*1 Appellant, RAISLER, Plaintiff v. and WARREN LOU CO., a Delaware RAILROAD NORTHERN BURLINGTON Grain, Defendants, and BURLINGTON Corp., and Ross-Ko Third-Party COMPANY, Plain- NORTHERN RAILROAD ELEVATOR Petitioner, v. FARMERS UNION tiff Respondent. Third-Party COMPANY, Defendant 84-372. No. 21, 1985. Submitted Feb. 31, 1985. Decided Dec. Rehearing April Denied P.2d 535. *2 Spence, Billings,
Thomas W. for Northern. Anderson, Brown, Gerbase, Jones, & & J. Harman Cebull Steven Woods, Cynthia Billings, R. for Farmers Union Elevator. Hartman, Herndon, Munro, Billings, Harper Rodney & T. for Ross-Ko Grain. Towe,
Towe, Ball, Billings, Enright Mackey, E. & Thomas Raisler. Opinion the Court.
MR. JUSTICE WEBER delivered the cer- Montana has The United States District Court for the State of personal questions a federal action for tified two to this Court from injuries party a or indem- and derivative third suit for contribution court, nity. questions, certified the federal are: as to us injured employee party damages 1. When an sues party joins employer party the third as a third defendant seek- ing indemnity, contribution or is assertion of Section defense, MCA, by party employer unconsti- defendant applied party plaintiff? Our tutional as it to the third answer no. damages, injured employee When an sues a third party joins as a third defendant seek-
ing indemnity, signed a contribution or and the writ- certification, provisions ten agreement with the outlined this can complete as a defense assert yes. to the third Our answer is action? Court sets
The certification order of the United States District employed following allegations Warren Raisler was forth fact: (Farmers). Company laborer Union While a Elevator top loading grain facility, grain from of a cars Farmers’ he fell at by co-employee. car Mr. sustained being that was moved Raisler injuries, including partial amputation his foot. He has severe *3 compensation from Farmers for his received workers’ benefits injuries. personal injury in Yellowstone
Mr. Raisler initiated a action (Ross-Ko) County and District Court. He named Ross-Ko Grain Northern) Burlington Company (Burlington Northern Railroad as. Ross-Ko, corporation, alleged He a Minnesota defendants. at the loading grain time owned the railroad cars into which he was alleg- Northern, corporation, Burlington of accident. a Delaware edly accident occurred. owned the tracks and the land where the grain facility from Bur- handling Farmers’ on land leased is situated to court based on lington Northern. The suit was removed federal parties’ diversity citizenship. party defendant joined as a third Northern Farmers, indemnity sought should from contribution and/or ultimately Farmers’ em- found liable to be summary judgment on the ployee, Raisler. Farmers moved for 39-71-411, pay- MCA, its to the ground limited that Section compensation ment of workers’ benefits. provides: — nonliability remedy insured chapter exclusive “Provisions compen- under the Workers’
employer. employments For all covered coverage sation Act or for which an election has been made for chapter, provisions chapter under this Ex- of this are exclusive. cept provided part chapter 5 of for uninsured this except provided Compensation as otherwise in the Workers’ Act, subject any liability is not whatever for personal death of or to an the Workers’ Compensation any Act or for claims for contribution or person asserted damages sought from whom are on ac- injuries count of such or death ...” requests interpretation federal court this Courts’ of Section
39-71-411, MCA, as it relates to the Montana Constitution.
I Montana enacted Compensation the Workmen’s Act in 1915. Sec. Chap. statutory compensation scheme, Laws 1915. Under the employees relinquished their against employ- common law remedies exchange ers in employers’ for guarantee pay compensation injuries work-related regardless employers’ of fault. The Act limited to workers’ provided benefits and that a claim injured under the Act remedy was an worker’s exclusive 92-204, that was covered the Act. Section (1947). R.C.M.
Because the many common law at inju- time left work-related uncompensated, ries statutory remedy Montana’s transition to a advantageous However, light improved prospects workers. theories, under modern tort workers and third turning are increasingly exemption courts from the exclu- remedy sive rule. “Continuing challenges remedy to the exclusive underlying rule reveal an compensa- tension between the workers’ system Exceptions to the Exclusive system.” Note, tion and the tort Remedy Requirements Statutes, Workers’ (1983). Harv.L.Rev. 1641 exceptions The creation of common law *4 remedy judicial attempt exclusive rule reflects a to reconcile the comparative scheme with modern tort theo- ries, such negligence. sought by as strict Courts have relatively various means to given reconcile the modest awards in- jured larger monetary workers with in recoveries allowed modern tort cases.
II right to collect from asserts its Northern here express alternative, or, on grounds on the contribution of indemnity provisions agreement between the lease contribution, theory regard and Farmers. With negligence it was Farmers’ act Burlington Northern claims that for contribution. Bur- the accident and affords the basis that caused if only passively negligent, at it was lington Northern contends that indemnity upon express indemnity allegation is based all. agreement. provisions contained the lease by requir joint among loss tortfeasors distributes Contribution proportion upon his ing pay proportionate share based each to injuries. Section 27-1- negligence proximately caused 703(1), MCA, tortfeasors. contribution between authorizes hand, from the the entire loss
Indemnity, on the other shifts required pay who should bear it to the one one who been 1971). Torts, (4th Prosser, ed. Law of Section 51 at 310 loss. W. duty indemnity upon independent or obli is based “The party, either as the result gation employer to the third owed implication raised law.” express result of an contract or as the Law, Compensation Larson, at 14-571 Workmen’s Section 76.13 2A (1983). em- provided that an insured the death of or any liability whatever
ployer subject “is not the Act. personal employee” who is covered to an indemnity. contribution or 1977 statute did not mention Stetson-Ross, Inc. in Cordier v. interpreted that statute This Court the statute P.2d We concluded parties under damages sought protected from current in accord with the theory That conclusion is of contribution. negligent em- join party cannot sue majority rule that a third at com- statutes or ployer joint under contribution tortfeasor Law, Section 76.20 Workmen’s Larson, 2A mon law. (1983). at 14-591 remedy Cordier, exclusive concluded that the Court also for non- Compensation Act barred a claim
provision of the Workers’ was involved express contract indemnity. No contractual indemnity. Cordier, any ruling such reserved on and the Court Cordier, P.2d at 92. at Legis- appeal in Cordier pending, the 1979 Montana
While the
259 39-71-411, proviso lature amended Section MCA. addition to the employer injury employee that the for to an is not liable death or Act, by provided the amendment that shall any not for or be liable “for claims contribution asserted by person sought damages a third on account form whom are of such injuries or death.”
Ill question
The first certified is: injured employee party damages Where an sues for and party joins seeking as a third defendant indemnity, 39-71-411, or contribution is the of assertion MCA, by defense, the third defendant as a constitu- applied tional as it is party plaintiff? to the third suc- Phrased more 39-71-411, cinctly: Is it constitutional for an use Section to complete defense to a third claim for contribution indemnity? or argues Northern Sec- that the limitation contained in
tion violates Art. 16 Sections and 17 of Montana Constitution.
Art. provides part Mont. Const. 1972 that courts justice open every of person speedy remedy shall be and afforded every injury. for argues that Section MCA, deprives Burlington right Northern of its constitutional to a remedy every injury for legal and full redress. Ill, 1889 comparable had a Sec- provision. Constitution
tion Mont. Const. states: justice open of every person, speedy “Courts shall and a rem- be edy every character; injury person, property, afforded for of and denial, right sale, justice and shall be administered without delay.” Mining Shea v. Co. North-Butte provision
This interpreted was 522, 179 499, personal injury by P. a action a miner employer. argued the Workmen’s Shea’s counsel repugnant guar Act constitutional every justice open person antee that courts of shall be and speedy remedy leg every injury. insisted that afforded for Shea tort. injured islature could not to sue in abolish legislature’s adoption This Court discussed the basis for the Act: imperfect object sought eco- for the and was to substitute
“[T]he by private in- nomically system action wasteful common-law part jured employee damages negligent fault on the waste, which, delay employer, great with com- while attended pensated proxi- establish the employees only those who were able to system by injury, fault and the mate connection between the every employee industry might receive com- in a hazardous during pensation any arising out injury suffered him words, theory of employment ... In other course legislation such is that loss occasioned reason employee not alone as it was under shall be borne *6 itself, industry in- system, directly by the the and common-law but Shea, 528-29, by P. at directly public . .” 500. the . Mont. Shea compen- theory to of workers’ regard The rationale with after its initial declaration sation was reaffirmed a number of times in Finally, recognized 1919. in the 1972 Montana rationale was 1972 states: Constitution. Art. Mont. Const. every person, speedy rem- justice open “Courts of be to and shall No or edy every injury person, property, character. afforded for of injury person deprived legal in- shall be this redress of full for may person be liable ex- employment another curred in which cept employer who hired employees to his immediate and fellow coverage under employer provides him such immediate if justice Compensation Right Workmen’s Laws this state. and of sale, denial, delay.” (Emphasis sup- shall or be administered without provi- plied.) original added to underscored sentence was explanation Ill, An sions of Section Mont. Const. Report to the Constitutional amendment set a Committee forth Convention: unanimously with one retain this section
“The committee voted
to
present
in the
Constitution
provision as it stands
addition. The
sale,
remedy
denial
guarantees justice
speedy
for all without
and a
interpretation
of
felt,
light
a
delay.
of
recent
The committee
remedy
Law,
to be
this
needed
Compensation
that
Workmen’s
employed
one cov-
persons
may be
explicitly guaranteed
who
to
an-
of
Compensation
on the facilities
Workmen’s
to work
ered
of
law,
decision
the recent
Under
as announced
other.
Montana
Co.,
v.
Power
There is no indication of intent to injured change to an specifically worker. The aimed at allowing recovery by responsible party. a worker time,
For the provided first Constitution Montana deprive State could legal full his em- redress ployer for injury employment. express during incurred That is an recognition originally constitutional in Shea. the rationale stated challenge Northern’s primarily based on the first of Art. sentence provides justice open speedy courts be shall to all and rem- edy every injury. disregard afforded for This contention tends *7 16, next sentence in specifically Section limits for II, injuries. work-related We conclude that Art. Section 16 must be entirety, considered in including its the second which lim- sentence its guarantees the broad contained the first sentence. pertinent part of the sentence second states: person deprived legal
“No shall be of this full redress for [Raisler] employment person [Burlington incurred in for which another may except employer be liable to . . . immediate his Northern] . . .” [Farmers] employee deprived
The sentence makes certain of redress that no is against However, party. employee deprived a third it allows an be legal against of full employer. redress his substance, 39-71-411, MCA, provides In that by indemnity not liable for for asserted Bur- a claim contribution or lington Northern, party. interpreted If be this limitation can right the worker’s to claim
as an extension of the limitation on expressly against employer, the limitation would be author- then 16, by ized Mont. Const. party by third distinguish
Is there a between a claim a reason to directly by the indemnity for contribution and a claim asserted or Cordier, employee? question this Court This was answered where stated: 92-204.1, opinion provisions
“It
is our
the
of Section
broad
1947,
39-71-411, MCA, require
us to hold
R.C.M.
now Section
provisions
Compensation Act are exclusive as to
of the Workers’
by
injured
liability
damages
sustained
directly,
they
employee
employee
sought
are
whether
“any liability
party
Our statute rules out
under contribution.
employee and
goes on
state that
whatever” even before it
recovery as the Act allows
those
him
limited to such
under
are
liability
“any
whatever” would
against
employer.
language
liability
only
em
not
to the
surplusage
be
unless it is read to mean
him,
ployee
any other
at
claiming
those
under
but also
liability
the same inci
tempting
against
to claim
Cordier,
508-09,
dent.”
at
Here we are not employee. The third has sued the third who been legal against right full redress claims that its constitutional already that an concluded has been eliminated. We have legal redress employee may constitutionally deprived of full be indirectly. against directly conclude that employer, his both We Raisler, em- there is no distinction between a direct claim by Bur- ployee, Farmers, employer, claim or an indirect employer. Hall Farmers, Northern, lington party, against holding does not conflict here. with our 16, Const., II, con analysis Section Mont. we our of Art. cases, that, af clude the second sentence upon provisions in fords a limitation the first sentence. broad provided We workers’ com conclude that where an pensation constitutionally may deprived of coverage, be directly legal injury against employer, full redress for both any indirectly. denying liability for con We hold that claims 39-71-411, MCA, indemnity by party, tribution or 16, does not violate Art. Mont. Const. argues vio- Northern also that Section Const, per- provides
lates Art. that: “No Mont. life, process deprived liberty, property son shall without due be deprives argues of law.” the statute party plaintiff Because of its to contribution. substantive provided, Burlington Northern no reasonable substitute has been process right. unlawfully deprived due We contends it has been of a disagree. process analysis requires a test of the rea
Substantive due
power
the State's
to enact
sonableness of a statute
relation to
legislation.
process is that
such
“The essence of substantive due
unreasonable, arbitrary
police power
State cannot use its
to take
(Mont.
Matter
C.H.
capricious
action
an individual.”
1984),
184,]
St.Rep.
1002.
683 P.2d
[210
en
satisfy
process guarantees, a statute
order to
substantive due
reasonably
to a
police
must
related
power
acted under a state’s
be
State v. Turk
permissible
legislative objective.
314-15,
cally preclude liability part employer to on the of an insured indemnity parties. legislative contribution or objective to third protect employers was to great potential liability” from “the if employers required pay could result were to the amount collected by party in his action a third in to addition payment Memorandum, compensation of the benefits. Judi Senate ciary Committee, February 39-71-411, MCA, 1979. Section scope liability employers amended to ensure that would by continue spite to be limited the Workers’ Act developing tort theories. 39-71-411, MCA,
The effect of the amendment to Section was to promote pay the continued economic welfare of who into employees compensa- State Fund and the welfare of who receive tion benefits. We therefore conclude that the limitations contained 39-71-411, MCA, reasonably permissi- are related to the legislative public ble objective protecting welfare. 39-71-411, MCA, We hold that assertion of Section as a defense to Act, employer does not violate Mont. Const. 1972. IV question The second certified is: injured employee party damages,
Where an sues a third joins employer as a third defendant seek ing indemnity, contribution or signed and the has a writ agreement provisions certification, ten with the in this outlined can complete assert Section as a defense to the third action? discussed, previously indemnity nothing proposition.
As an all or is required pay It it shifts the entire loss from the one who has been Cordier, to the one who Court held that an should bear it. this paid to an em- who benefits ployee subject indemnity is not based on a noncontractual claim The Cordier Court did not rule on contractual party. indemnity. Wright Howard S. Const. indemnity
Contractual
was considered in
Wright
v. F.E. DeBeer
Mech.
In this loss, any damage, injury or hold harmless for Farmers, employees agent, or any death from act omission of its em- person property to the lease and their ployees. form, agreement indemnity provision in the lease interpreta- enough broad to allow as a matter of contract question tion. Our is whether can now assert Section 39-71- 411, MCA, complete defense to the action contractual indemnity. majority express
A recognized of courts has contractual *10 Annot., See, exception remedy as an 100 to the exclusive rule. (1980). frequently-stated rationale A.L.R.3d Section at 380 8[b] separate legal cause is that the claim definition a is upon relationship obligation. based a contractual and a contractual Law, Larson, Workmen’s 2A 76.42 at 14-630 (1983). exposure employer bargained The increased is partial serves as consideration or at least consideration for whatever Compensa- Robinson, Workmen’s party. is received from the third Dilemma, (1983). Party tion: The Third 259, L. 268 19 Idaho Rev. statutory jurisdictions Courts in three that their have concluded language specifically precludes in party suits for contractual third Rob demnity, obligations and such contractual are therefore void. 985; Gray’s Rigging erts v. (1985), 29, Crane & Or.App. 697 P.2d 638; Paul Krebs & Assoc. v. (Ala.1978), Fritts Const. So.2d Gulf Corp. Operating Oil v. Rota-Cone Field Co. 84 N.M. employee P.2d 78. in if the The stated rationale these cases is that party is allowed to recover from a and then the third third employer subjected employer, allowed to recover from the liability. double theories, impor- legal in we find it view of these contradictions Shea construed
tant Constitution. review our Montana cases and and set forth Montana’s Act in relation to the 1889 Constitution sys- compensation why legislature adopted reasons the workers’ employee by tem as for common law tort suits a substitute Shea that the Act was per- employer. We concluded in legislative power, policy missible exercise of based on sound social protecting injured workers.
The Constitutional Convention Art. Committee which considered keenly Mont. Const. was aware of a need to protect discussed, injured employees. previously As interests of it was in the of the second that awareness that resulted addition sentence Section 16. commonly recognized theory
Indemnification was a at the time of the 1972 Constitutional Convention. The above-quoted Report Committee indicates that the Convention had judicial interpreta- mind the 1889 Constitution and at least one employee’s parties. tion limited an to sue third Had Ill, so, Convention chosen to do it could have amended Art. Const, employ- protection granted to diminish the protec- ers. The Convention concluded instead that the continued employers proper. compensation tion of workers’ was discussed, previously legislature’s As 1979 amendment of Sec- expressed legislative tion intent allow a should not be in such a manner as to broadened employer. sponsor to recover from an As the bill’s explained: law, relatively developments product
“With new problem employers emerged. injured employee collects compensation. equip- He then sues the manufacturer or seller of may injury. ment which have to his The manufacturer contributed equipment or seller of the then sues the for the amount employee theory implied express indem- sought on the Thus, nity. possibility of not is confronted with the benefits, only paying but also the amount party. Oregon collected in action problem protect confronted with this same potential liability, an amend- great that state from the it enacted *11 protect from such ment to its law to its and insurers claims the manufacturers sellers. in Mon- designed accomplish Bill to the same result
“Senate 322 is Judiciary Memorandum, Healy, E. Senate tana.” Senator John Committee, 7, February
Legislative protect employers from to third intent to equitable contractual and is clear. No distinction is made between history the legislative indemnity in itself or the the statute amendment. not Legislature grant right Montana chose a third the indemnity theory recover on a contractual from an car-
rying insurance. That choice was consistent opinion people with the expressed adoption of the their of Art. 16, Mont. Const. 1972. conclude that We neither the legislature Convention nor the change desired to make a grant would to recover from an on a indemnity theory. contractual argues recovery against that a failure to allow impairs obligation of its indemnification contract. This
subject was in Neel v. First Sav. and Federal length discussed at (Mont. 1984), Loan Assoc. 96, 376,] St.Rep. 675 P.2d [207 31, 18. Both Mont. Const. and Art. prohibit
U.S. impairment Const. of contracts. This Court pointed out in Neel the two contract clauses have been con interchangeably strued applied: and set forth the test to be Energy Reserves, Supreme “The [Group, Inc. v. Kansas Court Co., Light Power and 459 U.S. 103 S.Ct. 74 L.Ed2d 569 (1983)] noted that an legislation validity examination of the under the requires contract step analysis. clause a three The thresh- inquiry old fact, is ‘whether the operated state law has as a sub- impairment stantial relationship.” of the contractual If there is no impairment substantial relationship, inquiry contractual Second, is ended. if legislation substantially impairs the contrac- rights, state, tual justification, significant must have a “[t]he legitimate public purpose Third, regulation.’ behind the adjust- ment rights responsibilities contracting parties must be ‘[u]pon based appro- reasonable conditions’ and be a character ‘[o]f priate public purpose justifying legislation’s adoption.’ As notes, opinion contract, unless the State is a courts Neel, properly will legislative defer to judgment step.” on this third 104-05, (Citations omitted.) St.Rep. P.2d at 27-28. We find statutory prohibition enforcement of impairment contract is a substantial of the contractual relationship that exists between Northern and Farmers. Thus, inquiry the threshold is met. question second significant is whether the State had a and le-
gitimate public purpose in enacting previously the statute. As Shea, pointed out in the aim of the Workers’ Act was compensate every employee any during suffered employment, course whether was at fault or not. *12 system guar- compensation were Employers participated who in the the common liability. system designed anteed limited public wards. This not become good injured so that workers would purpose legislative purpose legitimate. and significant is both limited guarantee is to continue behind Section statutory prohibition liability the Act. The indemnity was enacted contribution or against third claims for compensation purpose perpetuating Montana’s workers’ with the to be a system development. We find this light in of recent tort law purpose, meets the second significant legitimate public which and part of the test. statutory adjustment of the requirement
The third that based responsibilities contracting parties must be rights appropriate to the upon conditions and be of a character reasonable Neel, that where a purpose In this Court concluded of the statute. properly question, will the contract courts State is not a Neel, St.Rep. at P.2d at legislative judgment. defer to judg- proper legislative that it is to defer to 27-28. We conclude many courts have held point. recognize We that ment on this third separate indemnity is an action enforce an contract that an action to recovery employee, and injury of the original from the claim for the appro- is not an employer. That can therefore be allowed pointed As Compensation Act. priate our Workers’ distinction under Cordier, damages held liable for should not be out an damages sought are injured employee, whether such sustained recovery indirectly through from employee directly party. all of case, could recover present possible that Raisler it is prove that if he Burlington could damages tort from Northern injuries, of his was a cause negligence might have been the injuries though principal cause of such
even recovery by the of such a negligence employer. of his the event its to recover employee, could claim Burlington Northern then result The end basis. from Farmers on a contractual em- indirectly from his would recover would be he also re- injury for which ployer damages for the all of his tort inappropri- compensation indirect benefits. That ceived of the workers’ foundation the basic ate. It would contradict imposes state, absolute law this all other employees and eliminates upon injury to employer. part of the on the We three-part conclude that in Neel test has been met. We hold that Section does not violate the constitu- prohibitions tional against impairment contracts, obligation 39-71-411,MCA, complete Farmers can assert Section defense to the third action Northern.
Shea, Cordier, Judiciary and the Committee Minutes on the 39-71-411,MCA, amendment to Section set forth sound reasons for *13 limiting employers’ liability protect compen- in order to the workers’ system sation in Montana. legislature’s
We find the employers’ liability limitation on to be constitutional. We conclude properly that an insured can 39-71-411, assert complete defense to third express action for indemnity. MR. CHIEF JUSTICE TURNAGE and MR. JUSTICES HARRI- SON, HUNT, MORRISON and SHEEHY concur.
MR. GULBRANDSON, JUSTICE dissenting.
I concur with response question to certified No. but would respond question “no” to certified 2.No. majority opinion states: legislative purpose
“The 39-71-411,MCA, behind Section con- is to guarantee tinue to limited the Act. statutory prohibition third claims for constitution purpose perpetuating enacted with the Mon- tana’s system light of recent tort law de- velopment.” added.) (Emphasis my view, majority “per has done more than “continue” or
petuate”
present
what was
legislature
at the time the
acted. This
previous pronouncements
(1970),
Court’s
in DeShaw v. Johnson
Wright