Opinion
Nos. 27359 and 27361
Decided January 17, 1940.
Workmen's compensation — Premium rates — Section 1465-53, General Code — Occupations and industries, and not types of operations, classified — Insufficient allegations of abuse of discretion — Classification, establishing basic rates and merit rating exercise of administrative authority — Inequality in basic rating cured by merit rating, when — Basic rate and 30 per cent payable by new risk, when — Coal mining by electrically powered mechanical equipment — Payroll not segregated among various classes of employment — Garage improperly rated under mining industry, when.
IN MANDAMUS.
These two actions in mandamus, which are brought originally in this court, by relators as employers to compel correction of alleged wrongful rating by the Industrial Commission of Ohio under the Workmen's Compensation Law, have been heard and are submitted together on demurrers to the amended petitions. These demurrers were filed after the petitions were amended by interlineation and the answers and replies withdrawn. Each of these demurrers is based on two grounds: First, that the allegations of the petition do not state facts sufficient to constitute a cause of action, and, second, that this court has no jurisdiction of such an action.
In the action brought by relator The River Mining Company against the Industrial Commission of Ohio, the amended petition sets up three causes of action.
In the first cause of action relator alleges in substance that in the past it had, and now has, in excess of three employees and the Industrial Commission of Ohio has received from the relator in contributions to the State Insurance Fund approximately $30,000 and has paid out approximately $15,000; that the relator is engaged in the business of coal mining by electrically powered mechanical equipment; and that the relator has requested respondent to set up a rate for this type of operation, which request has been refused.
In the second cause of action it alleged that the respondent, the Industrial Commission of Ohio, has applied manual rate No. 1002 which is seven dollars per $100 payroll as a basic rate and in addition thereto has charged a penalty of $4.27 per $100 payroll; that the same has been done wilfully, wrongfully and due to prejudice among its employees toward the relator; that the penalties imposed and reserves set up by the respondent are exorbitant and the action of the respondent has been wilful, malicious, wrongful, illegal, unreasonable, unjust and prejudicial to the relator and amounts to the taking of relator's property without due process of law; and that the respondent has refused to remove or reduce the reserves set up and strike off or remove the penalties and has refused a hearing on relator's application to correct and reduce or remove such penalties or reserves.
In the third cause of action relator sets out that the respondent "has not applied the form of rating system which in its judgment is best calculated to merit or individually rate the risk most equitably predicated upon the basis of its individual industrial accident experience."
In the petition filed by relator Earl J. Jones Coal Company against the Industrial Commission it is alleged that such company has employed, for some time in the past, and now employs laborers in excess of three and has contributed to the State Insurance Fund approximately $30,222.62; that the Industrial Commission has paid out on such risk a small per cent of the amount paid in; that the relator is engaged in the business of mining coal by electrically powered mechanical means and transports all of the coal out of its mine by means of a system of belt conveyors; that no mining cars are used in the mines; that electric wiring in its mines is fully insulated and electrical hazard incident to the use of electric main haulage locomotives is eliminated; and that the relator by the use of electric cutting machines and electric loaders eliminates the hazard connected with electric hauling machinery.
It further appears from the allegations that the commission has rated the relator under "manual No. 1002, which includes all coal mining operations where underground mining is carried on by use of electrical coal machines and electric main haulage locomotives."
Relator further alleges that it "is and will be burdened with the expense of those engaged in employing labor for electrical main haulage locomotive mines, the work in which is a greater risk and has and will occasion a greater percentage of accident injuries and losses, especially inasmuch as haulage locomotives contribute to a majority of the lost time accidents caused in such mines."
Relator also avers in the petition "that on the 28th day of February, 1937, it sent in a premium to the Industrial Commission to cover its risk, and said risk started as of the 31st day of March, 1937, at which time plaintiff employed only three persons and neither owned nor operated a mine. Said Industrial Commission records show the risk as starting on the 2nd day of October, 1937, after actual coal mining operations had begun. Said Industrial Commission has a rule which penalizes a new industry thirty per cent for the first year that it is in business. Said Industrial Commission has carelessly and negligently refused to correct its records to show plaintiff's risk as beginning on the 31st day of March, 1937, thereby injuring plaintiff, thereby violating the laws of the state of Ohio pertaining to the Industrial Commission, and is taking property without due process of law."
With reference to the garage business the petition contains the following allegation: "Said plaintiff states that it owns and operates a garage in the city of Zanesville, Muskingum county, Ohio; that in the operation of said garage they render service to the public. The repair and maintenance of its own equipment has priority.
"Plaintiff further says that the Industrial Commission has set up a manual for automobile garage being manual No. 8380, and has a rate of $1.80 per each $100 of payroll. Said Industrial Commission has wrongfully, prejudicially and in violation to [ sic] the laws of the state of Ohio placed plaintiff's garage business under its manual 1002, which manual carried a rate of seven dollars per each $100 of payroll, notwithstanding the fact that plaintiff's garage is approximately eleven miles from the coal mine, and its garage labor is not employed elsewhere than in the garage."
Other allegations of fact are set forth in the opinion.
Messrs. Frazier Holliday, for relators.
Mr. Herbert S. Duffy and Mr. Thomas J. Herbert, attorneys general, Mr. Eugene Carlin, Mr. R.M. Shockey and Mr. E.P. Felker, for respondent.
It appears from the first cause of action in the amended petition of the relator The River Mining Company that it has contributed a large sum to the State Insurance Fund. The relator seeks to have a rate set up for its peculiar type of operation. It is averred that relator is engaged in coal mining, and mines by electrically powered equipment. The allegations do not even show whether relator's mines are underground or surface mines. From all that is contained therein the respondent was justified in refusing to set up a rate for the exact type of operation engaged in by relator. Under Section 1465-53, General Code, the Industrial Commission classifies occupations and industries, not types of operation.
The relator in the second cause of action seeks relief against a penalty of $4.27 per $100 payroll imposed in merit rating to cover allegedly exorbitant and unreasonable reserves set up for injured employees who have fully recovered from their injuries. Merit rating is within the sound discretion of the commission, and, unless this discretion is abused, mandamus will not lie.
Abuse of discretion is not shown by the bare allegation of such abuse nor by mere allegation that the commission acted maliciously or from any improper motive. To constitute a cause of action based upon abuse of discretion, facts must be alleged from which an inference of such abuse arises. Allegations that the action of the commission was malicious, wilful, illegal and the like, standing alone, are insufficient for that purpose. Relator, it is alleged, was placed under a certain manual rate based on payroll and subjected to a certain penalty in the merit rating; but no facts are pleaded which show that the commission in so acting did not exercise a sound discretion.
The relator further contends that the action of the commission constitutes the taking of property without due process of law and is in violation of its constitutional rights, and pleads that the commission, on application, has refused to reduce or remove the reserves and strike off the penalty and has denied relator a hearing on its application filed for such purpose. In the judgment of this court, classification, establishment of basic rates and merit rating are not matters of judicial cognizance which entitle the relator to a formal hearing before the Industrial Commission upon application, but are, on the other hand, subjects which require the exercise of administrative authority only.
In the third cause of action the relator merely pleads that the Industrial Commission had not complied with that portion of Section 1465-54(4), General Code, which reads: "The Industrial Commission of Ohio shall have power to apply that form of rating system which, in its judgment, is best calculated to merit or individually rate the risk most equitably, predicated upon the basis of its individual industrial accident experience, and to encourage and stimulate accident prevention * * *." The allegations in this cause of action, which follow the language of the statute, amount, when considered as a whole, to no more than conclusions of law.
The facts well pleaded in the separate causes of action do not show an abuse of discretion, a denial of due process, or a violation of constitutional rights; therefore, the demurrer to the amended petition of the relator, The River Mining Company, is sustained on the first ground, namely, the facts stated therein and in each cause of action therein are not sufficient to constitute a cause of action; however, the second ground of the demurrer which raises the question of jurisdiction is not well founded.
The amended petition of the relator Earl J. Jones Coal Company, presents a somewhat different state of facts. Relator mines its coal by electric machinery and conveys the coal out of the mine by belt conveyors. No locomotives or cars are used. The commission classified the relator under manual No. 1002, which includes underground coal mining by use of electric coal machines and electric main haulage locomotives. Although there is no express averment that relator's mine is underground, it perhaps appears inferentially. There is no averment or claim made that relator is engaged in surface mining. The allegations do not show any abuse of discretion in applying the same manual or basic rate to all mines electrically operated whether haulage is by locomotive and cars or by belt conveyors. It is the industry that is classified and not the working method. The fact that an employer introduces improved machinery and thereby reduces hazards does not entitle him to a basic rating different from other employers in the same industry who still use old type machinery and thereby incur greater hazards. All such employers may be covered by the same manual. In the normal course of events merit rating tends to cure the inequality, for under merit rating the premium may be less than the basic rate. State, ex rel. Zone Cab Corp., v. Industrial Commission, 132 Ohio St. 437, 8 N.E.2d 438. If the introduction of less hazardous machinery improves the employer's accident experience, his merit rating will likewise be improved after the lapse of a reasonable length of time. Before applying manual No. 1002 to underground coal mines in which belt conveyors are used, it would have been well to change the language defining the manual's scope but the allegations of the petition do not show an abuse of discretion in placing the relator in the same classification with other electrically operated underground mines.
In merit rating, the new risk, lacking accident experience, is required for the first year or rather for the first two six-month periods, to pay the basic rate plus 30 per cent. State, ex rel. Zone Cab Corp., v. Industrial Commission, supra. The commission held that the risk started October 2, 1937, after actual mining operation had begun, and that that date should be the beginning of the one-year period. The relator contends that the one-year period should start March 31, 1937, but avers that at that time relator employed only three persons and did not own or operate a mine. This contention is not well founded.
Relator further maintains that it is engaged in a trucking operation in which its truck drivers haul coal "from tipple to barge," as appears from the amended petition. It is alleged that when Earl J. Jones individually owned this trucking business, manual 7218 was applied with a basic rate of five dollars per $100 payroll but, when the business was purchased by relator, it was placed under manual 1002. It is further alleged that there are certain other employees who work on the surface near and about the mine but do not enter it. It is contended that these employees should be placed under manual 1005, entitled "Coal Mining Surface," which carries a basic rate of $4.50 per $100 payroll.
These truck drivers and surface men stand on the same basis. As heretofore indicated the commission in classifying underground mines electrically operated is classifying an industry and not an occupation. Employees of different occupations may all come under the manual applied to a particular industry. The commission is not compelled "to segregate the payroll among the various classes of employments" embraced in such general business. State, ex rel. Reaugh Construction Co., v. Industrial Commission, 119 Ohio St. 205, 162 N.E. 800; 42 Ohio Jurisprudence, 791, Section 153. In other words there is no requirement that each occupation or type of operation within a given industry be classified or rated separately.
It is plain that the allegations of the petition are sufficient to show an abuse of discretion on the part of the commission in rating the relator's garage business under manual 1002, which, as has been said, covers coal mining operations where underground mining is carried on by use of electric coal machines and electric main haulage locomotives. A garage which is located in the city of Zanesville, eleven miles from the company's mine and which, though giving priority to the company's business, serves the public in the repair of automobiles, is not merely incidental to the operation of the mine but a separate business undertaking.
As was said in the first case, the second ground of the demurrer is not well founded.
Since it would be an abuse of discretion to rate a garage, so operated, under manual 1002, the demurrer to the petition of relator Earl J. Jones Coal Company, will be overruled.
Demurrer is sustained in cause No. 27359 and overruled in cause No. 27361.
Demurrer sustained in cause No. 27359. Demurrer overruled in cause No. 27361.
WEYGANDT, C.J., DAY, ZIMMERMAN, WILLIAMS, MYERS, MATTHIAS and HART, JJ., concur.