Rueda v. Union Pacific Railroad Co.

• Decision Date: 28 October 1946
• Citation: 175 P.2d 778,180 Or. 133
• Parties: RUEDA <I>v.</I> UNION PACIFIC RAILROAD CO.
• Court: Oregon Supreme Court

180 Or. 133

175 P.2d 778

RUEDA

v. UNION PACIFIC RAILROAD CO.

Supreme Court of Oregon.

Argued at Pendleton October 28, 1946.

Reversed December 20, 1946.

Contracts — Arbitration and award

1. Limited arbitration or submission agreements, when stated as conditions precedent to liability, are not illegal, and when a plaintiff has brought suit without first pursuing the agreed procedure, such agreements may be set up as a stay or bar to action.

Contracts — Condition precedent

2. Public policy does not require that a limited arbitration agreement should be held void when worded as a collateral covenant and be held valid when worded as a condition precedent.

Contracts — Arbitration and award

3. Executory arbitration agreements whether or not revocable are not illegal if fairly made.

Arbitration and award — Enforcement

4. A common-law award is not self-enforcing, and an action at law must be brought thereon, and court will enter judgment thereon unless award was fraudulent or arbitrary or result of gross mistake of fact, or unless it appears that arbitrators intended to follow the law and then based award on clear misapprehension concerning the law.

Arbitration and award — Impeachment

5. Awards may be impeached in equity as having been induced by fraud or overreaching or entered into unadvisedly through ignorance, folly or undue pressure, but they cannot be impeached for mere mistake, and in absence of equitable grounds for impeachment the award is conclusive.

Arbitration and award — Courts

6. Parties can stipulate beforehand to submit their rights generally to judgment of designated third party for final determination without thereby ousting the courts of jurisdiction.

Constitutional law — Arbitration and award

7. An executed award is analogous to an accord and satisfaction and may be pleaded as such in defense of the original cause of action, and the constitutional provision that every man shall have remedy for injury done him is not violated by such an award.

Arbitration and award — Res judicata

8. An executed common-law award is accorded the benefits of doctrine of res judicata in much the same manner as the judgment of a court.

Master and servant — Arbitration and award

9. Where decision of single question whether employee's injuries were sustained in fight or brawl would in effect determine whether employee was entitled to recover medical and hospital expenses incurred in treatment of injuries from hospital department funds to which both employer and employee contributed, agreement between employer and employee to submit all questions concerning hospital department to arbitration was a "general arbitration agreement", and award executed pursuant thereto was binding.

Arbitration and award — Binding award

10. An award executed pursuant to general arbitration agreement is binding unless the agreement was essentially unfair, and is subject to rules concerning impeachment of awards in general.

Master and servant — Arbitration and award

11. A railway company's hospital department to which both railway company and employees contributed was a "benevolent organization", as respects validity of agreement between company and employees to submit questions concerning hospital department to arbitration.

Master and servant — Arbitration and award

12. A railway company agreeing that award should be made by chief surgeon and general manager to whom questions concerning hospital department were submitted for arbitration thereby waived objection to any apparent bias that chief surgeon and general manager may have had.

Arbitration and award — Binding award

13. A party to general arbitration agreement could not revoke agreement after award was made pursuant thereto.

Master and servant — Binding award

14. An award, made pursuant to general arbitration agreement, that railway company employee was injured in fight or brawl and that therefore he was not entitled to benefits from hospital department to which both railway company and employee contributed, was final and precluded employee from maintaining action to recover such benefits.

BELT, C.J., dissenting.

                  See 3 Am. Jur. 892, 919; decisions of benefit society
                conclusiveness, note, 51 A.L.R. 1420; see, also, notes 104 A.L.R
                567, 110 A.L.R. 142; 39 C.J., Master and servant, § 15
                

Appeal from Circuit Court, Union County.

R.J. GREEN, Judge.

Hugh E. Brady, of LaGrande, for respondent.

Joseph G. Berkshire, of Portland (with Roy F. Shields, of Portland, and Cochran & Eberhard, of LaGrande, on the brief), for appellant.

Before BELT, Chief Justice, and BAILEY, LUSK, BRAND and HAY, Justices.

REVERSED.

Action by plaintiff, an employee of the defendant company and a contributor to its hospital fund, to recover medical and hospital expenses incurred for the treatment of injuries sustained. From a judgment for plaintiff, defendant appeals.

Under the rules of the Hospital Department, to which the plaintiff had by contract agreed, he would not be entitled to benefits from the fund if his injuries were sustained in a "fight or brawl." The defendant affirmatively alleges that it was agreed that the decision of the authorized officials of the department should be final and conclusive, that upon investigation the officials determined that plaintiff's injuries were the result of a "fight or brawl," and that such determination constitutes a bar to the action.

BRAND, J.

The case presents an important and, in this state, a novel question. There is no conflict of testimony on any material issue. Our decision must rest solely upon the pleadings, the admissions and stipulations of the parties, and the undisputed evidence. We will recite the facts in narrative form.

The defendant has established and maintains a hospital department for its Northwestern District, which includes Oregon, for the care of sick and injured employees. The defendant railroad company by resolution accepted from a predecessor in interest the transfer of the hospital fund "to be held as a hospital fund, under such rules and regulations as this company may, from time to time, establish," and "assumed certain obligations" including the "obligation as trustee of said hospital fund." Plaintiff entered the employ of the defendant in February 1944, pursuant to a written application signed by him and accepted by the defendant. It reads in part as follows:

"In consideration of my employment by said Company and as a part of consideration moving it to employ me, I do hereby agree to contribute to the said Company each month or fractional part thereof during said employment, such sums as may be prescribed, to be deducted from my salary or wages and to be applied by the said Company to the maintenance of the Hospital Department, the benefits of which I shall by virtue of such contributions be entitled to enjoy, in accordance with the rules and regulations governing the said Department, as adopted by the said Company, and such amendments thereto as may hereafter be adopted."

The Hospital Department is operated by the defendant without gain or profit to it. In addition to the contributions of the employees, the company contributes about $2500 a month to the trust fund. All contributions made by plaintiff to the Hospital Department by wage deductions were turned over to said department for administration pursuant to the rules and regulations.

Section 3, Article V of said rules and regulations provides:

"No benefits will be given for venereal diseases, nor for ailments due to intemperance, vicious habits, injuries received in a fight or brawl, or occasioned by any unlawful act, or for chronic diseases acquired before entering the employ of the Company."

Article IV of the rules provides:

"The Chief Surgeon shall be the executive officer immediately in charge of the Department and all correspondence pertaining thereto should be addressed to him direct. All questions concerning Administration of the Department will be decided by him and there will be no appeal from his decision, save to the General Manager, whose decision shall be final."

After his injury the plaintiff requested an order for his treatment by the Hospital Department, which request was referred to the Chief Surgeon who investigated the facts surrounding the plaintiff's injuries and concluded that the injuries were received in a "fight or brawl" and that plaintiff was ineligible for benefits pursuant to the provisions of Article IV. Plaintiff, claiming that he was assaulted through no fault of his own, then appealed to the General Manager. The Manager conducted an investigation of the facts and, after considering the matter, affirmed the decision of the Chief Surgeon and denied plaintiff's request. The plaintiff then brought this action.

In construing Article IV of the rules, it is significant that "all questions" concerning administration of the department are first submitted to the Chief Surgeon, thus indicating that the questions in contemplation relate to medical matters or claims for benefits from the fund. Again, the provision for appeal to the General Manager normally would suggest a proceeding on a claim against the department rather than a question of internal management or policy of the department. Questions as to financial policy concerning investments of the trust fund or the like would scarcely have been referred to the Chief Surgeon.

If there should be a question as to the construction of Article IV, there is no question as to the practical construction placed upon it by both parties. By appealing to the General Manager from the adverse decision of the Chief Surgeon, the plaintiff himself has construed the rule as requiring that claimants for sick benefits must exhaust the appellate procedure prescribed therein. The General Manager of the defendant by entertaining the appeal also clearly construed the rule as providing for appeal to him in such cases. The trial court construed the rule to which plaintiff had agreed as...