Sheehan Co v. Shuler

• Decision Date: 26 May 1924
• Docket Number: No. 593,593
• Parties: R. E. SHEEHAN CO. et al. v. SHULER, State Treasurer, et al
• Court: U.S. Supreme Court

265 U.S. 371

44 S.Ct. 548

68 L.Ed. 1061

R. E. SHEEHAN CO. et al.

v SHULER, State Treasurer, et al.

No. 593.

Argued Jan. 9, 1924.

Decided May 26, 1924.

Mr. William H. Foster, of Syracuse, N. Y., for plaintiffs in error.

Mr. E. Clarence Aiken, of Albany, N. Y., for defendants in error.

Mr. Justice SANFORD delivered the opinion of the Court.

This case involves the question of the constitutionality of two recent amendments to the Workmen's Compensation Law of New York, enacted Laws 1913, c. 816; reenacted Laws 1914, c. 41.

This is a compulsory law establishing in certain employments classed as hazardous an exclusive system governing compensation for injuries to employees resulting in disability or death, irrespective of negligence, and requiring compensation to be paid to injured employees or, in case of death, to designated beneficiaries,¹ according to prescribed scales gauged by the previous wages and the extent of the disabilities or dependency of the beneficiaries. The employer is required to insure the payment of such compensation in a State insurance fund or with an authorized stock association or mutual association, unless, upon proof of his financial ability, he is permitted to become a 'self-insurer.' The constitutionality of this law was sustained in New York Central Railroad v. White, 243 U. S. 188, 37 Sup. Ct. 247, 61 L. Ed. 667, L. R. A. 1917D, 1, Ann. Cas. 1917D, 629.

The Compensation Law was amended by the Laws of 1922, c. 615 (Consol. Laws, c. 67), so as to include, as subdivisions 8 and 9 of section 15, the two provisions involved in this case, which read:

'8. Permanent Total Disability after Permanent Partial Disability. If an employee who has previously incurred permanent partial disability through the loss of one hand,' arm, foot, leg, or eye, 'incurs permanent total disability through the loss of another member or organ, he shall be paid, in addition to the compensation for permanent partial disability'² and after the cessation thereof, 'special additional compensation for the remainder of his life to the amount of sixty-six and twothirds per centum of the average weekly wage earned by him at the time the total permanent disability was incurred. Such additional compensation shall be paid out of a special fund created for such purpose in the following manner: The insurance carrier³ shall pay to the state treasurer for every case of injury causing death in which there are no persons entitled to compensation the sum of five hundred dollars. The state treasurer shall be the custodian of this special fund, and the [industrial] commissioner shall direct the distribution thereof.⁴

'9. Maintenance for Employees Undergoing Vocational Rehabilitation. An employee, who as a result of injury is or may be expected to be totally or partially incapacitated for a remunerative occupation and who, under the direction of the state board of vocational education is being rendered fit to engage in a remunerative occupation,⁵ shall receive additional compensation necessary for his maintenance,' but not exceeding ten dollars a week. 'The expense shall be paid out of a special fund created in the following manner: The insurance carrier shall pay to the state treasurer for every case of injury causing death, in which there are no persons entitled to compensation, the sum of $500. The state treasurer shall be the custodian of this special fund and the industrial commissioner shall direct the distribution thereof.'⁶

In February, 1923, an employee of the Sheehan Company in one of the hazardous occupations, sustained, in the course of his employment, accidental injuries resulting in his death. He left no survivors entitled to compensation. The State Industrial Board, in an appropriate proceeding under the Compensation Law, awarded the State Treasurer against the Sheehan Company, as employer, and the AEtna Life Insurance Company, as insurance carrier, two sums of $500 each, pursuant to subdivisions 8 and 9, respectively, of section 15. On successive appeals these awards were affirmed, without opinions, by the Appellate Division of the Supreme Court and by the Court of Appeals. State Treasurer v. Sheehan, 206 App. Div. 726, 199 N. Y. Supp. 951; 236 N. Y. 579, 142 N. E. 291. The record was remitted to the Supreme Court, to which this writ of error was directed. Hodges v. Snyder, 261 U. S. 600, 43 Sup. Ct. 435, 67 L. Ed. 819.

The companies contend that these subdivisions are in conflict with the Fourteenth Amendment and that the awards made thereunder deprive them of their property without due process and deny them the equal protection of the laws.

The substance of these two provisions is that when an injury causes the death of an employee leaving no beneficiaries, the employer or other insurance carrier shall pay the State Treasurer the sum of $500 for each of two special funds: one to be used in paying additional compensation to employees incurring permanent total disability after permanent partial disabilities; and the other, in the vocational education of employees so injured as to need rehabilitation. The use of such special funds for such purposes is an additional compensation to the employees thus injured, over and above that prescribed as the payments to be made by their immediate employers. Such additional compensation is neither unjust nor unreasonable. Thus, an employee who, having lost one hand in a previous accident, thereafter loses the second hand, is, obviously, not adequately compensated by the provision requiring his employer to make payment for the loss of the second hand, independently considered;⁷ the total incapacity finally resulting from the loss of both hands working much more than double the injury resulting from the loss of each separate hand considered by itself. In such a case, however, as in the case of an injury requiring vocational rehabilitation, it is the theory of the law that such additional compensation to the injured employee should not be required of the particular employer in whose service the injury occurred, but should be provided out of general funds created by payments required of all employers when injuries resulting in the death of their own employees leaving no beneficiaries, do not otherwise create any liability under the Compensation Law.

We do not think that the due process clause of the Fourteenth Amendment requires that such additional compensation to injured employees of the specified classes should be paid by their immediate employers, or prevents the legislature from providing for its payment out of general funds so created. In Mountain Timber Co. v. Washington, 243 U. S. 219, 244, 37 Sup. Ct. 260, 267, 61 L. Ed. 685, Ann. Cas. 1917D, 642, it was held that a Workmen's Compensation Act did not deprive the employers of due process, because the compensation to the injured employees and their surviving dependents was not made by their immediate employers, but out of state funds to which the employers were required to make stated contributions, based upon definite percentages of their payrolls, in different groups of industries classified according to hazard. On this question the...