
    248 F. 407
    JOHNSTON v. KENNECOTT COPPER CORP.
    No. 3031.
    Circuit Court of Appeals, Ninth Circuit.
    Feb. 18, 1918.
    
      John Lyons, of Seattle, Wash., and E. E. Ritchie and J. L. Reed, both of Valdez, Alaska, for plaintiff in error.
    R. E. Capers, of North Yakima, Wash., and E. Lyders, of San Francisco, Cal., for defendant in error.
    
      Before GILBERT and HUNT,' Circuit Judges, and WOLVERTON, District Judge.
   WOLVERTON, District Judge

(after stating the facts as above).

The plaintiff challenges the validity of the Alaska act, on the ground that it denies the employé the equal protection of the law, and is in violation of section 9 of the Organic Act of the territory of Alaska, inhibiting the Legislature to “grant to any corporation, association or individual any special or exclusive privilege, * * * or franchise without the affirmative approval of Congress.” 48 U.S.C.A. § 77.

The particular features of the act which it is insisted render it nugatory are: First, that it is class legislation; second, that it is discriminatory in its provisions; third, that it possesses no characteristic of industrial insurance and no provision for payment of compensation; that it creates no official authority for adjustment of claims, but merely compounds a schedule of payments to which the injured is entitled, and is a limitation of liability on the part of the employer.

The suggestion that the act is in violation of section 9 of the Organic Act of the territory is not seriously pressed in the argument and briefs of counsel. Nor can it avail plaintiff, for it is manifest that the act grants neither privilege nor franchise to the mining companies of Alaska.

Counsel for defendant urges that the Fourteenth Amendment to the federal Constitution can have no application in the present controversy, because the amendment inhibits state action as it regards the denial of the equal protection of the laws, and does not, it is insisted, restrict the legislative action of a territory. This question may be waived, without deciding it, as we have concluded that plaintiff .cannot prevail upon either of the questions presented in his behalf.

For convenience, the third objection will first receive our attention. The gist of this objection to the validity of the. act is that it contains no feature of industrial insurance and no provision for the payment of compensation. While the act does not contain any provision for industrial insurance, it does contain regulations for securing payment of the compensation for injuries. A bond or cash deposit by the mining company is provided for, where beneficiaries of deceased persons are concerned, out of which to meet the compensation to which they are entitled; and in an action for the scheduled compensation, the employé has his attachment for securing the demand. So it cannot be said that the employé is without provision looking to the eventual payment of his claim. As to the absence of any insurance feature, the late cases of the Supreme Court proceed upon a ^reasoning, in support of Employers’ Liability Acts, which appears to us to be ample to support the present statute.

The New York act (Consol.Laws, c. 67) which is styled the “Workmen’s Compensation Law,” requires every employer subject to the provisions of the act to pay or provide compensation, according to a schedule, for the disability or death of his employé resulting from an accidental personal injury arising out of and in course of the employment, without regard to fault as a cause, except where the injury is occasioned by the willful intention of the injured employé, or where it results solely from his intoxication while on duty. A commission is created, with judicial functions, for passing upon claims, and a state insurance fund is provided for, to be made up primarily of premiums to be' paid by the employers. By the present act the district court is constituted a tribunal for ascertaining the legitimacy of the claims and the amount, but the so-called insurance feature, as we have previously indicated, is wanting. In practically all other respects, this act con■forms in principle with the New York legislation. The New York act was brought to test in the Supreme Court in the case of New York Central R. R. Co. v. White, 243 U.S. 188, 37 S.Ct. 247, 61 L.Ed. 667, L.R.A.1917D, 1, Ann.Cas.1917D, 629. Responding to three considerations urged adverse to the act — namely, (a) that the employer is subject to a liability for compensation without regard to any neglect or default on his part, and this though the injury may be solely attributable to the neglect or fault of the employé; (b) that the employé is prevented from obtaining compensation commensurate with the damages actually sustained; and (c) that both the employer and the employé are deprived of the liberty of agreement respecting the terms of employment — the court first disposed of the questions pertaining to the right of litigants to invoke the common-law remedies and the defenses of assumption of risk, negligence of a coemployé, and contributory negligence adversely to the continued maintenance of the right in the face of legislation taking it away and substituting other adequate remedies and defenses, and then proceeded to a discussion of the reasons which are thought to 'support the act, saying: “The statute under consideration sets aside one body of rules only to establish another system in its place. If the employé is no longer able to recover as much as before in case of being injured through the employer’s negligence, he is entitled to moderate compensation in all cases of injury, and has a certain and speedy remedy, without the difficulty and expense of establishing negligence or proving the amount of the damages. Instead of assuming the entire consequences of all ordinary risks of the occupation, he assumes the consequences, in excess of the scheduled compensation, of risks ordinary and extraordinary. On the other hand, if the employer is left without defense respecting the question of fault, he at the same time is assured that the recovery is limited, and that it goes directly to the relief of the designated beneficiary. And just as the employé’s assumption of ordinary risks at common law presumably was taken into account in fixing the rate of wages, so the fixed responsibility of the employer, and the modified assumption of risk by the employé under the new system, presumably will be reflected in the wage scale. The act evidently is intended as a just settlement of a difficult problem, affecting one of the most important of social relations, and it is to be judged in its entirety.”

After referring to the scheme of compensation, the court continues: “Of course, we cannot ignore the question whether the new arrangement is arbitrary and unreasonable, from the standpoint of natural justice. Respecting this, it is important to be observed that the act applies only to disabling or fatal personal injuries received in the course •of hazardous employment in gainful occupation. Reduced to its elements, the situation to be dealt with is this: Employer and employé, by mutual consent, engage in a common operation intended to be advantageous to both; the employé is to contribute his personal services, and for these is to receive wages, and ordinarily nothing more; the employer is to furnish plant, facilities, organization, capital, credit, is to control and manage the operation, paying the wages and other expenses, disposing of the product at such prices as he can obtain, taking all the profits, if any there be, and of necessity bearing the entire losses. In the nature of things, there is more or less of a probability that the employé may lose his life through some accidental injury arising out of the employment, leaving his widow or children deprived of their natural support; or that he may sustain an injury not mortal, but resulting in his total or partial disablement, temporary or permanent, with corresponding impairment of earning capacity. The physical suffering must be borne by the employé alone; the laws of nature prevent this from being evaded or shifted to another, and the statute makes no attempt to afford an equivalent in compensation. But, besides, there is the loss of earning power; a loss of that which stands to the employé as his capital in trade. This is a loss arising out of the business, and, however it may be charged up, is an expense of the operation, as truly as the cost of repairing broken machinery or any other expense that ordinarily is paid by the employer. Who is to bear the charge? It is plain that, on grounds of natural justice, it is not unreasonable for the state, while relieving the employer from responsibility for damages measured by common-law standards and payable in cases where he or those for whose conduct he is answerable are found to be at fault, to require him to contribute a reasonable amount, and according to a reasonable and definite scale, by way of compensation for the loss of earning power incurred in the common enterprise, irrespective of the question of negligence, instead of leaving the entire loss to rest where it may chance to fall — that is, upon the injured employé or his dependents. Nor can it be deemed arbitrary and unreasonable, from the standpoint of the employé’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.”

As it relates to the freedom of agreement respecting employment, the court is of the view that the act is fairly supportable on the ground that it is a reasonable exercise of the police power of the state. The court further says concerning the act, answering the objection advanced that it is inimical to the equal protection clause of the Fourteenth Amendment: “The only apparent basis for it is in exclusion of farm laborers and domestic servants from the scheme. But, manifestly, this cannot be judicially declared to be an arbitrary classification, since it reasonably may be considered that the risks inherent in these occupations are exceptionally patent, simple, and familiar.”

Now, all this discussion has proceeded independently of the industrial insurance feature of the act, and is as applicable and cogent here as to the New York act. The insurance feature, among other things, is designed to afford the employé adequate security for his compensation. In the present act, another scheme is evolved, intended to accomplish the same purpose. The particular method for accomplishing the purpose is mainly one of legislative choice, and so long as such method is reasonably adapted to the purpose, and is not arbitrary and without proper regard to cause and effect, it is beyond the scope of judicial function to disturb the choice. We think that the present legislation is reasonably adapted to secure to the employé the compensation provided for in the act. At least, it is such that the court will not say that the legislation is arbitrary and not based upon sufficient reason for its adoption.

In Hawkins v. Bleakly, 243 U.S. 211, 37 S.Ct. 255, 61 L.Ed. 678, Ann.Cas.1917D, 637, another case decided at the same time, involving the Iowa act (Acts 35th Gen. Assem. c. 147) relating to employers’ liability and workmen’s compensation, the same general reasoning is adopted for upholding the statute, and this again quite aside from the insurance provision. The Iowa act, in its general features, is practically the same as the New York act, and it was held that it is not inimical to that cause of the Fourteenth Amendment guaranteeing the equal protection of the laws. See, also, Mountain Timber Co., v. Washington, 243 U.S. 219, 37 S.Ct. 260, 61 L.Ed. 685, Ann.Cas.1917D, 642, and Cunningham v. Northwestern Improvement Co., 44 Mont. 180, 119 P. 554.

This disposes of the third objection favorably to the validity of the act in question.

The law is assailed by the first objection on the ground that it is thought to be class legislation, and this because, out of all the industries, the Legislature has selected but one class, namely, mining concerns employing five or more persons in the work. This pertains, again, to the equal protection of the laws clause of the Fourteenth Amendment. Classification of subjects for regulation by law is a function belonging to the legislative department of government. Generally speaking, class legislation is prohibited, but legislation which is limited in its application, if within the sphere of its operation it affects alike all persons similarly situated, is not within the prohibition. Barbier v. Connolly, 113 U.S. 27, 31, 5 S.Ct. 357, 28 L.Ed. 923.

The Legislature possesses a wide scope of discretion in the exercise of its function of classification, and such legislation can be condemned as vicious only when it is without any reasonable basis, and therefore purely arbitrary; and when legislative classification is called in question, if any state of facts can be reasonably conceived that would sustain the law, the existence of that state of facts at the time it was enacted must be assumed. Lindsley v. Natural Carbonic Gas Co., 220 U.S. 61, 31 S.Ct. 337, 55 L.Ed. 369, Ann.Cas.1912C, 160. To the same purpose, with elaborate discussion of the subject, see Miller v. Wilson, 236 U.S. 373, 382, 35 S.Ct. 342, 59 L.Ed. 628, L.R.A.1915F, 829; Louisville & Nashville R. R. v. Melton, 218 U.S. 36, 30 S.Ct. 676, 54 L.Ed. 921, 47 L.R.A.(N.S.) 84; Mondou v. New York, New Haven & Hartford R. R. Co., 223 U.S. 1, 32 S.Ct. 169, 56 L.Ed. 327, 38 L.R.A.(N.S.) 44; Cunningham v. Northwestern Improvement Co., supra.

The application of the rule here is simple. Mining is the one great industry of Alaska. It is attended by many hazards and complexities, and it is not strange that the Legislature should make of the single industry a classification for adjustment of workmen’s compensation. The act is criticized because “mining operations” are to be held to include all work performed on or for the benefit of any mine or mining claim; it being urged that many persons but remotely connected with the working of mines are thereby included. This again is matter for legislative discretion, and the question whether the workmen are engaged in mining operations is one that can be best disposed of when we come to it.

The second objection pertains to the elective aspect of the law. It is insisted that the law makes it more difficult for the workmen to make their election to accept the provisions, and to waive them when the election is once made, than for the employer, and that it is burdensome for the workmen to pay the expenses pertaining to verification and recording. This constitutes only a minor inequality, if inequality it can be called, and is without the indicia of arbitrary discrimination.

Lastly, it is insisted that the act makes no provision respecting workmen under the age of majority for accepting or rejecting the provisions of the act. The Legislature assumed, perhaps, that a minor, having the capacity to contract or to be contracted with, has the capacity to reject or waive such provisions. But, however that may be, minors are not denied the interposition of a guardian or next friend in doing the act for them.

Affirmed.  