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«THE EXTRA-TERRITORIAL APPLICATION OF COMPENSATION ACTS BY CLARENCE W. IIOBBS 1. In General. A goodly number of the compensation acts are by their ...»

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v. Ind. Com., 234 N. W. 889, was very similar on the facts to Bradford Electric Light Co. v. Clapper: i.e., an employee of a power company, resident in Iowa and working there regularly, was transferred to work temporarily in Wisconsin, where he was killed. The court held that the business of the employer was localized in the state and awarded compensation. Here, however, the contract of employment was entered into in Wisconsin, which distinEXTRA-TERRITORIAL APPLICATION OF COMPENSATION ACTS 267 guishes it from the Clapper case. The cases of Val Blatz Brewery Co. v. Gerard, 230 N. W. 622, and McKesson, Morrison Co. v. Ind. Com., 250 N. W. 397, seem flatly inconsistent. In the first case, the court applied the Wisconsin law to the case of an out-of-state injury to a salesman employed by a Wisconsin concern to sell its products in Missouri and Arkansas. This accords fairly well with the localization theory, or as the court puts it, the status theory, since the wo'rk was transitory in character, and incidental to the Wisconsin operations; though to be sure it practically overrules Wandersee v. Moskewitz et al, 223 N. W. 837, where compensation was denied a buyer, no part of whose service was in Wisconsin. But the second case involved the salesman of an unlicensed foreign corporation without even a working address in Wisconsin, and the injury took place in Illinois. The localization theory could not justify the award of compensation to him under the Wisconsin law: in fact, the one element linking the case to Wisconsin at all seems to have been the residence of the employee in Wisconsin.

Other cases which seem to reflect the localization theory are Kennedy-Van Saun Mfg. Co. v. Ind. Com., 189 N. E.

916 Ill. This involved the extra-territorial application of the Illinois law to the employee of a New York corporation, sent to work with an Illinois subsidiary.

Bishop v. International Sugar Feed Co., 162 N. E. 71 Ind.

Smith v. Mengies Shoe Co., 188 N. E. 592 Ind.

FinkIey v. Eugene Saenger Tailoring Shop, 196 N. E.

536 Ind.

In all these cases the emphasis seems to be on the fact that it is not an Indiana employment.

Durrett v. Eicher Woodland Lumber Co., 140 So. 867 La.

Abood v. Louisiana,Oil Ref' g Corp'n, 155 So. 484 La.

U. S. Casualty Co. ~. Hoage, 77 F. 2nd 542 D. C.

The localization theory has much to recommend it from the practical standpoint. It avoids technicalities, and along the lines indicated in New York makes a rule which brings under the act about what a state is really interested in regulating. There is to be sure a no-man's-land between outside operations clearly transitory and incidental, and outside operations at fixed locations: but this is as nothing compared with the difficulties often met with in deciding where a contract of employment is made, to say nothing of the

2~8 EXTRA-TERRITORIAL APPLICATION OF COM~PENSATION ACTS

various other pitfalls incidental to the contract theory. It seems also reasonably close to the lines followed by the Supreme Court. F o r this latter reason it seems likely to receive in the future a further extension.

–  –  –

(b) Insurance Contracts.

One collateral effect of the extra-territorial effect of compensation acts is to be noted in case of a contract of insurance which by its terms or by requirement of law covers generally an employer's liability under the compensation act, or which, as in Massachusetts and Texas is for the purpose of making an employer an "insured person" under the compensation act.

It would seem in any of these cases, and, where the obligation to give full coverage is statutory, the policy covers not only injuries within the state, but extra-territorial injuries to which the law applies as well, any provisions in the policy contract to the contrary notwithstanding.

I47right' s case, 197 iV. E. 5 Mass.

State ex rel. London and Lancashire Ind. Co. v. Dist. Ct.

170 N. W. 218 Minn.

Venuto v. Carter Lake Club, 178 N. W., 760 181 N. W.

377 Neb.

In the last named case, however, the decision was based on estoppel, the premises on which the injury occurred having been named in the policy declarations, although outside the state boundaries.

Home Life Ins. Co. v. Orchard, 227 W. 705 Tex.

This case involved a policy issued prior to the amendment of the law inserting the extra-territorial provisions.

The policy was held to cover an extra-territorial injury sustained during the policy term, and subsequent to the amendment.

This rule does not hold good, of course, if the policy can be validly restricted, and is restricted to operations within the state.

There is one Connecticut case, Miller Bros. Const. Co. v.

Maryland Casualty Co., 155 A. 709, which involved two policies in different companies, one on the Connecticut business and one on the Vermont business of the assured. An injury happened in Vermont. The employee was entitled under the Connecticut extra-territorial provisions to compensation under the Connecticut law. The court in this case held that the injury came within the coverage of the Vermont policy, rather than the Connecticut policy: This, in spite of the fact that the Vermont policy gave no coverage under the Connecticut law, so that if an award were made under the Connecticut law it would of necessity be paid by the employer. A case in the Federal courts, McCaffrey v.





270 EXTRA-TERRITORIAL APPLICATION OF COMPENSATION ACTS

American Mutual Liability Ins. Co., 32 F. Ind. 791, 37 F.

Ind. 870, brought up the problem in another way. The employee was hired in Tennessee and injured in Texas. The Tennessee act is extra-territorial--very much so--but the employer had insured his liability under the Texas Act with the defendant. The employee elected to proceed under the Texas act, and received an award. It was held that the insurer was bound under its contract.

8. Conclusion.

The principles of conflict of law as applied to compensation will be seen from the above to be in no very orderly condition. There are several theories for applying principles of comity and there is also the Federal jurisdiction under the Full Faith and Credit clause and the Due Process clause which does not regard teehnieal rules under any one of them, but decides cases on grounds of substantive merit. It is not claimed that there is no agreement in the decided eases. The great majority of states make some application of the rules of conflict of law derived from the contract theory. But the applieation is not uniform, and is very extensively modified by legislative policy.

The contract theory, while the oldest and best established of any, seems destined to be less relied on in the future. It was a natural theory to adopt, but it simply does not fit the needs of the situation.

It affords a eonvenient theory for the extra-territorial application of compensation acts: but its full application in ease of contracts made out of the state would remove from the influence of the local eompensation acts eases which the state has a clear interest in protecting. A state cannot well refuse protection to one who is regularly employed within its bounds, merely because the contract of employment was made years before outside its bounds. T o admit such a principle would afford a facile means of avoiding its compensation act altogether. And yet, to inject the terms of its own act into a contract of employment made beyond its bounds is to trespass on the sovereignty of another state and run dangerously near the constitutional mandate against impairing the obligation of a contract. T o say, that because the services contemplated are to be rendered within the state, provisions of the state compensation act become automatically a part of the contract, is untrue in fact,

EXTRA-TERRITORIAL APPLICATION OF COMPENSATION ACTS

although true in the sense that it sets forth the policy the court intends to pursue. Again, the very facility with which the theory justifies the extra-territorial application of the law, tends to bring within the scope of the law activities in which the state has no possible interest. Compensation acts have been held to cover injuries sustained in Europe, in Nicaragua and on the high seas: in fact there is no limit to their extension. This is not so much of an objection as the possibility that it may bring within the act enterprises in other states, carried on at fixed locations, and in every way properly subject to the law of the state of location.

The ver:~ natural result has been a most undesirable variation in state policy. A few states have in effect closed their borders to the law of other states. Others have written limitations into their extra-territorial provisions, or have by judicial decision educed limitations unknown to the principles of conflict of law applicable to contracts. Still others have discarded the contract theory entirely, and the Supreme Court has, as above stated, turned its back on theoretical considerations.

Ultimately the lines of procedure must come nearer to those followed by the Supreme Court, though it may be anticipated that the program of uniformity will take some little time. It seems probable that the ultimate result will be in fair accord with the theory of localization as worked out and applied by the courts of New York. This theory is simple and logical. It lays down very natural lines as a limit to the jurisdiction of the state, including the greater part, certainly, of what the state is really interested in protecting, and leaving out the greater part of that in which the state has no protective interest. It substitutes a practical test for a theoretical test. It obviates the enormous difficulty of going into past history and disentangling the various steps by which a contract of employment was made, and substitutes therefore the simple and easily provable test of where the employee is characteristically employed. All this is a great gain. It is not claimed that the theory will serve in all cases: but it is thought it comes closer to the idea of the Supreme Court than any other theory.

Meanwhile, and until this branch of the law crystallizes into more permanent form it is necessary, in dealing with a problem of conflict of law to read carefully the statutes and decisions in each of the states concerned, and also the decisions of the Supreme

272 EXTRA-TERRITORIAL APPLICATION OF C O M P E N S A T I O N ACTS

Court. It m a y be assumed that the temporary and incidental employment of an employee in another state will as a rule be no interruption of the application of the law of the state where he is employed. It may also be assumed that if the employment is at fixed location in another state for a substantial period, that generally the law of that state will govern the operation. T h a t this will be held in aIl states is by no means certain: but it seems as likely an ultimate result as any.

EXTRA-TERRITORIAL APPLICATION OF COMPENSATION ACTS

APPENDIX

CASES AND STATUTORY REFERENCES

1. Federal.

Bradford Electric Light Co. v. Clapper, 286 U. S. 145.

State of Ohio v. Chattanooga Boiler & Tank Co., 289 U. S. 439.

Alaska Packers Ass'n v. Ind. Acc. Com., 294 U. S. 532.

(application of "FuU Faith and Credit" provision to conflicts of laws involving compensation acts)

Western Union Tel. Co. v. Brown, 234 U. S. 542. _:;

Slater v. Mexican Nat'l R. Co., 194 U. S. 120, 126.

Cuban R. R. Co. v. Crosby, 222 U. S. 473.

(application of "Full Faith and Credit" provision and "Due Process" provision to conflicts of law involving actions in tort) Texas Pipe Line Co. v. Ware, 15 F. 2nd 171.

United Dredging Co. v. Lindberg, 18 F. 2nd 453.

(enforcement of compensation act by Federal court) McCaffrey v. American Mutual Liability Co., 32 F. 2nd 791, 37 F. 2nd 870, 281 U. S. 751.

(liability of insurer when employee, having remedy under two compensation acts, elects remedy under law covered by insurer's policy) Scott v. White Eagle Oil & Ref'g Co., 47 F. 2nd 615.

(Law of place of making contract of hire applied to extraterritorial compensable injury) The Linseed King, 48 F. 2nd 311.

In Re Spencer Kellogg & Sons, 52 F. 2nd 129.

(compensation act of state of employment held to prevail over action under death statute of place of injury) (these cases were reversed in Supreme Court on point of Federal maritime jurisdiction. Spencer Kellogg Co. v. Hicks, 285 U. S. 502) Ford, Bacon & Co. v. Volentine, 64 F. 2nd 800.

(discussion as to whether law of place of performance should not apply) Betts v. Southern Railway Co., 71 F. 2nd 787.

(effect of subrogation section of compensation act on action to recover damages for wrongful death in another state) U. S. Casualty Co. v. Hoage, 77 F. 2nd 542.

(compensation act of District of Columbia applicable to injury there sustained though contract of employment was made elsewhere)

9.7~ EXTRA-TERRITORIAL APPLICATION" OF C O M P E N S A T I O N ACTS

Joseph Wiederhoff Inc. v. Neal, 6 F. Supp. 798.

(Illinois compensation act held to apply to injury in Missouri, when contract of employment was made in Illinois and both employer and employee resides there)

2. Alabama.

Compensation act (see. 7540) gives exclusive remedy for injuries sustained outside state where contract of employment is made in state, unless contract of employment expressly otherwise provides.

St. Louis S. F. R. Co. v. Carros, 93 So. 445.

Deft. in action for damages for out-of-state injury cannot avail himself of statute unless it is specifically pleaded in bar.

Singleton v. Hope Engineering Co., 137 So. 441.

Action of tort for injury in another state cannot be maintained if compensation act of that state gives an exclusive remedy therefor.

Note: See U. S. Cas. Co. v. Hoage, 77 F. 2nd 542, which held that above provision did not, under the circumstances, prevent award under law of District of Columbia for injury sustained there.

3. Alaska.

No extra-territorial provision. Section 2185 of compensation acts stipulates that no action shall be maintained under act outside territory, unless service of process cannot be had within territory.

Martin v. Kennecott Copper Corp'n, 252 F. 207.

Action to recover compensation in suit brought outside territory held barred by above provision.



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