The power exercised was neither unreasonable nor arbitrary, and the police authority existed "to impose upon the employer the absolute duty of making Second. It answers the objection to the act from the employee's standpoint by declaring: "Nor can it be deemed arbitrary and unreasonable, from the standpoint of the employee's interest, to supplant a system under which he assumed the entire risk of injury in ordinary cases, and in others had a right to recover an amount more or less speculative upon proving facts of negligence that often were difficult to prove, and substitute a system under which in all ordinary cases of accidental injury he is sure of a definite and easily ascertained compensation, not being obliged to assume the entire loss in any case but in all cases assuming any loss beyond the prescribed scale."2 Third. Meeting the objection that the statute strikes at the constitutional freedom of contract, the Court declares that, without qualifying or weakening its preceding declarations respecting the primary importance of rights of personal liberty and of private property, it recognizes in this statute a reasonable restraint laid on the exercise of these rights, since "The subject-matter in respect of which freedom of contract is restricted is the matter of compensation for human life or limb lost or disability incurred in the course of hazardous employment, and the public has a direct interest in this as affecting the common welfare."3 The Court, answering the criticism that the act imposes no rule of conduct upon the employer with respect to the conditions of labor in the various industries, states that measures of prevention are not of sole interest to the public, since these may be accomplished by other statutes, while in the present instance the legislature is primarily concerned in averting the economic consequence flowing 137 Sup. Ct. Rep., 253. 237 Sup. Ct. Rep., 253. 337 Sup. Ct. Rep., 254. from the loss of the support or earning power of the individual, and thus preventing pauperism, vice, and crime. The Court sustains both the scheme of compensation presented as a whole and the method of securing its payment by requiring the employer either to give reasonable security for or to furnish satisfactory proof of his financial ability to meet his statutory obligation. In conclusion, the Court sounds a significant warning by observing that it is not to be understood as holding that "any scale of compensation, however insignificant on the one hand or onerous on the other, would be supportable." THE WASHINGTON CASE STATEMENT OF CASE The foundation of this appeal was an action brought by the State to recover certain premiums based upon a percentage of the estimated payroll of a logging company, which sum was to be paid into the state accident fund, to which employers in certain classified hazardous occupations were under compulsion to contribute, in accordance with their classified risk. The Supreme Court of Washington gave a judgment in favor of the State (75 Washington, 581). Mr. Justice Pitney delivered the majority opinion, sustaining the decision of the State Court and the validity of the compensation act; the Chief Justice and Justices McKenna, Van Deventer, and McReynolds dissented without expressing their reasons. DISTINCTION BETWEEN NEW YORK AND WASHINGTON CASES Mr. Justice Pitney, after briefly summarizing the Washington statute and disposing of preliminary objections, points out that the chief distinction between this case and that involving the New York Compensation Act lies in the enforced contribution to the state fund, which is the essential characteristic of the Washington Act. This compulsory requirement, it had been urged, violated the "due process of law" and "equal protection" clauses of the Fourteenth Amendment, since it compelled the employer to contribute to the state accident fund whether his own employees were injured or not, so that even though they were immune from injury or death, he was still required to make periodical contributions for the compensation of the disabled employees of his more negligent competitors. CONSTITUTIONAL TEST OF WASHINGTON ACT The Supreme Court of Washington declared the act to legitimately possess the character of "a license tax upon the occupation, partaking of the dual nature of a tax for revenue and a tax for purpose of regulation." The crucial inquiry, declared Mr. Justice Pitney, whether the act be regarded as a regulation or a combination of regulation and taxation, depends, in turn, upon whether or not the Washington statute, under the Fourteenth Amendment, is a fair and reasonable exercise of governmental power, or so extravagant and arbitrary as to constitute an abuse of it. To apply this test to the statute before it, the Court asks and answers three questions: 1. Whether the chief object which the Washington statute undertakes to accomplish is of general and public rather than private and particular interest, so as to justify the restrictions upon personal liberty and the right of acquiring property resulting from its operation. 2. Whether the tax burden imposed upon the employer is reasonable in amount or of such a nature as to be manifestly oppressive. 3. Whether there is a fair distribution of the burden giving due consideration to the causes which make the legislation necessary. Answering these questions in an elaborate discussion, the Court holds: ESTABLISHMENT OF A COMPENSATION SYSTEM A PUBLIC CONCERN 1. "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."1 137 Sup. Ct. Rep., 265. BURDEN NOT EXCESSIVE 2. It is declared that inasmuch as the compensation allowed is not objected to as unduly large, the burden resting upon industry cannot be regarded as excessive "if the State is at liberty to impose the entire burden upon the industry." If, declares the opinion, injuries in such employments as that covered by the Washington Act have become frequent and inevitable, and if, as in the New York case, "the State is at liberty, notwithstanding the Fourteenth 3. It is held that the plan of assessment insurance applying experience to the fixing of premiums for relative hazard is as just a means of distributing the burden of loss as has been suggested. On this point the Court held: "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."1 ANSWER TO DISCRIMINATIONS Answering the criticism that more carefully managed plants are required to meet losses arising from the negligence of less careful competitors, it is pointed out that it is impossible to foresee when or in what plant or industry injury may occur. And that as the power exists in the State to provide for the relief of such disabilities or dependency as may ensue, it is reasonable to impose the burden of such relief upon the industry through a system of occupational taxes limited to the actual losses occurring, instead of imposing such obligation upon the particular employer in whose plant accidents may occur. 137 Sup. Ct. Rep., 267. EXAMPLES OF SIMILAR TAXES In conclusion, the Court calls attention to the fact that special excise taxes for regulation and revenue proportioned to the special injury attributable to particular activities are not new. It cites several instances of such legislation, among these perhaps the most illustrative is that of the tax imposed by many states upon dog owners, to remunerate the owners of sheep killed by dogs, the tax being imposed without regard to whether or not all the dogs taxed actually kill sheep.1 THE IOWA CASE STATEMENT OF CASE This was an appeal from the United States District Court for the Southern District of Iowa, which dismissed an application for an injunction to restrain the enforcement of the Iowa Compensation Act (220 Fed. 378). It appears that since the appeal was taken the Supreme Court of Iowa had construed and sustained this act.2 The Supreme Court of the United States consequently accepted that construction of the language of the act in determining the constitutional objections to it. IOWA ACT ELECTIVE The Iowa Act, unlike that of Washington or New York, previously considered, is elective in form, possessing the general features common to similar statutes sustained by the various State Supreme Courts. To the main purpose of the act, the establishment of a compensation system, no constitutional objection was made, the criticism being confined to particular provisions of the law. ACCEPTANCE UNDER DURESS 1. To the contention that the employer was subjected to undue duress by the threatened abolition of his commonlaw defenses in order to persuade him to accept the act, it was answered that the contention had been disposed of by the New York, Washington, and other decisions holding that the employer had no vested right in such defenses, which were subject to modification and abrogation by the State. 1 Morey v. Brown, 42 N. H., 373. Tenney v. Lenz, 16 Wis., 589. 2 Hunter v. Colfax Cons. Coal Co. (Iowa), 154 N. W., 1037; 157 N. W., 145. |