Husted v. Consumers Power Co.

135 N.W.2d 370, 376 Mich. 41, 1965 Mich. LEXIS 195

• Court: Michigan Supreme Court
• Decided: June 7, 1965
• Docket: Calendar 10, 11, Docket 50,772, 50,773
• Status: Published

Opinions

Per Curiam.

One of our new rules of court is headed “Third-Party Practice.” It is cited properly as GCR 1963, 204. Under its auspices appellant Hertel-Deyo, employer of plaintiff Claude A. Husted up to the time of sustenance by the latter of personal injuries upon which he declares, was drawn ex parte into these consolidated Midland county lawsuits. Hertel-Deyo moved promptly for summary dismissal of the primary defendant’s third-party complaints and, upon leave granted, reviews an order denying said motion. The order of denial is quoted in full, infra.

Plaintiff Claude A. Husted declared under the 1952 amendment (PA 1952, No 155 [CLS 1961, § 413.15; Stat Ann 1960 Kev § 17.189]) against primary defendant Consumers for personal injuries sustained December 3, 1959, during the course of his work for Hertel-Deyo. Plaintiff Marie Husted, wife of plaintiff Claude, declared against Consumers for loss of consortium and companionship occasioned by the same injuries. The suits were commenced November 13,1962.

The declarations allege that plaintiff Claude A. Husted was working at the bottom of an excavation made for the purpose of constructing a new bridge ; that the work required lowering of buckets of mixed cement to him by means of an overhead crane operated by a fellow employee; that on account of specified acts of negligence of defendant Consumers “the crane boom came into contact with some electrical poles, wires and apparatus, owned, operated, controlled and maintained by defendant” [Consumers]; that the overhead wires thus owned and maintained by Consumers were both negligently energized and negligently maintained and, on account of such contact, that he was electrically shocked to unconsciousness and severely injured.

The third-party complaints allege duty of third-party defendant Hertel-Deyo and breach of such duty “in the operation of said crane, boom, and bucket so as to prevent the same from coming in contact with the electric lines of the said defendant and third-party plaintiff so as to prevent injury to persons in and about the construction project including the plaintiff, Claude A. Husted.” Such third-party complaints go on to allege the purely legal conclusion that, in the event of entry of judgments for the plaintiffs “against the defendant and third-party plaintiff,” the third-party defendant would, “on principles of indemnity and otherwise, be liable therefor to this defendant and third-party plaintiff.”

Orders granting leave to implead Hertel-Deyo as third-party defendant having entered, the latter moved for summary dismissal assigning failure of the third-party plaintiff to state, in the third-party complaints, claims upon which relief could be granted. Plaintiffs supported the motion. Judge Holbrook denied it. The difficulty of decision faced by the judge was and now is highlighted by unusual provisos which, upon insistence of the judge, appear in such order:

“It is hereby ordered, that said motions be and the same are hereby denied; provided, however, if the defendant Hertel-Deyo Company is found to be negligent in the trial of this matter, and a judgment is rendered against the Hertel-Deyo Company, the amount of liability of the defendant Hertel-Deyo Company to the plaintiff and/or the defendant Consumers Power Company, by right of contribution, indemnification, or otherwise, shall not be in excess of the amount of workmen’s compensation benefits paid or payable to the plaintiff, at the time such judgment is rendered; and provided, however, if the defendant Hertel-Deyo Company for itself and on behalf of its workmen’s compensation carrier will file in said cause a disclaimer of any right to reimbursement for compensation paid and to be paid the plaintiff Claude A. Husted, said motion for summary judgment and to dismiss may then be renewed and will be granted.”

The decisive question brought to review is whether the third-party plaintiff’s complaints state causes upon which, relief may be granted. We hold they do not.

Some preliminary observations are in order. The first is made by reference to specific comment Honigman & Hawkins have appended to the third-party rule. They say of the rule, and we agree (1 Honigman and Hawkins, Michigan Court Rules Annotated, p 508):

“Rule 204 does not create substantive rights. The substantive basis for defendant’s claim against the third-party defendant must be found elsewhere before the rule becomes operative. That basis may be found in principles of indemnity, subrogation, contribution, warranty, or other substantive right.”

The next is that the substantive rights and liabilities of all present parties are determinable properly according to the law as it stood when the causes alleged by the two plaintiffs accrued in 1959. At that time, and quite aside from the remedies equity then provided (and yet provides despite the “merger” of law and equity)¹ for reimbursement, subrogation, exoneration, and indemnity (see authorities considered in Hack v. Concrete Wall Co., 350 Mich 118 at 123-126; Hack Investment Co. v. Concrete Wall Co., 356 Mich 416, 421-423, and Ellis v. Phillips, 363 Mich 587), the only remedy available to a joint tort-feasor against his brother in guilt was by chancery action for contribution taken in pursuance of the act of 1941 (CL 1948, § 691.561 et seq. [Stat Ann 1959 Cum Supp § 27.1683(1) et seq.]). The act of 1941 was changed in minor degree (to accommodate the new procedure only and not to change the substance) and re-enacted as section 2925 of the revised judicature act of 1961 (CLS 1961, § 600.2925 [Stat Ann 1962 Rev § 27A.2925]).

First: Has Consumers pleaded a right to indemnity?

This must be the essence of Consumers’ position as third-party plaintiff. It relies particularly on Blackford v. Sioux City Dressed Pork, Inc., 254 Iowa 845 (118 NW2d 559). Blackford’s specific underpinning is Ryan Stevedoring Co., Inc., v. Pan-Atlantic Steamship Corp., 350 US 124 (76 S Ct 232, 100 L ed 133). Neither case has application here, there being no allegation by Consumers upon strength of which this Court might conclude that a contractual relationship, express or equitably implied, for indemnity by Hertel-Deyo in favor of Consumers, existed at the time plaintiff was injured.

The specific link between Blackford and Ryan appears in the beginning sentences of division IV of Blackford’s opinion (p 852) :

“An authority directly in point on its facts and law is Ryan Stevedoring Company v. Pan-Atlantic Steamship Corporation, supra. It was there held that the action over against the employer by the third party held negligent to the employee, was not based upon the employer’s negligence, but on its breach of a duty owed by the employer to the third party arising out of the contract between them.” (Italics by present Court.)

Bef erring back to Ryan: The Supreme Court based its decision upon the fact of a contract of indemnity, saying (p 130) :

“In the face of a formal bond of indemnity this statute clearly does not cut off a shipowner’s right to recover from a bonding company the reimbursement that the indemnitor, for good consideration, has expressly contracted to pay. Such a liability springs from an independent contractual right. It is not an action by or on behalf of the employee and it is not one to recover damages ‘on account of’ an employee’s ‘injury or death.’ It is a simple action to recover, under a voluntary and self-sufficient contract, a sum measured by foreseeable damages occasioned to the shipowner by the injury or death of a longshoreman on its ship.”

The dissenting opinion of Ryan, dealing as it does with the legal position of an employer sued as here by third-party complaint, is of interest as we pass to the main question of effect upon this third-party complaint of the Michigan workmen’s compensation law. That opinion was prepared by Mr. Justice Black. It bears, with his signature, the signatures of Chief Justice Warren and Justices Douglas and Clark.

On pages 140 and 141 of the report, after having depicted what employers gain and what they lose by the principle of workmen’s compensation, and then having alluded to the right of third-party suit which the longshoremen’s and harbor workers’ compensation act provides in favor of injured employees,⁴ the opinion proceeds to conclusion that there was not in fact a contract for indemnity by plaintiff Palazzolo’s employer in favor of the third-party shipowner which paid Palazzolo’s judgment. Upon that conclusion the four Justices held (p 141):

“But the end result here is that this employer is actually mulcted in damages because its employee successfully prosecuted a third-party action. Liability is thus imposed because of the negligence of the employer’s other employees. This the act forbids. Whether called ‘common-law indemnity,’ ‘contribution,’ ‘subrogation,’ or any other name, the re-suit is precisely the same. The employer has to pay more ‘on account of’ an injury to his employee than congress said he should.

“I agree, of course, that if the employer here had made a contract, oral or written, agreeing to hold this shipowner harmless or to indemnify the shipowner against liability for injuries to petitioner’s employees caused by the shipowner’s negligence in whole or in part, the contract would have been valid and indemnity could have been obtained. For the longshoremen’s act does not forbid employers under it to make independent agreements to indemnify others.”

Thus the only reason the shipowner succeeded with its action for indemnity against the employer was on account of majority finding that the employer had contracted to indemnify the shipowner. In the case before us there is, of course, no claim that Hertel-Deyo correspondingly contracted to indemnify Consumers. And we cannot accept Consumers’ bare legal conclusion, that Hertel-Deyo’s negligence was “active” and Consumers’ negligence was “passive,” as framing an issue for determination of the presence of a contract of indemnity, or of a tort-created right to indemnity (as in Westchester Lighting Co. v. Westchester County Small Estates Corp., 278 NY 175 [15 NE2d 567], cited by Consumers). On this record, looking at the two declarations in array with the two third-party complaints, one can only conclude that Consumers and Hertel-Deyo would, in the absence of intervention of a workmen’s compensation law, be deemed joint tort-feasors.

Refer to Chief Judge Learned Hand’s regularly quoted opinion of Slattery v. Marra Brothers (CA 2), 186 F2d 134. In that case most of the authorities cited by Consumers (Winchester, supra, included) were duly distinguished. Marra Brothers, sued for personal injuries by Spencer & Son’s employee Slattery, sought by third-party complaint full indemnity from Spencer & Son. Marra Brothers’ allegations were much the same as those of Consumers here. Having conceded, “at least when the putative indemnitor is not protected by a compensation act,” that some courts have based indemnity merely upon a difference between the kinds of negligence of the two tort-feasors (giving as an instance where the negligence of the indemnitee is “passive” and that of the indemnitor is “active”), the court reached a conclusion this Court supports (p 139):

“So far as we can see therefore there is no body of sure authority for saying that differences in the degrees of fault between two tort-feasors will without more strip one of them if he is an employer, of the protection of a compensation act; and we are at a loss to see any tenable principle which can support such a result.”

There is here no pleading by Consumers of any right to indemnity. Indemnity arising from tort, unlike contribution, is available only when the party appealing therefor is able to plead and prove freedom on his part from personal fault. This third-party plaintiff has pleaded no conclusions of fact which, if proved, would justify a finding or verdict that it was free from such fault. See Indemnity Insurance Co. of North America v. Otis Elevator Co., 315 Mich 393 (171 ALR 266) ; also this key sentence appearing in another case upon which Consumers depends (Lunderberg v. Bierman, 241 Minn 349, 354 [63 NW2d 355, 359, 43 ALR2d 865, 871]):

“The whole doctrine of indemnity rests upon the proposition that, when one is compelled to pay money which in justice another ought to pay, the former may recover of the latter the sum so paid unless the one making the payment is barred by the wrongful nature of his conduct.”

Second: May Consumers have contribution, against Eertel-Dayo, the workmen’s compensation law considered?

Refer to Wall v. Studebaker Corp., 219 Mich. 434.⁵ When Wall was decided in 1922, part 1, § 4 of the act (CL 1915, § 5426 [CL 1929, § 8410, Stat Ann § 17.144]) was relied upon and emphasized by the Court as now indicated (p 437):

“Any employer who has elected, with the approval of the industrial accident board, hereinafter created, to pay compensation as hereinafted provided, shall not be subject to the provisions of section 1; nor shall such employer be subject to any other liability whatsoever, save as herein provided for the death of or personal injury to any employee, for which death or injury compensation is recoverable under this act, except as to employees who have elected in the manner hereinafter provided not to become subject to the provisions of this act.”

By the amendment of 1943 (PA 1943, No 245) said section 4 of part 1 presently reads (CL 1948, § 411.4 [Stat Ann 1960 Rev § 17.144]):

“Sec. 4. Where the conditions of liability under this act exist, the right to the recovery of compensation benefits, as herein provided, shall be the exclusive remedy against the employer.” (Italics by presently seated Court.)

The words of the statute stressed by the Court in Wall, and the unanimous opinion of Wall, make up the best evidence of presently sought legislative intent. When the workmen’s compensation law was studied and legislatively considered, prior to and during the year of enactment (1912),⁶ it would seem that the primordial intent of all participants was that the quo to be received by the employer in return for his quid would be outright and absolute immunity from liability (except as provided in the act) stemming from each compensable injury. True, the legislative assembly may not have foreseen today’s specific question and so may have had no specific intent with regard thereto.⁷ Nonetheless, according to Wall, that body made it clear that an employer operating under the act and paying compensation as required thereby should not — on account of or as a result of the compensable event— be subjected “to any other liability whatsoever.”

Wall's opinion was signed by Justices Bird and Fellows. . Justice Bird was “there” when the workmen’s compensation law was studied and debated prior to and during the year of enactment, first as attorney general and then as Justice of the Court (161 Mich iii). Justice Fellows was elected attorney general in 1912 (173 Mich iii) and continued to hold that office until elected to the Court in 1916 (194 Mich iii). Closer then to the legislature than obtains today, the attorney general was the legal adviser — exclusively and in fact — of the legislative branch. He of that day must be held as knowing much more about the legislative intent of the times than we can separately ascertain.

Bearing in mind that legislative intent is determinable properly by what was at the time of enactment, rather than what might appear a half century later — by hindsight (Wayne County Road Commissioners v. Wayne County Clerk. 293 Mich 229, 235; Platt v. Union Pacific R. Co., 99 US 48, 63, 64 [25 L ed 424]; 50 Am Jur, Statutes, § 236, p 224), we depend much upon what members of the Court wrote at the time of or shortly after enactment of statutory provisions which, considered then as to purpose and intent, have remained unamended in substance (see comment, Dyer v. Sears, Roebuck & Co., 350 Mich 92, 95). Pursuing these doctrines, the Court’s ruling in the Wall Case must be regarded as controlling. If, in 1922, it appeared to the Court that section 5426 (of the compiled laws of 1915) was intended, in event of industrial injury to a minor, to destroy the separate right of action of that minor’s parent, we suffer no trouble in holding that the same section has destroyed the cause for contribution this third-party plaintiff claims.

Turning now to the clear weight of authority outside Michigan; authority dealing with contribution distinguished from indemnity. When Larson’s original work was written and published, that recognized authority considered the cases and their reasoning under this introductory paragraph (2 Larson’s Workmen’s Compensation Law, § 76.21, pp 230, 231) :

“The great majority of jurisdictions have held that the employer whose concurring negligence contributed to the employee’s injury cannot be sued or joined by the third party as a joint tort-feasor, whether under contribution statutes or at common law. The ground is a simple one: the employer is not jointly liable to the employee in tort; therefore he cannot be a joint tort-feasor. The liability that rests upon the employer is an absolute liability irrospective of negligence, and this is the only kind of liability that can devolve upon him whether he is negligent or not. The claim of the employee against the employer is solely for statutory benefits; his claim against the third person is for damages. The two are different in kind and cannot result in a common liability.”

The editorial writers of American Law Reports, agreeing fully with Larson’s analysis, have prepared a similar brief (“Effect of workmen’s compensation act on right of third-person tort-feasor to recover contribution from employer of injured or killed workman,” 53 ALR2d 977).

In addition to the above, see Larson’s 1964 cumulative supplement of volume 2, p 219, “§ 76.21 Majority rule; no contribution by employer,” and recent cases considered therein; also the most recently delivered volume of American Jurisprudence 2d (18 Am Jur 2d, Contribution, § 48, pp 69, 70). This last supports the majority rule and reads:

“This conclusion has been usually predicated on the fact that the employer and the third person are not under a common liability to the injured or killed workman, since the employer’s liability is imposed, as well as limited, by the provisions of a workmen’s compensation act, while that of the third-person tort-feasor rests on the principles of negligence.”

One of the most valuable decisions found in foregoing annotations is Baltimore Transit Co. v. State, 183 Md 674 (39 A2d 858, 156 ALR 460). Holding that an employer’s liability, resulting from industrial injury to his employee, is confined exclusively to the liability fixed by the workmen’s compensation law, the court went on to decide whether the Maryland joint tort-feasors act of 1941 (a duplicate in substance of our PA 1941, No 303 ) authorized “the joinder of a conforming employer whose negligence caused or contributed to the happening of an accident.” The holding (p 679) was that “the act is only applicable to a situation where there is a common liability to an injured person in tort”; also that “The right of contribution is a derivative right and not a new cause of action.”⁹

Thus if Husted could not sue his employer (Hertel-Deyo), and we know he could not, Hertel-Deyo and Consumers cannot be joint tort-feasors by law. Consumers therefore cannot sue Hertel-Deyo for contribution should it be held to respond to plaintiffs in damages. See the reasoning of Baltimore Transit, supra; also the recent searching decisions of United Air Lines, Inc., v. Wiener (CA 9), 335 F2d 379 and General Dynamics Corp. v. Adams (CA 5), 340 F2d 271.

To conclude: "We carefully avoid deciding that there cannot be, in any circumstances of noncontractual relationship between a sued defendant and the plaintiff’s employer, recovery over against the employer. See discussion of this feature of the question by Larson, “C. Contract-type remedy in recovery over; noncontractual relation between parties.” (2 Larson 1964 Supp at pages 217-219.) An obligation to reimburse can be implied by equitable principles, provided always the relator is without personal fault. Loss occasioned by vicarious liability, there being no such personal fault of the one seeking indemnity or reimbursement, is an example. See Lunderberg v. Bierman, supra, 352, and application in that case of Restatement’s principle (Restatement, Restitution, § 96, p 418); also the Cooley quotation appearing in Township of Hart v. Noret, 191 Mich 427, 432 (LRA 1916F 83). In the case at bar, however, Consumers has supplied nothing upon which such an obligation may be implied. Nor has it pleaded anything in the nature of an agreement to indemnify, as in the Ryan Stevedoring Case.

Reversed and remanded for entry of order dismissing the primary defendant’s third-party complaints. Plaintiffs and appellant Hertel-Deyo Company shall have costs on appeal.

Although we deem such a provision needless, Consumers may if desired have included in the order of dismissal a declaration of no prejudice to its original right, if any, to recover over against Hertel-Deyo should it be compelled to satisfy — in whole or in part — -any judgment or judgments these plaintiffs may recover in the causes now at issue.

T. M. Kavanagh, C. J., and Dethmers, Black, Souris, Smith, O’Hara, and Adams, JJ., concurred. Kelly, J., concurred in result.

1 See Joiner, The Union of Law and Equity, 55 Mich L Rev, p 1059.

4 This is the same right as was provided by amendment of our act m 1952 (CLS 1961, §413.15 [Stat Ann 1960 Rev §17.189]).

5 Followed expressly in Varga v. Detroit Edison Co., 240 Mich 593, 594, and Moran v. Nafi Corporation, 370 Mich 536, 539, 545.

6 See description of the continuing study of the act, prior to enactment thereof, in Mackin v. Detroit-Timkin Axle Co., 187 Mich 8, 14, 15.

7 “Interpretation is often spoken of as if it were nothing but the search and the discovery of a meaning which, however obscure and latent, had none the less a real and ascertainable pre-existence in the legislator’s mind. The process is, indeed, that at times, but it is often something more. The ascertainment of intention may be the least of a judge’s troubles in ascribing meaning to a statute. ‘The faet is,’ says Gray in his lectures on the ‘Nature and Sources of the Law,’ ‘that the difficulties of so-called interpretation arise when the legislature has had no meaning at all; when the question whieh is raised on the statute never occurred to it; when what the judges have to do is, not to determine what the legislature did moan on a point which was present to its mind, but to guess what it would have intended on a point not present to its mind, if the point had been present,’ ” Cardozo, The Nature of the Judicial Process, pp 14, 15.

9 The Maryland supreme eourt quoted, from a committee report, one of those rare epigrams of the law which succeeds in saying it all in one short sentence (p 680) :

“The common obligation contemplated by this act is the common liability of the tort-feasors to suffer adverse judgment at the instance of the injured person whether or not the injured person elects to impose it.”