Theodore v. Packing Materials, Inc.

Decision Date01 April 1976
Docket NumberNo. 12,12
Citation240 N.W.2d 255,396 Mich. 152
PartiesJames THEODORE, Jr., Deceased, et al., Plaintiffs-Appellees, v. PACKING MATERIALS, INC., and American Mutual Liability Insurance Company, Defendants-Appellants. 396 Mich. 152, 240 N.W.2d 255
CourtMichigan Supreme Court

Reamon, Williams, Klukowski & Craft, Lawrence C. Klukowski, Grand Rapids, for plaintiffs Jane Marie 'Doe', Virginia 'Doe', her adoptive mother and James Ernest 'Roe'; Stephen R. Drew, Grand Rapids, of counsel.

Cholette, Perkins & Buchanan by Kenneth L. Block, Grand Rapids, for defendants-appellants.

FITZGERALD, Justice.

The question before us is one of first impression: Is a natural child of a deceased employee a dependent' within the meaning of the Workmen's Compensation Act and therefore entitled to receive death benefits when such child has been adopted by other parents prior to the date of the employee's injury and resulting death? We answer in the negative, but also conclude that the hearing referee's unappealed-from decision that children in this category are conclusively presumed dependents became final and res judicata subject to subsequent modification or termination where such presumption can no longer be supported.

I

The decedent, James Theodore, Jr., suffered a work-related injury on July 17, 1969, and subsequently died on December 6, 1969. His employer, Packing Materials, Inc., and its insurer, American Mutual Liability Insurance Co., defendants in this matter, admit liability, the only question being to whom should death benefits be paid.

The decedent married his wife Shirley in 1953 and three children were born of this marriage: James (1954), Jane (1955), and Keith (1962). Though the marriage was never dissolved, James and Jane were adopted by different parents during the life of the deceased. Beginning in 1957, the decedent cohabited with one Florene Hansen and two children were born of this relationship: David (1958) and Jill (1959).

Following decedent's death, petitions were filed on behalf of widow Shirley and her son Keith, and on behalf of Florene and her children, David and Jill. The scheduled hearing was adjourned in order to notify the proper probate courts of potential benefits to which the adopted children, James and Jane, were entitled. In response, Jane's adoptive mother, Virginia 'Doe', requested that her claim be presented. James' adoptive parents, however, refused all present and future benefits due him.

The hearing referee, by order of January 6, 1971, ruled that James and Jane were dependents and entitled to share equally in the death benefits with widow Shirley, Keith, Jill Hansen and David Hansen. This ruling was appealed by Florene Hansen then subsequently withdrawn, an Ex parte order being entered to that effect on July 14, 1971. On September 8, 1971, defendants filed a petition for a determination of rights seeking to terminate death benefits payable to James and Jane, both of whom had been legally adopted by others, had reached the age of 16, and were no longer dependent upon their mother Shirley.

On July 25, 1972, the original order of January 6, 1971, was modified to reflect that James was no longer considered a dependent because he had graduated from high school and was presumed to be self-supporting as of December 12, 1972. The status of Jane remained unchanged and she continued to receive benefits. This ruling was appealed to the Workmen's Compensation Appeal Board and was affirmed on two grounds:

(1) The 1971 decision of the referee which determined that both James and Jane were dependents was allowed to become final and is thus res judicata.

(2) The referee's decision was soundly based upon Kujawski v. C. Buscemi & Sons, 1966 WCABO 363.

The board also ruled that since Jane had neither been proved self-supporting for six months nor reached the age of 21, she was entitled to continue her dependency status. Following denial of appellant's application for leave to appeal by the Court of Appeals, leave was granted by this Court.

II

The Workmen's Compensation Act 1 authorizes the payment of death benefits to 'dependents of the (deceased) employee, wholly dependent upon his earnings for support at the time of the injury'. 2 Those persons conclusively presumed to be wholly dependent for support upon a deceased employee are set forth in M.C.L.A. § 412.6; M.S.A. § 17.156 3 and include:

'A child or children under the age of 16 years, or over said age, if physically or mentally incapacitated from earning, upon the parent with whom he is or they are living at the time of the death or such parent. In the event of the death of an employee who has at the time of his or her death A living child or children by a former husband or wife or children who have been deserted by said deceased employee under the age of 16 years, or over said age, if physically or mentally incapacitated from earning, said child or children shall be conclusively presumed to be wholly dependent for support upon such deceased employee, even though not living with the deceased employee at the time of his or her death; * * *'. (Emphasis supplied.)

Other relevant statutory provisions include M.C.L.A. § 412.7; M.S.A. § 17.157: 4

'Questions as to who constitute dependents and the extent of their dependency shall be determined as of the date of the injury to the employee * * *'.

M.C.L.A. § 412.6(c); M.S.A. § 17.156(c): 5

'The payment of compensation to any dependent child shall cease when the child reaches the age of 21 years, * * *.'

and M.C.L.A. § 418.851; M.S.A. § 17.237(851):

'The hearing referee assigned to any hearing in accordance with the provisions of section 847 shall make such inquiries and investigations as he shall deem necessary. * * * Unless a claim for review is filed by a party within 15 days, the order shall stand as the order of the bureau.'

III

It is within this statutory framework that we review the question of whether the January 6, 1971 hearing referee's determination of dependency is res judicata. Defendants did not appeal this ruling witnin 15 days as required by M.C.L.A. § 418.851; M.S.A. § 17.237(851). We need not reach the question of whether Florene Hansen's appeal preserved defendant's right to appeal the referee's finding of dependency since the date upon which defendants' petition for a determination of rights was filed, September 8, 1971, was more than 15 days from the date of the Ex parte dismissal of Florene Hansen's appeal, August 14, 1971. Nor are we persuaded that the order of dismissal was improperly entered. No authority is cited which would require that written stipulation be obtained from any other interested parties prior to entry of the appeal board's order of dismissal.

While we recognize that the doctrine of res judicata is applicable to workmen's compensation proceedings, 6 compensation awards represent 'an adjudication as to the condition of the injured workman at the time it is entered, and conclusive of all matters adjudicable at that time, but it is not an adjudication as to the claimant's future condition and does not preclude subsequent awards or subsequent modifications of the original award upon a showing that the employee's physical condition has changed'. 7 Just as one's Physical condition may change with the passage of time, so too can one's Status vary from one day to the next. The hearing referee's decision of January 6, 1971 that 'a child cannot be denied benefits for the death of a natural parent because the child was adopted by others during the life of the (deceased) parent' was based upon the facts existing at the time of decedent's injury, July 17, 1969. 8 On this date, the ages of James and Jane were 15 and 13 years respectively. 9 Both children were indeed 'under the age of 16 years' and conclusively presumed to be wholly dependent for support upon the deceased employee.

When defendants filed the petition for a determination of rights on September 8, 1971, the ages of James and Jane were 17 and 16 respectively. Neither child being under the age of 16 years, the conclusive presumption of dependency no longer applies. Having successfully challenged the continuation of this conclusive presumption, defendants are obligated to pay death benefits only to those who were wholly dependent upon the deceased employee as a matter of fact. 10 Neither child was wholly dependent upon the deceased employee as a matter of fact upon reaching the age of 16 years. Each was under the lawful custody of his (her) respective parents and received no support of any kind from the decedent. Consequently, defendants were obligated to pay death benefits to James Ernest 'Roe' and Jane Marie 'Doe' from the date of decedent's death until each respectively reached the age of 16, the date upon which the conclusive presumption of dependency terminated.

IV

The matter before us is not limited to construction of the Workmen's Compensation Act. Also bearing upon the adoptive children's right to recover workmen's compensation benefits from their natural father is the adoption statute. M.C.L.A. § 710.6; M.S.A. § 27.3178(546), 11 provided that, upon examination of the written report concerning the child and the prospective adoptive parents, the probate judge, if satisfied that the best interests of the child will be served by adoption, shall enter 'an order which shall terminate the rights of the child's natural parents'. Following entry of the adoption order, the adoptive parents shall 'stand in the place of a parent or parents to such child in law, in all respects as though the adopted child has been the natural child of the adopting parents, and be liable to all duties and entitled to all the rights of parents thereto'. 12

Appellant argues that the legal effect of adoption is to relieve natural parents of all parental obligations. The conclusive presumption that James and Jane were dependents of the deceased was terminated at their respective adoption proceedings. They argue further that...

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