Case Title: Herrera v. Fulton Construction Co.

Citation: 200 Kan. 468, 436 P.2d 364

Docket Number: 45,132

State: kansas

Court: Kansas Supreme Court

Date: 1968-01-27T00:00:00Z

Document:
200 Kan. 468 (1968)
436 P.2d 364
JOHN C. HERRERA, Appellee,
v.
A.D. FULTON CONSTRUCTION COMPANY (Respondent), and ALLIANCE MUTUAL CASUALTY COMPANY (Insurance Carrier), Appellants.
No. 45,132

Supreme Court of Kansas.
Opinion filed January 27, 1968.
Harrison Smith, of Garden City, argued the cause and was on the briefs for the appellants.
Lelyn J. Braun, of Garden City, argued the cause, and Dale H. Corley and Patrick J. Regan, both of Garden City, were with him on the briefs for the appellee.
The opinion of the court was delivered by
KAUL, J.:
This is an appeal by respondent and its insurance carrier from an award of workmen's compensation. The question involved is whether claimant was an employee or a partner of a subcontractor.
The appellant-respondent, sometimes referred to as Fulton, was engaged in the business of building houses. The respondent subcontracted with one Lewis L. Kemper and claimant (Herrera) to do bricklaying jobs and masonry work on some of its building projects. The appellants contend that claimant and Kemper held themselves out as partners and that claimant was a member of a subcontractor-partnership rather than an employee. Claimant contends he was not a partner of Kemper but merely an employee. After he suffered an injury claimant informed respondent that he was not a partner of Kemper and sought relief under respondent's workmen's compensation insurance. Claimant contended that even *469 though employed by Kemper he was engaged in work that was a part of respondent's business and under the provisions of K.S.A. 44-503 (a) respondent was liable as if claimant had been immediately employed by him. The workmen's compensation examiner awarded compensation. The respondent and insurance carrier appealed to the director who denied the claim. Claimant appealed to the district court which reversed the director and reinstated the examiner's award. Thereafter respondent and its insurance carrier perfected this appeal.
The trial court made comprehensive findings which may be summarized as follows: Claimant was a common laborer with an 8th grade education; that he worked as a mud tender for Lewis L. Kemper, a bricklayer, for about three months prior to the injury. Claimant was either paid $2 an hour or received a third of the profits made by him and Kemper on the job. Kemper got the jobs, made the bids on them, received the checks and divided the money. The trial court found that Kemper and claimant held themselves out to be partners but the claimant actually knew nothing about the construction business except his work as a mud tender, and that he merely followed Kemper's orders and did what he was told to do. The trial court concluded.
The sole question confronting this court on review is whether there is sufficient substantial evidence to support the findings of *470 the trial court. The rules governing our review and the many decisions of this court, adhering thereto, are set out in Phillips v. Skelly Oil Co., 189 Kan. 491, 370 P.2d 65, are as follows:
The basis for the award in this case is found in the provisions of K.S.A. 44-503 (a) which we quote in pertinent part as follows:
The purpose of the statute quoted is to give employees of a subcontractor a remedy against a principal evading liability by contracting with outsiders to do part of the work which is undertaken by the principal. (Schafer v. Kansas Soya Products Co., 187 Kan. 590, 358 P.2d 737; Durnil v. Grant, 187 Kan. 327, 356 P.2d 872; Bailey v. Mosby Hotel Co., 160 Kan. 258, 160 P.2d 701.)
Bearing in mind the rules limiting our review of the trial court's application of the statute quoted, we turn to the specific question whether there is substantial competent evidence to support the trial court's finding that claimant was an employee rather than a partner of subcontractor Kemper. The record discloses the respondent (contractor) furnished all the material, and the subcontractor (Kemper) owned and furnished all of the equipment. The work being done at the time of the injury was the bricking of a fireplace, and it was paid for on a per brick basis.
*471 The claimant testified concerning his arrangement with Kemper as follows:
"Q. Bricking a private residence? A. Yes, sir.
"Q. Now, were these jobs bid? A. Yes.
Lewis L. Kemper testified in part as follows:
..............
..............
"Q. And was he so informed by you? A. Yes, sir.
"Q. Well, but I mean  A. Yes.
A.D. Fulton, the contractor, testified that he made the arrangements with Kemper but that he was contracting with Kemper and Herrera as a partnership and that they called themselves partners. Appellants argue that since Kemper and Herrera held themselves out as partners and, since Fulton relied on such representation Herrera is now estopped from denying his partnership with Kemper regardless whether or not such relationship actually existed. Claimant on the other hand argues that Fulton, as a general contractor, knew or should have known that claimant owned no equipment, was incapable of contracting or performing as a partner and was in fact nothing more than an employee-mud tender and, since Fulton was personally working on the same job, he could see and observe the relationship between Kemper and Herrera. Claimant further contends that both Kemper and Fulton had the right to control, direct, and supervise his work even though Fulton may not have often exercised such right.
Generally the question whether or not a workman was an independent contractor or employee depends upon the facts and circumstances of each particular case. (Schroeder v. American Nat'l Bank, 154 Kan. 721, 121 P.2d 186; Pottorff v. Mining Co., 86 Kan. 774, 122 Pac. 120.) It is the right to exercise direction, supervision, or control over a workman not the actual exercise thereof which determines whether he be a servant or independent contractor. (Evans v. Board of Education of Hays, 178 Kan. 275, 284 P.2d 1068; Garner v. Martin, 155 Kan. 12, 122 P.2d 735; Hurla *473 v. Capper Publications, Inc., 149 Kan. 369, 87 P.2d 552.) A fair analysis of the testimony in the instant case reveals that even though Fulton may not actually have exercised control over Herrera on the present job he had done so on other jobs, and his right to exercise such control over Herrera is not denied. The mere designation of a relationship by the parties as a partnership does not determine its true legal character. The conduct of the parties is far more significant than the name they used to describe the nature of their relationship. (Grannell v. Wakefield, 172 Kan. 685, 242 P.2d 1075; Wade v. Hornaday, 92 Kan. 293, 140 Pac. 870.) In this case the evidence clearly establishes that Herrera was really no more than a mud tender or bricklayer's helper, subject to the orders and supervision of Kemper and, since there is no evidence of any sort of a formal partnership agreement or any other factors tending to show an actual partnership between Herrera and Kemper, we believe the trial court was justified in finding the existence of an employer-employee relationship, rather than that of a partnership. Without pursuing the subject further it is sufficient to say there is substantial competent evidence in this record to support the finding of the trial court that claimant was an employee within the protection of the Workmen's Compensation Act.
The judgment is affirmed.
FONTRON, J., dissenting:
In view of the trial court's finding that the claimant and Kemper held themselves out to be partners, I am unable to concur in the court's opinion.
I think it elementary that parties who hold themselves out as partners are estopped to deny the existence of a partnership as against third persons who deal with them in reliance on their apparent relationship, and such is true even though there is in fact no true or legal partnership between the ostensible partners. (40 Am. Jur., Partnership, §§ 71, 72, pp. 178-180.) In 68 C.J.S., Partnership, § 32, p. 457, the rule is stated in this wise:
This court has long recognized the rule. (Rizer & Co. v. James, 26 Kan. 221; Woodward, Faxon & Co. v. Clark, 30 Kan. 78, 2 Pac. 106; Rider v. Hammell, 63 Kan. 733, 66 Pac. 1026; John Deere Plow *474 Co. v. Klaurens, 153 Kan. 151, 109 P.2d 98.) In Clark v. Crouse, 130 Kan. 177, 285 Pac. 577, we said:
In my opinion, the evidence in this case clearly shows that claimant and Kemper held themselves out to be partners. The claimant, himself, so testified. Moreover, the testimony is undisputed that Fulton, the contractor, dealt with claimant and Kemper as partners, and paid them as such. Although the trial court stated that the contractor knew or should have known that claimant was not actually a partner, but an employee of Kemper, the record is entirely barren of any evidence to support such a conclusion.
The trial court asserted that the arrangement was a scheme by Kemper to avoid his responsibility as an employer and the evidence may justify such a conclusion, as the majority opinion points out. However, the issue is not Kemper's responsibility, but Fulton's. The uncontradicted testimony is that Kemper and claimant did hold themselves out to Fulton as partners, and that Fulton did contract with and pay them as partners.
I believe it must be said that Fulton's reliance on the apparent partnership reacted to his detriment, for his testimony, undenied, is that he required a certificate of insurance coverage when dealing with a subcontractor who employed help, but that he contracted with claimant and Kemper on the basis of a partnership. I find no evidence in the record from which it can be inferred that Fulton's reliance on the representations of claimant and Kemper was not in good faith.
For the foregoing reasons, I respectfully dissent.