American Mutl. L. Ins. Co. v. U.S. Elec. Tool Co.

This is a proceeding in error from the Court of Common Pleas of Hamilton county, wherein judgment was rendered in favor of the defendant, United States Electrical Tool Company, pursuant to an instructed verdict.

The parties will be referred to as they appeared in the trial court.

The plaintiff in its amended petition alleged that it was a Massachusetts corporation and that the defendant was an Ohio corporation, that by the statutes of Alabama it was provided that:

"A personal representative may maintain an action and recover such damages as the jury may assess in a court of competent jurisdiction within the state of Alabama and not elsewhere for the wrongful act, omission, or negligence of any persons, or corporations, his or their servants or agents, whereby the death of his testator or intestate was caused, if the testator or intestate could have maintained an action for such wrongful act, omission, or negligence, if it had not caused death. Such action shall not abate by the death of the defendant, but may be revived against his personal representatives; and may be maintained, though there has not been prosecution, or conviction, or acquittal of the defendant for the wrongful act, or omission, or negligence; and the damages recovered are not subject to the payment of the debts or liabilities of the testator or intestate, but must be distributed according to the statute of distribution. Such action must be brought within two years from and after the death of the testator."

It was further alleged that the statute of Alabama provided for compensation to injured workmen and in case of death provided for benefits to their dependents. The entire act was incorporated in the amended petition by reference.

It was further alleged that one Herbert Thomas, a resident and citizen of the state of Alabama, while in the employment of the American Cement Tile Manufacturing Company in the city of Birmingham, Alabama, was killed upon the 29th day of July, 1930, by reason of such employment and during the course thereof, that his death resulted when an electric drill negligently constructed by the defendant caused an electric charge to pass through his body while he was using the drill in the course of his employment, and that his employer at the time of his death had complied with the Workmen's Compensation Act of Alabama.

The pleading sets forth the several dependents of the deceased and the amount of his weekly earnings.

It is further alleged that the employer of Thomas had exercised the right given it by Paragraph 30 of the Workmen's Compensation Act of the state of Alabama to insure and keep insured its liability to its employees imposed by the Act. Such Paragraph 30 is as follows:

"30 (Section 7584) Employer given right to insure risks: Conditions. Every employer who accepts the provisions of Articles 1 and 2 of this chapter relative to the payment of compensation may, at his option, insure and keep insured his liability thereunder in some insurance corporation, association, organization, or insurance association or corporation, or association formed of employers and workmen or formed by a group of employers to insure the risks under Article 2 of this chapter, operating by the mutual assessment or other plans or otherwise provided that such insurance association, organization or corporation shall have first had its contract and plan of business approved in writing by the superintendent of insurance of Alabama and have been authorized by said superintendent of insurance to transact the business of workman's compensation insurance in this state and under such charter or plan. Those writing such insurance shall in every case be subject to the conditions of this section hereinafter named. * * * The insurer must be one authorized by law to conduct such business in the state of Alabama, and all insurance companies writing such insurance may include in their policies, in addition to the requirements now provided by law, the additional requirements, terms and conditions in this section provided. * * *"

It is further alleged that plaintiff had accepted such insurance and complied with all the laws of Alabama appertaining thereto and has paid to the dependents of Thomas the amounts required by law to be paid by his employer, and will continue to make such future payments as are required by law.

In conclusion it is alleged that this action is brought for the benefit of plaintiff to the extent of payments made and liabilities incurred to and for the dependents of the deceased employee and in subrogation of the rights of such dependents as provided for by the laws of Alabama as follows:

"Section 7587. Third party not under article 2. Where the injury or death, for which compensation is payable under article 2 of this chapter, was caused under circumstances also creating a legal liability for damages on the part of any party other than the employer, such party not being subject to the provisions of article 2 of this chapter, legal proceedings may be taken by the employee or dependents against such other party to recover damages, notwithstanding the payment by the employer, or his liability to pay compensation hereunder. But in such case, if the action against such other party is brought by the injured employee, or in case of his death, by his dependents, and judgment is obtained and paid, or settlement is made with such other party, either with or without suit, the employer shall be entitled to deduct from the compensation payable by him the amount actually received by such employee or his dependents. If the injured employee, or in case of his death, his dependents, shall agree to receive compensation from the employer or shall institute proceedings to recover the same, or accept from the employer any payment on account of such compensation, such employer or his insurance carrier shall be subrogated to all the rights of such employee, or dependents, and may maintain, or in case an action has already been instituted, may continue the action either in the name of the employee or dependents, or in his own name, against such other party for the recovery of damages, but such employer shall nevertheless pay over to the injured employee or dependents all sums collected from such other party by judgment or otherwise in excess of the amount of such compensation payable by the employer under article 2 of this chapter, and costs, attorney's fees and reasonable expenses incurred by such employer in making such collection or enforcing such liability; but in no case shall such party be liable to any person other than the employee or his dependents for any damages growing out of or resulting from such injury or death."

The answer of the defendant alleged that the death of Thomas was due solely to his own negligence and denied all other matter alleged except the formal allegations concerning the organization and incorporation of the several corporations involved.

A reply was filed meeting the allegations of negligence on the part of the deceased.

At the close of the opening statement of counsel for the plaintiff the defendant made a motion for judgment on the pleadings:

"Mr. Williams: If Your Honor please, on behalf of the defendant, on the pleadings in this case and the opening statement of counsel, I move this action be dismissed at the cost of the plaintiff, and judgment rendered in favor of the defendant."

The court in its opinion, which is made a part of the bill of exceptions, stated:

"Being of the opinion that this statute does not declare any mandatory duty upon the court, and that the maintenance of this action is against the public policy of the state of Ohio, the court holds that the motion is well taken and is granted."

The court then proceeded to instruct a verdict for the defendant.

The plaintiff maintains that it is incumbent upon the courts of this state to give full faith and credit to the statutes of Alabama, and that as the cause of action stated in the petition is authorized by the statutes of Alabama and originated in that state, the action may be maintained, and the trial court was in error in holding otherwise.

The defendant claims and the trial court agreed that as the laws of Ohio do not permit such a cause of action as is here considered to be prosecuted by an insurer of an Ohio employer, the state has pronounced its opinion through the Legislature as adverse to such an action. This conclusion is based upon a statute which had been amended prior to the commencement of this action.

The statute in question as it existed before amendment is found in 107 Ohio Laws, 6:

"Section 1. That section 1465-101 of the General Code of Ohio be so amended to read as follows:

"Sec. 1465-101. All contracts and agreements shall be absolutely void and of no effect which undertake to indemnify or insure an employer against loss or liability for the payment of compensation to workmen or their dependents, for death, injury or occupational disease occasioned in the course of such workmen's employment, or which provide that the insurer shall pay such compensation, or which indemnify the employer against damages when the injury, disease or death arises from the failure to comply with any lawful requirement for the protection of the lives, health and safety of employees, or when the same is occasioned by the wilful act of the employer or any of his officers or agents, or by which it is agreed that the insurer shall pay any such damages. No license or authority to enter into any such agreements or issue any such policies of insurance shall be granted or issued by any public authority.

"Section 2. That original section 1465-101 of the General Code be and the same is hereby repealed."

This act was amended in 114 Ohio Laws, 111, and, as amended, the section now has added the following provision:

"* * * Provided that any corporation organized under the laws of this state to transact liability insurance as defined in paragraph 2 of section 9607-2 or as defined in paragraph 2 of section 9510 of the General Code may by amendment of its articles of incorporation or by original articles of incorporation, provide therein for the authority and purpose to make insurance in states, territories, districts and countries, other than the state of Ohio indemnifying employers against loss or liability for payment of compensation to workmen and employees and their dependents for death, injury or occupational disease occasioned in the course of the employment and to insure and indemnify employers against loss, expense and liability by risk of bodily injury or death by accident, disability, sickness or disease suffered by workmen and employees for which the employer may be liable or has assumed liability."

The obvious purpose of this legislation is to create in Ohio a monopoly in the state to write the insurance involved. Can it be said that the Legislature of Ohio would definitely authorize corporations created by it to do outside of the state of Ohio a thing which the state considered to be against its public policy? If so, the effect of such a position is to say to an Ohio corporation, you may do outside of Ohio what we consider reprehensible — and we will incorporate you for such purpose.

To us it seems that such a position on the part of the state would be entirely illogical.

We find nothing in the expressions of the Legislature indicating that such an action as is here presented is contrary to the public policy of the state.

If an Ohio corporation duly authorized to write such insurance as is here involved were plaintiff, the state would be placed in the peculiar position of permitting and definitely authorizing its incorporation, but refusing to permit it to sue in this state. This cannot be the law.

The effect of the Alabama statute is merely by law to create an assignment of the cause of action existing in the employee. Any recovery by the insurer here would be impressed with a trust in favor of the employee, subject only to the necessary expenses incidental to such recovery.

Obviously the employee could sue here to recover, subject only to deduction for compensation received. We see no violation of our public policy in permitting the insurer to recover for the employee.

The case of Broderick v. Rosner, 294 U.S. 629, 55 S. Ct., 589,79 L. Ed., 1100, definitely approves the conclusions herein reached. The syllabus in that case provides:

"A statute of New Jersey (Corporation Act, sec. 94 [b]) provides that no proceeding may be maintained in the courts of that state to enforce a stockholder's statutory personal liability arising under the laws of another state, except suits in the nature of `an equitable accounting for the proportionate benefit of all parties interested, to which such corporation and its legal representatives, if any, and all of its creditors and all of its stockholders shall be necessary parties.' The Superintendent of Banks of New York brought an action in a New Jersey court against 557 New Jersey stockholders of a New York bank, to recover unpaid assessments levied upon them pursuant to the banking laws of New York. The bank had altogether 20,843 stockholders and more than 400,000 depositors and other creditors, many of whom resided elsewhere than in New Jersey. The court held the action barred by the New Jersey statute; suggested that leave might be granted to file a bill in equity pursuant thereto. Held:

"1. The New Jersey statute, as here applied, effectively denies to the Superintendent the right to resort to the courts of that state to enforce the liability of stockholders residing there; the complaint conformed to the New Jersey practice and the action would have been entertained but for the statute. Pp. 639, 640.

"2. The nature of the cause of action brings it within the scope of the full faith and credit clause; the subject matter is not such as permits considerations of local policy to dominate rules of comity. P. 643.

"3. That the assessment was made under statutory direction by an administrative officer does not preclude the application of the full faith and credit clause. P. 644.

"4. That the administrative determination of the assessment made in New York may be subject to collateral attack does not justify the New Jersey Court in refusing to take jurisdiction of the Superintendent's suit. P. 646.

"5. Question whether Superintendent's determinations as to the propriety and amount of the assessment are conclusive, not decided. P. 646.

"6. The full faith and credit clause requires that the action of the Superintendent in this case be entertained. P. 647."

The judgment of the Court of Common Pleas is reversed and the cause remanded for further proceedings according to law.

Judgment reversed and cause remanded.

HAMILTON, J., concurs.