Lead Opinion
Certiorari to review a decision of the Industrial Commission awarding workmen’s compensation to a Minnesota workman for injuries he sustained in the State of South Dakota while employed there pursuant to a contract with a Colorado employer. The issue presented is whether, under the facts herein related, there was a sufficient governmental interest in the employment status to warrant the Minnesota Industrial Commission in taking jurisdiction to determine compensability of the injuries sustained in South Dakоta.
From the record it appears that the employer, Steams-Rogers Manufacturing Company, is one of about 75 contractors engaged in various phases of construction of the Missouri River Basin conservation project. The project involves work in various states. The employee, Henry Houle, was hired as a welder in March 1960 to work on part of the project at Rapid City, South Dakota. Houle and another workman, who later became a foreman on the jоb, were hired in Minnesota through the union office in Minneapolis. They were immediately put on the payroll of the employer at the time they started travel from their homes in Minnesota to the location of their work in South Dakota. Houle’s base pay was $150 a week. In addition to pay during travel time, he was paid expenses and a subsistence allowance of $21 a week. He worked in South Dakota from March 1960 until July 22, 1960, a few weeks after the accident in which he was injured. His employment was interrupted when he returned to Minnesota because of the illness and death of his daughter. For this trip, travel expense was paid both ways by the employer. During all of the period in question, the employee maintained his residence in Minnesota. After he was injured in July 1960, Houle was paid $4,877 in a South Dakota compensation proceeding and entered into an agreement releasing the company from all claims arising under the laws of South Dakota or any other state. It appears thаt Houle thereafter required additional medical attention, bringing the total of his expenses to over $4,000 by March 1965. He therefore sought further relief under the workmen’s compensation laws of Minnesota. The Industrial Com
It is contended that the commission was without jurisdiction to grant additional workmen’s compensation benefits because benеfits had already been paid under the laws of South Dakota and that the release signed by the workman is a complete bar to further benefits in Minnesota. We held in Cook v. Minneapolis Bridge Const. Co.
There is ample authority for the Minnesota commission to assume jurisdiction of injuries sustained by an employee while engaged in work for an employer in a foreign state when the employer’s business is localized in this state. State ex rel. Chambers v. District Court,
It is not seriously contended by respondent thаt the incidents of the employer’s activities in Minnesota are sufficient to warrant taking jurisdiction under the theory of localization discussed in the foregoing authorities. We believe, however, that respondent is correct in his position that jurisdiction may be asserted here on the sole ground that the contract of employment was entered into in the State of Minnesota. He argues that, as a resident of Minnesota under a Minnesota contract for hire, he was covered by the Minnesоta Workmen’s
Respondent’s position is supported by the United States Supreme Court’s decision of Alaska Packers Assn. v. Industrial Acc. Comm.
“* * * ‘The contract creates a relationship under the sanction of the law and the same law attaches as an incident thereto an obligation to compensate for injuries sustained abroad amounting to a sort of compulsory insurance.’ [Citation omitted.] Obviously the power of a state to effect legal consequences is not limited to occurrences within the state if it has control over the status which gives rise to those consequences.”
The court emphasized the disadvantages to which such an employee would necessarily be subjected were he required to retrace his steps to the jurisdiction of the accident in order to successfully prosecute his claim for compensation and concluded that California had a legitimate public interest in controlling and regulating the employer-employee relationship under such circumstances. This consideration was adverted to by this court in Hubbard v. Midland Constructors, Inc.
“It has been suggested that in some instances an employee may be denied a practical remedy if he must return tо the state in which he was injured and the witnesses who were temporarily employed there are no longer available. This possibility, together with the danger of his becoming a public charge, has been described as a matter of grave concern to the state of the employee’s residence. Threaded through all of these cases is the expressed policy of protecting employees who have substantial business connections and personal ties within the jurisdiction where compensation is sought.”
It would accordingly appear that one state may have a sufficient legitimate governmental interest in a single work injury to sanction adjudication of compensability under local law without violation of
The question arises as to whether, in a particular case, a state might have a “sufficient legitimate governmental interest” to warrant the exercise of jurisdiction on the basis of contract status alone. We have no statutory provisions or precedents in this state which might serve as a guide. Some states have express statutory provisions relating to the extraterritorial application of their workmen’s compensation acts. New Mexico has a statute providing that an employee assigned work outside the state is entitled to compensation under the New Mexico act where the injuries have been received within a specified time after leaving the state and the assignment was not permanent. Franklin v. Livermore, 58 N. Mex. 349,
On the basis of the record in this case, we are of the view that the State of Minnesota has a sufficient legitimate governmental interest to entertain jurisdiction. We cannot agree that South Dakota is the exclusive forum for adjudicating the claim merely because the accidеnt happened there. The transitory nature of the employment must be considered. Neither the employer nor the employee were residents of South Dakota. The State of South Dakota had no more interest in the employment project than any one of a number of states. The employer had its place of business in Colorado and was engaged in an interstate project. The employee was temporarily stationed in South Dakota while being paid subsistencе pay by the employer and travel expenses to and from his home as well. Moreover, the employer had certain contacts within the State of Minnesota at the time
It is next urged by relators that the contract was not in fact entered into in Minnesota. In considering this point, it should be noted that the contractual rights of the parties derive from an agreement between the emplоyee’s union, the International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers and Helpers, and more than 75 contractors engaged within the States of Montana, Kansas, Missouri, Minnesota, Nebraska, Colorado, South Dakota, Wisconsin, Wyoming, North Dakota, and Iowa in various phases of construction of the so-called Missouri River Basin. Article 2 of this contract states:
“The employer recognizes the Union as the sole and exclusive bargaining representative for all boilermakers journeymen, apprentices and helpers in the employ of the Employer with respect to wages, hours and other terms and conditions of employment herein expressed in the performance of all work coming within the terms of this Agreement subject to the provisions of existing law.”
Article 4(a) states the agreement covers the working rules and conditions of employment for all journeymen boilermakers. Appendix “D” refers to the technique of referral of men. Section 1 (“Exсlusive Referral”) states:
“(a). The Employer shall, under the terms of this Appendix, request the Union to furnish all competent and qualified field construction boilermakers, boilermakers helpers and boilermakers apprentices. The Employer in requesting the Union to furnish such applicants, shall notify the Union either in writing or by telephone, stating the*353 location, starting time, approximate duration of the job, the type of work to be performed and the number of workmen required.”
Sections 2 and 3 set up the nеcessary registration and qualifications for the boilermakers. Section 4 states:
“Upon the request of the Employer for foreman, assistant foremen, boilermakers, boilermaker helpers or boilermaker apprentices, the Union shall immediately refer competent and qualified registrants to the Employer in sufficient number required, in the manner and under the conditions set forth in this Appendix, from the appropriate out-of-work list, on a first in, first out basis, that is, the first name registered shall be the first namе referred, * * *.”
Section 5 provides for nondiscriminatory referral but 5(b) does provide:
“The Employer retains the right to reject any job applicant referred by the Union.”
Article 5(b) also contains a similar provision:
“* * * The Employer shall have the right to reject any applicant for employment who is unable to thus establish his qualifications and skill necessary to perform the work required by the Employer or for any other bona fide reason.”
Since the contract appears to give the employer the right to reject any aрplicant for employment, it is argued that the last act in the contract of hire occurred in South Dakota, and it consequently must be construed as having been entered into where that act took place. It should be noted that the employer utilized the union as an agent to convey the employer’s offer of work to individuals in designated order. In this case, one of the employer’s supervisors in South Dakota contacted the union office in Minneapolis and had the offer of employment communicated to the employee. The terms of employment were known to the employee since the governing conditions of employment were expressed in the union contract. The commission concluded that, since the employee was immediately placed' on the payroll and paid time and travel expenses, the offer and acceptance of em
The point thus raised by relators has been considered in two recent cases — Reynolds Elec. & Eng. Co. v. Workmen’s Comp. App. Bd. 65 Cal. (2d) 429,
Relators’ contention that the employee is barred from asserting rights in Minnesota because of the release given in the South Dakota
Affirmed.
Notes
Wilson v. Faull, 27 N. J. 105, 141 A. (2d) 768; 2 Larson, Workmen’s Compensation Law, § 86.10; Restatement, Conflict of Laws, §§ 400, 403; 55 W. Va. L. Rev. 131; 24 Tenn. L. Rev. 325; Horovitz, Injury and Death under Workmen’s Compensation Laws, pp. 34 to 38 and note 9, p. 36.
Dissenting Opinion
(dissenting).
In holding that to confer jurisdiction for purposes of awarding workmen’s compensation it is now only necessary to show that -a contract of employment was entered in this state with a Minnesota resident, we are overruling 50 years of precedent sub silentio. The court has abandoned the requirement that an employer have a localized business in Minnesota as a prerequisite to imposing liability under the Workmen’s Compensation Act. Predictably, the next step will be to apply the Minnesotа act regardless of where a Minnesota resident is hired or injured. While this may be constitutionally valid, in the absence of legislation which clearly expresses a purpose to extend the act that far, I cannot agree we should summarily reverse a position to which we have adhered without deviation since 1918. If a majority of the court is of a different opinion, it seems to me that we should expressly overrule our prior decisions.
Where, as here, it is conceded that the emplоyer had no business localized in Minnesota, I fail to see how he has an obligation to submit to our act. Apparently, because of prior activity in this state, this employer did in fact carry workmen’s compensation insurance. Ordinarily, however, this will not be the case where the employer has no connection with this state beyond hiring Minnesota residents for work elsewhere. The burden thus imposed is out of proportion to any reciprocal benefit which this state confers on the employer.
Moreover, there may well be a great many other employers similarly situated outside of this state who, relying on our localization rule, have heretofore failed to secure compensation insurance. As to them our retroactive reversal of policy is manifestly unjust.
By the same token, we certainly do not encourage nonresident employers to seek Minnesota construction workers out of local hiring
In State ex rel. Chambers v. District Court,
“* * * when a business is localized in a state there is nothing inconsistent with the principle of the compensation act in requiring the employer to compensate for injuries in a service incident to its conduct sustained beyond the borders of the state. The question of policy is with the legislature. It may enact an elective compensation act bringing such result if it chooses. In the case before us the business of the employer was localized in the state. What the employee did, if done in Minnesota, was a contribution to the business involving an expense and presumably resulting in a profit. It was not different because done across the border in North Dakota. It was referable to the business centralized in Minnesota.”
Every case dealing with the subject since the Chambers decision has found the employer’s business to be localized in this state as a basis for recovery. State ex rel. Maryland Cas. Co. v. District Court,
As recently as November 1964, we noted in Hubbard v. Midland Constructors, Inc.
“* * * The Minnesota court has developed the ‘business localization’ theory as a test for applicability of the Minnesota Act.”
Wellen, Workmen’s Compensation, Conflict of Laws and the Constitution, 55 W. Va. L. Rev. 131, 134, notes:
“* * * [T]he courts in several states, even in the absence of statutory provisions, have developed conflict of laws principles more adapted to workmen’s compensation problems. The common factor in these theories is the attempt to find some act, relation, or situation within the jurisdiction to which the local act will attach legal consequences. Probably the best known of these theories has been the ‘business localization test’ developed by the Minnesota court. * * *
:)« * #
“In an increasing number of states, the business localization theory is being regarded as an important factor in determining whether the local act will be applied.” (Italics supplied.)
Professor McClintock made a similar observation in Restatement, Conflict of Laws, Minn. Ann. p. 94. Finally, 2 Larson, Workmen’s Compensation Law, § 87.50, comes to the following conclusion:
“The state in which the employer’s business is localized has a relevant interest in a compensable injury, as shown in the constitutional discussion earlier, since the obligation side of the compensation relation is as much a part of that relation as the benefit side, and since the burden of payment would ordinarily fall most directly on the employer and community where the industry is centered. Minnеsota is the only state, however, in which this test [localization] has been fully developed by judicial decision, as the most important test of all, although other jurisdictions have relied upon it in conjunction with other tests. In Minnesota, the decisions seem to indicate that*358 the local statute will be applied on the strength of business localization even if the injury and other major factors are outside the state; and, conversely, the presence of such other major factors as emрloyee residence and place of contract within the state does not seem to satisfy the courts unless they can also find some kind of business localization in Minnesota.” (Italics supplied.)
While Alaska Packers Assn. v. Industrial Acc. Comm.
For the reasons stated I would not lightly abolish the requirement of an employer’s business localization in this state without stating more compelling reasons for our deviating from the doctrine of stare decisis.
Dissenting Opinion
(dissenting).
I concur in the dissent of Mr. Justice Otis.