Laffoon v. Bell & Zoller Coal Co.

359 N.E.2d 125, 65 Ill. 2d 437, 3 Ill. Dec. 715, 1976 Ill. LEXIS 457

• Court: Illinois Supreme Court
• Decided: December 3, 1976
• Docket: 47596, 47861, 48317 cons.
• Status: Published

Opinions

MR. JUSTICE KLUCZYNSKI

delivered the opinion of the court:

These consolidated appeals present two common issues: first, whether the exclusive-remedy provision of section 5(a) of the Workmen’s Compensation Act (Ill. Rev. Stat. 1975, ch. 48, par. 138.5(a)) was intended to bar an action under the Structural Work Act (Ill. Rev. Stat. 1975, ch. 48, par. 60 et seq.) by an injured workman against a general contractor who “is liable to pay compensation” to that workman under section 1(a)(3) of the Workmen’s Compensation Act (Ill. Rev. Stat. 1975, ch. 48, par. 138.1(a)(3)); and second, assuming it was intended to bar such an action, does section 5(a) violate the employee’s right to due process and equal protection of the law.

Section 5(a) of the Workmen’s Compensation Act provides, in pertinent part:

“No common law or statutory right to recover damages from the employer, his insurer, his broker, any service organization retained by the employer, his insurer or his broker to provide safety service, advice or recommendations for the employer or the agents or employees of any of them for injury or death sustained by any employee while engaged in the line of his duty as such employee, other than the compensation herein provided, is available to any employee who is covered by the provisions of this Act, to any one wholly or partially dependent upon him, the legal representatives of his estate, or any one otherwise entitled to recover damages for such injury.” (Ill. Rev. Stat. 1975, ch. 48, par. 138.5(a).)

Section 1(a)(3) of the Act states:

“Any one engaging in any business or enterprise referred to in subsections 1 and 2 of Section 3 of this Act who undertakes to do any work enumerated therein, is liable to pay compensation to his own immediate employees in accordance with the provisions of this Act, and in addition thereto if he directly or indirectly engages any contractor whether principal or sub-contractor to do any such work, he is liable to pay compensation to the employees of any such contractor or sub-contractor unless such contractor or sub-contractor has insured, in any company or association authorized under the laws of this State to insure the liability to pay compensation under this Act, or guaranteed his liability to pay such compensation ***.

In the event any such person pays compensation under this subsection he may recover the amount thereof from the contractor or sub-contractor, if any, and in the event the contractor pays compensation under this subsection he may recover the amount thereof from the sub-contractor, if any.

This subsection does not apply in any case where the accident occurs elsewhere than on, in or about the immediate premises on which the principal has contracted that the work be done.” Ill. Rev. Stat. 1975, ch. 48, par. 138.1(a)(3).

In cause No. 47596, plaintiff, William Laffoon, was an employee of Refieuna Salvage Company (hereinafter Refieuna) and was injured while dismantling a building located on mining properties owned by the defendant, Bell & Zoller Coal Company (hereinafter Bell & Zoller). Refieuna had contracted with Bell & Zoller to dismantle this building. Laffoon filed a claim for workmen’s compensation with the Industrial Commission against Refieuna, which carried no compensation insurance. Applying section 1(a)(3), Bell & Zoller paid compensation benefits of $9,218.19 to Laffoon. Subsequently, Laffoon filed an action for damages against Bell & Zoller under the Structural Work Act (Ill. Rev. Stat. 1975, ch. 48, par. 60 et seq.). The defendant moved for a summary judgment, maintaining that it was compelled to and did, in fact, pay plaintiff compensation benefits in accordance with section 1(a)(3) of the Workmen’s Compensation Act, and that, accordingly, it was an “employer” immune from such suit under section 5(a) of the Act. The circuit court of Franklin County granted the motion for a summary judgment. On appeal to the appellate court, the judgment was affirmed, with one justice dissenting. (Laffoon v. Bell & Zoller Coal Co., 27 Ill. App. 3d 472.) That court held that section 5(a) indicated a legislative intent to bar a subsequent action under the Structural Work Act, particularly after the employee had accepted the benefits of the Workmen’s Compensation Act. We granted plaintiff leave to appeal.

In cause No. 47861, plaintiff, George E. Hoover, was employed by Seal-Tite Roofing Inc., a subcontractor of the general contractor, Stephenson Roofing & Sheet Metal Company (hereinafter Stephenson). Hoover was severely injured when he fell from the roof of a building on which he was working. He filed a claim for compensation, naming as the respondents Stephenson as well as his own employer. Pursuant to this claim Stephenson undertook to pay compensation benefits in accordance with section 1(a)(3) of the Workmen’s Compensation Act. Thereafter, plaintiff initiated a suit under the Structural Work Act against Stephenson and certain other defendants, who are unrelated to the present appeal. Stephenson moved to dismiss the complaint against itself on the grounds that plaintiff was restricted to the exclusive remedy of the Workmen’s Compensation Act. The circuit court of St. Clair County granted defendant’s motion to dismiss, and this court allowed plaintiff’s application for a direct appeal under Supreme Court Rule 302(b) (Ill. Rev. Stat. 1975, ch. 110A, par. 302(b)).

In cause No. 48317, Angelo Nutini was an employee of Joseph Turuc, a plastering contractor who subcontracted with S. H. Freund & Sons (hereinafter Freund), a general contractor. Nutini sustained paralyzing injuries when a scaffold on which he was standing collapsed. He filed a claim for compensation against Turuc and received an award for the permanent loss of use of both legs. Turuc, however, had no workmen’s compensation insurance, and Nutini subsequently amended his claim to join Freund as a respondent under section 1(a)(3). An order was then entered holding Freund liable to pay the benefits awarded against Turuc. Nutini later filed an action against Freund and the owner of the building, alleging violations of the Structural Work Act. As did Stephenson in cause No. 47861, Freund moved to dismiss the complaint as to itself. Relying on the appellate court decision in Bell & Zoller, the circuit court of Cook County granted the motion. We allowed plaintiff’s direct appeal pursuant to Supreme Court Rule 302(b) (Ill. Rev. Stat. 1975, ch. 110A, par. 302(b)), and consolidated it with the two preceding causes.

The defendants maintain, basically, that section 5(a) of the Workmen’s Compensation Act provides them with immunity from an action for damages by an employee of an uninsured subcontractor when they are required to pay compensation benefits to that employee under section 1(a)(3) of the Act. The plaintiffs respond that section 5(a) was intended to provide immunity only to the employer of that employee, and alternatively, if the defendants’ interpretation of section 5(a) is correct, that interpretation is violative of their rights to due process and equal protection.

The resolution of these conflicting positions may be reached by concentrating on the latter portion of plaintiffs’ argument. The rationale behind that argument can readily be illustrated by an example proffered by one of the plaintiffs. Two men are working on a beam which suddenly collapses injuring both men. The first man is an employee of a subcontractor who has workmen’s compensation insurance. This man will receive compensation benefits from his employer and may subsequently sue the general contractor — or the person “engaging in any business or enterprise referred to in subsections 1 and 2 of Section 3 of [the Workmen’s Compensation] Act” (hereinafter included under the term general contractor) —who, he maintains, is tortiously liable for his injuries. The second man is an employee of a subcontractor who carries no compensation insurance and has not “guaranteed his liability to pay such compensation.” Under section 1(a)(3) of the Act, this man will receive compensation benefits from the general contractor. He will be precluded, however, under defendants’ interpretation of section 5(a) from maintaining a suit for damages against. the general contractor even though he is liable for the employee’s injuries. Moreover, the general contractor who pays benefits to the injured employee is permitted by section 1(a)(3) to recover from the subcontractor the amount paid, and, thus, may suffer no monetary loss. Plaintiffs contend that a construction of section 5(a) which allows the result illustrated creates an arbitrary and impermissible classification among injured employees.

“For these classifications to be deemed constitutional, as in all cases involving classifications, it must appear that the particular classification is based upon some real and substantial difference in kind, situation or circumstance in the persons or objects on which the classification rests, and which bears a rational relation to the evil to be remedied and the purpose to be attained by the statute, otherwise the classification will be deemed arbitrary and in violation of the constitutional guarantees of due process and equal protection of the laws.” (Grasse v. Dealer’s Transport Co., 412 Ill. 179, 193-94.) This court has held that the underlying purpose of the Workmen’s Compensation Act is to provide financial protection to employees whose earning power has been temporarily diminished or terminated as a result of injuries arising out of and in the course of employment. (Board of Education v. Industrial Com., 53 Ill. 2d 167, 171.) “The evil to be remedied by that act was that under the common-law rules of master-servant liability, employees injured in the course of their employment had to bear practically the full measure of their loss, hence a substitute system of liability was provided.” (Grasse v. Dealer’s Transport Co., 412 Ill. 179, 195.) “In construing the provisions of the Workmen’s Compensation Act, all portions thereof must be read as a whole and in such manner as to give to them the practical and liberal interpretation intended by the legislature.” Vaught v. Industrial Com., 52 Ill. 2d 158, 165.

An issue similar to the one presented in this appeal arose in Grasse. There, the court considered a provision of the Workmen’s Compensation Act which precluded an injured employee from recovering common law damages against a third-party tortfeasor if that party was also bound by the Act. If the tortfeasor was not bound by the Act then the injured employee could recover such damages. The court found this classification arbitrary and in no way conducive to the objectives of the Act. As the court stated: “It is readily apparent that there is no rational difference between an employee injured in the course of his employment by a motorbus, and one injured by a farmer’s truck. Each may sustain the same injuries, and be entitled to the same amount of compensation from their employers; neither had any control over the circumstances of their injuries, or the status of the party who hit them, yet in one case the statute authorizes the employee to recover damages from the third party, and in the other case the employee must be content with the amount of compensation he may be entitled to receive from his employer.” (412 Ill. 179, 196.) The sole basis for differentiation, as far as the injured employee was concerned, was the fortuitous circumstance of whether the tortfeasor was bound to provide coverage under the Act.

To construe section 5(a) as providing general contractors with immunity from actions for damages by injured employees of a subcontractor who carries no compensation insurance would result in the same arbitrary classification condemned in Grasse. In the example previously set forth, the two workmen may sustain the same injuries, and each is entitled to compensation under the provisions of the Act (see Ill. Rev. Stat. 1975, ch. 48, pars. 138.3(1) and (2)), regardless of who is liable for those benefits. Yet, the first man may recover damages from the general contractor, while the second must be content with the amount received as compensation. The sole basis for this differentiation is the fortuitous circumstance of whether the workman’s employer carries compensation insurance. Moreover, the classification of general contractors in regard to their liability as third-party tortfeasors is equally arbitrary, for it, too, is based upon the fortuitous circumstance of whether the particular subcontractor provides compensation coverage. Significantly, the real possibility must not be overlooked that in certain situations this may not be such a “fortuitous circumstance” for the general contractor. He may attempt to cloak himself with immunity and thereby abate liability for his negligent or otherwise wilful conduct by hiring only those subcontractors who have no compensation coverage and do not guarantee their liability to pay such.

As heretofore noted, the purpose of the Workmen’s Compensation Act is to afford employees financial protection when their earning power is temporarily diminished or terminated due to employment injuries. It was the obvious intent of the legislature in enacting section 1(a)(3) to ensure this purpose was carried out when the employer-subcontractor cannot fulfill this obligation. It was logical and reasonable to impose the liability for compensation benefits upon the general contractor, because he was in a position to hire subcontractors who possessed the necessary insurance. To bestow immunity upon the general contractors would reward those employing subcontractors who have no workmen’s compensation coverage but yet are bound by the provisions of the Workmen’s Compensation Act; and it would penalize those general contractors who, mindful of the purpose and spirit of said Act, only employ insured subcontractors.

It is the duty of this court to construe acts of the legislature so as to uphold their validity and constitutionality if it can reasonably be done, and if their constitutionality is doubtful, to resolve that doubt in favor of their validity. (Illinois Crime Investigating Com. v. Buccieri, 36 Ill. 2d 556, 561.) Accordingly, we must interpret section 5(a) as conferring immunity upon employers only from common law or statutory actions for damages by their immediate employees. To hold otherwise in light of the present factual situations would be violative of the injured employee’s right to due process and equal protection of the laws.

The defendants argue that a construction of section 5(a) adverse to their position would result in a violation of their rights to due process and equal protection. They premise this contention on the basis that they are liable to pay compensation benefits without fault under section 1(a)(3) and still remain subject to a subsequent common law or statutory action for damages. We find this argument to be without merit, for under this construction of section 5(a) defendants are placed in no worse position than they are in regard to suits by employees of insured subcontractors. The only difference between the two situations is that in one case the general contractor has paid compensation. He, however, has the right of indemnification against the uninsured subcontractor. If the subcontractor is insolvent, the general contractor who is found liable based upon a common law or statutory cause of action may set off from that award the amount of compensation benefits he has previously paid to the employee. The employee receives no windfall or double recovery. In some cases, where the subcontractor is insolvent and the general contractor prevails in the common law or statutory action, the general contractor must bear the burden of the compensation payments. It must be noted, however, that the general contractor had it within his power to protect himself from this loss by hiring insured subcontractors. Furthermore, it is an underlying rationale of workmen’s compensation law that the loss occasioned by injuries to employees should be borne by the common enterprise.

Having predicated our decision on this constitutional basis, we need not consider other arguments raised by the various parties.

Accordingly, the judgment of the appellate court and the judgment of the circuit court of Franklin County in cause No. 47596 are reversed, the judgment of the circuit court of St. Clair County in cause No. 47861 is reversed, the judgment of the circuit court of Cook County in cause No. 48317 is reversed, and all causes are remanded to the respective circuit courts for further proceedings not inconsistent with the views expressed herein.

47596 — Reversed and remanded.

47861 — Reversed and remanded.

48317 — Reversed and remanded.