EMPLOYERS' LIABILITY AND WORKMEN'S

COMPENSATION LAWS

BY J. WALTER LORD, OF THE BALTIMORE BAR

(From an Address delivered at the Seventeenth Annual Meeting of the Maryland State Bar Association, July, 1912)

The subject which I shall undertake to discuss in the following paper is one that has received elaborate consideration in this country, particularly within the past three years. The paper, therefore, does not reflect any original thought on the part of the writer, but is rather an attempt to compress, within unobjectionable limits, the conditions out of which the movement toward the enactment of workmen's compensation acts in this country has developed, and the constitutional and economic questions related to that problem. My justification for selecting this subject is not so much that these questions are academically novel and interesting, as that the subject is itself a timely one, and that we may feel reasonably assured that the "law of negligence," in cases of occupational injuries, will very soon be superseded generally in this country, as, indeed, it has been almost everywhere else, by the "law of compensation."

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It is a somewhat interesting coincidence that contemporaneously with the decision of the English Court of Exchequer in Priestly vs. Fowler (3 M. & W. 1, decided in 1837) — the case which is considered as the genesis of the doctrines of fellow-servant and assumption of risks the Kingdom of Prussia took the initial step in the recognition of the principle that the employer should be held to an absolute liability in the case of occupational injuries. The replacement, by Prussia, of the old law of negligence by its first liability law of November 3, 1838, relating only to railway employees, was doubtless based upon the obvious hazard of that industry, which had just then been introduced in the country. Had there been presented to Lord Abinger, in Priestly vs. Fowler, a situation where the employment in which the injury occurred was intrinsically hazardous, or a case wherein the circumstances of the injury were more complex than those involved in the extremely simple case of a butcher's helper injured through the carelessness of his master's wagon driver, with whom he customarily worked, it is not improbable that the current of our law respecting a master's liability for his servant's injuries might have been changed. However that may be, it is of some interest to note, that from these contemporaneous events there has developed in Germany a system of workmen's compensation and industrial insurance which gives prompt and effectual pecuniary relief, without economic waste, in all

cases of occupational injuries, whilst in England and America, through rigorous applications of the doctrines of fellow-servant and assumed risks, there developed a situation characterized by denial of pecuniary relief in the great majority of cases of industrial accidents, great economic waste arising out of the conduct and defense of damage. suits and resultant antagonism between employer and employee.

The present movement in the direction of workmen's compensation laws has proceeded from a recognition that the rules of law governing the workmen's remedy for injury received in the course of his employment, as formulated in the safe and simple industrial conditions of the early nineteenth century, are not adapted to the hazardous and complex conditions of modern day industry; and it derives quite as much of its strength from practical considerations as from sentimental humanitarianism.

EMPLOYERS' LIABILITY LEGISLATION

The forerunners of the present movement are the so-called employer's liability laws, abrogating or modifying the defense of fellow-servant and, in some instances, the defense of assumption of risks. As early as 1855 the State of Georgia passed a law, applicable to railroads only, abolishing the defense of fellow-servant. In 1872 the State of Iowa passed a similar law; and the example thus set was followed by Kansas in 1874, and Wisconsin in 1875. The first statute relating to all employments was passed in England in 1880. That act, however, did not abolish these defenses; it merely modified them. The courts of England had gone to a considerable extent in the application of the doctrines of fellow-servant and assumption of risks, and the object of this law was to restrict the scope of those doctrines. This act has served as a model for Alabama (1884), Massachusetts (1887), Indiana (1893), New York (1902), Pennsylvania (1907), New Jersey (1909), Vermont (1910). In addition to the States thus enumerated, other States, as well as the Federal Government, have passed laws, applicable to railroads only, abolishing the defense of fellow-servant ; so that in 1910, when the first workmen's compensation act was passed in this country, the situation on this side of the water in respect of employers' liability laws was as follows: Eight jurisdictions had laws modifying, but not entirely abrogating, the defenses of fellow-servant and assumption of risks in all employments; two jurisdictions had abolished the fellow-servant defense in the case of all corporations, and one (Colorado) in the case of all employments; fourteen had abolished it, but only in the case of railroads, and three had modified it in the case of railroads.

After seventeen years of experience under her employers' liability law, England decided that it was a failure; that it did not adequately

meet the conditions of modern industry. Indeed, this was the conservative opinion in the early nineties, when, in a memorandum from the Home office to the Royal Commission of Labor (1893), which bore the approval of Sir Frederick Pollock, we find it said: "The truth is that to the workman litigation under the act has more than its usual terrors. It is not merely that litigation is expensive, and that he is a poor man and his employer comparatively a rich one, it is that when a workman goes to law with his employer he, as it were, declares war against the person on whom his future probably depends; he seeks to compel him by legal force to pay money, and his only mode of doing so is the odious one of proving that his employer or his agents - his own fellow-servants have been guilty of negligence. Add to this that the legal proof of such negligence is often extremely difficult, the broad result is that a legal claim for damages only answers where the injury is very great, and the workman is prepared to leave his master's services." (Report of Wainwright Commission, New York, 1910, p. 40.) The feeling in England that the employers' liability law was inadequate culminated in 1897, in her first workmen's compensation act, which was limited in its scope to what were deemed hazardous employments. The act was extended later (1906) so as to embrace all occupations, including even domestic service. But the wisdom of this extension, in the light of experience under the act, may be open to serious question.

There is no reason to suppose that the employers' liability laws in this country have been any more effectual than the one in England. Those which are not modeled strictly upon the English Act, but which abrogate the fellow-servant defense, are limited, in the main, to railroads; and this is only one of the many hazardous industries in this country. It is conservatively estimated that the number of industrial accidents resulting in death in this country approximated 35,000 annually, whilst the non-fatal injuries exceed 500,000. It is, of course, impossible to know in what percentage of these there is a substantial recovery; but from cases studied by the State Commissions of New York and Wisconsin (ibid. p. 88, et seq.) it would appear that in not more than 20 per cent is there actually litigation, and that as to the balance, in 60 per cent of the cases of death, and in a like percentage of the cases of non-fatal injury, the claimant has received either nothing at all or, at the most, only funeral or medical expenses.

Under the broadest kind of an employers' liability law there still rests upon the injured workman, as a prerequisite to his recovery, the burden of proving personal negligence on the part of some one as the proximate cause of injury. Industrial experts tell us that in the highly developed state of organized industry there are, in the case of accidents not due entirely to the dereliction of the workman himself, a great many contributory factors in the chain of causation, which are

either in the nature of minor personal faults or referable to what are commonly known as "trade risks" a risk inevitably attendant upon the prosecution of the work, and in respect to which negligence, in the sense of moral obliquity, cannot be imputed to any one. It is undoubtedly true that in a very few cases can an accident be said to be due exclusively to a trade risk; but, on the other hand, particularly in hazardous employments, the trade risk, though minor faults may also concur, is ordinarily a very responsible factor in accident causation. This consideration, coupled with the fact that the invariable presence of the trade risk and the involved machinery of the modern industrial establishment, unite to render difficult the proof of personal faults concurring in the chain of causation, is the primary justification for the imposition of an absolute liability upon the employer. And the obligation, independently of fault, to compensate the injured workman is the principal feature of the workmen's compensation act.

The other feature is that the measure of indemnity is made as nearly just and automatic as is possible. One of the defects of the present system, as well under employers' liability statutes as under the common law, is that the quantum of damages is left to the determination, or, rather, conjecture, of a jury. In a workmen's compensation act the indemnity is, to a large extent, predetermined — the standard being the average weekly earnings of the workman at the time of his injury. Upon this standard, the computation of indemnity is rather a question of mathematics than of prejudice, sentiment or a compromise verdict. One of the particular industrial evils, resulting from the present system, is the antagonism that is necessarily created between the employer and employee when the injury has occurred. The doubt surrounding the question of fault, the extreme divergence of individual view as to the proper amount of compensation, tend to place the parties in immediate hostility to each other, and to furnish a strong inducement for each to suppress or distort the facts relative to the cause of the injury, and thus close the doors to scientific investigation of accident causation and prevention. By eliminating the cause of hostility the workman's compensation act is calculated to promote harmony between capital and labor, and by destroying the motive to distort the facts relative to the cause of an injury, a serious impediment to progress along the line of industrial safety, would, in all probability, be removed.

COMPENSATION ACTS

Having thus considered the objects of the compensation act, let us address ourselves to the methods, as proposed, for the accomplishment of these objects. Various forms of workmen's compensation acts, some of which have been enacted into laws, are now receiving serious consideration in this country. With regard to their essential points

of difference, it may be said that they are divided, perpendicularly, into two classes, the direct and the indirect, and, horizontally, into two classes, the compulsory and the elective.

Taking the first classification, the difference between the direct and the indirect is this: In the direct, or, as it is sometimes called, the simple plan of compensation, the obligation to indemnify the workman rests immediately upon the person in whose employment the injury occurred. Under the indirect, or state insurance plan, employers are required by the state to pay an annual tax, graded in accordance with the nature of the industry, and proportioned to the payroll of the particular establishment. When the injury occurs, the workman is paid indemnity out of this fund the fund being administered by state officials.

Taking the second classification, the difference between the compulsory and elective is this: The compulsory imposes an absolute obligation upon the employer to pay the compensation in the one case, or the annual tax in the other. The elective, however, formulates a plan of compensation, and then seeks to coerce the employer into accepting it, by imposing the dreadful alternative of a wide-open liability law; that is, it says to him, "Unless you elect to come under this scheme, you may not, in the event of suit for damages, avail yourself of the following defenses: contributory negligence, assumption of risks or negligence of fellow-servant. Elective laws are peculiar to this country, and were devised in order to circumvent the difficulties which, it is supposed, are presented by our written constitutions to the enactment of a compulsory law. In March, 1911, the New York Court of Appeals held that a compulsory direct compensation act was unconstitutional, because the imposition of liability upon the employer, irrespective of his negligence, amounted to a deprivation of his property without due process of law (Ives vs. South Buffalo Railway, 201 N. Y. 271). On the other hand, in September of the same year a statute of the state of Washington, embodying a compulsory indirect or state insurance plan, was sustained by the Supreme Court of that state as a legitimate exercise of the police power, the court expressly disapproving the New York decision and regarding it as a direct authority against their position (The People ex rel. Davis-Smith Company vs. State Auditor, 107 Pacific 1101). In 1911 Nevada passed a direct compulsory act; but the other states which have passed compensation acts have preferred to avoid the constitutional difficulties, and have enacted elective laws either direct. elective laws or elective laws framed on the indirect or state insurance plan. These to date are New Jersey, New Hampshire, Wisconsin, Illinois, California, Kansas, Rhode Island and Michigan, which have adopted the direct method of compensation; Ohio, which has adopted substantially the indirect plan; and Massachusetts, where