Rich Hill Coal Company v. Bashore
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This case comes to us on a bill in equity, later amended, filed by certain coal companies to restrain the Secretary of Labor and Industry from enforcing the Workmen's Compensation Acts of 1937 and 1938. These acts are: 1, the Act (No. 323) of June 4, 1937, P. L. 1552; 2, the Act (No. 552) of July 2, 1937, P. L. 2714, called the "Occupational Disease Compensation Act"; and 3, Act No. 20 of the Special Session of 1938, approved September 29, 1938, P. L. 52. "1" is an "amendment" to the Workmen's Compensation Act of 1915, P. L. 736. "2" is a "supplement" to the Act of 1915. "3" amends Article II of the Act of 1915 "by adding a new section 201.1 thereto and imposing the presumption *Page 454 of negligence upon employers; providing for admission of certain evidence; and providing for double damage under certain circumstances." These acts are alleged to be unconstitutional. A motion was made for a preliminary injunction; a rule to show cause was granted; and testimony was later taken, showing, inter alia, the workmen's compensation insurance rates under the Act of 1915 and by comparison under the acts challenged. These new rates, as fixed by the Pennsylvania Compensation Rating and Inspection Bureau, represent an increase of 62 1/2 per cent over the rates under the old act. This would mean to one of the plaintiffs, the Morrisdale Company, a cost of 11 1/2 cents per ton of coal mined. It was also testified that the plaintiff just named considered rejecting the compensation system imposed by Act No. 323, but it was advised by insurance brokers that no insurance carrier in Pennsylvania would insure it against the liability in actions at law under the provisions of section 201, Article II of Act No. 323, which strips employers rejecting the compensation law of the following defenses: (1) the negligence of a fellow employee, (2) assumption of risk, (3) contributory negligence. (It should be noted in this connection that the hereinafter discussed Act No. 20, passed by the legislature after being called in special session, approved September 29, 1938, amending the Act of 1915, as reënacted and amended by the Act of June 4, 1937, P. L. 1552, No. 323, provides, inter alia, that "when injury results to an employee in the course of his employment it shall be presumed that the employer's negligence caused said injury, which presumption may be rebutted by the employer.") The other plaintiff, Rich Hill Coal Company, offered evidence that as to it the insurance rates under the new law represent about the same increase as the other plaintiff showed. The President of Rich Hill Coal Company testified as follows: "A. It is impossible for us to carry our own insurance, we are not large enough, the expense would be too great, we cannot reinsure, we *Page 455 will have to carry our own rate below $10,000 or up to $10,000 and it is just putting the small operator out of business. Q. In other words, from a business standpoint you could not possibly afford to take the risk involved in rejecting the Act and carrying your own risk up to $10,000 per accident, is that correct? A. We couldn't do it, one major accident would put us out of business. Q. Do I understand from that that you cannot get insurance for the first $10,000 of your liability? A. No, sir; we cannot."
Upon the conclusion of the testimony, the court heard arguments upon the constitutional questions raised by the bill. On December 29, 1937, the defendant filed preliminary objections to the bill. The next day a preliminary injunction was granted. On December 31, 1937, 43 anthracite coal mining companies presented to the court a petition asking leave to intervene as parties plaintiff. The petitioners, all of whom are taxpayers, averred that, though they had all elected to pay compensation under Article III of the Workmen's Compensation Act of 1915, they had "been compelled as a matter of economic necessity to reject the system imposed by Acts Nos. 323 and 552." On December 31, 1937, leave to intervene was granted and the enforcement of Acts Nos. 323 and 552 was restrained against these intervening plaintiffs upon their posting required bonds. On January 3, 1938, the Attorney General and the attorney for plaintiffs, respectively, filed the following stipulation: "The testimony adduced in support of the rule to show cause represents all the testimony the plaintiffs have to offer, and for the purpose of this case, shall be considered as if taken on final hearing of the bill of complaint. The defendant has no testimony to offer for the purposes of this case."
On the same day, the Attorney General presented to the Supreme Court the stipulation just quoted and also a petition averring that the only question between the parties was the constitutionality of Acts Nos. 323 and *Page 456 552 and praying the court to bring the record before it on special certiorari so that the case might be decided finally at an early moment. Counsel for plaintiffs then notified this court that counsel for the intervening anthracite operators desired to present certain additional facts to the court in support of their contention that Acts Nos. 323 and 552 were unconstitutional. The Attorney General declared that these facts would be stipulated by agreement. The defendant later asserted that the facts could not be stipulated. Thereupon, on May 12, 1938, certain of the intervening plaintiffs, to wit: Monarch Anthracite Mining Company, The Kingston Coal Company, Glen Alden Coal Company, The Lehigh Valley Coal Company and The Hudson Coal Company, filed a separate bill in equity in the Court of Common Pleas of Dauphin County setting up certain facts, inter alia, as follows: "The total number of persons employed in the anthracite industry in Pennsylvania is approximately 100,000. Between 1926 and 1935, the working capital of the anthracite industry shrank from $111,097,223 to $8,860,217. During the years 1932, 1933, 1934 and 1935, the industry suffered losses, respectively, of $10,507,779, $8,572,586, $1,664,142 and $10,235,977. In 1934, the total amount of workmen's compensation liability incurred by anthracite operators in Pennsylvania was $2,600,000. The anthracite industry was also conducted at a loss in 1937, and the workmen's compensation liability for 1936 and 1937 was approximately the same as in 1934. The cost of workmen's compensation to the anthracite operators of Pennsylvania would be increased by more than 100 per cent over the cost of workmen's compensation under the Act of 1915, solely by reason of the increased schedules of compensation. The features of Act No. 323 other than its schedules would increase the costs of compensation by an additional 20 per cent. In many cases of total permanent disability and death from accident, Act No. 323 would increase the compensation benefits by approximately 200 per cent. The estimated *Page 457 compensation liability of anthracite operators under Act No. 552 during the first year of its operation would be $8,640,000. This amount would be increased by $2,500,000 during each of the three successive years so that in the fourth year of the operation of the act the total compensation liability of anthracite operators under Act No. 552 would be $16,200,000. Under the provisions of the Workmen's Compensation Act of 1915, the plaintiffs were exempted from the requirement that insurance be carried against their liabilities under Article III. Prior to January 1, 1938, anthracite operators who applied for an exemption from the duty of insuring against liability under Article III were required by the defendant to deposit with him securities of the value of many millions of dollars in order to obtain such exemption. They were also required to carry excess insurance against such liability.
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This case comes to us on a bill in equity, later amended, filed by certain coal companies to restrain the Secretary of Labor and Industry from enforcing the Workmen's Compensation Acts of 1937 and 1938. These acts are: 1, the Act (No. 323) of June 4, 1937, P. L. 1552; 2, the Act (No. 552) of July 2, 1937, P. L. 2714, called the "Occupational Disease Compensation Act"; and 3, Act No. 20 of the Special Session of 1938, approved September 29, 1938, P. L. 52. "1" is an "amendment" to the Workmen's Compensation Act of 1915, P. L. 736. "2" is a "supplement" to the Act of 1915. "3" amends Article II of the Act of 1915 "by adding a new section 201.1 thereto and imposing the presumption *Page 454 of negligence upon employers; providing for admission of certain evidence; and providing for double damage under certain circumstances." These acts are alleged to be unconstitutional. A motion was made for a preliminary injunction; a rule to show cause was granted; and testimony was later taken, showing, inter alia, the workmen's compensation insurance rates under the Act of 1915 and by comparison under the acts challenged. These new rates, as fixed by the Pennsylvania Compensation Rating and Inspection Bureau, represent an increase of 62 1/2 per cent over the rates under the old act. This would mean to one of the plaintiffs, the Morrisdale Company, a cost of 11 1/2 cents per ton of coal mined. It was also testified that the plaintiff just named considered rejecting the compensation system imposed by Act No. 323, but it was advised by insurance brokers that no insurance carrier in Pennsylvania would insure it against the liability in actions at law under the provisions of section 201, Article II of Act No. 323, which strips employers rejecting the compensation law of the following defenses: (1) the negligence of a fellow employee, (2) assumption of risk, (3) contributory negligence. (It should be noted in this connection that the hereinafter discussed Act No. 20, passed by the legislature after being called in special session, approved September 29, 1938, amending the Act of 1915, as reënacted and amended by the Act of June 4, 1937, P. L. 1552, No. 323, provides, inter alia, that "when injury results to an employee in the course of his employment it shall be presumed that the employer's negligence caused said injury, which presumption may be rebutted by the employer.") The other plaintiff, Rich Hill Coal Company, offered evidence that as to it the insurance rates under the new law represent about the same increase as the other plaintiff showed. The President of Rich Hill Coal Company testified as follows: "A. It is impossible for us to carry our own insurance, we are not large enough, the expense would be too great, we cannot reinsure, we *Page 455 will have to carry our own rate below $10,000 or up to $10,000 and it is just putting the small operator out of business. Q. In other words, from a business standpoint you could not possibly afford to take the risk involved in rejecting the Act and carrying your own risk up to $10,000 per accident, is that correct? A. We couldn't do it, one major accident would put us out of business. Q. Do I understand from that that you cannot get insurance for the first $10,000 of your liability? A. No, sir; we cannot."
Upon the conclusion of the testimony, the court heard arguments upon the constitutional questions raised by the bill. On December 29, 1937, the defendant filed preliminary objections to the bill. The next day a preliminary injunction was granted. On December 31, 1937, 43 anthracite coal mining companies presented to the court a petition asking leave to intervene as parties plaintiff. The petitioners, all of whom are taxpayers, averred that, though they had all elected to pay compensation under Article III of the Workmen's Compensation Act of 1915, they had "been compelled as a matter of economic necessity to reject the system imposed by Acts Nos. 323 and 552." On December 31, 1937, leave to intervene was granted and the enforcement of Acts Nos. 323 and 552 was restrained against these intervening plaintiffs upon their posting required bonds. On January 3, 1938, the Attorney General and the attorney for plaintiffs, respectively, filed the following stipulation: "The testimony adduced in support of the rule to show cause represents all the testimony the plaintiffs have to offer, and for the purpose of this case, shall be considered as if taken on final hearing of the bill of complaint. The defendant has no testimony to offer for the purposes of this case."
On the same day, the Attorney General presented to the Supreme Court the stipulation just quoted and also a petition averring that the only question between the parties was the constitutionality of Acts Nos. 323 and *Page 456 552 and praying the court to bring the record before it on special certiorari so that the case might be decided finally at an early moment. Counsel for plaintiffs then notified this court that counsel for the intervening anthracite operators desired to present certain additional facts to the court in support of their contention that Acts Nos. 323 and 552 were unconstitutional. The Attorney General declared that these facts would be stipulated by agreement. The defendant later asserted that the facts could not be stipulated. Thereupon, on May 12, 1938, certain of the intervening plaintiffs, to wit: Monarch Anthracite Mining Company, The Kingston Coal Company, Glen Alden Coal Company, The Lehigh Valley Coal Company and The Hudson Coal Company, filed a separate bill in equity in the Court of Common Pleas of Dauphin County setting up certain facts, inter alia, as follows: "The total number of persons employed in the anthracite industry in Pennsylvania is approximately 100,000. Between 1926 and 1935, the working capital of the anthracite industry shrank from $111,097,223 to $8,860,217. During the years 1932, 1933, 1934 and 1935, the industry suffered losses, respectively, of $10,507,779, $8,572,586, $1,664,142 and $10,235,977. In 1934, the total amount of workmen's compensation liability incurred by anthracite operators in Pennsylvania was $2,600,000. The anthracite industry was also conducted at a loss in 1937, and the workmen's compensation liability for 1936 and 1937 was approximately the same as in 1934. The cost of workmen's compensation to the anthracite operators of Pennsylvania would be increased by more than 100 per cent over the cost of workmen's compensation under the Act of 1915, solely by reason of the increased schedules of compensation. The features of Act No. 323 other than its schedules would increase the costs of compensation by an additional 20 per cent. In many cases of total permanent disability and death from accident, Act No. 323 would increase the compensation benefits by approximately 200 per cent. The estimated *Page 457 compensation liability of anthracite operators under Act No. 552 during the first year of its operation would be $8,640,000. This amount would be increased by $2,500,000 during each of the three successive years so that in the fourth year of the operation of the act the total compensation liability of anthracite operators under Act No. 552 would be $16,200,000. Under the provisions of the Workmen's Compensation Act of 1915, the plaintiffs were exempted from the requirement that insurance be carried against their liabilities under Article III. Prior to January 1, 1938, anthracite operators who applied for an exemption from the duty of insuring against liability under Article III were required by the defendant to deposit with him securities of the value of many millions of dollars in order to obtain such exemption. They were also required to carry excess insurance against such liability. If the anthracite operators were to accept the provisions of Acts Nos. 323 and 552, they would be required to deposit additional securities in the amount of millions of dollars in order to obtain an exemption from the duty of carrying insurance against workmen's compensation liability, and they would also be required to carry additional and greater amounts of excess insurance." The defendant later filed preliminary objections to the bill of the five anthracite coal companies above named.
Claiming that defendant failed to comply with Equity Rule No. 49 by neither placing the case upon the argument list for hearing nor filing an answer on the merits, plaintiffs, on July 25, 1938, filed as appears from the docket entry a "suggestion for judgment pro confesso in favor of plaintiffs against defendant for failure to file an answer as provided by Equity Rule No. 49." The defendant contends that Equity Rule No. 49 merely defines the default which warrants the entering of a decree pro confesso but that the decree must be entered under Rule No. 51. Defendant adds: "This was never done." InSolar Elec. Co. v. Brookville Boro. et al.,
This record will have to be returned to the court below for the development of facts essential to the due determination of the important issues involved. However, as some of the questions presented by this record are purely questions of law, we deem it our duty to decide them now so that a final decision of all the questions involved may be accelerated.
The legislature derives its power to enact a Workmen's Compensation Act from Article III, section 21 of the Constitution, being the amendment adopted November 2, 1915. This constitutional authorization of such an act lays down three fundamental requirements of the act: (1) The compensation which may be required of employers must be "reasonable." (2) The injuries compensated must arise "in the course of employment." Compensation for occupational diseases of employees must also by clear implication arise in the course of employment. (3) The acts authorized must provide for benefits to be paid by employers to their employees. The constitutional provision referred to does not authorize acts which would provide compensation from employer "A" to the employees of employer "B."
It is scarcely necessary to point out that a Workmen's Compensation Act must conform not only to the limitations of the enabling constitutional provision but also to the limitations of the applicable provisions of the federal and state constitutions.
As to the first test of reasonableness, we are not able from the record now before us to decide whether or not all the prescribed compensation rates are reasonable. A decision as to this depends on the facts in the cases presented *Page 459
and when these cases reached us the essential facts had not been established. We are therefore sending these cases back to the court below for the full development of facts and for proper and ample findings. We may pertinently say at this point, however, that when the necessary facts are found it will be a matter for judicial determination whether the challenged compensation acts are reasonable. It is elementary that the money (i. e., the wealth) used in the payment of compensation benefits to employees must be produced by the joint endeavors of the capital and labor which have united their energies and effort in the production of wealth. If compensation rates are fixed so high that capital does not reap a fair share of reward from these joint endeavors or if the rate is fixed so high as to wipe out or unduly encroach on that margin of a just return to which capital is entitled, the compensation rate is unreasonable and therefore the act prescribing it is invalid and unconstitutional. There can be no more fatuous policy than one of so burdening industry as to kill the spirit of enterprise and to paralyze what would otherwise be normal initiative and energy. One of the earliest and most widely known and accepted fables is that of "killing the goose that laid the golden eggs." In this venerable fable the man who committed this act of folly is held up as an archetype to be avoided. The courts of this state and nation have in countless decisions recognized and enforced the right of those who invest and manage capital to a fair share of the fruits of such investment and management. It has been held by the United States Supreme Court that even the owner of a business dedicated to the public service, such as a railroad, is entitled to "fair or reasonable profit": Dayton-Goose Creek R.Co. v. U.S. Interstate Commerce Com.,
A Workmen's Compensation Law which meets the test of reasonableness in compensation as between the employee whoreceives and the employer who pays is one of the most socially beneficent enactments which statesmanship is capable of producing. On the other hand, a Workmen's Compensation Law which places upon any industry a burden so crushing that it makes that industry's *Page 461 existence either impossible or, to its owners, economically undesirable, is a measure which the workmen themselves should emphatically condemn and reject, for it paralyzes the very activities on which their economic well-being depends. Unprofitable industries soon become idle industries; idle industries mean idle capital, and in all ages and countries idle capital has always meant idle men.
There are many provisions of Act No. 323, which are alleged to be unreasonable. For example, under section 306 A of Act No. 323 the minimum compensation "for the first 500 weeks after the 7th day of total disability, . . . shall not be . . . less than twelve dollars per week, . . . provided that if total disability shall continue for a period of four weeks or more, the employee also shall be entitled to receive compensation for the first seven days of total disability. Should total disability become permanent, then, in addition to the compensation provided for 500 weeks, and beginning at the expiration of the 500 weeks, the sum of $30 per month shall be payable during such permanent total disability prior to death." It is obvious that the above provision for compensation for life imposes a heavy burden on industry and if the complainants can prove that the minimum of $12 per week exceeds in a substantial number of instances the wages paid, the provision should be adjudged unreasonable. A law which requires an employer to pay a disabled employee, and particularly for a long period, more than the employee earned before his disability arose, does not conform to the constitutional test of reasonableness. The most earnest advocates of Workmen's Compensation Laws never contemplated that the rate of compensation for disabled employees should be placed so high as to make idleness more remunerative than work.
Another provision in Act 323 which is alleged to be unreasonable is that which gives to a widow of a deceased employee, "if there be no children, 44% of wages *Page 462
but not in excess of twelve dollars per week." This compensation shall be paid during 500 weeks, except that, in the case of a widow, if she shall remain unmarried, compensation shall continue after said period of 500 weeks, at the rate of $5 per week for life. If the widow remarries, if she be other than a nonresident alien widow, the compensation of such widow shall continue two years from the date of such remarriage. The rate of compensation for widows with children increases substantially. It is obvious that in mining or other pursuits in which there might be a high percentage of deaths resulting from injuries or occupational diseases, only those concerns which, even under the operation of the Workmen's Compensation Act of 1915, were left with a large margin of net income, would be able to continue their industrial operations. However, whether or not the challenged act is unreasonable in respect to a sufficiently large number of employers to make the act unconstitutional on that ground is primarily a factual question, which can be decided only on an ample record. Plaintiffs contend that during the 1st, 2d 3rd and 4th years of the operation of Acts Nos. 323 and 552, the cost to the anthracite industry of Pennsylvania will be, respectively, $14,360,000, $16,880,000, $19,400,000 and $21,920,000. It is said that the cost to this industry in 1937 before the passage of the challenged acts was $2,600,000. Plaintiffs in their brief declare as follows: "Stated differently, under the Workmen's Compensation Act of 1915, as amended prior to 1937, the cost of workmen's compensation to the anthracite industry for the 4 years beginning with 1938, would have been $10,400,000; but under Acts Nos. 323 and 552 it would be $39,080,000. Of this amount, the employers would be obliged to pay at least $26,516,000. (The balance would be paid by the State, if, by any chance, Section 3211 of Act No. 323 and Section *Page 463
7(a)2 of Act No. 552 should be held valid.)" If these or substantially similar facts are established, it will be a question for the courts to decide whether the acts which place such a heavy burden on one of the state's major industries provide only for "reasonable compensation." The reasonableness of the compensation prescribed in these Workmen's Compensation Laws, with their multifarious provisions, must be determined, as the United States Supreme Court in Interstate Commerce Com.v. Ill. Cent. R. R.,
Act No. 323 is also challenged because it fails to measure up to the constitutional standard above mentioned, to wit, the injuries giving rise to liabilities under an avowedly "Workmen's Compensation Act," as the act under review, with its amendments, is, must be those of *Page 464
employees of the compensator and must arise "in the course of employment." Section 203 of this act imposes liability on the primary employer for injuries to the employees of subcontractors "engaged in services furthering the employer's regular business entrusted to such employee or subcontractor . . . whether said injury [to the subcontractor's employee] occurred upon premises occupied or controlled by the employer or not, provided only that the injury occurred in the course of employment." Section 203 of the Workmen's Compensation Act of1915 imposed on the general employer liability for injuries to those "laborers or an assistant hired by an employee or contractor for the performance upon such premises [italics supplied] of a part of the employer's regular business entrusted to such employee or contractor." In Qualp v. JamesStewart Co.,
It is conceded in the brief of defendant that section 302(b) of the new act permits the rejection or acceptance of the actonly as to employees who come upon the premises. The brief says: "In other words, whether the statutory employer accepted or rejected the act, in so far as the statutory employees who never come upon the premises are concerned, he could not avoid his common law liability. Thus, an election of the act would not avoid the operation of the amendment to Section 203, and cannot be considered a compulsion to accept the act." Section 303 of the new act provides that acceptance of the compensation system shall constitute a surrender by the employee of his common law rights of recovery against the general contractor. But employees of a subcontractor who have not entered upon thepremises of the general contractor have not (according to section 302(b) of the new act) accepted the compensation *Page 466 system, as between them and the general contractor. Therefore, they may invoke the liability created by section 203 and in the ensuing suit the defendant will find himself denied of all his former common law defenses, and under section 201.1 of Act No. 20, passed September 29, 1938, P. L. 52, and amending the amending Act No. 323, passed June 4, 1937, he would, if we did not adjudge most of its provisions unconstitutional (as we do hereafter), find himself confronted with the "presumption" that his "negligence caused said injury" and with the legislative fiat that "declarations, remarks and utterances made by the injured employee within twelve hours after the injury was sustained shall be admissible as competent evidence."
In Holbrook v. Wilkes-Barre,
When the Constitution says that the legislature may enact laws requiring employers to pay reasonable compensation for injuries to employees arising in the course of their employment, it gives neither to the legislature nor to the courts authority to declare injuries arising outside the course of employment, to be injuries in the course of employment. The Constitution would be a "dead letter" if its plain prescriptions could be disobeyed by perverting the Constitution's words and phrases from their true and long accepted meanings.
Section 203 of the Act of June 4, 1937, purports to be part of "an act defining the liability of an employer to pay damages for injuries received by an employee in the course of an employment, establishing an elective schedule of compensation, and providing procedure for the determination of liability and compensation thereunder." The act itself is called "The Workmen's Compensation Act." Section 203 of that act as amendedby the Act of June 4, 1937, is unconstitutional in that it goes beyond the power delegated to the legislature on this subject-matter.
Article III, section 301(b) of Act No. 323 provides that "the right to receive compensation under this act shall not be affected by the fact . . . that a minor or other employee, on account of whose injury or death the benefits are claimed, was violating any law or rule or regulation of the business or industry or a positive order of the employer at the time of the injury, except that no minor or employee shall be entitled to receive compensation under this act, who, at the time of injury, was engaged in the commission of a felony."
It requires no argument to support the proposition that any employee who is injured while violating a law or a rule or regulation of the industry is not injured "in *Page 468
the course of employment." In Shoffler v. Lehigh Valley CoalCo.,
It is contended that the word "law" as used in section 301(b) "applies only to any law or rule or regulation of thebusiness or industry"; in other words, it is contended that by "law" a state law defining crimes and misdemeanors is not meant. We cannot accept this view. The fact that the section expressly excludes felonies as a defense, shows that it was not intended to exclude misdemeanors. The word "law," as used in legislative enactments, has a well known and established meaning. It does not mean a mere rule or regulation ofbusiness. Law is defined by Blackstone, Vol. 1, sec. 44, as "a rule of civil conduct prescribed by the supreme power in a state, commanding what is right and prohibiting what is wrong." This definition has always been accepted by the courts of this Commonwealth. See Appeal of Locke,
We adjudge section 301(b) of Act No. 323 as being unconstitutional in that it goes beyond the power delegated to the legislature on this subject-matter.
Section 8 of Act No. 552, i.e., the Act of July 2, 1937, P. L. 2714, known as the "Occupational Disease Compensation Act," which is expressly made a supplement to the Workmen's Compensation Act of 1915, provides: "In any action brought after the effective date of this act in any court by an employee against his employer who has elected not to be bound by the provisions of Article III of the Workmen's Compensation Act, and such action is based upon a claim by the employee for damages for personal injury resulting from an occupational disease, proof on the part of the employee that he had been subjected to a physical examination by such employer and that he had been discharged by such employer within one year after such examination, or proof of discharge by such employer and the further fact that the employee was unable to secure other employment within six months of the date of such discharge by reason of the presence of an occupational disease in any stage, shall be prima facie evidence of negligence on the part of such employer. In any such action it shall not be a defense *Page 471 on the part of any employer — (a) That the injury was caused in whole or in part by the negligence of a fellow employee; or (b) That the employee had assumed the risk of the employment; or (c) That the injury was caused in any degree by the negligence of such employee; or (d) That the employee was exposed to the hazard of such disease in any other employment more than two years prior to the date of such action. The Statute of Limitations in any such action for personal injury resulting from an occupational disease shall commence to run from the date of the last exposure to the hazards of such disease in the employment of the defendant."
Section 201.1 of Act No. 20, approved September 29, 1938, amending Article II of the Workmen's Compensation Act of 1915, provides as follows: "In any action brought to recover damages for personal injury to an employee in the course of his employment or for death resulting from such injury, the following legal presumption, the rules for admitting certain evidence and the amount of damages which can be recovered, shall apply: (a) When injury results to an employee in the course of his employment, it shall be presumed that the employer's negligence caused said injury, which presumption may be rebutted by the employer, and both the injured employee and the employer will be permitted to introduce testimony showing the cause of said injury. The final determination in all cases shall be a question of fact for the jury. (b) When an employee sustains an injury in the course of his employment, declarations, remarks and utterances made by the injured employee within twelve hours after the injury was sustained shall be admissible as competent evidence. (c) If the jury finds that the employee's injury was caused, or contributed to, by the employer's violation or failure to observe any safety law or regulation in effect at the time of the injury, the injured employee or his dependents shall be entitled to double damages." *Page 472
The foregoing sections of the two acts referred to, both of which are parts of the Workmen's Compensation Act of 1915,as now amended, bring before us the question, inter alia, of "presumptions" and the power of the legislature to create them. The due administration of justice depends in large measure on the proper use of presumptions. For example, in a criminal case, for a court to fail to charge a jury that the defendant was presumed to be innocent until proved guilty beyond a reasonable doubt, is reversible error: Com. v. Deitrick,
The right of the legislature to create procedural presumptions has been recognized, subject to the limitation that "there is some rational connection between the fact proved and the ultimate fact presumed, and that the inference of one fact from proof of another shall not be so unreasonable as to be a purely arbitrary mandate": Mobile, J. K. C. R. R. v.Turnipseed, Admr.,
When the legislature attempts to create presumptions which are not necessary as procedural expedients and are not rules of proof production based upon the comparative availability to the respective parties, of material evidence, and are diametrically opposed to the generally known results of wide experience, such presumptions are entirely arbitrary and are therefore invalid. The presumptions legislatively created by the challenged acts clearly fall within the category just described.
Proof, as provided in section 8 of the Occupational Disease Compensation Act No. 552, (1) that an employee had been subjected to a physical examination by his employer, (2) that he had been discharged by such employer within one year after such examination, or proof (1) of discharge by such employer and (2) that he was unable to secure other employment within six months of the date of such discharge by reason of the presence of an occupational disease in any stage, furnishes no logical or reasonable basis for a prima facie inference of negligence on the part of such employer. *Page 475 Defendant argues: "Prima facie evidence of negligence is merely equivalent to an inference of negligence which disappears when contrary testimony is introduced." The answer to that is, if no contrary testimony is introduced, the prima facie evidence stands.
Likewise, proof that injury resulted to an employee in the course of his employment furnishes no logical or reasonable basis for an inference of negligence on the part of such employer, and the presumption prescribed in section 201.1 of Act No. 20 is therefore arbitrary and invalid. It is an attempt to make conjecture serve as proof. It would be equally reasonable to declare by statute that a criminal accusation is presumptive proof of guilt.3 When mere conjectures are by legislative fiat accepted in courts of justice as substitutes for facts and reasonable inferences, our trials will invite the characterization the then leader of the American Bar in 1898, Joseph H. Choate, publicly applied to the trial of Emile Zola, which had just taken place in France: "It purported to be a jury trial, but for reckless disregard of every principle of right and justice, it is without a precedent in modern history." The courts in their expositions of that fundamental guarantee of "due process of law," by which in this country
every individual's life, liberty and property are shielded, have again and again declared that the power of legislatures is limited and that the guarantee of "due process of law" operates as a practical restraint upon their arbitrary actions. It is a constitutional function of the American judiciary to protect life, liberty and property against highhanded or capricious official invasions operating under legal forms. In Ex ParteMilligan, 4 Wall. 2, the judiciary faithful to its constitutional responsibilities and heedless of the *Page 476
plea of "military necessity" saved the lives of men upon whom the penalty of death had been imposed under a procedure in formlawful but in its essence lawless. In Loan Association v.Topeka,
In Truax v. Corrigan,
In Cooley's "Constitutional Limitations" (8th ed.), Vol. 2, p. 737, it is said: " 'Due process of law' does not mean 'the general body of the law, common and statute, as it was at the time the Constitution took effect; for that would deny to the legislature the power to change or amend the law in any particular. Neither, on the other hand, does 'the law of the land' or 'due process of law' mean anything which the legislature may see fit to declare to be such; for there are certain fundamental rights, which our system of jurisprudence has always recognized, which not even the legislature can disregard in proceedings by which a person is deprived of life, liberty or property. . . . Although the legislature may at its pleasure provide new remedies or change old ones, the power is nevertheless subject to the condition that it cannot remove . . . certain fundamental rights which have been always recognized and observed in judicial procedures." Cooley quotes from Broom's Constitutional Law, page 228, as follows: "It is indeed an essential principle of the law of England, 'that the subject hath an undoubted property in his goods and possessions; otherwise there shall remain no more industry, no more justice, no more valor; for who will labor? who will hazard his person in the day of battle for that which is not his own? The Banker's Case, by Turner, 10." *Page 479
In Norman v. Heist, 5 W. S. 171, Chief Justice GIBSON of this court refers to the oath which members of the legislature have to take "to support the Constitution, which declares that no citizen shall be deprived of his life, liberty or property, unless by the judgment of his peers or the law of the land. . . . The design of the convention was to exclude arbitrary power from every branch of the government; . . . The right of property has no foundation or security but the law; and when the legislature shall successfully attempt to overturn it, even in a single instance, the liberty of the citizen will be no more."
Daniel Webster in his argument in the Dartmouth College case (4 Wheat. 519), declared: "The meaning [of the phrase, 'law of the land'] is that every citizen shall hold his life, liberty, property and immunities under the protection of the general rules which govern society. Everything which may pass under the form of an enactment is not therefore to be considered the law of the land. If this were so, . . . acts of confiscation . . . and acts directly transferring one man's estate to another . . . would be the law of the land. Such a strange construction would render constitutional provisions of the highest importance completely inoperative and void. It would tend directly to establish the union of all powers in the legislature. There would be no general, permanent law for courts to administer or men to live under. The administration of justice would be an empty form, an idle ceremony. Judges would sit to execute legislative judgments and decrees; not to declare the law or to administer the justice of the country. 'Is that the law of the land,' said Mr. Burke, 'upon which, if a man go to Westminster Hall, and ask counsel by what title or tenure he holds his privilege or estate according to the law ofthe land, he should be told, that the law of the land is not yet known; that no decision or decree has been made in his case; that when a decree shall be passed, he will then knowwhat the law of the land is? *Page 480 Will this be said to be the law of the land, by any lawyer who has a rag of a gown left upon his back, or a wig with one tie upon his head?' "
The following cases typify the protection the United States Supreme Court has accorded persons who invoked the due process clause of the federal 14th Amendment. In Pierce, Governor ofOregon, v. The Society of Sisters,
In the light of reason and of these authoritative cases, we have no hesitancy in declaring section 8 of Act No. 552, i. e., the Act of July 2, 1937, P. L. 2714, the "Occupational Disease Act," and section 201.1, subsection A of Act No. 20, approved September 29, 1938, amending Art. II of the Workmen's Compensation Act of 1915, invalid, as contravening (1), section 9 of Article I, the Bill of Rights, of the Constitution of this Commonwealth, which section declares, inter alia, that no person can "be deprived of his life, liberty or property unless by the judgment of his peers or the law of the land," and (2) the 14th Amendment to the Constitution of the United States which declares, inter alia, that no state shall "deprive any person of life, liberty or property without due process of law, nor deny to any person within its jurisdiction the equal protection of the laws."
We will now consider subsection B of section 201.1 of Act No. 20 (supra) which provides that "when an employee sustains an injury in the course of his employment, declarations, remarks and utterances made by the injured employee within 12 hours after the injury was sustained shall be admissible as competent evidence."
This is an extraordinary provision and nothing like it has ever before been placed on the statute books of Pennsylvania. If there is any such statute in any other state, it is not cited in the comprehensive brief of counsel who are attempting to uphold the challenged acts. The provision quoted (201.1 B) means that anything an injured *Page 482
employee says within 12 hours after the injury, to anybody, shall be adjudged "competent evidence" in any action brought to recover damages for personal injury to that employee. Even though the injured employee be living at the time his action is tried his "within-12-hours" declaration is "competent evidence." This is so whether he takes the witness stand or whether he does not. Even though A, the employee, wilfully made to B, a false statement about the injury or its cause and the false statement was repeated in court by B, neither could be prosecuted for perjury, for A did not make his statement under oath and B only repeated under oath what A had told him. A might not even be present in court when his case was tried. He might absent himself beyond the jurisdiction of the court and depend on his attorney "making out a case" for him by calling witnesses to whom he had made declarations within twelve hours after the injury. Under those circumstances A could not even be called "as for cross-examination" and interrogated about his "within-12-hours" statements, and if he had died, it would mean that "evidence" was received which, while not possessing the avouchment of truthfulness which the solemnity of dying declarations and the spontaneity of a res gestæ declaration provide, was also not subjected to the test of cross-examination. Courts have repeatedly held that cross-examination is not a privilege but a right. Chief Justice GIBSON said in Bank v. Fordyce,
The section in question does not require that "declarations, remarks and utterances," which are statutorily declared to be "competent evidence," relate to the injury. For all that appears in the act, they might consist of a prejudicial attack on the employer-plaintiff. Ex parte declarations made by an employee "within 12 hours after the injury" have no probative value whatsoever, for (1) they are not made under the safeguard of an oath, (2) they do not possess the spontaneity of res gestæ declarations, these latter being "a spontaneous and sincere response to the actual sensations and perceptions produced by the shock," and made before considerations of self-interest have had an opportunity to affect the statements of the victim (see Com. v. Fugmann,
Wigmore (sec. 4, Vol. 1, Evidence, 2d ed.) points out that "the rules of admissibility are in general the same for the trial of civil and of criminal cases. Not only in practice, but in principle and in spirit, there is no occasion for a distinction. The relation between the evidentiary fact and a particular proposition is always the same." Suppose the "proposition" to be established by legal evidence was that B committed a certain crime? What would the people think of a statute which made "competent evidence" against B, something A had said within 12 hours after the alleged crime and which was not said under the sanctity of an oath, and subject to the test of cross-examination, and was not said under circumstances which made it a dying declaration or a res gestæ declaration? The framers of the Constitution were so fearful of even the possibility of such a thing that they provided in the Bill of Rights (sec. 9) that in all criminal prosecutions the accused "has a right to meet the witnesses face to face." It was apparently never contemplated by those who framed and the people who adopted the Constitution that in civil actions (in which vastly more persons are directly concerned than are concerned as defendants in criminal cases), it was necessary to safeguard against arbitrary legislative action long-established rules of evidence other than in the general language of the Constitution which provides that "trial by jury shall be as heretofore" and that no person can be deprived of life, liberty or property ". . . unless by the law of the land" (sections 6 and 9, respectively, of the Bill of Rights).
Not only does the section in question attempt to clothe with the attribute of probative value something which *Page 485 has none, but it possesses from the constitutional point of view an even more obviously fatal defect in that (1) it appliesonly to actions for damages in which "employees injured in the course of employment" are plaintiffs. All other plaintiffs in actions for damages, such as, e. g., the tens of thousands of victims of automobile accidents, cannot invoke this section in behalf of the "competency" of "declarations, remarks and utterances made" by them "within twelve hours after" their injuries were sustained; (2) even in actions for damages brought by "employees injured in the course of employment," the benefit of this radical rule of evidence prescribed by section 201.1 B is denied to the defendant. There has never come to our attention any other instance of a lawmaking body attempting toopen the door of "loose hearsay testimony" for the benefit ofone party to litigation while keeping it closed to the other. Because of the discriminatory character of this rule, if there was no other reason, the section creating it is invalid.
We recognize the right of the legislature to create or alter rules of evidence. But this power is subject to these limitations: (1) It is at least doubtful if the legislature can, under the guise of creating a "rule of evidence," make something evidence which is in fact not evidence, (2) If in fact the legislature is attempting to regulate a rule of evidence, "its regulation must be impartial and uniform": Cooley on Constitutional Limitations, 8th ed., Vol. 2, p. 768. That learned jurist said further (p. 769): "In judicial investigations the law of the land requires an opportunity for a trial, and there can be no trial if only one party is suffered to produce his proofs." The corollary of this is that there "can be no trial" in the proper acceptation of that word, if one party is permitted to introduce "hearsay testimony," and the opposing party is not. Judge COOLEY'S statement of the principle above cited was reiterated by the Supreme Court of Kansas in Missouri, K. T. Ry. Co. *Page 486 v. Simonson et al., 68 P. 653. That case decided that a state law which makes the specification of weights in bills of lading issued by railroad companies for hay, grain, etc., shipped over their lines conclusive evidence of the correctness of such weights, is unconstitutional because denying to the companies due process of law, and because wrongfully depriving the courts of the judicial power to determine the weight and sufficiency of evidence.
The legislature cannot make any fact conclusive proof of a fact in issue.4 While there is, of course, a logical distinction between making a fact conclusive proof of a fact in issue and making an unsworn utterance of an injured employee "competent evidence," in support of his claim, yet in practical effect this latter provision makes a finding of an employer's fault almost inevitable from the mere fact of an employee's injury. In respect to a large percentage of injuries to employees there are no witnesses except the employee himself; therefore, ifanything he says to any person or persons within 12 hours of his injury is to be received in court as competent evidence, an employer's right of rebuttal would be practically valueless, and he would scarcely be in a more helpless position to defend himself against liability if the legislature decreed that the mere fact of an employee's injury should be taken as conclusiveproof of his employer's fault.
Section 201.1 B of Act 20 not only contravenes the principle that rules of evidence must be uniform and impartial, it also breaches that provision of section 7 of Article III of the State Constitution, reading as follows: "The General Assembly shall not pass any local or special law . . . regulating the rules of evidence in any judicial proceeding or inquiry before courts. . . ." *Page 487
In support of the constitutionality of paragraph B of section 201.1 of Act No. 20, counsel for the defendant cites the case of Com. v. Newhart,
We adjudge paragraph B of section 201.1 of Act No. 20, approved September 29, 1938, to be invalid for its lack of uniformity and impartiality as a rule of evidence and because it is "special legislation" which contravenes section 7 of Article III of the State Constitution and because it is a denial of "equal protection of the laws" guaranteed by the 14th Amendment to the Constitution of the United States.
The members of this court are in complete accord with the social policy underlying Workmen's Compensation Acts. As Attorney General Bard said in his brief filed in this case: "No provision of any compensation act ever passed in Pennsylvania has ever been held unconstitutional and the basic validity of this act was upheld in Anderson v. Carnegie Steel Corp.,
The reasonableness of the compensation provided for in the Workmen's Compensation Act of 1915 has never *Page 490
been questioned. However, when the rates and periods of compensation have been materially increased, and persons affected thereby have challenged these new statutes as unreasonable and otherwise invalid, it becomes the duty of the judiciary to pass on their constitutionality. The question of the reasonableness of compensation is analogous to the question of the reasonableness of rates permitted to be charged by railroads and public utility corporations. If the rates fixed by state administrative bodies prevent an adequate return on investment, they are adjudged to amount to a confiscation of the company's capital and property, and therefore to a denial of due process of law. As Justice CARDOZO said in West Ohio GasCo. v. Public Utilities Commission of Ohio (No. 1),
The reasonableness of the compensation prescribed by statute must be determined by a consideration of the requirements of both employee and employer. The burden on the employer is not determined simply by the rate of compensation but by compensation multiplied by the number of times it has to be paid. A rate of compensation which would be a negligible burden to a great industry in which there were a comparatively small number of employees injured annually might be a crushing *Page 491 burden to an equally great industry in which there were a comparatively large number of employees injured during an equal period of time. In judging the weight of the present and future economic burden of a compensation law, the past records of injuries in the industries affected must be one of the guides. Compensation rates which would be a light burden on industries in State "A" whose major industries offered mainlynonhazardous employment, might be an intolerably heavy burden in State "B" whose major industries offered mainlyextra-hazardous employment. This is illustrated in the table appended below5 showing pertinent statistics in respect (1) to the automobile industry in the State of Michigan, and (2) to the coal industry in the State of Pennsylvania for the year1938. In Michigan's major industry, automobile manufacturing, there were in 1938 only 14 fatal accidents; in Pennsylvania's major industry (or, at least, one of its major industries), coal mining, there were during the same period 332 fatal accidents. Even if the rates of compensation in any two states are anywhere near the same, that fact standing alone would throw little or no light on the problem of the reasonableness of the compensation here provided by a Workmen's Compensation Law. Just as in physics, momentum means mass multiplied by velocity, so the "momentum" with which a Workmen's Compensation Law bears down on industry depends on the compensation prescribed in individual cases multiplied by the number of cases in which the prescribed compensation is translated into dollars to be paid out of the product of the industry affected. *Page 492
If the compensation required by statute in Pennsylvania makes it impossible for Pennsylvania industries employing wage earners to continue to operate with a reasonable return on the property invested, such a compensation law would have to be adjudged unreasonable as respects those industries. If they normally employ a sufficient number of wage earners to make the destruction of those industries substantially harmful to the body economic of this Commonwealth, the statute in question would have to be adjudged as failing to meet the standard of reasonableness prescribed by Article III, section 21 of the Constitution. One of the most profoundly philosophical of statesmen, Edmund Burke, once said: "Every law which obstructs property is . . . in proportion to the force and extent of the obstruction, a discouragement to industry." (See footnote 6 at end of opinion.)6
Except (1) the provision, section 203, of the Act of June 4,1937, P. L. 1552, which makes an employer liable to the employees of subcontractors for injuries to such employees in the course of employment whether said injury occurred upon premises occupied or controlled by the employer or not, and except (2) that part of paragraph B of section 301 of the sameact which provides that violation of "any law or rule or regulation of the business or industry or a positive order of the employer at the time of the injury" shall not affect the employee's "right to receive compensation," and except (3)section 8 of Act No. 552, approved July 2, 1937, P. L.2714, down to and including the phrase "shall be prima facieevidence of negligence on the part of such employer," and except (4) subsection "D" of section 8 of that act, which subsection "D" arbitrarily limits the factual defense which "due process of law" requires should be open to the defendant for whatever it may be worth as evidence, and except (5) the major portions of the Act of September 29, 1938, P. L. 52, (ActNo. 20), to wit: Section 201.1 and subsections A and B next following section *Page 493
201.1, and except (6) that provision of section 437 of Act No.323 which authorizes a lay member of a labor union to represent a claimant in litigating his claim (which provision Attorney General Bard in his oral argument conceded to be invalid), the Workmen's Compensation Acts of June 4, 1937, P. L. 1552, and July 2, 1937, P. L. 2714, and Act No. 20, approved September 29, 1938, P. L. 52, are not adjudged to be unconstitutional, but the questions as to the reasonableness of the compensation prescribed by them and as to the validity otherwise of their several provisions are left open for future judicial determination in appropriate proceedings in the court below, and on any appeal which may follow. All of the sections and subsections and provisions under the foregoing exceptions indicated as 1, 2, 3, 4 and 5, are by us unanimously adjudged to be invalid as contravening the Constitutions both of Pennsylvania and of the United States, as herein pointed out. Six is invalid under our decision in Shortz et al. v. Farrell,
It should be noted that 3, 4 and 5, of these six excepted sections and provisions adjudged invalid relate solely toactions at law by employees against employers who, availing themselves of the elective rights accorded them by section 302 of the Workmen's Compensation Act of 1915, and amendments thereto, have in due form declared that the provisions of Article III of that act do not apply to the contracts of hiring made by them.
In defendant's paper book appears the following incontrovertible statement: "The system of workmen's compensation afforded to employers by the reënacted Workmen's Compensation Act and the 'Occupational Disease Compensation Act' is purely elective." It follows that if employers regard the compensation prescribed in Article III and its amendments and supplements as unreasonable and as casting upon them and *Page 494 their industries an insupportable burden, they cannot, for exercising their right of rejection, be penalized by having their constitutional rights as defendants in actions at law taken away from them or abridged, for whatever rights are guaranteed them by the Constitution of Pennsylvania or by the Constitution of the United States are beyond the reach of legislative power.
The record is remitted to the court below for further proceedings in accordance with this opinion. *Page 495 *Page 496 *Page 497
The plaintiffs, and the several intervening plaintiffs, filed a petition for reargument, in which the attorney general joined, praying the court to dispose of questions raised concerning the validity of sections 321 and 502 of the Act of June 4, 1937, P. L. 1552.
"(b) One-fourth of the amount received in each case under this section by the department, but, not, however, in excess of two hundred and fifty dollars ($250.00), shall be paid by it into the Federal Rehabilitation Fund of the State Treasury, through the Department of Revenue, which amount shall be credited to a ledger account to be known as the industrial rehabilitation account. . . .
"(c) The balance of any amount received by the department under this section shall be paid by it into the State Workmen's Insurance Fund of the State Treasury, through the Department of Revenue, which amount shall be credited to a ledger account to be known as the second injury reserve account. All amounts credited to the second injury reserve account are hereby appropriated to the department for the payment of the compensation provided in clause (g) of section three hundred and six of this act. . . ."
Auto Workers
Michigan . . . . 226,327 $1,250,000,000 14 3,119
Mine Workers
Pennsylvania 213,831 $400,000,000 332 17,459
"MINING"
"Taxation and Workmen's Compensation rates appear to be two factors extremely harmful to both the anthracite and bituminous coal industries. . . . Both of these industries are in a desperate plight, probably worse than any other in the state. There is little question that wholesale bankruptcy faces this industry unless relief is forthcoming in the near future. Here is an industry which cannot physically migrate, but in the case of bituminous coal, its production can migrate. The operator who has coal lands in this and other states can shift his market from Pennsylvania. In the case of anthracite, no migration can take place but substitutes can replace this fuel and are doing so."
"ANTHRACITE"
". . . The anthracite industry is equipped to produce 80,000,000 tons a year (normal production some years ago) but can now market only about 50,000,000 tons. In ten years during which this decline in production took place, the domestic consumption of coke has increased 400% and of fuel oil 1200%. These substitutes are slowly robbing anthracite coal of its market. The working capital of this industry has declined in the last twelve (12) years from $110,000,000 to less than $9,000,000. . . . The operators contended that the 1937 Workmen's Compensation Act increased compensation costs approximately 107% (variations from 102% to 110%). Experience seems to indicate that the increase is about 110%. This increase does not include occupational disease compensation. The total increase, exclusive of occupational disease, is estimated by operators at $2,600,000 a year, as measured with the year 1934. This increase is due to the provisions of the 1937 compensation act which (a) increases the period for payment of compensation to dependents, (b) increases the period for payment of compensation for partial disability, and (c) increases the minimum compensation from $7 to $12 per week.
"The statement was made that operators producing more than one-half of the anthracite coal have rejected the new compensation act. More recent reports indicate this percentage has increased materially. The feeling prevails that it is cheaper to submit to suits for damages, without common law defenses, than to pay compensation under present laws. But such a procedure on the part of the small operator is deemed highly dangerous in case of a serious accident. Cases are now being settled at common law, without suit, on the basis of the former compensation law and agreements with miners to such a procedure is in force at some mines. Smaller companies are banding together in an endeavor to secure catastrophe insurance.
"When occupational disease compensation is fully operative, it is estimated by operators this will add another $2,600,000 to compensation costs. It is said that 23% of all anthracite employees are anthraco-silicotic and potential claimants under the occupational disease act.
"Illustrations of increases in compensation costs were laid before the committee in the form of actual bills rendered. These increases over rates for the year 1934 varied from $10.00 to $12.00, for each $100.00 payroll. In one case total compensation rates, exclusive of occupational disease, run as high as $30.00 per $100.00 of payroll.
"One operator testified he closed down one mine on account of this compensation cost and was going to close another in a few days, placing more families on relief. One witness, not an operator, referred to these compensation rates as 'suicidal' to the community, since the largest element of cost in a ton of anthracite coal is labor. The labor cost of producing a ton of coal is many times greater than the labor cost of producing an equal of BTU's of oil or coke. Compensation costs are consequently out of all proportion to those paid by producers of competing substitutes. . . ."
"BITUMINOUS"
"The picture in the bituminous coal region is substantially the same as in the anthracite region. One mine employing 250 men in 1937 is delinquent in local taxes to the extent of $49,000 without calculating interest and penalties. This company has working capital of less than $35,000. Another mine employing 200 men owes $36,000, in local taxes and still another employing 150 men, $30,000. These companies are all in bankruptcy. They complain they 'can no longer meet West Virginia competition and depression prices.' These miners all face sales for delinquent real estate taxes.
"The thought was expressed that these mines might be rehabilitated if the state would lend 'a helpful hand by authorizing resettlement or compromise of taxes that have accrued during the years of the depression. We simply can't pay our taxes, we can't do it.'
"But even if a rehabilitation were attempted it was contended that existing taxes, compensation rates and wages made continuing operation difficult and perhaps impossible. Some operators have closed down Pennsylvania mines but are operating in West Virginia.
"One witness stated that wage rates in West Virginia were eight (.08) cents a ton less than in Pennsylvania, taxes eight (.08) cents a ton less, and Workmen's Insurance from a minimum of eight (.08) to twelve (.12) cents a ton less, one witness made the differential sixteen (.16) cents a ton.
"While Pennsylvania production has lost in production approximately 80,000,000 tons in fifteen years, West Virginia has increased its tonnage 60,000,000 tons in this same period. . . .
"CLAY MINING AND MANUFACTURING"
"The only evidence produced relative to clay mining and manufacturing consisted of protests against the new compensation rates. One representative offered the following comparisons of old and new rates per $100 of payroll.
Old Rate New Rate
Clay mining .............. $5.712 $9.991 Clay manufacturing ....... 2.142 3.502
"The compensation costs on mining are alleged to amount to .20 cents a ton and on manufacturing .10 cents a ton. These two costs amount to 10% of the selling price, and are alleged to affect the production of Pennsylvania clay.
. . . . . . . . . . . . .
". . . Five companies contacted recently which desire to locate in the Harrisburg area, in each case, after careful consideration assigned taxes, compensation or restrictive labor legislation or all of them as making the location of industry here impossible. . . .
"At the Philadelphia hearing, your committee heard from representatives of the Chamber of Commerce and representatives of manufacturers of rayon, farm implements and sleds, radios, textiles, carpets, cleaning and dyeing, steel shafting pulleys and pressed metal products, fertilizers and chemicals, technical instruments, iron products, automobile tires and paper boxes, in the Philadelphia area. Much direct testimony was given by which the harmful effects of Pennsylvania tax, compensation and other legislation was portrayed. . . .
"Restrictive or burdensome taxation is a deterrent to the location of any new industry and by its unsystematic burden on invested capital drives out working capital leading to lessened production and ultimate bankruptcy followed by greater unemployment. . . .
"The Commission recommends a complete and comprehensive study of workmen's compensation costs. The compensation set-up from the establishment of rates to the final disposition of cases is in need of complete revision. It is admitted that the coal industry in Pennsylvania carries the largest load of compensation costs and that a definite limitation should be placed upon the amount that can be charged for compensation on a per ton basis or a percentage basis similar to that in other States, thereby giving the coal industry an opportunity to successfully compete with coal operators in other States and aid in the rehabilitation of Pennsylvania as a mining state."
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7 A.2d 302, 334 Pa. 449, 1939 Pa. LEXIS 659, Counsel Stack Legal Research, https://law.counselstack.com/opinion/rich-hill-coal-company-v-bashore-pa-1939.