Case Name: JOHN W. LAWSON, Respondent, v. HALIFAX-TONOPAH MINING COMPANY, Appellant
Court: Supreme Court of Nevada
Jurisdiction: Nevada
Decision Date: 1913-10
Citations: 36 Nev. 591
Docket Number: No. 2050
Parties: JOHN W. LAWSON, Respondent, v. HALIFAX-TONOPAH MINING COMPANY, Appellant.
Judges: Norcross, J.: I concur in the judgment.
Reporter: Nevada Reports
Volume: 36
Pages: 591–611

Head Matter:
[No. 2050]
JOHN W. LAWSON, Respondent, v. HALIFAX-TONOPAH MINING COMPANY, Appellant.
1. Master and Servant • — ■ Liability for Injuries — Release of Liability — “Indemnity.”
Under Rev. Laws, sec. 5652, providing that no contract of employment, insurance, relief benefit, or indemnity for injury or death entered into by or ón behalf of any employee, nor acceptance of any insurance, relief benefit, or indemnity by the person entitled, thereto,' shall .constitute a defense to an action for personal injuries or death, a release of an employer from liability for personal injuries, damaging an employee in the sum of about $1,200, in consideration of the payment of $36, did not prevent a recovery of such damages,, since the statute invalidates defenses based, not only on contracts made to cover future injuries, but defenses based upon acceptance of insurance, relief benefit, or indemnity by a person already injured, and the word “indemnity” means protection or exemption from loss or damage, past or to come, or immunity from punishment for past offenses.
2. Constitutional Law — Master and Servant — Liability for Injuries — Release of Liability — Statutory Provisions.
Such section is not .unconstitutional, since, the legislature has power to enact laws to promote healthful conditions of work or freedom from undue oppression; and a contract which the state; in the legitimate exercise of its police power, has the right to prohibit is not within the protection of Const. U. S. Amend. 14, prohibiting the states from depriving any person of liberty or property without due process of law, especially in view of the further provision of that section that upon the trial of an action the defendant may set off the sum it has contributed toward any such insurance, relief benefit, or indemnity that may have been paid to the person entitled thereto. . - .
Norcross, J., dissenting.
Appeal from the Fifth Judicial District Court, Nye County; Mark R. Averill, Judge.
Action by John W. Lawson against the Halifax-Tonopah Mining Company. From an order sustaining a demurrer to the answer, and from a judgment for plaintiff, defendant appeals.
Affirmed. Rehearing denied.
The facts sufficiently appear in the opinion.
Bartlett & Thatcher, for Appellant:
There was a valid agreement in settlement for the injuries sustained by the plaintiff entered into after the injury. The provisions of the state "Employers’ Liability Act” of 1907 does not affect contracts of settlement entered into after injury. (AkensOn v. RailroacL Co., 75 N. W. 676;. Donald v. R. R. Co., 93.Iowa, 284, 33 L. R. A. 492; Maine v. R. R. Co., 109 Iowa, 260; McGuire v. R. R. Co., 131 Iowa, 340, 108 N.W. 902, 33 L. R. A. n.s. 706; McNamara v. Washington T. Co., 35 App. D. C. 230; Mondou v. N. Y., N. H. & H., 223 U. S. 1; P. B. & W. R. Co: v. Schubert, 224 U. S. 603; 36 Cyc. 1178, 1179.)
Any other construction would render the section unconstitutional as an ■ unwarranted and unreasonable restriction upon the liberty of contract guaranteed by the fourteenth amendment. (Williams v. Fears, 179 U. S. 270; Allgeyer v. Louisiana, 165 U. S. 578; Block v. Schwartz, 27 Utah, 387; Henry v. Cherry, 30 R. I. 38; School Corp. v. Heiney, 98 N. E. 628; People v. Steele, 231 111. 340; State v. Goodwill, 33 W. Va. 179; Ex Parte Drexel, 147 Cal. 763; Goldfield Con. M. Co. v. Goldfield Miners’ Union, 159 Fed.'513-517; Adair v. U. S., 208 U. S. 174-5; Lockner v. N. Y.., 198 U. S. 53; People v. Marcus, 185 N. Y. 259; State v. Julow, 129 Mo. 163; State v. Kreutzberg, 114 Wis. 540; Gillespie v. People, 188 111. 176; Young v. Commonwealth, 101 Ya. 853.)
Geo. B. Thatcher, for Appellant, on petition for rehearing.
H. R. Cooke, for Respondent: .
The plain purport and purpose of the law is to prevent contracts for or acceptance of indemnity or money payment from constituting an absolute bar to an action, and to leave it open for the employee to avail himself of the courts if he so desired.
Against the plain language of the statute argument is superfluous and useless,' unléss, indeed, it is intended to obtain a judicial repeal of the” statute. The act contemplates putting an end to just such defenses as respondent met with in the case at bar. ' Had the-Nevada legislature intended the act to mean what counsel say it means, they would have used the same language that the Iowa statute uses.'
Liberty of contract is not a universal right and may be abridged when required for the public good. (McLean v. Arkansas, 211 U. S. 539; Railway Co. v. Beckwith, 129 U. S. 26; Peoplev. Erie Ry. Co., 29 L. R. A. 240; Leepv. St. Louis R. Co., 23 L. R. A. 264; Peel Co. v. State, 17 L. R. A. 385; Holden v. Hardy, 169 U. S. 366'; Harbison v. Knoxville Co., 56 L. R. A. 316, 183 U. S. 13; Brakebill v. Chicago Ry. Co.., 131 Pac. 540; Kilpatrick v. Ry. Co., 93 Am. St. Rep. 887; Ink Text Book Co.- v. Weisenger, 65 L. R. A. 599; McLean v. State, 211 U. S. 539; Hopper v. State, 155 U. S. 648; Patterson v. The Endora, 190 U. S. 169; Philadelphia v. Schubert, 224 U. S. 603.)
Henry M. Hoyt and L. A. Gibbons were permitted, as amici curise, to file a brief in support of the petition for a rehearing, from which the following extract is taken:
We concede great powers to the state under the vague term "police power.” Yet we say the courts, both state and federal, have at all times been watchful to prevent the invasion by legislative authority of natural contractual functions necessary to the freedom of men. Restraints imposed upon man’s natural activities and intelligent, self-reliant conduct in the living of his life must rest upon reasons which bear some direct relation to the common welfare, in order to obtain judicial sanction. {Kuhn v. Detroit, 70 Mich. 534; Hume v. Laurel Hill Cem., 142 Fed. 563; State v. Robins, 73 N. E. 470; George Boiler Co. v. North Platte V. Irr. Co., 121 Pac. 22; State v. Daniels, 136 N. W. 584; Amer. Surety Co. v. Shallenberger, 183 Fed. 636; Dennis v. Moses, 52 Pac. 333; Ex Parte Jentzsch, 112 Cal. 468.)

Opinion:
By the Court,
McCarran, J.:
This action grew out of injuries sustained by the respondent while in the employ of the appellant corporation, in the sinking of a mining shaft. The complaint in this cause sets forth that the respondent was injured while descending the shaft of appellant in a mining bucket, in pursuance of his employment in bailing water from the bottom of the shaft. The respondent was 29 years of age, and had been earning wages as a miner at the rate of $5 a day. The injuries, as set forth in the complaint, were of a more or less serious nature, and it is alleged that defendant, by reason of the injuries, is incapacitated from performing ordinary manual labor, and, further, that he suffered numerous and severe hemorrhages and continued physical pain. The respondent in this case admits in his complaint the receipt of $36 from appellant.
This action was brought under the employers' liability act of this state, and a credit, or set-off, was admitted and allowed by respondent to appellant in the sum of $36, and respondent prayed for judgment in the sum of $1,964.
A demurrer, submitted by the appellant, was overruled by the trial court, following which order the appellant filed its answer, in which answer the appellant set up, among other things, the following allegation in support of its affirmative defense: "That plaintiff ought not and should not have or maintain his cause of action, for on account of the facts set forth in his said complaint, for in that at Tonopah, Nye County, State of Nevada, the said plaintiff, for and in consideration of the sum of $36 to him in hand paid by said defendant in full accord and satisfaction of the facts set forth in plaintiff's complaint, and of the injury complained of therein, made, executed, and delivered to defendant that certain instrument in writing in full of all account and claims of and for and on account of the pretended facts set forth in plaintiff's complaint and in accord, relinquishment and satisfaction 'thereof as follows, to wit: 'Tonopah, Nevada, November 18, 1911. Received of the Halifax-Tonopah Mining Company the sum of seventy-six dollars, being in full of all account and claims of and for any injury heretofore sustained by the undersigned, while in the employ of the Halifax-Tonopah Mining Company and the undersigned, for and in consideration of the sum of seventy-six dollars does forever release and discharge said Halifax-Tonopah Mining Company, of and from any and all claims of damages therefor, and does hereby release and discharge any and all claims of every nature, from the beginning of the world to the date of these presents, he may have or claim against said Halifax-Tonopah Mining Company. Jack Lawson.'"
Of the sum specified in the foregoing receipt $40 was paid respondent by appellant as wages for services actually performed, and the remainder of the sum, amounting to $36, was paid the respondent by appellant on account of his injuries. To this answer, and especially to that phase of the answer quoted above, respondent demurred on the ground that the affirmative defense did not state facts sufficient to constitute any defense to respondent's cause of action. This demurrer, on the part of the respondent, was sustained by the trial court, and ten days allowed appellant for amendment. To the ruling of the court in this respect the appellant excepted, and by notice duly given, through its attorney, declined to amend the answer. Thereafter the cause was heard before the trial court without the assistance of a jury, and a decision was rendered in favor of respondent, and judgment entered against the appellant in the sum of $1,174 and costs. From the order sustaining respondent's demurrer to appellant's answer, and from the judgment rendered in the cause, appeal is taken to this court.
Section 5652 of the Revised Laws of the State of Nevada, applicable to the subject of personal injuries, is as follows: " That no contract of- employment, insurance, relief benefit, or indemnity for injury or death, entered into by or on behalf of any employee, nor the acceptance of any insurance, relief benefit, or indemnity by the person entitled thereto, shall constitute any bar or defense to any action brought to recover damages for personal injuries to, or death of such employee; provided, however, that upon the trial of such action'the defendant may set off therein any sum it has contributed toward any such insurance, relief benefit, or indemnity that may have been paid' to the person entitled thereto. "
One question alone is to be decided by this court, viz: Was the receipt given by Jack Lawson, the respondent, to the Halifax-Tonopah Mining Company, the appellant, for the sum of $36, in full of all account and claims of and for any injuries sustained by respondent, such an acceptance as is contemplated by the inhibitions of section 5652 of the statute quoted above? In the consideration of this question, however, a secondary proposition is presented and raised by appellant, viz, the constitutionality of the section set forth.
The employers' liability act, of which the foregoing section is a part, was enacted by our legislature in 1907, and by the enactment of this statute common carriers and mill and mine owners were made liable to their employees in case of injury, or to the personal representative of their employees in case of death, where the injury or death was the result of negligence of the officers, agents, or employees of the common carrier, or mill or mine operator. By the enactment of this statute this state, speaking through its legislature — the representatives of its people — declared its policy applicable to this all-important subject. By this statute the common-law rule of fellow servants was modified, and, moreover, the common-law rule of contributory negligence was superseded by the statutory rule, which is more or less properly termed the rule of " relative" or " comparative" negligence. In enacting section 5652, the object and purpose of the legislature was manifest and obvious, and the meaning of the words therein contained is to our mind in no wise obscure. By its enactment the legislature manifestly sought to avoid the various and devious contracts and agreements so often required by employers as a condition precedent to the obtaining of employment, and also to guard against the many and devious ways by which employers seek to avoid the consequences of their own acts, or the acts of their agents, by obtaining releases therefrom by the signing of instruments at the hands of the injured party tending to establish a settlement. Section 2071 of the code of the State of Iowa, dwelling upon a similar subject, is as follows: "Every corporation operating a railway'shall be liable for all damages sustained by any person, including the employees of such corporation, in consequence of the neglect of the agents, or by any mismanagement of the engineers or other employees thereof, and in consequence of the wilful wrongs, whether of commission or omission, of such agents, engineers, or other employees, when such wrongs are in any manner connected with the use and operation of any railway on or about which they shall be employed, and no contract which restricts such liability shall be legal or binding. Nor shall any contract of insurance, relief benefit, or indemnity in case of injury or death, entered into prior to the injury, between the person so injured and such corporation, or any other person or association acting for such corporation, nor shall the acceptance of any such insurance, relief benefit, or indemnity by the person injured, his widow, heirs or legal representatives after the injury, from such corporation, person, or association, constitute any bar or defense to any cause of action brought under the provisions of this section, but nothing contained herein shall be construed to prevent or invalidate any settlement for damages between the parties subsequent to injuries received. "
The code of Iowa quoted above is very analogous to our own statute, but contains a distinctive provision recognizing and sanctioning settlements for damages between the parties.
Section 5652 invalidates any defense based upon contract made to cover the contingency of future injury, and it likewise invalidates a defense based upon the acceptance of insurance, relief benefit, or indemnity accepted by reason of injury already sustained. The acceptance of any insurance, relief benefit, or indemnity must necessarily be an act of acceptance done after an injury, and hence it follows that the intendment of the statute was to make nugatory any defense based on acceptance of insurance, relief benefit, or indemnity, after the injury, as well as any .defense based on contract or agreement made or entered into prior to injury, created for the purpose of relieving the employer from his proper responsibility.
The word "indemnity" means: Protection or exemption from loss or damage past or to come. It also means: Immunities from the punishment of past offenses. One who indemnifies, or enters into a contract of indemnity, thereby agrees to save harmless. The word, generally speaking, carries with it two meanings: First, in the sense of' giving security; and, second, in the sense of relieving a party from liability for damage already accrued.
Laws enacted under the police power of the state, which will in their general nature promote healthful conditions of work and freedom from undue oppression, are always within the scope of the legislative department. The health and safety of the great mass of the employed is a subject with reference to which there has been vast and varied legislation in recent years, and the true aim and object of it all has been to protect life, person, and property where persons are engaged in hazardous vocations. The various legislative acts, dwelling upon this subject in the many states, have been passed upon by the courts in numerous decisions, with the result that the courts of last resort of many states, as well as the Supreme Court of the United States, have upheld the principle that such legislation was within the police power of the state; that power being exercised to govern men and things within the limits of its dominion. It has been generally said that where the health, prosperity, good order, and peace of the people, or of any general class of the people, require legislative regulations, it is within the power of the legislature of the several states to enact such statutes.
The legislature of the State of Nevada, speaking for the policy of the people of this state, has in the past enacted many laws intended to better the conditions of the laboring class,, by laying down rules and regulations in the interest of humanity, and to save the lives and limbs and safeguard the health of workingmen. The employers' liability act, of which section 5652 is a part, is but one of the great class of legislative acts enacted for the purpose of extending humane protection to the laborer, while legitimately pursuing his vocation. In enacting this statute the legislature evidently had in mind the inequality, from the standpoint of opportunity, of the employer and the employee, and it was within the power of the legislature to take into consideration and provide against the natural tendency of the employer to exact a favorable bargain where the opportunity presents itself. It was within the power of the legislature to make nugatory any contract or agreement whereby an employee might, by entering into such agreement, destroy the safeguards which the law threw about him. (Lochner v. People of State of N. Y., 198 U. S. 45, 25 Sup. Ct. 539, 49 L. Ed. 937, 3 Ann. Cas. 1133; Kilpatrick v. Grand Trunk R. Co., 74 Vt. 288, 52 Atl. 531, 93 Am. St. Rep. 887.)
The state, having the power to enact laws of this general character for the protection of the life and welfare of the individual members of any class, with equal power may declare void any agreement, contract of employment, insurance, relief benefit, or indemnity entered into prior to or subsequent to the injury, the general nature of which would be to destroy the effectiveness of the act itself.
It will be observed that the statute relied upon by counsel in this case differs from that under consideration in the case of McGuire v. C. B. & Q. R. Co., 131 Iowa, 340, 108 N. W. 902, 33 L. R. A. n.s. 706, cited by appellant, in that the Iowa statute makes special provision for settlement for damages between the parties subsequent to the injury. In this respect it may be observed that if these safeguards of legislation, enacted for the purpose of enforcing a policy, may be valid in nullifying contracts entered into prior to accident or injury, if legislative enactment may be valid to prevent an individual from entering into a contract while in full possession of his health, strength,- and faculties, how much more should their validity be upheld when they operate to safeguard and protect one who, by reason of accident or calamity occasioned by the very nature of his employment, is suddenly cast into suffering and privation? If public policy and public health demand that the employee be protected against himself when he is in full enjoyment of all the faculties with which nature has endowed him, and when those dependent upon him are receiving the full measure of his labor and ability, in our judgment it cannot be successfully argued that the same protection should not apply to him when, stricken down with some catastrophe in the course of his vocation, he finds himself deprived of the power to either support himself or provide for those dependent upon him.
The power of the state to prevent the individual from making certain kinds of contracts has been passed upon approvingly by many of the courts of last resort, and it has been generally said that if the contract be one which the state, in the legitimate exercise of its police power, has the right to prohibit, it is not prevented from prohibiting it by the fourteenth amendment. The rule has been laid down in state jurisdictions, as well as by the Supreme Court of .the United States, that contracts in violation of the statute, either of the federal or of a state government, could obtain no protection from the federal constitution as coming under the amendment bearing upon the subject of liberty of person and of free contract. When a state by its legislature, assuming to exercise under its police power, passes an act which in its general scope protects the health or welfare of the individual members of any general class, it has the right to enact legislation prohibiting contracts the general nature of which would be to prevent the operation of the law. (McNamara v. Washington Terminal Co., 35 App. D. C. 230.)
We think it unnecessary in this case to dwell upon the inadequacy of the consideration as represented by the receipt given by respondent to appellant and set forth herein. It is our judgment that it was the intention of the legislature to provide against just such instruments as that which presents itself in this case in the receipt or acceptance signed by respondent, wherein inadequacy is manifest and whereby the employer, by the payment of a mere pittance, seeks to avoid the just consequences of his own wrongful act. The purpose of the statute is to prevent such an acceptance operating as an absolute bar to an action; the object being to have the question of the amount of damages ascertained and determined by judicial calculations governed by legal principles and limited by equitable rules.
By the provisions of the statute any sum contributed toward the relief or indemnity of the party injured constitutes a set-off or a credit to the employer. It follows that the amount contributed would be deducted from any judgment that might be awarded to the injured person, and hence, in our judgment, the employer is deprived of no legal right or benefit by the inhibition of the statute.
In view of the foregoing reasoning it is our judgment that the respondent's demurrer to appellant's answer should have been sustained, as it was sustained by the trial court. No question is raised by appellant as to the evidence warranting the court in making the findings and entering the judgment for the sum specified.
It therefore follows that the order and judgment appealed from should be affirmed.
It is so ordered.