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Haggard v. Industrial Commission

Supreme Court of Arizona

November 3, 1950

HAGGARD et al.

Page 916

Judgment reversed and cause remanded with instructions.

Leslie C. Hardy, of Phoenix, for appellants and cross-appellees.

H. S. McCluskey, Phoenix, Robert E. Yount and Donald J. Morgan, Phoenix, of counsel, for Industrial Commission of Arizona, appellees and cross-appellants.

La Prade, Chief Justice. Udall, Stanford, Phelps and De Concini, JJ., concurring.


La Prade, Chief Justice.

Page 917

[71 Ariz. 95] Appellants (plaintiffs below) brought an action in behalf of themselves and others

Page 918

similarly situated (class action under the provisions of Sec. 21-524, Arizona Code Annotated, 1939, challenging certain orders of the Arizona Industrial Commission decreeing that certain individuals in and around plaintiffs' places of business were employees of plaintiffs and insurable as such under the provisions of the Workmen's Compensation Act, A.C.A.1939, § 56-901 et seq., at the expense of plaintiffs. From an adverse judgment they prosecute this appeal.

The factual situation out of which the action arose is not in dispute and may be summarized as follows: At the time it was instituted the appellants Haggard et al. were engaged in conducting horse racing in Arizona; the appellants Hagin et al. in dog racing. These businesses were regularly licensed under the provisions of Ch. 73, A.C.A.1939, Secs. 73-1601 to 73-1608, but now controlled by Ch. 61, Reg. Sess. 1949, as amended by Ch. 56, Laws 1949, 1st Spec. Sess. The new law, however, does not alter the situation and the questions presented by this action. Permits to conduct racing meets under these new provisions were duly issued to plaintiffs and they conducted racing meets under and by virtue of said permits. Since plaintiffs were subject to the provisions of the Workmen's Compensation Act, they took out compensation insurance policies with the commission.

In January, 1949, the commission became doubtful as to whether these policies conformed with the law, and therefore on January 20, 1949, ordered that all such policies would be cancelled as of January 25, 1949.

The order further provided that if plaintiffs would institute an appropriate action to determine the questions involved, the commission would issue binders according full insurance protection to plaintiffs, subject to a judicial determination of the questions in dispute. Plaintiffs thereupon applied to the commission for a rehearing on the order under Sec. 56-908, A.C.A.1939, and also made application for an insurance policy which limited the coverage to "the office force, the pari-mutuel machines, ground keepers, janitors, and persons directly on our (plaintiffs') payroll," and expressly excluded all "trainers, stablemen, helpers, swipes, grooms, exercise boys, hostlers, jockeys, horse owners," it being the contention of plaintiffs that the parties excluded in the application were, so far at least as plaintiffs were concerned, independent contractors and so not proper subjects of industrial insurance by plaintiffs.

[71 Ariz. 96] At the hearing the commission declined to issue the policies of insurance as applied for, and confirmed its order of cancellation of existing policies, but offered to issue a binder affording insurance on all persons serving in any capacity in the racing meet operated by plaintiffs on certain conditions, the substance of which was that plaintiffs

(a) Would immediately institute a suit of proper nature to determine the questions in dispute,

(b) Would furnish full information as to all persons whose right of coverage by policies issued by the commission to plaintiffs was in dispute, and further required and ordered: "That any person or persons purporting to be independent contractors for whom any claim of exemption from coverage under this policy is made shall be disclosed to the Commission prior to any such persons being put to work; and the applicant agrees, as a consideration and inducement for the issuance of this policy, that all such contractors purporting to be independent contractors who do not have a policy of insurance under the Workmen's Compensation Law, and who are subject thereto, and the employees of such contractors, shall be deemed to be insured under this policy and premium to be paid thereon."

(c) Would accept and pay as a proper premium for all such persons the sum computed in the method and in the amount fixed by the comission, all subject finally to the decision of this court on the questions in dispute.

The commission declared "* * * that there is no established formula by which the Commission may determine what constitutes the fair average earning capacity of the persons engaged in the industry for any thirty-day period; * * *"

Page 919

and insisted upon the establishment of a formula which would take into consideration the intermittency of the employment and the difficulty in determining what constitutes a fair average earning capacity of the persons engaged in the industry. This formula was to be agreed to by the commission, the insured, and their employees, and was to constitute the basis for the payment of compensation benefits and for the assessment of premiums.

The plaintiffs agreed to said conditions under protest, and the commission suspended the cancellation of the insurance policies above set forth and issued a binder covering all the occupations as above, whereupon this suit was promptly filed and submitted to the trial court on the issues raised by the pleadings and the record made before the Industrial Commission. The trial judge announced that the case was not to be tried de novo, "but purely a matter of review for the court to determine the action of Commission relative to whether the Commission acted reasonably and lawfully in its order." Nevertheless that court made findings of fact and conclusions of law and rendered its judgment thereon, whereupon each party appealed to this [71 Ariz. 97] court from that portion of the judgment unfavorable to their respective contentions.

The record shows that neither party questions the sufficiency of the evidence before the commission and before the court by acquiescence to sustain the findings of fact made by the trial court, insofar as such findings are in truth findings of fact and not conclusions of law, as we shall hereafter point out.

Our opinion in O'Neill v. Martori, 69 Ariz. 270, 212 P.2d 994, had not been handed down when this case was determined below or at the time of the filing of briefs herein. At the time of the oral presentation of arguments in this court the holding in the Martori case was called to the attention of counsel and it was then mutually conceded that regardless of the misconception of the trial procedure it was desired that the case be determined on the record made as though the matter had been tried de novo within the precepts of the Martori case. It is only the conclusions of law which the trial court drew from the findings of fact which are in dispute, and it is to these conclusions of law that we shall later direct our attention.

We shall consider the case on the legal issues raised by the record rather than on the formal assignments of error, and first review the issues raised by the appeal of plaintiffs.

The first issue is whether plaintiffs were entitled to a declaratory judgment; the second is whether the commission had the power to fix premium rates on the basis it used; and the third is whether certain classes of persons rendering services in connection with the racing meet were employees of plaintiffs within the meaning of the Workmen's Compensation Act.

The first question is whether the Declaratory Judgement Act, being Art. 7, Ch. 27, A.C.A.1939, is applicable to proceedings of this nature, or whether the only remedy of plaintiffs is the special procedure set forth in Secs. 56-914 to 56-918, A.C.A.1939.

A similar question has been raised in other jurisdictions and the majority of cases hold that under a special act like the Workmen's Compensation Act the exclusive remedy is that set forth in the act, and that the Declaratory Judgment Act is not applicable. Moore v. Louisville Hydro-Elec. Co., 226 Ky. 20, 10 S.W.2d 466; United States Fidelity & Guaranty Co. v. Thirion, 123 N.J.L. 29, 7 A.2d 863; State ex rel. and to use of Public Service Commission v. Blair, 347 Mo. 220, 146 S.W.2d 865; State ex rel. and to use of Public Service Commission v. Padberg, 346 Mo. 1133, 145 S.W.2d 150.

We think the question has already been settled for Arizona in S. H. Kress & Co. v. Superior Court, 66 Ariz. 67, 182 P.2d 931, 933, where this court quoted approvingly from Employers' Liability Assur. Corp. v. Matlock, 151 Kan. 293, 98 P.2d 456, 127 A.L.R. 461, the following language: "This [71 Ariz. 98] court has repeatedly asserted the well established principle that the workmen's compensation act establishes a procedure of its own, and that the procedure furnishes a

Page 920

remedy which is substantial, complete and exclusive in compensation cases. ...

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