Bennett v. State Industrial Accident Commission

LUSK, J.

The attorney general, appearing for the respondent, State Industrial Accident Commission, moved for a continuance of the oral argument of this case on the ground that Mr. Ben Anderson, of the firm of Anderson, Franklin & Landye, who are attorneys of record for the appellant, is a member of the legislative assembly and in his representation of the appellant is acting in contravention of Art. XV, § 7 of the Constitution, which reads:

“No state officers or members of the legislative assembly shall directly or indirectly receive a fee, or be engaged as counsel, agent, or attorney in the prosecution of any claim against this state.”

The motion was denied on January 19, 1954, when the case was called for hearing, with the announcement that an opinion would be rendered later.

The action was filed in the Circuit Court as an appeal from the rejection by the State Industrial Accident Commission of plaintiff’s claim for compensation for disability caused by an industrial accident. The trial resulted in a judgment of nonsuit from which plaintiff has appealed to this court. It is plain that Mr. Anderson is engaged as an attorney in the prosecution of plaintiff’s claim. The question is whether the claim is one against the State of Oregon within the meaning of the foregoing constitutional provision. In our opinion it is not. In Butterfield v. S.I.A.C., 111 Or 149, 223 P 941, 226 P 216 (1924), we held that an appeal in this class of cases should not be taken by the state but only by the commission, as provided by statute. The attorney general there contended that the state was the real party in interest, but we said “The state is not a party to cases initiated before the Industrial Accident Commission”. We said further that the immunity of the state from suit “does not obtain when an agency of the state is a party”. This latter statement was erroneous, as Mr. Justice Rossman pointed out in United Contracting Co. v. Duby, 134 Or 1, 11, 13, 292 P 309 (1930). In that case it was held that a suit arising out of contract against the State Highway Commission was a suit against the state and could not be maintained. A similar decision is Mohler v. Fish Commission, 129 Or 302, 276 P 691. See 81 CJS 1311, 1312, States § 216. The basis of the holding in the United Contracting Co. case is that the funds disbursed by the State Highway Commission are public funds in possession of the state treasurer and any judgment rendered in that case would he paid' out of such funds. The Butterfield case was distinguished on the ground that the fund administered by the State Industrial Accident Commission, and out of which a judgment would be paid, was “ somewhat remotely removed from the general assets of the state available for the discharge of its common debts.” It was said:

* * In other words, the judgment of the circuit court was payable out of funds of which the state was custodian, but possibly not owner; the funds had been gathered not for the general enrichment of the state but for the benefit of injured contributing employees.”

The distinction was noticed in the opinion of United States District Judge Fee in Pacific Fruit & Prod. Co. v. Oregon Liquor Control Commission, 41 F Supp 175. In the United Contracting Co. case the court expressly approved the following statements of the rules for determining whether an action brought against an officer of the state is an action against the state itself.

“* * * suits against officers of a state as representing the state in action and liability, where the state, although not a party to the record, is the real party against which relief is sought, and where a judgment for the plaintiff, although nominally against the defendant as an individual, could operate to control the action of the state or subject it to liability, are suits against the state. The rule does not, however, afford immunity to an officer * * 25 BCD 413, States §50.

To the same effect, see 49 Am Jur 304, 305, States §92.

“* * * It seems that the rule which forbids a suit against state officers because in effect a suit against the state applies only where the interest of the state is through some contract or property right, and it is not enough that the state should have a mere interest in the vindication of its laws, or in their enforcement as affecting the public at large or the rights of individuals or corporations; it must be an interest of value in a material sense to the state as a distinct entity.” 36 Cyc, p. 916.

The substance of the foregoing may be found stated also in 81 CJS 1312, States § 216.

At the time of the decision in the Butterfield case the state, as the opinion discloses, was a contributor to the State Industrial Accident Fund and was interested in the fund. Since then, the state’s relationship to the fund has radically altered. In 1928 this court held in Eastern & Western Lbr. Co. v. Patterson, 124 Or 112, 146, 258 P 193, 264 P 441, 60 ALR 528, that an act of the legislature providing for the investment of $600,000 of the State Industrial Accident Fund in the construction of an office building in Salem was constitutional. In the opinion it was strongly suggested that the state had the right to recoup at least $1,000,000 of the $2,000,000 then comprising the fund. At the next ensuing session of the legislature the state, by ch 172, Oregon Laws 1929, disclaimed all interest in the fund. This act, after reciting that a question had arisen as to whether the State of Oregon had any proprietary interest in the fund, that the state had made no financial contributions thereto since July 1,1923, since which time the fund had been maintained entirely by contributions of employers and employees in hazardous employment, and that the contributions of the state could no longer be identified, provided:

“The state of Oregon hereby does declare that the industrial accident fund created by the workmen’s compensation act of Oregon, being chapter 112, General Laws of Oregon, 1913, as amended by various sessions of tbe legislature thereafter, be and the same is a trust fund for the uses and purposes declared in said act as so amended, and no other, and that the contributions to the said fund heretofore made by the state of Oregon have become an integral part of said fund and have either been expended or allocated to the catastrophe fund, rehabilitation fund or segregated accident fund, and the state of Oregon hereby does declare that it has no proprietary interest in said fund or in the contributions thereto heretofore made by said state, and hereby does disclaim any right to reclaim said contributions or any part thereof for its own use, and hereby does waive any such right of reclamation, if any it ever had, in or to any of said fund. This act shall not be deemed to amend or impair the force of said chapter 322, General Laws of Oregon, 1927, or to limit, restrict or control the investment of the sum of $600,000 of said accident fund for building purposes.”

If there is any reason for doubting the soundness of the statement in the Butterfield case that, in the then existing state of the law with respect to the interest of the State of Oregon in the State Industrial Accident Fund, an action against the commission was not an action against the state, that reason has been completely removed by the state’s renunciation of any interest in the fund through the enactment of the law just referred to. It must be entirely clear today that no claim or judgment against the State Industrial Accident Commission can be paid out of any moneys belonging to the State of Oregon or affect “an interest of value in a material sense to the state as a distinct entity.” An action against the commission is in effect a proceeding to have a certain portion of a trust fund administered by the commission but in which the state has no interest, appropriated to the satisfaction of an injured employee’s claim for compensation under the provisions of the Workmen’s Compensation Law. It is not an action against the state.

B. Richard Anderson, Newport, argued the cause for appellant. On the brief were Anderson, Franklin & Landye, Portland. Ray H. Lafhy, Assistant Attorney General, Salem, argued the cause for respondent. With him on the brief were Robert Y. Thornton, Attorney General, and Roy K. Terry, Assistant Attorney General, of Salem.

The question is not one of propriety or policy, but of legal interpretation. We have found no cases construing a constitutional provision similar to Art. XV, § 7, but we know of no reason why the principles established by the decisions in cases where the immunity of the state from suit is involved should not be controlling upon the question now before us. It is our opinion, therefore, that a workman’s claim for compensation under the Workmen’s Compensation Act is not a claim against the state, and that Art. XV, § 7 of the Constitution is not a bar to a member of the legislative assembly representing the claimant as his attorney.