plea.

That Congress did not exceed its power, in imposing the liability defined by the statute, has been decided by this court. Second Employers' Liability Cases, 223 U. S. 1, 56 L. ed. —, 32 Sup. Ct. Rep. 169. Section 5 provides:

'That any contract, rule, regulation, or device whatsoever, the purpose or intent of which shall be to enable any common carrier to exempt itself from any liability created by this act, shall to that extent be void: Provided, that in any action brought against any such common carrier under or by virtue of any of the provisions of this act, such common carrier may set off therein any sum it has contributed or paid to any insurance, relief benefit, or indemnity that may have been paid to the injured employee or the person entitled thereto on account of the injury or death for which said action was brought.'

With respect to this section, the court said in the case cited: 'Next in order is the objection that the provision in § 5, declaring void any contract, rule, regulation, or device, the purpose of intent of which is to enable a carrier to exempt itself from the liability which the act creates, is repugnant to the 5th Amendment to the Constitution, as an unwarranted interference with the liberty of contract. But of this it suffices to say, in view of our recent decisions in Chicago, B. & Q. R. Co. v. McGuire, 219 U. S. 549, 55. L. ed. 328, 31 Sup. Ct. Rep. 259; Atlantic Coast Line R. Co. v. Riverside Mills, 219 U. S. 186, 55 L. ed. 167, 31 L.R.A.(N.S.) 7, 31 Sup. Ct. Rep. 164; and Baltimore & O. R. Co. v. Interstate Commerce Commission, 221 U. S. 612, 55 L. ed. 878, 31 Sup. Ct. Rep. 621, that if Congress possesses the power to impose that liability, which we here hold that it does, it also possesses the power to insure its efficacy by prohibiting any contract, rule, regulation, or device in evasion of it.' Second Employers' Liability Cases, supra, p. 52.

In Chicago, B. & Q. R. Co. v. McGuire, supra, the court had before it the amendment, made in 1898, of § 2071 of the Code of Iowa. This section, in the cases within its purview, abrogated the fellow-servant rule, and the amendment provided:

'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 relief, insurance, 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 the injuries received.'

It was held that the amendment was valid, and hence that the defense based upon the acceptance of benefits could not be sustained. The court said (pp. 564, 572): '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. . . . Its provision that contracts of insurance, relief benefit, or indemnity, and the acceptance of such benefits, should not defeat recovery under the statute, was incidental to the regulation it was intended to enforce. Assuming the right of enforcement, the authority to enact this inhibition cannot be denied. If the legislature had the power to prohibit contracts limiting the liability imposed, it certainly could include in the prohibition stipulations of that sort in contracts of insurance, relief benefit, or indemnity, as well as in other agreements. . . . It does not aid the argument to describe the defense as one of accord and satisfaction. The payment of benefits is the performance of the promise to pay contained in the contract of membership. If the legislature may prohibit the acceptance of the promise as a substitution for the statutory liability, it should also be able to prevent the like substitution of its performance.'

Upon similar grounds, Congress had the power to enforce the regulations validly prescribed by the act of 1908 by preventing the acceptance of benefits under such relief contracts from operating as a bar to the rocovery of damages, and by avoiding any agreement to that effect. The question is...