Philadelphia, Baltimore & Washington Railroad v. Schubert

Background

A brakeman for a railroad was injured on May 13, 1908 and sued his employer under the Employers’ Liability Act of April 22, 1908 to recover damages. The railroad said he had joined a voluntary employee “Relief Fund” in 1905 that deducted $2.10 a month from his wages and that fund’s rules said accepting benefits would release the company from liability. He accepted $79 in benefits after the injury, the company paid significant sums to run the relief department, and the trial court rejected the company’s special plea and awarded the worker $7,500, a judgment the appeals court affirmed.

Reasoning

The central question was whether Congress could, by the Act, declare void any contract or rule that aimed to let a carrier escape the liability the law created, and whether that prohibition covered existing relief-fund agreements. The Court said Congress validly imposed the liability and could prevent contracts that defeated it. Section 5 specifically voids any contract whose effect is to exempt a carrier from the Act, while allowing carriers to deduct amounts they actually contributed or paid to benefits. The Court applied that rule to the membership pledge and rejected the railroad’s attempt to treat benefit acceptance as a complete release.

Real world impact

The decision means employees injured while working for a carrier can pursue the statutory damages Congress provided even if they had joined employer relief funds and accepted modest payments. Employers may only reduce an award by amounts they actually paid into benefits; they cannot rely on preexisting membership releases to avoid liability.