Thomas v. Industrial Comm.

Upon reconsideration of the record, I find myself unable to concur in the decision the court in this case for the reasons hereinafter stated: I concurred in the decision in the case of IndependenceIndemnity Co. v. Industrial Comm., supra, without realizing as I should have done that it in principle overruled the MarylandCasualty Co. Case, supra. I do not question the general rule that a decision of this court considerately made should not be overruled except for strong and compelling reason. On the other hand, when the court is convinced that a prior decision is erroneous, in my opinion it should not hesitate to admit its error and correct it at the first opportunity except in cases where the decision has become a rule of property. It has been my observation that judges are in favor of overruling cases which they are convinced are erroneous but are very strongly opposed to overruling a case which in their judgment was correctly decided. In the end it comes down to a matter of opinion. I am of the view that the overruling of the Independence Case, supra, would do justice in this and similar cases and accomplish what was sought to be accomplished by enactment and amendment of ch. 102, Stats.

Nor can I concur in the view that a decision of this court construing a statute and so becoming a part of the statute is thereby placed beyond the reach of subsequent reconsideration by the court. For this position there exists what seems to me to be ample authority.

The case of Swift v. Tyson, 16 U.S. 1, was decided in 1842. It construed a section of the judiciary act of 1789. The opinion was written by Mr. Justice STORY. It was held that while the supreme court of the United States was bound by the statutory enactments of the state in the consideration of a case arising in that state, it was not bound by the common law of that state or by the decisions of its courts. While questioned many times, it remained in force until 1937, a period of ninety-five years, when it was overruled in Erie R.Co. v. Tompkins, 304 U.S. 64, 80, 58 Sup. Ct. 817,82 L. Ed. 1188, opinion by Mr. Justice BRANDEIS, and this without any change in the statutory law. The court did not hesitate to overrule Swift v. Tyson on the ground that by the doctrine laid down in that case —

"This court and the lower courts have invaded rights which in our opinion are reserved by the constitution to the several states."

In our own court, in the case of Reiter v. Grober, 173 Wis. 493,181 N.W. 739, decided in 1921, this court overruled a doctrine laid down in Prideaux v. Mineral Point, 43 Wis. 513, decided in 1878, to the effect that the negligence of a driver should be imputed to the occupants of the vehicle which he was driving. While this did not involve the construction of a statute, it deprived litigants of a supposed right which they enjoyed under the decision of Prideaux v. Mineral Point, which had been in effect for forty-three years. This court had a number of times criticized the rule as harsh and had suggested that the rule be changed by legislation.¹ But no heed was paid to the suggestion, quite likely for the same reason that no action has been taken by the legislature in regard to the Independence Case, supra, — there is no one sufficiently interested to press it upon the attention of the legislature. In view of these cases and because I am convinced that the Independence Case is wrong, I feel it a duty to express my opinion in regard to correctness of the decision in that case.

¹ Lightfoot v. Winnebago Traction Co. (1905) 123 Wis. 479,102 N.W. 30.

All members of the court concur in the view that at the time of his injury and death, Kenneth was an employee of the plaintiffs within the meaning of the compensation act.

It is also apparent that the plaintiffs as parents of Kenneth by reason of his death sustained the same loss that they would have sustained if Kenneth had been killed while in the employment of a third person. The right to recover against the insurer is denied them on the ground that because it is said, they cannot be legally liable to themselves and therefore they have no right to a death benefit under the provisions of sec.102.48, Stats. That section provides:

"If the deceased employee leaves no one wholly dependent upon him for support, partial dependency and death benefits therefor shall be as follows:

"(1) An unestranged surviving parent or parents, residing within any of the states or District of Columbia of the United States, shall receive a death benefit of twelve hundreddollars. . . ."

Under the Workmen's Compensation Act, as passed in 1911, the employer was not required to carry insurance. The act (now ch. 102, Stats.) was amended by ch. 599, Laws of 1913. Sec. 2394-24, 2, provided:

"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. . . ."

That provision ever since has been and still is a part of the Workmen's Compensation Act and is found in sec. 102.28 (2), Stats. 1939, which was in force at the time this action arose. The employer is required to insure payment of suchcompensation. It is to be noted that it is not a policy which merely insures the employer against loss or against liability. What is insured is payment of compensation and benefits to the employee or the dependent, not the liability of the employer.

Sec. 102.30, Stats., provides that by certain arrangements therein described, benefits in addition to compensation may be provided for. It further provides that the person entitled to compensation shall have —

"the right to enforce in his own name, in the manner providedin this act, the liability of any insurance company which mayhave insured the liability for such compensation," etc.

Sec. 102.31(1), Stats., provides:

"Every contract for the insurance of the compensation herein provided for, or against liability therefor, shall be deemed to be made subject to the provisions of this act, and provisions thereof inconsistent with the act shall be void. Such contract shall be construed to grant full coverage of all liability of the assured under and according to the provisions of the act, notwithstanding any agreement of the parties to the contrary," etc.

The contract issued by the insurer in this case provides:

This insurer "does hereby agree with this employer, named and described as such in the declarations forming a part hereof, as respects personal injuries sustained by employees, including death at any time resulting therefrom as follows:

"I (a) To pay promptly to any person entitled thereto, under the Workmen's Compensation Law and in the manner therein provided, the entire amount of any sum due, and all instalments thereof as they become due.

"(1) To such person because of the obligation for compensation for any such injury imposed upon or accepted by this employer under such of certain statutes, as may be applicable thereto, cited and described in an indorsement attached to this policy, each of which statutes is herein referred to as the Workmen's Compensation Law, and

"(2) . . .

"It is agreed that all of the provisions of each Workmen's Compensation Law covered hereby shall be and remain a part of this contract as fully and completely as if written herein, so far as they apply to compensation or other benefitsfor any personal injury or death covered by this policy, whilethis policy shall remain in force."

There can be no doubt that if Kenneth had survived the accident in which he met his death, he would have been entitled to recover compensation for his injuries from the defendant insurer in a proceeding brought directly against it. The policy further provides:

"This agreement is subject to the following conditions: . . .

"D The obligations of paragraph I (a) foregoing are hereby declared to be the direct obligations and promises of the company to any injured employee covered hereby, or, in the event of his death, to his dependents; and to each such employee or such dependent the company is hereby made directly and primarily liable under said obligations and promises. This contract is made for the benefit of such employees or such dependents and is enforceable against the company, by any such employee or such dependent in his name or on his behalf, at any time and in any manner permitted by law, whether claims or proceedings are brought against the company alone or jointly with this employer. . . ."

If under the provisions of the statutes above referred to and in accordance with the terms of the contract hereinbefore set out the employee can maintain an action directly against the insurance carrier, I see no reason why the plaintiffs who are unestranged surviving parents may not recover the statutory death benefits provided for in sec. 102.48, Stats., directly from the Insurance Company. The right of independent recovery against the insurance carrier is to my mind exactly the same for an injured employee as for an unestranged parent claiming death benefits. They both rest upon the express language of the statute as well as upon the language of the contract.

The principal reason why I cannot agree with the opinion of the court is that the court has placed a construction upon certain sections of the Workmen's Compensation Law which in my opinion unduly limits and restricts them. The sections are as follows:

"102.28(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. . . ."

"(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.

"102.30(1) 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 ofemployer's liability, nor the right of the employer to insure in mutual or other companies, against such liability, or againstthe liability for the compensation provided for by sections102.03 to 102.34, inclusive. . . ."

"102.31(1) . . . 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. . . ."

Because of the words "such liability" in sec. 102.28(2), Stats., "the employer's liability" in sub. (4), the use of the words "employer's liability" and "the liability" in sec. 102.30 (1), and the words "liability of the assured" in sec. 102.31, it is held that the contract of the insurer is one of indemnity and that all that is accomplished by the statute and by the contract of insurance is to save the employer harmless from the liability imposed by statute upon the employer and therefore the liability of the insurer is that of an indemnitor. If the word "amount" is inserted before each of the phrases the meaning becomes clear. I agree that the effect of the statute and the policy is to save the employer harmless but in my opinion the statute as construed by the contract of the insurer goes further and imposes upon the insurance carrier, in the language of the contract, a direct obligation and promise of the insurer to discharge the obligations imposed by paragraph I (a). The liability of the insurer equals in amount that of the employer but its liability is not that of the employer. Its liability is created by statute and by contract and is direct to the person entitled to compensation or benefits. The contract itself declares that it is made for the benefit of dependents and is enforceable against the company by such dependents. That such was the view of the legislature it seems to me to be clearly indicated by sec. 102.62, which provides:

"In case of liability for the increased compensation or increased death benefits provided for by section 102.57 or included in section 102.60, the liability of the employer shall beprimary and the liability of the insurance carrier shall besecondary. . . ."

This section was introduced into the Workmen's Compensation Law by a revision law which became sec. 1, ch. 624, Laws of 1917. This chapter provided that compensation and death benefits under the act should be treble the amount otherwise recoverable, (a) in case the injured employee be a minor of permit age and had no permit; (b) if the injured employee be a minor of permit age, or over, or permitted to work at prohibited employment.

The provision that the liability of the employer should be primary and not secondary, was intended to make the employer bear the burden of violating the law in the respects stated.

If the legislature had been of the view that the liability of the employer was primary and that of the insurance carrier was merely one of indemnity it would not have enacted sec.102.62, Stats. The liability of the insurer under the Workmen's Compensation Act, except in a single case of liability for penalties, is a primary and direct liability, and it was so held by this court in a case where the decision turned upon that precise question, Maryland Casualty Co. v. IndustrialComm. (1929) 198 Wis. 202, 221 N.W. 747, 223 N.W. 444. The question in that case was whether the Industrial Commission had jurisdiction in a compensation case to determine whether a contract existed between the employer and the insurance carrier and this upon the ground that the Industrial Commission had no jurisdiction to determine whether an employer had made a contract with the insurance carrier for the reason that if the act had attempted to confer such power upon the Industrial Commission a serious question as to the constitutionality of the act would be raised. Upon rehearing the court changed its position and squarely held that the Industrial Commission had such jurisdiction on the ground that under the provisions of the statute, the insurer had consented thereto. The court said (p. 211):

"From a consideration of the whole statutory scheme we conclude that the provisions of the statute relating to insurance are principally for the purpose of securing to the employee payment for compensable injuries. The statute not only gives him a right against his employer, but when the right has been vindicated and the amount of compensation ascertained, it seeks to secure payment to him of the compensation. Therefore, when an insurance company undertakes to write workmen's compensation insurance it assumes the employer'sobligation to pay compensation. The measure of its liability under its policy and the statute is the employer's liability to the injured employee. It is permitted to make no defense which will impair the employee's right to payment of compensation.Its liability is in effect primary. It is not a mereindemnity. It is therefore considered that a controversy relating to compensation insurance is, within the meaning of the provisions quoted in the original opinion, a dispute or controversy concerning compensation."

If as the court now holds, a contract of the insurer is a mere indemnity contract, the court would have adhered to its original position. The Independence Case, supra, in principle but not in terms overruled the Maryland Casualty Co.Case, supra, and so the error crept into the law. The IndependenceCase was decided as it was because too much weight was given to labels reminiscent of common-law liability and too little weight given to the clear language of the statute and the contract.

The insurer in this case contracted to pay to the person entitled thereto all benefits. It did not make its contract to pay contingent upon the employer's liability. The liability of the employer is a measure of the insurer's liability, not the source of it. The statute already quoted provides that under the circumstances of this case the plaintiffs "shall receive a death benefit of twelve hundred dollars." It does not say that they shall receive it upon any condition whatever.

In the Maryland Casualty Co. Case, supra, the court said (p. 209):

"A study of the Workmen's Compensation Act (ch. 102, Stats.) convinces us that with respect to insurance the statutory scheme was intended to do more than merely protect the employer against liability on account of injuries sustained by his employees. The quite evident purpose of the whole scheme is to guarantee payment of compensation in accordance with the terms of the act to the injured employee. Instead of providing for a fund to be administered by the state, the act requires the employer to `insure payment of such compensation in some company authorized to insure such liability in this state unless such employer shall be exempted from such insurance by the industrial commission.'"

The statute requires the insurer to insure "liability," in effect to insure payment of liability and not merely to save the employer harmless. It seems to me that to deny the plaintiffs the right to benefits in this case violates the language as well as the spirit and purpose of the compensation act.

In my opinion the Independence Case, supra, should be overruled; the judgment appealed from reversed; and the record remanded to the trial court with directions to the trial court to enter judgment in favor of the plaintiffs in accordance with the statute.

I cannot concur in the construction placed by the court upon sec. 102.49(5), Stats. In my view, sec. 102.48 and sec.102.49(5) deal with a single situation; that is, a case where the injured employee dies leaving no person wholly dependent upon him for support.

In order to present the statutory situation, it is necessary to have the two sections in juxtaposition. The material part of sec. 102.48, Stats., provides:

"If a deceased employee leaves no one wholly dependent upon him for support, partial dependency and death benefits therefore shall be as follows:

"(1) An unestranged surviving parent or parents residing within any of the states or District of Columbia of the United States, shall receive a death benefit of twelve hundred dollars. . . .

"(2) In all other cases the death benefit shall be such sum as the commission shall determine to represent fairly and justly the aid to support which the dependent might reasonably have anticipated from the deceased employee but for the injury. To establish anticipation of support and dependency, it shall not be essential that the deceased employee made any contribution to support. . . ."

Sec. 102.49(5), Stats., provides:

"In each case of injury resulting in death, leaving no person wholly dependent for support, the employer or insurer shall pay into the state treasury such an amount, when added to the sums paid or to be paid on account of partial dependency, as shall equal the death benefit payable to a person wholly dependent, such payment to the state treasury in no event to exceed two thousand dollars. . . ."

The provisions made by statute in the event that the employee dies leaving one wholly dependent upon him for support are as provided in secs. 102.46 and 102.51, Stats. Sees.102.48 and 102.49 deal solely with death benefits and were added to the Workmen's Compensation Act by ch. 403, Laws of 1931. These sections deal with the situation where the injured employee dies not leaving a person wholly dependent upon him. They were enacted at the same time and are clearly in pari materia.

The dependency referred to in sec. 102.49(5), Stats., is the partial dependency provided for by sec. 102.48. By that section unestranged surviving parents are conclusively presumed to be partially dependent to the extent of $1,200. By sec. 102.42 other dependency is to be established in accordance with the provisions of sec. 102.51. In other words, what is due the parents under sec. 102.48 is a conclusively presumed partial dependency and in other cases partial dependency must be established.

Under the facts of this case, the most that the state could possibly be entitled to would be the difference between $1,200 and $2,000. The state is not entitled to the $1,200 because there is no one wholly dependent and the unestranged parents are partially dependent. In my opinion the parents are entitled to receive this $1,200. The court holds that the parents are not entitled to receive the $1,200 because of the IndependenceCase, supra, which, as I have already said, in my opinion was wrongly decided.

I am authorized to state that Mr. Justice MARTIN and Mr. Justice BARLOW concur in this opinion.