Pinkerton's Nat. D. Agency v. Fidelity & D. Co. of Md.

Decision Date31 January 1944
Docket NumberNo. 8250.,8250.
PartiesPINKERTON'S NAT. DETECTIVE AGENCY, Inc., v. FIDELITY & DEPOSIT CO. OF MARYLAND.
CourtU.S. Court of Appeals — Seventh Circuit

Guy A. Gladson and Douglas Moir, both of Chicago, Ill. (Winston, Strawn & Shaw, of Chicago, Ill., of counsel), for appellant.

Louis L. Dent, Geo. M. Weichelt, John P. Hampton, and Roger D. Doten, all of Chicago, Ill., for appellee.

George F. Barrett, Atty. Gen. of Illinois (William C. Wines, Asst. Atty. Gen., of counsel), amicus curiae.

Before SPARKS, MAJOR, and KERNER, Circuit Judges.

Writ of Certiorari Denied January 31, 1944. See 64 S.Ct. 523.

MAJOR, Circuit Judge.

The defendant on the first day of September, 1935, executed its surety bond, conditioned upon the faithful performance by Lawrence J. O'Connell of his duties as Chief Security Examiner of the Industrial Commission of the State of Illinois (hereinafter referred to as the Commission), a body charged with the administration of the Illinois Workmen's Compensation Act. Plaintiff was an employer subject to the provisions of such Act, and on August 9, 1935, for the purpose of qualifying as a self-insurer, entered into an Escrow Agreement with the Commission, acting by and through O'Connell, and deposited with the Commission a $10,000 United States Treasury Bond to be held by it as a guarantee for the payment of any awards entered against plaintiff under such Act. This arrangement continued from the date of the Escrow Agreement until May 24, 1941, when plaintiff furnished the Commission an insurance policy in lieu of the aforesaid deposit. Thereupon a request was made for the return of the $10,000 United States Treasury Bond, and on January 30, 1942 plaintiff was informed by the Commission that such bond was missing. It later developed that the bond had been converted by O'Connell to his own use and has not been returned or made good to the plaintiff.

Both plaintiff and defendant filed motions for summary judgment and the cause was submitted to the court on the pleadings, stipulation of facts and briefs. The court granted defendant's motion for summary judgment in its favor and entered judgment, from whence this appeal comes.

The contested issues may be briefly stated as (1) did the Commission have authority to accept and hold plaintiff's property as security for the payment of compensation provided by the Act? and (2) even so, did O'Connell as Chief Security Examiner of the Commission act in an official capacity in accepting such deposit? Plaintiff argues that both questions must be answered in the affirmative, while the defendant argues to the contrary. In addition, the defendant relies upon the statute of limitation as precluding plaintiff's right to recovery.

The question of the Commission's authority necessarily depends upon a construction of the pertinent provisions of the Act. Sec. 26, Ill.Rev.Stats.1941, Ch. 48, § 163, imposes upon an employer subject to the Act the duty to furnish, and upon the Commission the duty to require, assurance of the employer's financial ability to meet any awards of compensation which may be made to its employees. Par. (a)(1) provides: "File with the commission a sworn statement showing his financial ability to pay the compensation provided for in this Act * * *." Then follows in the same paragraph this provision: "If any such employer fails to file such a sworn statement, or if the sworn statement of any such employer does not satisfy the commission, of the financial ability of the employer who has filed it, the commission shall require such employer to, (2) Furnish security, indemnity or a bond guaranteeing the payment by the employer of the compensation provided for in this Act." Par. (3) authorizes the employer to insure his entire liability to pay compensation in certain authorized insurance carriers. (This paragraph is not involved in this suit.) Par. (4) provides: "Make some other provision, satisfactory to the industrial commission, for the securing of the payment of compensation provided for in this Act."

Sec. 16 of the Act, Ill.Rev.Stats.1941, c. 48, § 153, authorizes the Commission, among other things, to "make and publish rules and orders for carrying out the duties imposed upon it by law * * * and the process and procedure before the board shall be as simple and summary as reasonably may be." The sole rule promulgated by the Commission pertinent to the instant inquiry is rule 39, as follows: "Application for permission to become a self-insurer shall be accompanied by a current financial statement of the applicant, which statement shall show to the satisfaction of the Industrial Commission ability on the part of the employer to discharge accruing liability under the Workmen's Compensation Act. However, no application to become a self-insurer will be entertained by the Industrial Commission unless the applicant for such privilege shall have deposited in the name of an approved trustee and in an approved depositary a fund sufficient to discharge all liability that may have accrued by reason of awards for the payment of compensation that have become final on the date of such application."

It is the position of the defendant that the legislature has neither specified the manner by which an employer is to furnish security nor to whom, and that it has conferred upon the Commission the authority to prescribe such specification by rule. Further, the defendant contends that the Commission having by rule 39 prescribed a certain way, the security cannot be deposited in any other way. On the other hand, it is the position of the plaintiff that the legislature clearly conferred such authority upon the Commission and that rule 39 by its express terms is not applicable to the instant situation.

The question presented has not been decided by an Illinois court. Numerous Illinois authorities are cited, largely on rules of statutory construction, which we find of little benefit. We shall refer to one of such rules for the reason that the court below, in a carefully prepared opinion, appears to have attached considerable weight to its pertinency. The substance of the rule, as stated in People v. Wiersema State Bank, 361 Ill. 75, 85, 197 N.E. 537, 101 A.L. R. 501, is that the expression of one thing or one mode of action in a statutory enactment excludes any other, even though there be no negative words prohibiting it. Predicated upon this rule of construction, it is urged that rule 39, which it is claimed provided the sole method of furnishing security, excludes all other methods. In the Wiersema case and all others which we have examined, the rule was applied solely to a statutory enactment. In no case, so far as we know, has the expression of one mode of action by rule been held to exclude some other mode of action provided by statute. It is our view that this rule of construction so heavily relied upon is without application.

We have read and reread the statutory language involved and we think it clearly confers upon the Commission the authority to accept from an employer security for the purpose of assuring the discharge of his liability. It is insisted that if the legislature had so intended it would, after the word "f...

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