The Washington Workmen's Compensation Act, as originally
enacted, Laws 1911, c. 74, establishes a state fund for the
compensation of workmen injured, and the dependents of workmen
killed, in employments classed as hazardous; abolishes, except in a
few specified cases, the action at law by employee against employer
for damages due to negligence, and deprives the courts of
jurisdiction over such controversies. It is obligatory upon both
employers and employees. The fund is made the sole source of
compensation, and is supplied by assessments upon each employer of
definite percentages of his total
Page 243 U. S. 220
payroll. It classifies industries in groups, and aims to adjust
the percentage for each group, according to hazard, declaring this
the most accurate and equitable method and promising future
readjustments by the legislature of both classification and
percentages to fit experience. The contributions of each group form
a separate account or sub-fund, applicable to no other demands for
compensation than those arising in the industries composing that
group. Contributions, after the first, are not to exceed what is
necessary to meet actual losses in the group for which they are
exacted. The act expressly saves all actions and causes existing
when it took effect, as between employers and employees, some
months after its passage.
Held:
(1) The act not being valid against employers if not valid as
against employees, an employer may question its constitutionality
in both aspects.
(2) Viewed from the standpoint of employees, the act is the same
in principle as the act sustained in
New York Central R. Co. v.
White, ante, 243 U. S. 188.
(3) The act is not objectionable upon the ground that, in
violation of the Seventh Amendment, it does away with trial by jury
in the federal courts, since it does not undertake to interfere
with that mode of trial in respect of private rights of action
which are preserved, but abolishes for the future all right of
recovery as between employer and employee in the cases which it
covers, leaving nothing for trial by jury either in the state or in
the federal courts.
(4) Taking effect
in futuro and expressly preserving
intervening causes of action, the act disturbs no vested
rights.
(5) In requiring employers to make payments to the state fund
for the compensation of injured employees and the dependents of
those killed, without regard to fault, the act does not deprive
employers of their property, or of their liberty to acquire it, in
violation of the Fourteenth Amendment, provided the compensation be
not excessive and unreasonable, and provided the burden be fairly
distributed among the employers included in the industries
affected.
(6) In the absence of any showing to the contrary, the
compensation provided by the act may be regarded as not
unreasonable; this is not to say, however, that any scale of
compensation, however insignificant on the one hand or onerous on
the other, would be supportable; any question of that kind may be
met when it arises.
(7) As for the scheme for distributing the burden among
employers, the method of applying percentages to payrolls, in view
of the legislative declaration of its accuracy and fairness, cannot
be deemed arbitrary if the percentages be fair, and although in
this act the percentages seem high, it is plain that, as to each
group of industries,
Page 243 U. S. 221
the assessments, after the initial payments, will be limited to
the amounts necessary to meet the losses arising in and chargeable
to that group.
(8) The declarations of the act should be accepted as further
evidence of an intelligent effort to limit the burden to the
requirements of each industry.
(9) Since the question whether a state law deprives of a right
secured by the Constitution depends not upon how the law is
characterized, but upon its practical operation and effect, and
since the Constitution does not require a separate exercise of the
state powers of regulation and taxation, the crucial question is
whether this legislation, be it regarded as an exercise of the
power of regulation or a combination of regulation and taxation,
clearly appears to be not a fair and reasonable exertion of
governmental power, but so extravagant or arbitrary as to
constitute abuse of power.
A state, in the exercise of its power to pass such legislation
as reasonably is deemed necessary to promote the health, safety,
and general welfare of its people, may regulate the carrying on of
all those industrial occupations that frequently and inevitably
produce personal injuries and disability, with consequent loss of
earning power among employees and occasional loss of life of those
upon whom others are dependent for support, and may require that
these human losses be charged against the industry, either directly
or by publicly administering the compensation and distributing the
cost among the industries affected by means of a reasonable system
of occupation taxes.
In the absence of any particular showing of erroneous
classification, the evident purpose of an act to classify various
occupations according to the respective hazard of each is
sufficient answer to any contention that the act improperly
distributes the burdens among the several industries.
One who is engaged in the business of logging timber, operating
a logging railroad, and operating a saw mill with power-driven
machinery is not in a position to question the validity of a
classification of other businesses as hazardous.
The provision in § 4 of the Washington Workmen's Compensation
Law making it a misdemeanor for any employer to deduct any part of
the premium from the wages or earnings of his employees will not be
construed, in the absence of any constraining state construction,
so broadly as to prohibit employers and employees, in agreeing upon
terms of employment, from taking into consideration the fact that
the employer is a contributor to the state fund, and the resulting
effect of the act upon the rights of the parties.
Page 243 U. S. 222
The case is stated in the opinion.
Page 243 U. S. 227
MR. JUSTICE Pitney delivered the opinion of the Court.
This was an action brought by the state against plaintiff in
error, a corporation engaged in the business of logging timber and
operating a logging railroad and a sawmill having power-driven
machinery, all in the State of Washington, to recover under c. 74
of the Laws of 1911, known as the Workmen's Compensation Act,
certain premiums based upon a percentage of the estimated payroll
of the workmen employed by plaintiff in error during the three
months beginning October 1, 1911. Plaintiff in error by demurrer
raised objections to the act based upon the Constitution of the
United States.
Page 243 U. S. 228
The Supreme Court of Washington overruled them and affirmed a
judgment in favor of the state, 75 Wash. 581, following its
previous decision in
State ex rel. Davis-Smith Co. v.
Clausen, 65 Wash. 156, and the case comes here under § 237,
Judicial Code.
The act establishes a state fund for the compensation of workmen
injured in hazardous employment, abolishes, except in a few
specified cases, the action at law by employee against employer to
recover damages on the ground of negligence, and deprives the
courts of jurisdiction over such controversies. It is obligatory
upon both employers and employees in the hazardous employments, and
the state fund is maintained by compulsory contributions from
employers in such industries, and is made the sole source of
compensation for injured employees and for the dependents of those
whose injuries result in death. We will recite its provisions to an
extent sufficient to show the character of the legislation.
The first section contains a declaration of policy, reciting
that the common law system governing the remedy of workmen against
employers for injuries received in hazardous work is inconsistent
with modern industrial conditions, and in practice proves to be
economically unwise and unfair; that the remedy of the workman has
been uncertain, slow, and inadequate; that injuries in such
employments, formerly occasional, have become frequent and
inevitable, and that the welfare of the state depends upon its
industries, and even more upon the welfare of its wage workers.
"The State of Washington, therefore, exercising herein its
police and sovereign power, declares that all phases of the
premises are withdrawn from private controversy, and sure and
certain relief for workmen, injured in extra hazardous work, and
their families and dependents is hereby provided regardless of
questions of fault and to the exclusion of every other remedy,
proceeding, or compensation, except as otherwise provided in
this
Page 243 U. S. 229
act, and to that end all civil actions and civil causes of
action for such personal injuries and all jurisdiction of the
courts of the state over such causes are hereby abolished, except
as in this act provided."
The second section, declaring that, while there is a hazard in
all employment, certain employments are recognized as being
inherently constantly dangerous, enumerates those intended to be
embraced within the term "extra hazardous," including factories,
mills, and workshops where machinery is used, printing,
electrotyping, photoengraving and stereotyping plants where
machinery is used; foundries, blast furnaces, mines, wells, gas
works, waterworks, reduction works, breweries, elevators, wharves,
docks, dredges, smelters, powder works, logging, lumbering, and
shipbuilding operations, logging, street, and interurban railroads,
steamboats, railroads, and a number of others, at the same time
declaring that, if there be or arise any extra hazardous occupation
not enumerated, it shall come under the act, and its rate of
contribution to the accident fund shall be fixed by the department
created by the act upon the basis of the relation which the risk
involved bears to the risks classified, until the rate shall be
fixed by legislation. The third section contains a definition of
terms, and, among them:
"'Workman' means every person in this state who, after September
30, 1911, is engaged in the employment of an employer carrying on
or conducting any of the industries scheduled or classified in
section 4, whether by way of manual labor or otherwise, and whether
upon the premises or at the plant, or, he being in the course of
his employment, away from the plant of his employer,"
with a proviso giving to a workman injured while away from the
plant through the negligence or wrong of another not in the same
employ, or, if death result from the injury, to his widow,
children, or dependents, an election whether to take under the act
or to seek a remedy against the third party. "Injury"
Page 243 U. S. 230
is defined as an injury resulting from some fortuitous event, as
distinguished from the contraction of disease.
Section 4 contains a schedule of contribution, reciting that
industry should bear the greater portion of the burden of the cost
of its accidents, and requiring each employer prior to January 15th
of each year to pay into the state treasury, in accordance with the
schedule, a sum equal to a percentage of his total payroll for the
year, "the same being deemed the most accurate method of equitable
distribution of burden in proportion to relative hazard." The
application of the act as between employers and workmen is made to
date from the first day of October, 1911, the payment for that year
to be made prior to that date and upon the basis of the payroll of
the last preceding three months of operation. At the end of each
year, an adjustment of accounts is to be made upon the basis of the
actual payroll. The schedule divides the various occupations into
groups, and imposes various percentages upon the different groups,
the lowest being 1 1/2% in the case of the textile industries,
creameries, printing establishments, etc., and the highest being
10% in the case of powder works. The same section establishes 47
different classes of industry, and declares:
"For the purpose of such payments, accounts shall be kept with
each industry in accordance with the classification herein provided
and no class shall be liable for the depletion of the accident fund
from accidents happening in any other class. Each class shall meet
and be liable for the accidents occurring in such class. There
shall be collected from each class as an initial payment into the
accident fund as above specified on or before the 1st day of
October, 1911, one fourth of the premium of the next succeeding
year, and one twelfth thereof at the close of each month after
December, 1911: Provided, any class having sufficient funds
credited to its account at the end of the first three months or any
month thereafter, to meet
Page 243 U. S. 231
the requirements of the accident fund, that class shall not be
called upon for such month. In case of accidents occurring in such
class after lapsed payment or payments, said class shall pay the
said lapsed or deferred payments, commencing at the first lapsed
payment, as may be necessary to meet such requirements of the
accident fund. The fund thereby created shall be termed the
'accident fund,' which shall be devoted exclusively to the purpose
specified for it in this act.
In that the intent is that the
fund created under this section shall ultimately become neither
more nor less than self-supporting, exclusive of the expense of
administration, the rates in this section named are subject to
future adjustment by the legislature, and the classifications to
rearrangement following any relative increase or decrease of hazard
shown by experience. * . . . If, after this act shall
have come into operation, it is shown by experience under the act,
because of poor or careless management, any establishment or work
is unduly dangerous in comparison with other like establishments or
works, the department may advance its classification of risks and
premium rates in proportion to the undue hazard. In accordance with
the same principle, any such increase in classification or premium
rate shall be subject to restoration to the schedule rate. . . .
If, at the end of any
Page 243 U. S. 232
year, it shall be seen that the contribution to the accident
fund by any class of industry shall be less than the drain upon the
fund on account of that class, the deficiency shall be made good to
the fund on the first day of February of the following year by the
employers of that class in proportion to their respective payments
for the past year."
Section 5 contains a schedule of the compensation to be awarded
out of the accident fund to each injured workman, or to his family
or dependents in case of his death, and declares that, except as in
the act otherwise provided, such payment shall be in lieu of any
and all rights of action against any person whomsoever. Where death
results from the injury, the compensation includes the expenses of
burial, not exceeding $75 in any case, a monthly payment of $20 for
the widow or invalid widower, to cease at remarriage, and $5 per
month for each child under the age of sixteen years until that age
is reached, but not exceeding $35 in all, with a lump sum of $240
to a widow upon her remarriage; if the workman leaves no wife or
husband, but a child or children under the age of sixteen years,
there is to be a monthly payment of $10 to each child until that
age is reached, but not exceeding a total of $35 per month; if
there be no widow, widower, or child under the age of sixteen
years, other dependent relatives are to receive monthly payments
equal to 50% of the average monthly support actually received by
such dependent from the workman during the twelve months next
preceding his injury, but not exceeding a total of $20 per month.
For permanent total disability of a workman, he is to receive, if
unmarried, $20, or, if married, $25 per month, with $5 per month
additional for each child under the age of sixteen years, but not
exceeding $35 per month in all. (Section 7 provides that the
monthly payment, in case of death or permanent total disability,
may be converted into a lump sum payment, not in any case exceeding
$4,000, according to the expectancy
Page 243 U. S. 233
of life.) For temporary total disability, there is a somewhat
different scale, compensation to cease when earning power is
restored. For permanent partial disability, the workman is to
receive compensation in a lump sum equal to the extent of the
injury, but not exceeding $1,500.
By § 6, if injury or death results to a workman from his
deliberate intention to produce it, neither he nor his widow,
child, or dependents shall receive any payment out of the fund. If
injury or death results to a workman from the deliberate intention
of the employer to produce it, the workman or his widow, child, or
dependent shall have the privilege to take under the act, and also
have a cause of action against the employer for any excess of
damage over the amount receivable under the act.
By § 19, provision is made for the adoption of the act by the
joint election of any employer and his employees engaged in works
not extra hazardous. By § 21, the Industrial Insurance Department
is created, consisting of three commissioners. By § 20, a judicial
review is given, in the nature of an appeal to the superior court
from any decision of the department upon questions of fact or of
the proper application of the act, but not upon matters resting in
the discretion of the department. Other sections provide for
matters of detail, and § 11 renders void any agreement by employer
or workman to waive the benefit of the act.
From this recital, it will be clear that the fundamental purpose
of the act is to abolish private rights of action for damages to
employees in the hazardous industries (and in any other industry at
the option of employer and employees), and to substitute a system
of compensation to injured workmen and their dependents out of a
public fund established and maintained by contributions required to
be made by the employers in proportion to the hazard of each class
of occupation.
Page 243 U. S. 234
While plaintiff in error is an employer, and cannot succeed
without showing that its constitutional rights as employer are
infringed (
Plymouth Coal Co. v. Pennsylvania, 232 U.
S. 531,
232 U. S. 544;
Jeffrey Mfg. Co. v. Blagg, 235 U.
S. 571,
235 U. S.
576), yet it is evident that the employer's exemption
from liability to private action is an essential part of the
legislative scheme, and the
quid pro quo for the burdens
imposed upon him, so that, if the act is not valid as against
employees, it is not valid as against employers.
However, so far as the interests of employees and their
dependents are concerned, this act is not distinguishable in any
point raising a constitutional difficulty from the New York
Workmen's Compensation Act, sustained in
New York Central R.
Co. v. White, 243 U. S. 188. It
is true that, in the Washington act, the state fund is the sole
source from which the compensation shall be paid, whereas the New
York act gives to the employer an option to secure the compensation
either through state insurance, insurance with an authorized
insurance corporation, or by a deposit of securities with the State
Commission. But we find here no ground for a distinction
unfavorable to the Washington law.
So far as employers are concerned, however, there is a marked
difference between the two laws, because of the enforced
contributions to the state fund that are characteristic of the
Washington act, and it is upon this feature that the principal
stress of the argument for plaintiff in error is laid.
Two of the constitutional objections may be disposed of briefly.
It is urged that the law violates § 4 of Article IV of the
Constitution of the United States, guarantying to every state in
the Union a republican form of government. As has been decided
repeatedly, the question whether this guaranty has been violated is
not a judicial, but a political, question, committed to Congress,
and not to the courts.
Luther v.
Borden, 7 How. 1,
48 U. S. 39,
48 U. S. 42;
Pacific
Page 243 U. S. 235
States Telephone & Telegraph Co. v. Oregon,
223 U. S. 118;
Kiernan v. Portland, 223 U. S. 151;
Marshall v. Dye, 231 U. S. 250,
231 U. S. 256;
Davis v. Ohio, 241 U. S. 565.
The Seventh Amendment, with its provision for preserving the
right of trial by jury, is invoked. It is conceded that this has no
reference to proceedings in the state courts (
Minneapolis &
St. Louis R. Co. v. Bombolis, 241 U.
S. 211,
241 U. S.
217), but it is urged that the question is material for
the reason that, if the act be constitutional, it must be followed
in the federal courts in cases that are within its provisions. So
far as private rights of action are preserved, this is no doubt
true, but with respect to those we find nothing in the act that
excludes a trial by jury. As between employee and employer, the act
abolishes all right of recovery in ordinary cases, and therefore
leaves nothing to be tried by jury.
The only serious question is that which is raised under the "due
process of law" and "equal protection" clauses of the Fourteenth
Amendment. It is contended that, since the act unconditionally
requires employers in the enumerated occupations to make payments
to a fund for the benefit of employees, without regard to any
wrongful act of the employer, he is deprived of his property, and
of his liberty to acquire property, without compensation and
without due process of law. It is pointed out that the occupations
covered include many that are private in their character, as well
as others that are subject to regulation as public employments, and
it is argued that, with respect to private occupations (including
those of plaintiff in error), a compulsory compensation act does
not concern the interests of the public generally, but only the
particular interests of the employees, and is unduly oppressive
upon employers, and arbitrarily interferes with and restricts the
management of private business operations.
The statute, although approved March 14, 1911, took effect as
between employers and workmen on October 1
Page 243 U. S. 236
in that year, actions pending and causes of action existing on
September 30 being expressly saved. It therefore disturbed no
vested rights, its effect being confined to regulating the relation
of employer and employee in the hazardous occupations
in
futuro.
If the legislation could be regarded merely as substituting one
form of employer's liability for another, the points raised against
it would be answered sufficiently by our opinion in
New York
Central R. Co. v. White, 243 U. S. 188,
where it is pointed out that the common law rule confining the
employer's liability to cases of negligence on his part or on the
part of others for whose conduct he is made answerable, the
immunity from responsibility to an employee for the negligence of a
fellow employee, and the defenses of contributory negligence and
assumed risk, are rules of law that are not beyond alteration by
legislation in the public interest; that the employer has no vested
interest in them, nor any constitutional right to insist that they
shall remain unchanged for his benefit, and that the states are not
prevented by the Fourteenth Amendment, while relieving employers
from liability for damages measured by common law standards and
payable in cases where they or others for whose conduct they are
answerable are found to be at fault, from requiring them to
contribute reasonable amounts and according to a reasonable and
definite scale by way of compensation for the loss of earning power
arising from accidental injuries to their employees, irrespective
of the question of negligence, instead of leaving the entire loss
to rest where it may chance to fall -- that is, upon particular
injured employees and their dependents.
But the Washington law goes further, in that the enforced
contributions of the employer are to be made whether injuries have
befallen his own employees or not;, so that, however prudently one
may manage his business, even to the point of immunity to his
employees from accidental
Page 243 U. S. 237
injury or death, he nevertheless is required to make periodical
contributions to a fund for making compensation to the injured
employees of his perhaps negligent competitors.
In the present case, the Supreme Court of Washington (75 Wash.
581, 583) sustained the law as a legitimate exercise of the police
power, referring at the same time to its previous decision in the
Clausen case (65 Wash. 156, 203, 207), which was rested
principally upon that power, but also (pp. 203, 207) sustained the
charges imposed upon employers engaged in the specified industries
as possessing the character of a license tax upon the occupation,
partaking of the dual nature of a tax for revenue and a tax for
purposes of regulation. We are not here concerned with any mere
question of construction, nor with any distinction between the
police and the taxing powers. The question whether a state law
deprives a party of rights secured by the federal Constitution
depends not upon how it is characterized, but upon its practical
operation and effect.
Henderson v. Mayor of New York,
92 U. S. 259,
92 U. S. 268;
Stockard v. Morgan, 185 U. S. 27,
185 U. S. 36;
Galveston, Harrisburg & San Antonio Ry. Co. v. Texas,
210 U. S. 217,
210 U. S. 227;
Western Union Telegraph Co. v. Kansas, 216 U. S.
1,
216 U. S. 28-30;
Ludwig v. Western Union Telegraph Co., 216 U. S.
146,
216 U. S. 162;
St. Louis Southwestern Ry. Co. v. Arkansas, 235 U.
S. 350,
235 U. S. 362.
And the federal Constitution does not require a separate exercise
by the states of their powers of regulation and of taxation.
Gundling v. Chicago, 177 U. S. 183,
177 U. S.
189.
Whether this legislation be regarded as a mere exercise of power
of regulation or as a combination of regulation and taxation, the
crucial inquiry under the Fourteenth Amendment is whether it
clearly appears to be not a fair and reasonable exertion of
governmental power, but so extravagant or arbitrary as to
constitute an abuse of power. All reasonable presumptions are in
favor of
Page 243 U. S. 238
its validity, and the burden of proof and argument is upon those
who seek to overthrow it.
Erie R. Co. v. Williams,
233 U. S. 685,
233 U. S. 699.
In the present case, it will be proper to consider (1) whether the
main object of the legislation is, or reasonably may be deemed to
be, of general and public moment, rather than of private and
particular interest, so as to furnish a just occasion for such
interference with personal liberty and the right of acquiring
property as necessarily must result from carrying it into effect,
(2) whether the charges imposed upon employers are reasonable in
amount, or, on the other hand, so burdensome as to be manifestly
oppressive, and (3) whether the burden is fairly distributed,
having regard to the causes that give rise to the need for the
legislation.
As to the first point: the authority of the states to enact such
laws as reasonably are deemed to be necessary to promote the
health, safety, and general welfare of their people carries with it
a wide range of judgment and discretion as to what matters are of
sufficiently general importance to be subjected to state regulation
and administration.
Lawton v. Steele, 152 U.
S. 133,
152 U. S. 136.
"The police power of a state is as broad and plenary as its taxing
power."
Kidd v. Pearson, 128 U. S. 1,
128 U. S. 26. In
Barbier v. Connolly, 113 U. S. 27,
113 U. S. 31,
the Court, by Mr. Justice Field, said:
"Neither the [Fourteenth] Amendment -- broad and comprehensive
as it is -- nor any other Amendment was designed to interfere with
the power of the state, sometimes termed its police power, to
prescribe regulations to promote the health, peace, morals,
education, and good order of the people, and to legislate so as to
increase the industries of the state, develop its resources, and
add to its wealth and prosperity. From the very necessities of
society, legislation of a special character having these objects in
view must often be had in certain districts, such as for draining
marshes and irrigating arid plains. Special burdens are often
necessary for general benefits --
Page 243 U. S. 239
for supplying water, preventing fires, lighting districts,
cleaning streets, opening parks, and many other objects.
Regulations for these purposes may press with more or less weight
upon one than upon another, but they are designed not to impose
unequal or unnecessary restrictions upon anyone, but to promote,
with as little individual inconvenience as possible, the general
good. Though in many respects necessarily special in their
character, they do not furnish just ground of complaint if they
operate alike upon all persons and property under the same
circumstances and conditions. Class legislation, discriminating
against some and favoring others, is prohibited, but legislation
which, in carrying out a public purpose, is limited in its
application, if within the sphere of its operation it affects alike
all persons similarly situated, is not within the Amendment."
It seems to us that the considerations to which we have adverted
in
New York Central R. Co. v. White, supra, as showing
that the Workmen's Compensation Law of New York is not to be deemed
arbitrary and unreasonable from the standpoint of natural justice,
are sufficient to support the State of Washington in concluding
that the matter of compensation for accidental injuries with
resulting loss of life or earning capacity of men employed in
hazardous occupations is of sufficient public moment to justify
making the entire matter of compensation a public concern, to be
administered through state agencies. Certainly the operation of
industrial establishments that, in the ordinary course of things,
frequently and inevitably produce disabling or mortal injuries to
the human beings employed is not a matter of wholly private
concern. It hardly would be questioned that the state might expend
public moneys to provide hospital treatment, artificial limbs, or
other like aid to persons injured in industry, and homes or support
for the widows and orphans of those killed. Does direct
compensation stand on a less secure ground? A
Page 243 U. S. 240
familiar exercise of state power is the grant of pensions to
disabled soldiers and to the widows and dependents of those killed
in war. Such legislation usually is justified as fulfilling a moral
obligation, or as tending to encourage the performance of the
public duty of defense. But is the state powerless to compensate,
with pensions or otherwise, those who are disabled, or the
dependents of those whose lives are lost, in the industrial
occupations that are so necessary to develop the resources and add
to the wealth and prosperity of the state? A machine as well as a
bullet may produce a wound, and the disabling effect may be the
same. In a recent case, the Supreme Court of Washington said:
"Under our statutes, the workman is the soldier of organized
industry, accepting a kind of pension in exchange for absolute
insurance on his master's premises."
Stertz v. Industrial Insurance Commission, 91 Wash.
588. It is said that the compensation or pension under this law is
not confined to those who are left without means of support. This
is true. But is the state powerless to succor the wounded except
they be reduced to the last extremity? Is it debarred from
compensating an injured man until his own resources are first
exhausted? This would be to discriminate against the thrifty and in
favor of the improvident. The power and discretion of the state are
not thus circumscribed by the Fourteenth Amendment.
Secondly, is the tax or imposition so clearly excessive as to be
a deprivation of liberty or property without due process of law? If
not warranted by any just occasion, the least imposition is
oppressive. But that point is covered by what has been said. Taking
the law therefore to be justified by the public nature of the
object, whether as a tax or as a regulation, the question whether
the charges are excessive remains. Upon this point no particular
contention is made that the compensation allowed is unduly large,
and it is evident that, unless it be
Page 243 U. S. 241
so, the corresponding burden upon the industry cannot be
regarded as excessive if the state is at liberty to impose the
entire burden upon the industry. With respect to the scale of
compensation, we repeat what we have said in
New York Central
R. Co. v. White, that, in sustaining the law, we do not intend
to say that any scale of compensation, however insignificant, on
the one hand, or onerous, on the other, would be supportable, and
that any question of that kind may be met when it arises.
Upon the third question -- the distribution of the burden --
there is no criticism upon the act in its details. As we have seen,
its fourth section prescribes the schedule of contribution,
dividing the various occupations into groups and imposing various
percentages evidently intended to be proportioned to the hazard of
the occupations in the respective groups. Certainly the application
of a proper percentage to the payroll of the industry cannot be
deemed an arbitrary adjustment in view of the legislative
declaration that it is "deemed the most accurate method of
equitable distribution of burden in proportion to relative hazard."
It is a matter of common knowledge that, in the practice of
insurers, the payroll frequently is adopted as the basis for
computing the premium. The percentages seem to be high; but when
these are taken in connection with the provisions requiring
accounts to be kept with each industry in accordance with the
classification, and declaring that no class shall be liable for the
depletion of the accident fund from accidents happening in any
other class, and that any class having sufficient funds to its
credit at the end of the first three months or any month thereafter
is not to be called upon, it is plain that, after the initial
payment, which may be regarded as a temporary reserve, the
assessments will be limited to the amounts necessary to meet actual
losses. As further rebutting the suggestion that the imposition is
exorbitant or arbitrary, we should accept the declaration of intent
that
Page 243 U. S. 242
the fund shall ultimately become neither more nor less than
self-supporting, and that the rates are subject to future
adjustment by the legislature and the classifications to
rearrangement according to experience, as plain evidence of an
intelligent effort to limit the burden to the requirements of each
industry.
We may conveniently answer at this point the objection that the
act goes too far in classifying as hazardous large numbers of
occupations that are not in their nature hazardous. It might be
sufficient to say that this is no concern of plaintiff in error,
since it is not contended that its businesses of logging timber,
operating a logging railroad, and operating a sawmill with
power-driven machinery, or either of them, are nonhazardous.
Plymouth Coal Co. v. Pennsylvania, 232 U.
S. 531,
232 U. S. 544.
But further, the question whether any of the industries enumerated
in § 4 is nonhazardous will be proved by experience, and the
provisions of the act themselves give sufficient assurance that, if
in any industry there be no accident, there will be no assessment,
unless for expenses of administration. It is true that, while the
section as originally enacted provided for advancing the
classification of risks and premium rates in a particular
establishment shown by experience to be unduly dangerous because of
poor or careless management, there was no corresponding provision
for reducing a particular industry shown by experience to be
included in a class which imposed upon it too high a rate. This was
remedied by the amendment of 1915, quoted in the margin, above,
which, however, cannot affect the decision of the present case.
But, in the absence of any particular showing of erroneous
classification -- and there is none -- the evident purpose of the
original act to classify the various occupations according to the
respective hazard of each is sufficient answer to any contention of
improper distribution of the burden amongst the industries
themselves.
Page 243 U. S. 243
There remains, therefore, only the contention that it is
inconsistent with the due process and equal protection clauses of
the Fourteenth Amendment to impose the entire cost of accident loss
upon the industries in which the losses arise. But if, as the
Legislature of Washington has declared in the first section of the
act, injuries in such employments have become frequent and
inevitable, and if, as we have held in
New York Central R. Co.
v. White, the state is at liberty, notwithstanding the
Fourteenth Amendment, to disregard questions of fault in arranging
a system of compensation for such injuries, we are unable to
discern any ground in natural justice or fundamental right that
prevents the state from imposing the entire burden upon the
industries that occasion the losses. The act in effect puts these
hazardous occupations in the category of dangerous agencies, and
requires that the losses shall be reckoned as a part of the cost of
the industry, just like the payroll, the repair account, or any
other item of cost. The plan of assessment insurance is closely
followed, and none more just has been suggested as a means of
distributing the risk and burden of losses that inevitably must
occur, in spite of any care that may be taken to prevent them.
We are clearly of the opinion that a state, in the exercise of
its power to pass such legislation as reasonably is deemed to be
necessary to promote the health, safety, and general welfare of its
people, may regulate the carrying on of industrial occupations that
frequently and inevitably produce personal injuries and disability,
with consequent loss of earning power, among the men and women
employed, and, occasionally, loss of life of those who have wives
and children or other relations dependent upon them for support,
and may require that these human losses shall be charged against
the industry, either directly, as is done in the case of the act
sustained in
New York Central R. Co. v. White, supra,
243 U. S. 188, or
by publicly administering
Page 243 U. S. 244
the compensation and distributing the cost among the industries
affected by means of a reasonable system of occupation taxes. The
act cannot be deemed oppressive to any class of occupation,
provided the scale of compensation is reasonable, unless the loss
of human life and limb is found in experience to be so great that,
if charged to the industry, it leaves no sufficient margin for
reasonable profits. But certainly, if any industry involves so
great a human wastage as to leave no fair profit beyond it, the
state is at liberty, in the interest of the safety and welfare of
its people, to prohibit such an industry altogether.
To the criticism that carefully managed plants are in effect
required to contribute to make good the losses arising through the
negligence of their competitors, it is sufficient to say that the
act recognizes that no management, however careful, can afford
immunity from personal injuries to employees in the hazardous
occupations, and prescribes that negligence is not to be
determinative of the question of the responsibility of the employer
or the industry. Taking the fact that accidental injuries are
inevitable, in connection with the impossibility of foreseeing when
or in what particular plant or industry they will occur, we deem
that the state acted within its power in declaring that no employer
should conduct such an industry without making stated and fairly
apportioned contributions adequate to maintain a public fund for
indemnifying injured employees and the dependents of those killed,
irrespective of the particular plant in which the accident might
happen to occur. In short, it cannot be deemed arbitrary or
unreasonable for the state, instead of imposing upon the particular
employer entire responsibility for losses occurring in his own
plant or work, to impose the burden upon the industry through a
system of occupation taxes limited to the actual losses occurring
in the respective classes of occupation.
The idea of special excise taxes for regulation and revenue,
Page 243 U. S. 245
proportioned to the special injury attributable to the
activities taxed, is not novel. In
Noble State Bank v.
Haskell, 219 U. S. 104,
this Court sustained an Oklahoma statute which levied upon every
bank existing under the laws of the state an assessment of a
percentage of the bank's average deposits for the purpose of
creating a guaranty fund to make good the losses of depositors in
insolvent banks. There, as here, the collection and distribution of
the fund were made a matter of public administration, and the fund
was created not by general taxation, but by a special imposition in
the nature of an occupation tax upon all banks existing under the
laws of the state. In
Hendrick v. Maryland, 235 U.
S. 610,
235 U. S. 622,
and
Kane v. New Jersey, 242 U. S. 160,
242 U. S. 169, we
sustained laws, of a kind now familiar, imposing license fees upon
motor vehicles, graduated according to horse power, so as to secure
compensation for the use of improved roadways from a class of users
for whose needs they are essential, and whose operations over them
are peculiarly injurious.
And see Charlotte, Columbia &
Augusta R. Co. v. Gibbes, 142 U. S. 386,
142 U. S.
394-395, and cases cited. Many of the states have laws
protecting the sheep industry by imposing a tax upon dogs in order
to create a fund for the remuneration of sheep owners for losses
suffered by the killing of their sheep by dogs. And the tax is
imposed upon all dog owners, without regard to the question whether
their particular dogs are responsible for the loss of sheep.
Statutes of this character have been sustained by the state courts
against attacks based on constitutional grounds.
Morey v.
Brown, 42 N.H. 373, 375;
Tenney v. Lenz, 16 Wis. 566;
Mitchell v. Williams, 27 Ind. 62;
Van Horn v.
People, 46 Mich. 183, 185;
Longyear v. Buck, 83 Mich.
236, 240;
Cole v. Hall, 103 Ill. 30;
Holst v.
Roe, 39 Ohio St. 340, 344;
McGlond v. Womack, 129 Ky.
274, 283
et seq.
Page 243 U. S. 246
We are unable to find that the act, in its general features, is
in conflict with the Fourteenth Amendment. Numerous objections are
urged founded upon matters of detail, but they call for no
particular mention, either because they are plainly devoid of
merit, are covered by what we have said, or are not such as may be
raised by plaintiff in error.
Perhaps a word should be said respecting a clause in § 4 which
reads as follows:
"It shall be unlawful for the employer to deduct or obtain
[
sic] any part of the premium required by this section to
be by him paid from the wages or earnings of his workmen or any of
them, and the making or attempt to make any such deductions shall
be a gross misdemeanor."
If this were to be construed so broadly as to prohibit employers
and employees, in agreeing upon wages and other terms of
employment, from taking into consideration the fact that the
employer was a contributor to the state fund, and the resulting
effect of the act upon the rights of the parties, it would be open
to serious question whether, as thus construed, it did not
interfere to an unconstitutional extent with their freedom of
contract. So far as we are aware, the clause has not been so
construed, and, on familiar principles, we will not assume in
advance that a construction will be adopted such as to bring the
law into conflict with the federal Constitution.
Bachtel v.
Wilson, 204 U. S. 36,
204 U. S. 40;
Plymouth Coal Co. v. Pennsylvania, 232 U.
S. 531,
232 U. S.
546.
Judgment affirmed.
THE CHIEF JUSTICE, MR. JUSTICE McKENNA, MR. JUSTICE VAN
DEVANTER, and MR. JUSTICE McREYNOLDS dissent.
* By Sess.Laws 1915, c. 188, pp. 674, 677, § 4 was amended so as
to substitute in the place of the clause italicized the
following:
"In that the intent is that the fund created under this section
shall ultimately become neither more nor less than self-supporting,
exclusive of the expense of administration, the rates named in this
section are subject to future adjustment by the industrial
insurance department, in accordance with any relative increase or
decrease in hazard shown by experience, and if in the judgment of
the industrial insurance department the moneys paid into the fund
of any class or classes shall be insufficient to properly and
safely distribute the burden of accidents occurring therein, the
department may divide, rearrange or consolidate such class or
classes, making such adjustment or transfer of funds as it may deem
proper."