Subsequent Injuries Fund v. Industrial Acc. Commission

• Decision Date: 19 April 1957
• Citation: 310 P.2d 7,48 Cal.2d 365
• Court: California Supreme Court
• Parties: SUBSEQUENT INJURIES FUND, State of California, Petitioner, v. INDUSTRIAL ACCIDENT COMMISSION and Raymond C. Walters et al., Respondents. L. A. 24468.

Page 7

310 P.2d 7

48 Cal.2d 365

SUBSEQUENT INJURIES FUND, State of California, Petitioner, v. INDUSTRIAL ACCIDENT COMMISSION and Raymond C. Walters et al., Respondents.

L. A. 24468.

Supreme Court of California, In Bank.

April 19, 1957.

Edmund G. Brown, Atty. Gen., Irving H. Perluss, Asst. Atty. Gen., Patrick T. McCormick and F. G. Girard, Deputy Attys. Gen., for petitioner.

Everett A. Corten, Daniel C. Murphy, San Francisco, Edward A. Sarkisian, Los Angeles, Donald Gallagher and Loton Wells, San Francisco, for respondents. SCHAUER, Justice.

Petitioner State of California Subsequent Injuries Fund seeks annulment of a purported apportionment or contribution award against it made by respondent commission directly in favor of an employe who suffered permanent partial disability from silicosis resulting from successive employments in underground metal mining. We have concluded that petitioner's attacks upon the constitutionality of the provisions of section 5500.5 of the Labor Code, under which the award was made, are (upon any proper interpretation and application of the legislation) without merit, but that contrary to the provisions of that section and beyond the scope of its intendments the commission erroneously issued an award of workmen's compensation against petitioner directly in favor of the employe (rather than an apportionment or reimbursement award in favor of one or more of his employers against whom award in his favor could be made) and that therefore the award should be annulled and the matter remanded for further proceedings in accordance with the terms of the statute.

Reference is made to the companion case of Subsequent Injuries Fund v. Industrial Acc. Comm., Cal., 310 P.2d 1, for a more complete statement of the provisions of section 5500.5, here involved.

In the present case the commission found that the employee had suffered permanent disability equivalent to 6 1/2 per cent, resulting from silicosis contracted after 158.5 months of exposure in underground metal mining, and that 'Liability for compensation should be apportioned among the various insurance carriers (italics added) in accordance with the periods of their coverage during said period of employment and exposure, which apportionment is as follows:' Four 'Defendants' are then listed, including petitioner Subsequent Injuries Fund, and a percentage of liability as well as the monetary liability of each is set forth. The award was made 'in favor of Raymond C. Walters against (the four 'Defendants,' including petitioner) * * * in the percentages as provided herein in' the findings.

The parties agree that the award against petitioner is based upon section 5500.5 of the Labor Code, although neither the findings nor the award so state. There is, however, no suggestion that the Fund was an employer, or insurance carrier of an employer, engaged in underground metal mining. As ground for annulment of the award, petitioner first attacks the constitutionality of certain provisions of that section, urging that an unreasonable discrimination is made in favor of employers engaged in underground metal mining as distinguished from other employers.

The section (Lab.Code, § 5500.5) provides, among other things, that 'In any case involving a claim of occupational disease contracted as a result of more than one employment, the employee making the claim or his dependents, may elect to proceed against any one or more of the employers * * * and any award which the commission shall issue awarding compensation benefits shall be a joint and several award as against any two or more employers who may be held liable. * * * At any time within one year after the commission has made an award for compensation benefits in connection with an occupational disease, any employer held liable under such award may institute proceedings before the commission for the purpose of determining an apportionment of liability or right of contribution (which proceedings) * * * shall be limited to a determination of the respective contribution rights, interests or liabilities of all the employers joined in the proceeding, either initially or supplementally.' (Italics added.) If, however, the disability of the employe resulted 'from silicosis in underground metal mining operations,' then 'If any of the employers who have not contributed to payment of the original award shall be without the commission's jurisdiction, or are dead, insolvent, or not subject to enforcement of awards against them for such contributions, either directly or through solvent insurance carriers, then upon such showing being made to the satisfaction of the commission, it shall make an award in favor of the employer or employers who have paid the original award, payable out of the (Subsequent Injuries Fund) * * * in an amount equal to the unreimbursed portions of the original payment or payments to which such employer or employers are found entitled as aforesaid.' (Italics added.) Then follow the declarations of public policy and public welfare made by the Legislature, based upon its expressly stated findings of the special character of the underground metal mining industry with respect to silicotic hazard and investment hazard. ¹

Petitioner asserts that 'Concerning a special silicotic hazard in the underground metal mining industry, it is submitted that such does not exist.' As a basis for such assertion it relies upon statements found in bulletins published by certain state and federal agencies and upon a report of an interim committee of the California state Senate which indicate that 'silicosis can be acquired' in many other industries as well as in underground metal mining.

Petitioner also argues that 'Even if it be assumed that a special silicotic hazard does exist in the underground metal mining industry in California, that alone would not result in this discriminatory legislation being constitutional, for the crucial distinction between the underground metal mining industry and other industries by the legislature is the finding of an investment hazard which results in the closure of mines and disappearance of employers, with the consequent inability to enforce awards against them, which in turn results in the inequity of solvent employers or their insurance carriers bearing the entire award. As Section 5500.5 authorizes the use of public funds to the employer who has paid an award not in proportion to the employee's employment with such employer, it is obvious that this is the evil the statute was concerned with correcting. Therefore, if there is no basis for the legislative conclusion that awards cannot be enforced against insolvent mines, there can be no valid distinction between the underground metal mining industry and other industries on this ground. It is submitted that such is the case.' In support of this latter argument petitioner states that records of the Department of Industrial Relations show that in 1951, the year section 5500.5 was adopted, there were 236 permissibly self-insured employers (Lab.Code, § 3700), only one of which was in the metal mining industry, although during the same year there were 266 'operating producers of metallic minerals in California.' Thus, argues petitioner, 'it appears * * * that all metal mines except one carried insurance against liability to pay compensation * * * (and so) it is obvious that an award made against an insolvent mine is not unenforceable, because even if the employer cannot respond, the insurance company can. Therefore, no inequity to solvent employers or their insurance carriers can occur from the insolvency of a domestic mine, for at the time the section was enacted only one operating mine failed to carry insurance, and this (self-insured) mine had a substantial surety bond on deposit with a state official. Thus, the underground metal mining industry was as fully able to respond to Industrial Accident Commission awards as employers in any other industry where a silicotic risk is present, and there is no justification for the discrimination based on investment risk resulting in noncompliance with commission awards and the consequent inequity to other solvent employers or insurance carriers.'

As pointed out by respondents however, the issue is not whether facts existed which might have supported a contrary determination by the Legislature, but, rather, whether the classification between underground metal mining and other industries involving a silicotic hazard, and the legislative findings upon which such classification is based, are so palpably arbitrary that no set of facts can reasonably be conceived that would sustain them. (See 11 Cal.Jur.2d 726-728, and cases there cited.) Thus, in Sacramento Municipal Utility Dist. v. Pacific Gas & Electric Co., 1942, 20 Cal.2d 684, 693(5), 128 P.2d 529, it is declared that 'Wide discretion is vested in the Legislature in making the classification and every presumption is in favor of the validity of the statute; the decision of the Legislature as to what is a sufficient distinction to warrant the classification will not be overthrown by the courts unless it is palpably arbitrary and beyond rational doubt erroneous. (Citations.) A distinction in legislation is not arbitrary if any set of facts reasonably can be conceived that would sustain it.' Further, in In re Herrera, 1943, 23 Cal.2d 206, 212(2), 143 P.2d 345, the rule is again quoted that 'The authority and the duty to ascertain the facts which will justify classified legislation must of necessity rest with the legislature, in the first instance, to whom has been given the power to legislate and not to the courts and the decision of the legislature in that behalf is ordinarily conclusive upon the courts. Every presumption is in favor of the validity of the legislative act * * *' See also Jersey Maid Milk Products Co. v. Brock, 1939, 13 Cal.2d 620, 636(1), 91 P.2d 577. In Lockheed Aircraft Corp. v. Superior Court, 1946, 28 Cal.2d...