Eckman v. Chicago, Burlington & Quincy Railroad

Mr. Jüstice Carter

delivered the opinion of the court:

The real controversy in this case is not whether the injury to the appellant complained of was caused by the negligence of the appellee company, but whether the receipt by appellant of the benefits provided by the company under its contract with appellant, through its relief department, mentioned in the record as the Burlington Voluntary Relief Department, after the happening of the injury, constituted a sufficient defense to the action.

It was not disputed that after the happening of the injury appellant received, through this department of the company, in installments, from time to time, the aggregate sum of §245 as such benefits on account of the injury and under his contract of membership, and that there was also disbursed by said department for appellant, for nurses, medicine and surgical attendance, the sum of §121.90; but it is contended, in the first place, by appellant, that the company could not, by a contract in advance, exempt itself from liability to its employees for its gross negligence; that such a contract would be contrary to public policy and void. The correctness of this position is undoubted, and it is not disputed on behalf of appellee, but its contention is that the contract here in question is not of that character; that, on the contrary, it merely provides for an accord and satisfaction after the injury has been received and at the election of the injured employee, and that after the injury in this case there was such accord and satisfaction, and that the same is a complete bar to a recovery in this suit.

Contracts of this character have been the subject of judicial investigation in many cases in different States, and it has been almost uniformly held where the question has arisen as in this case, that they are not void, as being against a sound public policy. As said in Chicago, Burlington and Quincy Railroad Co. v. Miller, 76 Fed. Rep. 439, by the United States Circuit Court of Appeals for the Eighth District: “The various courts which have had this question under consideration appear to agree that the stipulation in question is not opposed to sound public policy, but, on the whole, is conducive to the well-being of those whom it immediately affects, inasmuch as many railroad employees, owing to the dangerous character of their employment, are hurt without any culpable negligence on the part of their employer, and inasmuch as the employee retains, until after he sustains an injury, the right to elect whether he will sue his employer for negligence or accept benefits from the association. It also appears to be agreed that the obligation assumed by the employer to maintain and support such association by contributing the funds necessary for that purpose creates a privity of contract between the employer and all the members of the association, and at the same time furnishes a sufficient consideration to support such contract.” Substantially the same language and reasoning have been used in the following cases, all of which sustain the sufficiency of such a defense: Maine v. Railroad Co. (Iowa) 70 N. W. Rep. 630; Railroad Co. v. Bell, 44 Neb. 44; Donald v. Railroad Co. (Iowa) 61 N. W. Rep. 971; Railroad Co. v. Wymore, 40 Neb. 645; Vickers v. Railroad Co. 71 Fed. Rep. 139; Leas v. Pennsylvania Co. 10 Ind. App. 47; Ringle v. Pennsylvania Co. 164 Pa. St. 529; Shaver v. Pennsylvania Co. 71 Fed. Rep. 931; Otis v. Pennsylvania Co. 71 id. 136; Johnson v. Railroad Co. 163 Pa. St. 127; Spitze v. Railroad Co. 75 Md. 162; Fuller v. Relief Ass. 67 id. 433; Graft v. Railroad Co. (Pa.) 8 Atl. Rep. 206; Martin v. Railroad Co. 41 Fed. Rep. 125; State v. Railroad Co. 36 id. 655; Owens v. Railroad Co. 35 id. 715; Griffiths v. Earl of Dudley, 9 Q. B. Div. 357; Clements v. Railroad Co. 2 id. 482; O’Neill v. Iron Co. 63 Mich. 690.

The only case to which our attention has been called that is said to announce a contrary doctrine is Miller v. Chicago, Burlington and Quincy Railroad Co. 65 Fed. Rep. 305. This case went off on a demurrer to the answer, and is the same case referred to above as Chicago, Burlington and Quincy Railroad Co. v. Miller, 76 Fed. Rep. 439. On appeal to the Circuit Court of Appeals that court used the language quoted above, conceding that such propositions were supported by adequate authority, but held the judgment of the lower court on the demurrer correct, and pointed out specifically wherein the answer was insufficient, although the lower court placed, its decision on a different ground, holding the contract itself insufficient to bar the suit for damages.

In the case at bar the appellee contributes largely to the fund under its agreement to make up or guarantee deficits, to furnish surgical aid and attendance, to pay all the expenses of administration and management, and to become responsible for the safe keeping of the funds of the relief department. Such contributions by the appellee to the relief department would be sufficient consideration for a discharge of the appellee’s liability to appellant for the injury sustained, after he accepted the benefits of the fund so maintained-. Nor does the fact that the fund was in part formed by his contributions to it alter the case. The agreement that the acceptance of the benefits for the injury, from the relief fund, should operate as a release and satisfaction of all claims against the company on account of such injury cannot be construed as a provision exempting the company from liability for its own negligence. As said in Johnson v. Railroad Co. supra: “The benefits, by the regulations of the relief association, become due to members whenever disabled by accident in the railroad company’s service, or by sickness or injury other than in the company service, without reference to the question of negligence at all. As these provisions include-benefits in cases of accident pure and simple, of injury by the negligence of fellow-workmen and by the member’s own contributory negligence, it is apparent that they cover a wide field, in which there is no liability of the railroad company at all. Such cases are probably a large majority of those occurring to railroad employees, and the association, therefore, is of the highest order of beneficial societies. But even in cases of injury through the company’s negligence there is no waiver of any right of action that the person injured may be thereafter entitled to. It is not the signing of the contract, but the acceptance of benefits after the accident, that constitutes the release. The injured party, therefore, is not stipulating for the future, but settling for the past. He is not agreeing to exempt the company from liability for negligence, but accepting compensation for an injury already caused thereby. He may as well accept it in installments as in a single sum, and from an appointed fund to which the company has contributed as from the company’s treasury as a result of litigation. The substantial feature of the contract which distinguishes it from those held void as against public policy is, that the party retains whatever right of action he may have until after knowledge of all the facts, and an opportunity to make his choice between the sure benefits of the association or the chances of litigation. Having accepted the former he cannot justly ask the latter in addition.”

In every case of injury the injured party has the right to compromise the damages for any valuable consideration, no matter how small, and if he chooses to accept a smaller amount than he might have been able to secure at the hands of a jury, such settlement is nevertheless a full accord and satisfaction and a bar to the prosecution of any suit for damages for such injuries. It is well known that railroad companies frequently compromise such suits out of court, and such compromises áre always upheld, if honestly and fairly made. Here is an agreement made between the railroad company and the appellant that the acceptance of the benefits should release the railroad company from responding in damages as the result of an action at law. It is not this agreement alone that constitutes the release, but the acceptance of the benefits therein stipulated, well knowing that the acceptance of such benefits will have the effect of a release. That the appellant knew what the effect of the acceptance of the benefits was is not disputed. He was furnished with a hand-book, which plainly stated that an injured member may either accept the benefits of the fund or rely upon the issue of a suit; that he cannot do both. The agreement is not against public policy, as it merely puts the employee to his election, after an injury has been sustained by him, either to take the benefits of the relief fund, to which the appellee has materially contributed, or to sue for damages in a court of law.

Appellant’s next contention is, that the appellee has no right to go into the insurance business, and that the whole relief department scheme is both illegal under the insurance laws of this State, and ultra vires of a railroad corporation. The Burlington Voluntary Relief Department is not incorporated as such, but is managed, as has been stated, by some of the officials of the appellee, and the appellee contributes funds to it. The application was made to the superintendent of the relief department of the Chicago, Burlington and Quincy Railroad Company. The relief department is composed of the appellee and six other railroad corporations and certain of the employees of the same. That such relief department is not an insurance company has been held in Donald v. Railroad Co. supra, and in Johnson v. Railroad Co. supra. The latter part of section 31 of the Corporation act, as amended in 1883, provides that “associations and societies which are intended to benefit the widows, orphans, heirs and devisees of deceased members thereof, and members who have received a permanent disability, and where no annual dues or premiums are required, and where the members shall receive no money, as profits or otherwise, except for permanent disability, shall not be deemed insurance companies.” While sick benefits, such as are usually paid by secret and fraternal societies, are not mentioned in express terms in the section quoted, we think they may be fairly construed to be within the spirit of the same. In fact, no mention of the payment of sick benefits occurs in any of our insurance statutes until the statute of 1893 on fraternal beneficiary societies. The business done by the relief department was not prohibited by the statutes relating to insurance companies in force at its organization nor at the time of the injury to appellant, but whether the contract (where it had not been performed by the payment and receipt pf the money) or whether the organization of the relief department would or not be held to be' ultra vires the corporation is a question not necessary to the decision of this case. Appellant cannot invoke that defense against appellee after having received the benefits secured to him by his contract. It is a general rule that a corporation cannot avail itself of the defense of ultra vires where a contract, not immoral in itself nor forbidden by any statute, has been in good faith fully performed by the other party and the corporation has had the full benefit of its performance. (McNulta v. Corn Belt Bank, 164 Ill. 427; Kadish v. Garden City Building Ass. 151 id. 531.) And this rule applies with equal force to the other party setting up that the contract was ultra vires the corporation. (Kadish v. Garden City Building Ass. supra.) Appellant was paid at the rate of one dollar a day after he was injured until he began this suit, and then, by the terms of the regulations, the payment of benefits ceased. The appellee paid as it agreed to do and the appellant has accepted such payment, and the contract has been fully executed. It is therefore immaterial to inquire whether the contract or the organization of the relief department was ultra vires the corporation or not. That question does not properly arise in this case, and we do not, by anything hereinbefore said, intend to express any opinion as to whether or not it would appear, in a direct and proper- proceeding on the part of the State, that the appellee corporation has exceeded its charter powers in organizing and maintaining its voluntary relief department.

Certain testimony was offered by appellant which he contends would have tended to prove that he was coerced into joining the relief department. The substance of this testimony was, that he was advised on three different occasions by the superintendent or foreman, who had power to discharge him, to join the association, and that he did so, not because he desired to, but that, being in the presence of his superior who had power to discharge him, be felt that he would stand better with the company by signing. It was not claimed or offered to be proved that he made any objection whatever to joining the association or that anything more than mere advice was used in the premises. Plainly, this offered proof would not have shown coercion. Besides, by the very terms of the contract he was at liberty to withdraw at the end of any month, and was at liberty, after he was injured, to refuse to accept the benefits and sue the company for damages.

Some contention is also made that when appellant received the first payment of benefits, which was two dollars, he was under the influence of opiates, and, by reason thereof, unable to appreciate the full import and meaning of the reception of such benefits. In the first place, the evidence was insufficient to establish appellant’s contention in this regard; and in the second place, he continued to receive monthly installments, varying in amounts from $29 to $31, for eight months thereafter, and it is not claimed that he did not at those times fully understand the consequences of his acts.

Upon the whole record we are satisfied there was no evidence admitted or offered which would have authorized the jury to find a verdict against the company, and that the court properly directed a verdict in its favor.

The judgment of the Appellate Court affirming the judgment below is affirmed. Judgment affirmed.