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Geneva Const. Co. v. Martin Trans. Co.

OPINION FILED NOVEMBER 18, 1954.

GENEVA CONSTRUCTION COMPANY ET AL., APPELLEES,

v.

MARTIN TRANSFER AND STORAGE COMPANY, APPELLANT.



APPEAL from the Appellate Court for the Second District; — heard in that court on appeal from the Circuit Court of Kane County; the Hon. HARRY C. DANIELS, Judge, presiding.

MR. CHIEF JUSTICE BRISTOW DELIVERED THE OPINION OF THE COURT:

This court has allowed the petition for leave to appeal of defendant, Martin Storage and Transfer Company, from a judgment of the Appellate Court, affirming a judgment of the circuit court of Kane County entered in favor of plaintiffs, Geneva Construction Company and its employee, Frank J. Powers, in the amount of $15,000, for personal injuries sustained by Frank J. Powers.

This appeal presents essentially two questions of law: first, whether, under the status of the law after the first paragraph of section 29 of the Workmen's Compensation Act (Ill. Rev. Stat. 1947, chap. 48, par. 166,) was held unconstitutional, and prior to the 1953 amendments thereto, an employer could recover, from a third-party tort-feasor operating under the act, the amount of compensation the employer paid to the injured employee; and secondly, whether, under the terms of section 46 of the Civil Practice Act, an employee injured by a third-party tort-feasor under the Workmen's Compensation Act can assert a common-law claim for damages against such party more than four years after the injuries were sustained, by filing an amendment and joining in the employer's action against the tort-feasor, which had been instituted in the proper time.

According to the stipulated facts, on May 24, 1948, plaintiff Frank J. Powers sustained accidental injuries arising out of and in the course of his employment with the plaintiff Geneva Construction Company, a corporation bound by the Workmen's Compensation Act, which injuries were negligently caused by defendant, Martin Transfer and Storage Company, a corporation also operating under the act. The employer, Geneva Construction Company, was compelled to pay Frank J. Powers workmen's compensation in the amount of $3706.83. On May 18, 1950, the Geneva Construction Company instituted proceedings against defendant under the provisions of paragraph I of section 29 of the Workmen's Compensation Act to recover the amount of compensation paid Frank J. Powers.

On March 20, 1952, that provision of the act was held unconstitutional by this court in Grasse v. Dealer's Transport Co. 412 Ill. 179; and on May 29, 1952, more than two years after the filing of the original complaint, and more than four years after the date of the accident, Frank J. Powers filed a petition for leave to intervene as an additional plaintiff, which was allowed. The circuit court thereupon gave Powers and Geneva Construction Company leave to file instanter an amended complaint, wherein Geneva Construction Company was the sole plaintiff in counts I and II, Geneva Construction Company and Frank J. Powers were joint plaintiffs in count III, and Powers alone asserted a cause of action in count IV. After trial on the amended complaint, judgment was entered on a joint verdict in favor of both plaintiffs in the sum of $15,000. The Appellate Court affirmed that judgment, (Geneva Construction Co. v. Martin Transfer and Storage Co. 351 Ill. App. 289,) and on January 13, 1954, this court granted leave to appeal therefrom.

In determining the propriety of the judgment of the Appellate Court we shall consider first whether plaintiff Geneva Construction Company could properly recover from defendant Martin Transfer and Storage Company the amount of workmen's compensation paid an employee as a result of defendant's negligence.

The accident upon which the rights of the plaintiffs herein are predicated occurred in 1948. At that time the first paragraph of section 29 of the Workmen's Compensation Act governed the rights of the parties under the circumstances herein. Under that paragraph, it had been held the employee's common-law action for damages was transferred to his employer (O'Brien v. Chicago City Railway Co. 305 Ill. 244,) who was entitled to institute proceedings and recover from such tort-feasor the amount of compensation the employer was obliged to pay the employee under the act, provided the employer established the negligence of the third-party tort-feasor, freedom from contributory negligence, damages suffered by the injured employee, and the fixed amount of compensation the employer was required to pay. City of Taylorville v. Central Illinois Public Service Co. 301 Ill. 157.

The original complaint, filed in 1950 by plaintiff Geneva Construction Company was predicated upon that statutory provision. However, in Grasse v. Dealer's Transport Co., determined in March, 1952, this court held, in a proceeding for common-law damages by an injured employee against a third-party tort-feasor bound by the act, that paragraph I of section 29 was unconstitutional on the ground that it violated the due process and equal protection of law clauses of the State and Federal constitutions by creating an unreasonable classification between employees injured by tort-feasors bound by the act and employees injured by tort-feasors not under the act. Employees injured by tort-feasors under the act could recover only workmen's compensation benefits from their employers, whereas employees injured by tort-feasors outside the act could recover common-law damages from such negligent tort-feasors, and, therefore, the court held there was no reasonable relation between that classification established by the statute and the statutory objective.

The legal effect of declaring that provision of the act unconstitutional was to relegate the parties to such rights as obtained prior to the enactment of the unconstitutional provision. (People v. Schraeberg, 347 Ill. 392.) Consequently, the court held that the employee in the Grasse case was entitled to assert a common-law claim for damages for injuries inflicted by the third-party tort-feasor. The rights of the employer were not involved in that proceeding, but it was apparent that if paragraph I of section 29 were unconstitutional, there would be no statutory right of subrogation for the employer whose employee was injured by a third-party tort-feasor bound by the act. It was therefore argued in the Grasse case that holding paragraph I of section 29 unconstitutional was objectionable on the ground that it created an unreasonable classification among employers, inasmuch as only those whose employees were injured by persons not bound by the act would have a right of subrogation under the valid second paragraph of section 29.

The court in the Grasse case, while cognizant of the principles of constitutional law that a court is obliged to adjudicate the constitutionality of a statute only to the extent required by the case before it and that it is the province of the legislature to correct any inequalities arising as a result of the decision, endeavored, nevertheless, to resolve all the arguments submitted, and by way of dictum, stated, at page 201: "The effect of our determination is to render the provision void, and to relegate the parties to such rights as they may have had prior to the enactment of the unconstitutional provision. [Citation.] Under those circumstances, the rights of the parties would be governed by common-law subrogation principles, and the non-negligent employer who had paid compensation would be entitled to be subrogated to the rights of the employee against the third party tort-feasors."

Plaintiff Geneva Construction Company relies upon that dictum as determinative of this issue in the case, whereas defendant argues that the dictum was not in accordance with the prevailing judicial opinion, and that plaintiff has no common-law right of subrogation.

The remedy of common-law subrogation in workmen's compensation cases is largely academic, inasmuch as the vast majority of States have varying statutory provisions giving the employer or insurer who pays compensation to an employee injured by a third-party tort-feasor recourse against the wrongdoer. (35 Minn. L. Rev. 654; 38 Harv. L. Rev. 972.) Although the 1953 amendments to the Illinois Workmen's Compensation Act (Ill. Rev. Stat. 1953, chap. 48, par. 138.5,) now provide a mode of statutory subrogation for employers, this cause must be adjudicated under the law prevailing prior thereto.

In jurisdictions where the employer's common-law rights of subrogation against third-party tort-feasors have been considered, there is a conflict in the decisions and rationale of the courts. The employer has been allowed to recover from the tort-feasor the amount of compensation paid, in numerous cases in the absence of a statutory subrogation provision (83 C.J.S. 616; 71 C.J. 1548; Travelers Ins. Co. v. Great Lakes Engineering Co. 184 Fed. 426; Jones v. Waterman, 155 Fed.2d 992, 1001; Busch & Latta Paint Co. v. Woerman Construction Co. 276 S.W. 614, 310 Mo. 419; Fidelity & Casualty Co. of N.Y. v. St. Paul Gas Light Co. 188 N.W. 265, 152 Minn. 197; Staples v. Central Surety & Ins. Corp. 62 Fed.2d 650; Travelers Ins. Co. v. Northwest Airlines, 94 F. Supp. 620; Washington Gas Light Co. v. District of Columbia, 161 U.S. 316;) and recovery has been denied the employer in another group of cases. Crab Orchard Improvement Co. v. C. & O. Railway Co. 115 Fed.2d 277; McCullough v. Varick Co. 10 A.2d 245, 90 N.H. 409; Newark Paving Co. v. Klotz, 91 A. 91, 85 N.J.L. 432; Texas & Pac. Railway Co. v. Archer, 203 S.W. 796, (Texas); Interstate T. & T. Co. v. Public Service Electric Co. 90 A. 1062, 86 N.J.L. 26.

All of these cases, however, predicated on diverse statutory provisions and constructions, are of limited persuasive value, particularly under the unique status of the law in Illinois, where the legislature had declared a subrogation policy for ...


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