Case Name: FAY v. INDUSTRIAL COMMISSION et al.
Court: Utah Supreme Court
Jurisdiction: Utah
Decision Date: 1941-06-18
Citations: 100 Utah 542
Docket Number: No. 6259
Parties: FAY v. INDUSTRIAL COMMISSION et al.
Judges: MOFFAT, C. J., and McDONOUGH and PRATT, JJ., concur.
Reporter: Utah Reports
Volume: 100
Pages: 542–561

Head Matter:
FAY v. INDUSTRIAL COMMISSION et al.
No. 6259.
Decided June 18, 1941.
(114 P. 2d 508.)
Edward B. Twining, of Platt & Black, of Portland Or., and H. G. Metos, of Salt Lake City, for plaintiff.
Joseph Chez, Atty. Gen., and Judd, Ray, Quinney & Neb-eker, of Salt Lake City, for defendants.

Opinion:
WOLFE, Justice.
Certiorari to review an order of the Industrial Commission denying plaintiff benefits on account of the death of her husband, Richard W. Fay, a salesman for B. F. Goodrich Company. He was killed on March 30,1939, in an automobile accident in the State of Idaho, while traveling in the course of his employment.
The facts are not disputed. Fay entered the employ of the B. F. Goodrich Company at his home office in Akron, Ohio, on November 6, 1933, and was continuously in its employ until his death. At first he was engaged in sales promotion work in the Midwest. In 1935 he was transferred to California to work in á similar capacity, later being promoted to missionary salesman. In the fall of 1937 he was appointed salesman for a territory covering Utah, Montana, Idaho, and sections of Nevada, Oregon and Washington. He received a salary increase at that time which was approved by the home office in Akron. About January 1, 1938, Fay assumed his new duties and thereafter maintained headquarters in Salt Lake City. His employment was then carried by the rubber company as being in this state in its reports covering Workmen's Compensation, Unemployment Insurance, and the Federal Social Security Tax. From that time on, Fay worked about 50% of the time in Utah, maintained a residence in this state, reported his itineraries to, and received his mail through Goodrich store in Salt Lake City. His travel in the other states in his territory was, to a considerable extent in contacting customers of Salt Lake City business houses through which Goodrich products were sold. He received his instructions and salary through the company's branch in Los Angeles.
There is involved the construction of Sec. 42-1-52, R.S.U. 1933, which provides as follows:
"If a workman who has been hired in this state receives personal injury by accident arising out of or in the course of such employment, he shall be entitled to compensation according to the law of this state, even though such injury was received outside of this state. If a workman who has been hired outside of this state is injured while engaged in his employer's business and is entitled to compensation for such injury under the law of the state where he was hired he shall be entitled to enforce his rights against his employer in the courts of this state." (Italics added.)
We are particularly concerned with the sentence of the above section which we have italicized, since it defines the conditions under which compensation under the law of this state may be granted. The primary requisite is that claimant be "a workman who has been hired in this state." In the case before us we have a claim under our act, not an attempt to enforce the law of another state in our courts, as provided for in the second sentence of the above-quoted section.
In this case Fay had entered the company's service several years previously in Akron, Ohio. The Commission found that when he was transferred to the Salt Lake City territory, it was not a new contract of employment and that "Mr. Fay was not hired in this state at any time." It is apparent that the Commission construed the phrase "hired in this state" to be restricted to a contract of hire by means of which the employer-employee relationship had its inception. Since it did not find that Fay's new duties were performed under a new contract of hire, or that a contract of hire had been executed in Utah, the claim was denied. In that the Commission was in error.
Heretofore our act has been held applicable in three situations: (1) Where the contract of employment was made in this state, the status maintained and localized in this state and the employee injured in this state. (2) Where the contract of employment was made in this state, the status maintained and localized in this state and the employee injured outside this state. (8) Where the contract of employment was made outside this state, the status was maintained and localized in this state, and the employee was injured in this state. The applicability of the Act to situations 1 and 2 is at once apparent from a reading thereof. Its applicability to the third situation was determined in the case of Buckingham Transportation Company v Ind. Comm., 93 Utah 342, 72 P. 2d 1077, 1083. In the Buckingham case, Kennedy, the claimant, was employed at Denver, Colorado, by the transportation company. His headquarters were at Salt Lake City and he was injured in Utah. In applying the Utah Act to that situation, the court made the following statements:
"We have already shown that our act is one affecting the status of employer' and employee and is in nowise dependent upon the provisions of the contract of employment for its operation. The state of Utah has seen fit, under its police power, to regulate the status of employer and employee, with certain exceptions not material here, where that relation is sustained whthim, this state. When plaintiff sent Kennedy into this state to work for it here, it put him and itself within the reach of our act without regard to the lane of. the place where the employment contract was made. Likewise, whether Kennedy or plaintiff were residents of this state is immaterial. The controlling and decisive factor is that they maintained the status of employer and employee here." (Italics added.)
The court further said in that case:
"We do not think that the Legislature, after having used the broad language it did in section 42-1-40 in defining an employer as being one who has three or more workmen in his employ under 'any contract of hire,' intended to limit, by section 42-1-52, the application of the act to those cases only where the contract of hire was made in this state. Such an interpretation would furnish a means of completely nullifying the force of our act by resorting to the simple expedient of making the contract of hire in some other state."
We have quoted at length from the Buckingham case though it refers to a claim involving an injury within this state. From its language and from the language of the statute heretofore set out, it is clear that the claim under the Utah act was allowed by interpreting the phrase "hired in this state," to mean the status of being hired, or in other words, the maintenance of the status of employer and employee, in this state. By so construing that phrase, this court and others have held the statute to apply in the case of an injury within the state where the contract of employment had its inception in another state.
The case now before us presents a fourth situation. The contract of employment had its inception outside of the state, the status was maintained and localized in this state, and the injury took place outside the state. It is possible that the courts will be confronted with still other situations in the future. In the Buckingham case, supra, the court said, quoting from Ocean Accident & Guar. Corp. v. Ind. Comm., 32 Ariz. 275, 257 P. 644:
" the last sentence of said section [42-1-52 heretofore set out] applies only to cases where both the status of employer and employee and the injury arose outside of the state of Utah."
From the other language used, indicating that in all situations the status alone is to be considered, it is apparent that the last quoted sentence should be construed to mean that where the status of employer and employee is localized outside the state and the injury occurred outside the state, the last sentence of Sec. 42-1-52 would apply. It will be noted that by making use of the possessive, the statute is clear that the claimant must resort in such case to the courts and not to the Commission, to enforce his rights, for in such case we have true extraterritoriality. The word "status" is used and not "hired," indicating that the court considered not the inception of the contract but the relationship ensuing from the inception, as the important thing.
We hold that in all situations our Workmen's Compensation Act is intended to be "operative by virtue of the status of employer and employee, and not upon the theory of contract, express or implied, between the employer and employee." Buckingham Transportation Co. v. Ind. Comm., supra; Chandler v. Ind. Comm., 55 Utah 213, 184 P. 1020, 8 A. L. R. 930; Cudahy Packing Co. v. Parramore, 263 U. S. 418, 44 S. Ct. 153, 68 L. Ed. 366, 30 A. L. R. 532. This conclusion is also supported in decisions which consider the basic theory behind the enactment of such acts. Pickering v. Ind. Comm., 59 Utah 35, 201 P. 1029; Scranton Leasing Co. v. Ind. Comm., 51 Utah 368, 170 P. 976; American Fuel Co. v. Ind. Comm., 55 Utah 483, 187 P. 633, 8 A. L. R. 1342.
It follows from the reasoning in these cases that if the relationship is maintained in this state, our Commission has jurisdiction to make an award. The status itself, and not the place of origin thereof, determines jurisdiction. Having jurisdiction, the award may be made under our act, "even though such injury was received outside of this state."
To hold that the place where the contract is made is controlling if the injury occur outside the state, or at any time for that matter, would be to nullify the reasoning on which claims have been allowed for injuries within the state. We should then have to hold, contrary to the decision in the Buckingham case, that the act may depend for its operation on the place where the contract was made. The confusion and absurdities which would arise under such a holding are readily apparent: In cases involving a position such as that of traveling salesman for a company operating in several states, the administration and effectiveness of such acts might be seriously impeded. Liability for injuries, except those incurred in the course of employment within the state could be escaped by the simple means of placing the machinery of hiring in motion outside of the state. Where a workman, continuously employed, had been assigned to duties in several states, it might be necessary to examine the nature of the contract and its modifications made in every state in which he had worked. The facts of each new assignment of duties would have to be studied to determine if at any time there was a new hiring, or if the changes in duties involved merely unsubstantial modifications of the original contract of hire. By virtue of the fact that many large companies require home office acceptance of employment contracts negotiated by branch offices, we should find it necessary, if it were determined that the place of approval was the place of the making of the contract, to look to the New York act for employees of all such companies having head offices in New York, despite the fact that most of such employees may never reside or work in that state.
If we look to the original contract of employment rather than the employment status (and we must do this in all cases if in any), the Commission may then be confronted with difficulties in situations where the contract was executed in this state and the injury occurred outside the state. As an example a workman is employed in Utah and later transferred to California where his employment takes him into various sections of California and Oregon. He works ten years at his new duties with no interruption in his employment and is then injured in Oregon. For the past ten years his employer paid premiums in California under the act of that state. At no time in the last ten years was he in Utah in the course of his employment. If we must give the act the narrow construction which makes the place of execution of the contract of hire controlling, we should have to give it that construction in this case since this workman was hired in Utah originally, and was injured outside this state. Nevertheless, it cannot be conceived that an award under the Utah act would be made, the employee status not having been maintained within this state for ten years. Moreover, out of what fund would it be paid? The employer may not even reside here, let alone have a reachable insurance carrier in this state.
Hence, we recognize that the phrase "hired in this state" can only be construed, as used in this act, to mean the equivalent of the "status of employer and employee maintained in this state," just as we recognize a status of being married arising from a contract of marriage. The "hiring" is a continuing operation. The effect of this is to simplify administration by the Commission and insure the state the greatest benefits therefrom. Adherence by employers is thereby simplified and assured, in that in all cases, as here, premiums would be paid in the state where the employment is maintained rather than resorting to a precarious attempt to diagnose the contractual nature of each change of duties.
In support of our position, cases are cited from Minnesota and Wisconsin, states whose acts, at the time of such decisions, were elective rather than compulsory as in Utah. Since some of the cases involve facts where the original contracts of hire were made outside of the state and the injuries occurred outside the states whose acts are invoked, they are of interest here particularly as to the language used by the courts in applying their acts. In those states, if the employment originated elsewhere, on an employee's coming into the state to work the applicability of the acts would depend upon writing the compensation provisions into the contract of employment. Where the act is compulsory, its provisions apply automatically when the employee status acquires a situs within the state. In neither case is a new contract of employment necessary. Where the acts are elective, the contract may be modified to include the act of the state into which the status is transferred, possibly just a substitution of the act of the new state for that of the old. "Where the acts are compulsory, the contract of hire need only be determined to be in effect.
In Stansberry v. Monitor Stove Co., 150 Minn. 1, 183 N. W. 977, 20 A. L. R. 316, we have an employee of an Ohio corporation, working out of a Minnesota branch, traveling for the most part in North Dakota where he was injured. From the facts it is not clear where the contract of hire was executed. The court obviously considered only the place where he was then working. It said:
"Stansberry was employed by the Minneapolis branch and worked under its direction. For purposes of this case the situation is the same as though the head office instead of a branch were located in Minnesota. The business in which he was engaged was localized in this state, and in such a case, our Compensation Act applies and compensates for injuries in a service incident to its conduct, sustained beyond the borders of the state."
The Wisconsin case of McKesson-Fuller-Morrisson Co. v. Ind. Comm., 212 Wis. 507, 250 N. W. 396, 398, involved a traveling salesman who had been hired originally in Minnesota and was in the employ of the concern for 40 years. His headquarters had been in Minnesota until about a year q,nd a half prior to his death, and were thereafter in Wisconsin. The injury from which he died was incurred in Illinois. In allowing recovery, the Wisconsin court said, citing numerous- cases:
"Where the employer under the act engages a person to perform services in this state under a contract of hire, express or implied, no matter where or when such contract may have been engendered, such employee is under our act and is entitled to its benefits, and this is so even though he is injured while outside of this state rendering services incidental to his employment within this state. The place where the contract is made is not controlling. The controlling and decisive factor is whether he had a status as an employee within this state. The fact overwhelmingly appears, and is not disputed, that deceased was stationed in this state carrying on his employer's business in this state, and his ill-fated trip to Chicago was a mere incident to his employment in this state.
"We can do no more than emphasize what we think plainly appears from the cases above cited, that in all eases where compensation is sought under circumstances such as these the dominant consideration is whether the employee had obtained the status of an employee in this state, (Italics added.)
In Val Blatz Brewing Co. v. Gerard, 201 Wis. 474, 230 N. W. 622, 625, the court used similar reasoning, recognizing that the employee status may be changed from place to place:
"When residents of the state contract for service to be performed outside the state, a constructive status under the Wisconsin Compensation Act is created, which continues until the employee acquires an actual status as an employee in some other state."
In that case the court pointed out, as we do here, that the question involved is not one of giving extraterritorial effect to the act, but one of applying the act to persons who came within its jurisdiction by acquiring and maintaining the employee status within its borders.
We have before us a situation where the status had become localized in Utah. Premiums had been paid on the basis of his employment in this state for 19 months prior to Fay's death. Six years had passed since he was first employed in Ohio and four years since he had been stationed in that locality. We see no basis in the act for placing him in a category different from his fellow employees in the Salt Lake City branch, merely because they may have entered on duty here, while Fay had started his service elsewhere. His employer properly recognized the applicability of the Utah act. Benefits thereunder should be allowed on account of his death.
The order of the Commission is, therefore, set aside, and the cause remanded for further proceedings in accordance with the views herein expressed.
MOFFAT, C. J., and McDONOUGH and PRATT, JJ., concur.