Case ID: so2d_494/html/1221-01.html
Source: Caselaw Access Project
Author: {"author": "GAUDIN, Judge. BOWES, Judge,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

LIBERTY MUTUAL INSURANCE COMPANY v. STANDARD DRAYAGE SERVICE, INC.
    No. 85-CA-582.
    Court of Appeal of Louisiana, Fifth Circuit.
    Sept. 15, 1986.
    Writs Denied Nov. 21, 1986.
    P. Albert Bienvenu, Jr., Gregory J. McDonald, Bienvenu, Foster, Ryan & O’Ban-non, New Orleans, for defendants-appellants.
    Henry F. Mestayer, Satterlee, Mestayer & Freeman, New Orleans, for plaintiff-ap-pellee.
    Before CHEHARDY, KLIEBERT, BOWES, GAUDIN and DUFRESNE, JJ.
   GAUDIN, Judge.

This is an appeal by Jones Truck Lines, Inc. from a district court decree casting it in judgment jointly and in solido with Standard Drayage Services, Inc. Plaintiff-ap-pellee, is Liberty Mutual Insurance Company, which petitioned for past due unpaid workmen’s compensation insurance premiums totaling $41,858.00.

Liberty Mutual’s insured was Standard, not Jones, but the trial court found that Standard was Jones’ agent and therefore able to bind Jones for payment of the premiums. This finding was clearly erroneous.

Freight would come into New Orleans on Jones trucks to the Standard terminal, then Standard would make local deliveries. Standard’s agreement with Jones was that Standard would provide this local drayage service for which Jones paid $300.00 per week plus 105 per cent of Standard’s costs.

Standard provided local drayage services for companies other than Jones and it (Standard) purchased its insurance from Liberty Mutual without any reference to Jones. Liberty Mutual did not deal with Standard thinking it (Standard) was an agent of Jones; in fact, Liberty Mutual had no knowledge of the Standard-Jones business relationship.

Agency cannot be presumed, and the consent to establish an agency relationship must be expressed or implied, as stated in Busby v. Walker, 84 So.2d 304 (La.App. 2nd Cir.1955), Robertson Ad. Service, Inc. v. Winfield Life Ins. Co., 453 So.2d 662 (La.App. 5th Cir.1984), and many other cases.

Here, Standard had complete control of its New Orleans operations, it hired and paid its employees, it used and repaired its own vehicles, not Jones’ trucks, and it secured its own insurance.

Liberty Mutual’s primary contentions regarding agency are that the contract agreement was duly specific and that the actual day-by-day operation of the business created an agency situation. However, Standard had no authority, expressed in the contract or otherwise, to represent Jones. Instead, Standard remained an independent contractor, doing business with Jones, Yellow Freight Forwarding and other companies shipping goods to New Orleans.

Jones had two of its personnel in contact with Standard: Irvin Tull and Robert Elmer. Tull was located at the Standard terminal but he had responsibilities throughout the Gulf Coast area and was absent from New Orleans three to five days a week. Elmer came to New Orleans approximately three times a year for accounting purposes.

In summary, while the ties were close, Standard nonetheless retained its status as an independent contractor doing business with Jones and others and without any authority to bind Jones concerning Liberty Mutual’s insurance premiums.

The cost-plus agreement entered into was to provide a better method of compensating Standard, i.e., to insure that Standard made a profit in handling freight delivered to New Orleans by Jones’ vehicles. Jones’ only “control” over Standard was its efforts, through Tull and Elmer, to avoid excessive and unreasonable local delivery expenses. This amount of “control” is permissible, does not establish an agency and is distinguishable from the “control” in R.S. Electric and Armature Works v. George Engine Co., Inc., 346 So.2d 783 (La.App. 1st Cir.1977), cited and relied on by Liberty Mutual.

For these reasons, that portion of the April 30, 1985 judgment ordering Jones Truck Lines, Inc. to pay, along with Standard Drayage Services, Inc., the sum of $41,858.00 plus interest and costs is hereby reversed and set aside, and judgment is rendered in favor of Jones and against Liberty Mutual, dismissing all demands. Also voided is Jones’ third party judgment against Standard. Standard remains cast in judgment. Liberty Mutual is to bear all costs of this appeal.

REVERSED AND RENDERED.

BOWES, Judge,

dissenting with written reasons.

I respectfully dissent from the majority opinion of my learned brothers in this case. The majority view seems to be based on the belief that Standard had complete control over its operations, when, in fact, it was the agent and false front for Jones, capable of binding Jones to whose benefit the insurance inured, as found by the trial judge. Such a finding would seem to ignore many contrary clauses in the contract between Standard and Jones, such as, but not limited to, these:

Jones will make available to Standard at the end of each week sufficient funds to pay any and all expenditures excluding capital expenditures incurred in the operation of the business during the upcoming week. It is understood and agreed that Standard will not operate the business with any of its funds but rather with funds advanced by Jones for this purpose. At no time will Standard’s funds be utilized in the operation of Standard except on an emergency basis, and if such event occurs, Jones will immediately refund such expenditures in accordance with this agreement.
And, also:
Standard will be responsible for hiring, firing, controlling and utilizing the work force of Standard and Standard is responsible for the manner, means and method by which Standard’s business is operated, all of which is subject to Jones’ approval.

It must further be noted that Jones, according to the contract, provided all other insurance for vehicles, building, contents, liability, flood, cargo, etc., except for Workmen’s Compensation Insurance which was to be obtained by Standard.

Joseph Golden, former president of Standard, testified that Jones actively sought to establish the contract to avoid dealing with the unions in New Orleans. He also stated that after the contract was confected he put in only three or four hours a day and “just acted as front man for them on a salary.” Jones hired its own terminal manager, Joe Stein. Mr. Stein then supervised the operations, including hiring and firing of employees. In addition, Golden was instructed to keep the relationship between Standard and Jones confidential.

The testimony of Mr. Golden contradicted in many respects the testimony of Robert Elmer and Irvin Tull, direct employees of Jones. However, as stated by the Third Circuit in Knockum v. Amoco Oil Co., 402 So.2d 90 (La.App. 1st Cir.1980), the trial court is vested with the task of judging the credibility of the witnesses and deriving facts from their testimony. An appellate court is not to substitute its own judgment for that of the trial court. Where there is conflict in the testimony, reasonable evaluations of credibility and reasonable inferences of fact should not be disturbed on review, even though the appellate court may feel that its own evaluations and inferences are as reasonable. Canter v. Koehring, 283 So.2d 716 (La.1973).

In the present case, the testimony of Mr. Golden is supported by the terms of the contract itself, whereas the testimony of others, not believed by the astute trial judge, is not. The fact that Standard may have done business with a Yellow Freight Forwarding Company does not demonstrate that Standard was not an agent of Jones.

The present case is one of actual agency existing between Standard and Jones as expressed by the contract and implied from the conduct of the parties, as factually determined by the trial court. Under La. C.C. Art. 3021, the principal is bound to execute the engagements contracted by the attorney conformably to the power confided to him. Jones, therefore, is bound to a third party, Liberty Mutual, for the insurance premium which it requested and instructed Standard to obtain.

The entire record, including the testimony of Mr. Golden, and especially the agreements between the parties, is replete with ample evidence to support the factual findings and conclusions of the learned trial judge. Accordingly, I would affirm his judgment.

For the foregoing reasons, I respectfully dissent from the majority opinion.