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Mays v. Liberty Mutual Insurance Company.

August 28, 1963


Author: Staley

Before BIGGS, Chief Judge, and STALEY and FORMAN, Circuit Judges.

STALEY, Circuit Judge.

Plaintiff Edward Aaron Mays instituted this diversity action against Liberty Mutual Insurance Company, the insurance carrier of his employer, alleging that the latter's negligence in failing to properly inspect the employer's premises caused injury to him. The question presented is whether the suit is barred by the Pennsylvania Workmen's Compensation Act. 77 Purdon's Pa.Stat.Ann. §§ 1-1025. The district court concluded that the insurer was an "employer" within the meaning of the Act, and granted defendant's motion for summary judgment. 211 F.Supp. 541 (E.D.Pa.1962).

The complaint avers that, while in the employ of Cuneo Eastern Press, Inc., Mays was injured when a paper roll "suddenly came loose from the 'mansaver device' being used to transport it in the warehouse of the plaintiff's employer, and from its own external protective wrapping, and the said paper roll did then and there strike the paper rolls on which the plaintiff was standing in order to do his work, forcing the plaintiff to fall to the floor and subsequently, the above said paper roll did fall on the plaintiff." Extensive injuries are alleged. The theory of the case was that pursuant to its policy of Workmen's Compensation and Employers' Liability Insurance, defendant had a duty to inspect the work places, machinery, and equipment of the employer, and to advise and make recommendations concerning the existence of any "unsafe, hazardous, dangerous, and negligent conditions." The complaint further alleged that breach of that duty caused the accident.

While rejecting this interpretation of the contract of insurance, the district court observed:

"* * * Liberty admitted in answers to interrogatories put to it by Mays in Civil Action No. 31005 that it did undertake some safety inspections of the Cuneo plant. Thus, while there was no contractual obligation, the voluntary undertaking of such a program by Liberty possibly may have created a duty. However, as the facts are not yet sufficiently developed, an ultimate finding on the existence of a duty cannot be made prior to a hearing on the merits. At this point it cannot be said that as a matter of law Liberty had no duty to Mays." 211 F.Supp. at 542.

Since there is a genuine issue of material fact on the question of an enforceable duty,*fn1 and as the district court's decision was premised solely on its construction of the Pennsylvania Workmen's Compensation Act, the correctness of that construction is the only question we decide on this appeal.

The appellate courts of Pennsylvania have not passed upon the question. The problem, though novel, is wholly one of statutory construction. More particularly, as we have previously stated, it is refined to the question of whether the insurance carrier is an "employer" as that term is defined in the statute. Accordingly, we start with that definition:

"§ 21. 'Employer' defined

"The term 'employer,' as as used in this act, is declared to be synonymous with master,*fn2 and to include natural persons, partnerships, jointstock companies, corporations for profit, corporations not for profit, municipal corporations, the Commonwealth, and all governmental agencies created by it." (Emphasis supplied.) 77 Purdon's Pa.Stat.Ann. § 21.

It is not contended that Liberty is in any sense the master of Mays, and, thus, as the district court observed, "The specific language of this section would apparently exclude from the definition of 'employer' anything not therein included." However, the court was impressed with the expanded definition of the term found in Article IV, § 401 of the Act, and with the subrogation rights of insurance carriers. The relevant portion of § 401 provides:

"The term 'Employer,' when used in this article, shall mean the employer as defined in article one of this act, or his duly authorized agent, or his insurer if such insurer has assumed the employer's liability, or the fund if the employer be insured therein." (Emphasis supplied.) 77 Purdon's Pa.Stat.Ann. § 701.

The district court reasoned that, "[under] the Act, the carrier cannot assume any portion of the employer's recognized duty without assuming the corresponding liability. Having assumed a portion of the employer's liability, the carrier stands in the shoes of the employer under the Pennsylvania Act." 211 F.Supp. at 544.

But the legislature has defined the term "employer" in words which are clear and free from all ambiguity. The mandate of the Pennsylvania Statutory Construction Act requires adherence to that definition.*fn3 Nor is this legislative command made inapplicable by the definition contained in Article IV, § 401 of the Workmen's Compensation Act. Article IV relates solely to procedure, and § 401 specifically states that the definition therein contained applies only "when used in this article." Since the Act contemplates a system of compensation insurance, it is perfectly reasonable that the employer's insurance carrier, which pays the injured employee, be given the same procedural rights as the insured employer. Of course, the reference in § 401 to an insurer who "has assumed the employer's liability" means the liability to pay compensation to the injured employee, for under the Act that is the extent of the employer's liability. From this it is clear that, rather than expanding the principal definition of "employer", § 401 serves only this limited purpose. In this respect the definition in that section supports the position of Mays, for when ...

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