Thomas v. Indus. Comm'n

• Decision Date: 16 June 1943
• Citation: 10 N.W.2d 206,243 Wis. 231
• Parties: THOMAS et ux. v. INDUSTRIAL COMMISSION et al.
• Court: Wisconsin Supreme Court

243 Wis. 231

10 N.W.2d 206

THOMAS et ux.

v.INDUSTRIAL COMMISSION et al.

Supreme Court of Wisconsin.

June 16, 1943.

Appeal from a judgment of the Circuit Court for Dane County; Alvin C. Reis, Judge.

Action by Earl Thomas and wife against the Eagle Steam Laundry and others to review orders of the Industrial Commission of Wisconsin dismissing plaintiff's application for compensation and directing a refund to the Hardware Mutual Casualty Co. of Stevens Point of $2,000 paid into the state treasury. From a judgment confirming the orders, plaintiffs appeal.-[By Editorial Staff.]

Modified, and, as modified, affirmed.

ROSENBERRY, C. J., and MARTIN and BARLOW, JJ., dissenting.

This was an action commenced on October 24, 1942, by Earl Thomas and Lydia Ellen Thomas, husband and wife, plaintiffs, to review orders of the Industrial Commission of Wisconsin dismissing plaintiffs' application for compensation and directing a refund to Hardware Mutual Casualty Company of $2,000 paid into the state treasury in pursuance to section 102.49(5), Stats. The judgment of the circuit court dated October 30, 1942, confirmed orders of the industrial commission dated October 20, 1941.

The material facts will be stated in the opinion.

O'Melia & Kaye, of Rhinelander, for appellants.

John E. Martin, Atty. Gen., and Mortimer Levitan, Asst. Atty. Gen., for respondents.

WICKHEM, Justice.

Plaintiffs are the unestranged parents of Kenneth Thomas. They operated as partners a laundry business under the name of Eagle Steam Laundry. In this business, during 1939 and 1940 their seventeen-year-old son, Kenneth, worked as a truck driver and was paid on the same basis as other employees. He lived at home, paid nothing for board or lodging. No child labor permit had been obtained and his work was after school hours except during the summer period when he worked steadily. On January 10, 1941, while delivering laundry on his regular route Kenneth Thomas was killed. The Eagle Steam Laundry was under the Workmen's Compensation Act and covered by a policy issued by Hardware Mutual Casualty Company. After the death, on February 4, 1941, insured procured from applicants a stipulation that employment and liability existed and agreeing to submit the claim to the Commission and pay $28 to apply on the liability. The examiner found that decedent was an employee of Eagle Steam Laundry but that because the applicants were also the employers of decedent they were barred from compensation by reason of the decision in Independence Indemnity Co. v. Industrial Comm., 209 Wis. 109, 244 N.W. 566. On review by the commission the finding that decedent was also an employee was reversed, it being found that the decedent, although he worked regularly and was paid such sums as he earned and was listed for social security and income tax purposes, was not an emancipated minor, because he spent the money for clothes, paid no board at home, had no labor permit and his parents were legally entitled to his earnings. For this reason and on the basis of the holding in the Independence case, supra, the application was dismissed and a refund of the death payment into the state treasury was ordered. Upon appeal, the trial court did not determine whether or not employment existed, but held that recovery was barred by the Independence case.

Appellants' contention is that the rule of the Independence case is wrong on principle and should be repudiated by this court. The respondent, while resisting this contention, asserts that even if the Independence case were to be abandoned, the finding of the commission that Kenneth was not an employee must be sustained as founded on credible evidence. For reasons that will hereafter be set forth, we consider that the findings of the commission are not sustained by the evidence. Therefore, the first question is whether the Independence case was wrongly decided and whether under all the circumstances it should now be repudiated. In the Independence case, Minnie Boss, a widow, was engaged in operating a farm. She carried workmen's compensation insurance. Her son, Christian, was employed by her at a monthly wage to work on the farm. He came to his death by reason of injuries sustained in the course of his employment. He was unmarried and his mother-employer applied to the Industrial Commission for such relief as she might be entitled to in the premises. The defense of the insurance carrier was that the applicant and employer were one and the same person and that applicant as employer could not be liable to herself or herself recover any compensation or damages or benefit by reason of the statutory liability imposed upon her by the Workmen's Compensation Act for the injury and death of the deceased employee; that the policy covered only the liability of the employer and that no liability existed in this case.

The court there stated the questions to be: (1) May the Industrial Commission make an award directly against an insurance carrier without finding liability of the employer? (2) May the Industrial Commission award compensation to a surviving unestranged parent against herself as employer? The Court held that the fundamental purpose of the act is to provide compensation for one who is accidentally injured while in the employ of another who at that time is subject to the Act, and that the insurance provisions were for the purpose of guaranteeing payment of compensation to the injured employee in accordance with the terms of the act. It was further held that the compensation act clearly reveals that liability of the employer to the employee or dependent is the primary liability, although proceedings against either the employer or the insurance carrier may be had; that it is the liability of the employer that must be assumed by the insurance carrier, and that no liability exists on the part of the carrier in the absence of liability on the part of employer. Reliance was had upon sec. 102.28, Stats., which provided as follows:

“Sub. (2) An employer liable under this act to pay compensation shall insure payment of such compensation in some company authorized to insure such liability in this state. * * *”

“Sub. (4) If it appears by the complaint or by the affidavit of any person in behalf of the state that the employer's liability continues uninsured there shall forthwith be served on the employer an order to show cause”, etc.

Sec. 102.30(1) provides: “Nothing in sections 102.03 to 102.34, inclusive, shall affect the organization of any mutual or other insurance company, or any existing contract for insurance of employers' liability, nor the right of the employer to insure in mutual or other companies, against such liability, or against the liability for the compensation provided for by sections 102.03 to 102.34, inclusive * * *.”

Sec. 102.31 provides: “* * * Such contract shall be construed to grant full coverage of all liability of the assured under and according to the provisions of sections 102.03 to 102.34, inclusive, notwithstanding any agreement of the parties to the contrary unless the industrial commission has theretofore by written order specifically consented to the issuance of a contract of insurance on a part of such liability. * * *”

Under these sections it was held (1) that applicant sustained no liability to herself and (2) that in the absence of such liability there was no liability upon the insurance company. This is criticized by appellant as applying rules of contract law to a statutory liability. On this branch of the case we think the Independence case was rightly decided.

It is of little consequence what labels reminiscent of common law liability are attached to the statutory obligations. By no process can the conclusion be escaped that the insurance company, even though it may be sued directly, though its contract is not principally one of indemnity or surety in the common law sense, with attending rights to reimbursement, subrogation and exoneration, may set up as a defense anything tending to destroy or mitigate the liability of an employer. In every assignment, this court considers such defenses as that there was no relation of employer and employee, that the injury did not arise out of and in the course of employee's employment and any number of other defenses which go to destroy liability on the part of the employer. It may be proper to term the insurance liability a primary one in the sense that the insurance company may be sued directly and it is undoubtedly proper to regard it as principally for the purpose of assuring payment to the injured employee or his dependents, rather than that of indemnifying the employer. But whatever it be called, the conclusion cannot be avoided that establishment of a liability of the employer under the act to the employee or dependent is a condition precedent to any liability by the insurance company. In this respect, the situation is analogous to insurance policies covering liability for the operation of motor vehicles. There is nothing in this inconsistent with Maryland Casualty Company v. Industrial Comm., 198 Wis. 202, 221 N.W. 747,223 N.W. 444, 445. That case simply holds, and we hold here, that the purpose of requiring insurance is not to indemnify the employer but to assure the injured employee or his dependent that the employer's liability will be discharged. In fact, in that case the opinion states that the insurance company “* * * assumes the employer's obligation to pay compensation. The measure of its liability under its policy and the statute is the employer's liability to the injured employee.” As was pointed out in the Independence case, the Maryland Casualty case assumes that there must exist a liability of the employer and that it is this liability that the insurer must carry. It is suggested that the case of Hagenah v. Lumbermen's Mut. Casualty Co., 241 Wis. 226, 5 N.W.2d 760, 142 A.L.R. 1417, has in effect reversed the Independence case, but the Hagenah Case...