Drake v. Norge Division, Borg-Warner Corp.

116 N.W.2d 842, 367 Mich. 464, 1962 Mich. LEXIS 434

• Court: Michigan Supreme Court
• Decided: September 10, 1962
• Docket: Docket 71, Calendar 49,187
• Status: Published

Opinions

Souris, J.

Weekly compensation benefits and medical expenses were awarded to plaintiff by the workmen’s compensation appeal board in October of 1960 on a claim filed in 1958 for an occupation-connected disabling heart attack which occurred in 1953, weekly benefits to begin as of the last day of plaintiff’s employment in 1953. The appeal board awarded interest on all past due amounts at the rate of 5% per annum. We granted leave to appeal limited to review of the appeal board’s determination of the time when interest began to accrue.

In Wilson v. Doehler-Jarvis, 358 Mich 510, which involved a claim under the workmen’s compensation law for death benefits and expenses of the employee’s last illness and burial, this Court first determined that awards for such benefits and expenses should bear interest from the time such awards themselves became due. The majority of the Court which reached that conclusion, and in the process overruled (p 517) Fowler v. Muskegon County, 340 Mich 522, considered the commentary of Dean Roscoe Pound on the case of Parker v. Brinson Construction Co. (Fla), 78 So2d 873, which commentary appears in 16 NACCA Law Journal 135, 136, and the Minnesota cases of Brown v. City of Pipestone, 186 Minn 540 (245 NW 145), and Bourdeaux v. Gilbert Motor Co., 220 Minn 538 (20 NW2d 393), in concluding that interest should be paid on compensation awards in the same manner in which interest is paid in actions ex contractu, that is, from the time of the accrual of the cause of action. Reliance was placed (pp 518, 519) upon the following language from Brown v. City of Pipestone, as quoted in Bourdeaux v. Gilbert Motor Co. (p 541): “Here was a contract debt due at the times when the compensation instalments should have been paid under the provisions of the act, and we see no reason why it should not, like any other debt, bear interest at the legal rate when it is subsequently decided that the debt existed.” In the Wilson Case, interest was ordered computed and paid on the medical and burial expenses and on the instalments of death benefits from their respective due dates from and after the employee’s death.

We do not consider it significant that Wilson v. Doehler-Jarvis involved a claim for death benefits as distinguished from a claim by the disabled employee himself for weekly compensation benefits as is involved here. However, this case does involve a factual circumstance relied upon by defendant to. distinguish it from Wilson. In Wilson, the claim for death benefits was made shortly after the employee’s death, the employer having had knowledge of the employee’s own prior claim and of his death. Thus, the award of interest as of the date of death, the date death benefits became due, did not involve imposition upon the defendant of an obligation to pay interest on a claim as of a time when the defendant had no way of knowing of its possible liability for such claim. In the case at bar, on the contrary, plaintiff suffered his occupationally disabling heart attack in 1953 but no claim was made until 1958.

* Defendant contends that under such circumstances, it should not be required to pay interest during the 5-year period preceding its actual notice of plaintiff’s claim.

Defendant emphasizes its belief that the imposition of interest in such cases is punishment for deliberate refusal to pay a lawful obligation and concludes therefrom that it should be spared such punishment at least until the date in 1958 when it received notice of plaintiff’s claim and thereafter refused to pay it voluntarily. Such a concept of the purpose of interest in cases such as this does not conform to the views expressed in the majority’s opinion in Wilson.

While it is true that in Wilson the interest involved covered a period during which the employer refused to pay benefits, the decision was not based upon a finding that the employer’s refusal was malicious or vexatious or wilfully dilatory and, therefore, punishable by the imposition of a penalty. It was based upon a finding that the delay was without merit and, in that sense, wrongful. But interest was not imposed for that reason, as the opinion carefully points out. It was imposed (pp 516, 517) because the employer benefited from the use of money determined to be due the employee and because the employee had to do without its use. Imposition of interest upon the past due benefits punished no one; it charged for the use of another’s money.

Were we considering a penalty, as defendant suggests we are, defendant’s notice of plaintiff’s claim, or lack of such notice, might be pertinent to our inquiry. But here, under the standards established in Wilson v. Doehler-Jarvis, supra, we seek only to preserve to victims of compensable occupational disabilities the full measure of that which our legislature has provided. The legislature has provided that workmen’s compensation benefits accrue as of the eighth day after injury or on the date of injury (CL 1948, § 412.3 [Stat Ann 1960 Rev § 17.153]) or as of the date of disablement (CL 1948, §§417.2 and 417.7 [Stat Ann 1960 Rev §§ 17.221 and 17.226]), any one of which dates could be, and not infrequently is, substantially earlier than the day notice of claim first is given the employer. Unless interest is charged for past due benefits awarded, the employee inevitably will receive less than he is entitled to receive. By the same token, unless interest is charged for past due benefits awarded, the employer will have had the free use of money determined to have been due the employee. Our belated recognition of the elementary nature of the equities involved in this controversy finally establishes a parity between the employee who ultimately collects accrued benefits and the employer who redeems a claim by paying benefits in advance,—at a commuted value, of course (CL 1948, § 412.22 [Stat Ann 1960 Rev §17.172]).

Affirmed. Costs to plaintiff.

Black, Kavanagh, and Otis M. Smith, JJ., concurred with Souris, J.

The appeal board found, in the circumstances of this ease, that notice and claim for benefits were timely made. In this appeal, we do not review that finding.