Title: STATE EX REL 1ST NAT L BANK TRUS

State: montana

Issuer: Montana Supreme Court

Document:

No. 12401 I N THE S U P R E M E C O U R T O F T H E STATE O F MONTANA 1972 STATE O F M O N T A N A ex rel. FIRST N A T I O N A L BANK AND TRUST C O M P A N Y O F HELENA, Relator, THE DISTRICT C O U R T O F THE FIRST JUDICIAL DISTRICT O F T H E STATE O F M O N T A N A , I N AND F O R T H E COUNTY O F LEWIS AND C L A R K AND THE H O N O R A B L E GORDON R e BENNETT, PRESIDING JUDGE THEREOF, Respondents, ORIGINAL PROCEEDING: Counsel of Record: For Relator: Small, Cumins and Hatch, Helena, Montana. Robert Cumins argued, Helena, Montana. Patrick F. Hooks argued, Townsend, Montana. For Respondents: Arthur P. Acher and Robert F. Swanberg, Helena, Montana. Robert F, Swanberg argued, Helena, Montana. Submitted: November 28, 1972 Decided: 3nH 9 - 7573 M r . Justice Frank I. Haswell delivered the Opinion of the Court. Relator seeks through this original proceeding a writ of super- visory control t o require the respondent court t o vacate i t s order denying summary judgment on i t s behalf. Relator i s one of the defendants named i n cause No. 35473,filed on December 10, 1971, in the d i s t r i c t court of Lewis & Clark County, entitled John W. Foster, Plaintiff, vs. First National Bank & Trust Co. of Helena, e t a1 . , Defendants, wherein plaintiff seeks damages for personal injuries suffered during the course of his employment in the construction of drive-in parking f a c i l i t i e s for the Bank i n Helena. Relator Bank contracted with American Building Company, the general contractor, to construct some drive-in banking facilities. In the construc- tion contract, the Bank required American to carry workmen's compensation insurance protecting American from injury claims of its o w n employees, or the employees of any subcontractors. American then subcontracted w i t h Allen Electric Company to perform part of the work, American i n t u r n requiring A 1 len to carry workmen's compensation on A 1 len's employees. Plaintiff was an employee of Allen. The accident took place on February 5, 1971. Plaintiff was working on a ladder when a car driven by Hazel Anderson, the other defendant, ran into the ladder and knocked plaintiff to the ground, causing certain alleged injuries. Hazel Anderson was a bank customer utilizing the drive-in banking facilities which the Bank had required to remain i n operation throughout the construction. Plaintiff has received workmen's compensation benefits for the injuries resulting from this accident and now brings this common law action for damages against the Bank, American, and Hazel Anderson, alleging negli- gence. In particular, the complaint alleges the Bank to have been negligent in that "the attendant provided by said bank negligently failed and omitted to direct traffic entering said drive-in facility, and particularly the de- fendant Hazel Anderson, so as t o protect plaintiff engaged i n work on said driveway." To put the case in proper perspective, we review the central theory behind the Workmen's Compensation Act. In Yurkovich v. Indus. Acc. Bd., 132 Mont. 77, 314 P.2d 866, cited in Buerkle v. Montana Power Co., 157 Mont. 57, 61, 482 P.2d 564, we said: " ' * * * This act is fundamental legislation enacted first for the protection and benefit of the injured workman, his wife and children, and other depend- ents. By force of the law the employee surrenders his right of an action in tort for injury or death. The act however assures him and his dependents of the pro- tection of certain benefits in case of injury or death. "'Secondly, the act fixes a limited liability of the employer so that the economic loss caused by such accidents shall not rest upon the employee or the public, but that the industry in which the accident occurs shall pay in the first instance for the loss occasioned by such accident. "'In construing a statute the whole act must be read together, and where there are several provisions or particulars such a construction is, if possible, to be adopted as will give effect to all .'" Of particular importance is the quid pro quo concept that in return for workmen 's compensation benefits the employer receives immunity from common law negligence actions such as that brought by the plaintiff in the instant case. According to this principle the concept is that although such compen- sation benefits are the sole remedy against the employer, yet the injured employee is nevertheless permitted to bring a common iaw negligence action against "third partiestt--i .e. parties other than his employer. Both of these concepts are embodied in section 92-204, R.C.M. 1947, which states: "Where both the employer and employee have elected to come under this act, the provisions of this act shall be exclusive, and such election shall be held to be a surrender by such employer and the servants, and employees of such employer and such employee, as among themselves, of their right to any other method, form or kind of compensation, or determination thereof, or to any other compensation, or kind of determination thereof, or cause of action, action at law, suit in equity, or statutory or common-law right or remedy, or proceeding whatever, for or on account of any personal injury to or death of such employee, except as such rights may be hereinafter specifically granted * * *. Provided, that whenever such employee shall receive an injury while performing the duties of his employment and such injury or injuries, so received by such employee, are caused by the act or omission of some persons or corporations other than his employer, or the servants or employees of his employer, then such employee, or i n case of his death his heirs or personal representatives, shall, i n addition to the right t o receive compensation under the Workmen's Comepnsation Act, have a right t o prose- cute any cause of action he may have for damages against such persons or corporations, causing such injury * * *." Both the Bank and American moved for summary judgment i n their be- half. The motion was granted i n favor of American, b u t denied as to the Bank. The Bank now seeks through this writ t o review and reverse this denial of summary judgment to the Bank. The principal question presented is whether the Bank is a "person or corporation other than his employeru--i .e. a "third party". If so, then the Bank is immune from a common law negligence action. The word "employer" i s defined i n the act as anyone " * * * who has any person i n service, i n hazardous employment, under any appointment or contract of hire, expressed or implied, oral or written, and the legal representative of any deceased employer or the receiver or trustee thereof." Section 92-410, R.C.M. 1947. Plaintiff claims that the Bank cannot be considered to be the "employer" of plaintiff, since there was no direct contract between the two. See Sull ivan v. City of Butte, 117 Mont. 215, 157 P.2d 479. However, the employer's 1 iabi 1 i ty for compensation and corresponding immuni ty from third party suits does not depend solely on the above definition of "employer"; i t also encompasses the concept of "statutory employer" so that i f a person i s deemed to be a "statutory employer" he is liable for compensation and thus immune from third party suits. W e note that the employees of a subcontractor seldom have a direct contractual relationship w i t h the general contractor or owner, and for this reason cannot be considered actual employees of the latter. However, most states impose a special compensation liability upon an employer who con- tracts out i f the subcontractor f a i l s to insure compensation of his own employees. For a discussion of this see Larson on Workmen's Compensation, Vol. 1A, § 49, p. 853. Thus i n Montana we have section 92-604, R.C.M. 1947, which provides : "Where any employer procures any work to be done, who1 ly or in part for him, by a contractor other than an in- dependent contractor, and the work so procured to be done is a part or process in the trade or business of such employer, then such employer shall be liable to pay all compensation under this act to the same extent as if the work were done without the intervention of such contractor. And the work so procured to be done shall not be construed to be 'casual employment'". The effect of this statute is to make the owner a "statutory employer" of the employees of contractors other than independent contractors so that the owner i s 1 iabl e for their workmen's compensation coverage. The act then defines "independent contractor'' in section 92-438, R.C.M. 1947, which provides: " 'An independent contractor ' is one who renders service in the course of an occupation, representing the will of his employer only as the result of his work, and not as to the means by which it is accomplished. But the legal defense of independent contractor shall not bar otherwise compensabl e industrial accident claims against employers except when such defense is interposed on behalf of a party who has previously required the claimant's immed- iate employer to come within the Workmen 's Compensation Act . " This statute makes the owner the 'statutory employer' of employees of an independent contractor and permits him the use of the independent contractor defense if he requires the independent contractor to carry workmen's compensation on his own employees. The purpose of these two statutes is clear- ly to guarantee that all employees will be protected under the act, and that no employer or general contractor will escape 1 iability for compensation by contracting out, except when he requires the independent contractor to carry the compensation insurance. How does all this affect the owner's liability to a third party suit? Clearly when the owner is the claimant's employer, the owner is en- titled to the quid pro quo immunity from such third party suits. We also hold that where the owner requires the independent contractor to provide workmen 's compensation coverage against claims of employees of a subcon- tractor, the owner is immune from third party claims of such employees of the subcontractor. The intent of the statute is to guarantee the protection of a1 1 employees working on the job by encouraging the owner t o require the imediate employer to carry workmen 's compensation on his own employees. The intent of such statute would be self-defeating i f the owner who re- quired this was entitled to no immunity from common law actions. Thus w e held i n Ashcraft v. Montana Power, 156 Mont. 368, 480 P.2d 812, that when the owner by requiring the independent contractor to carry workmen's compensation is entitled t o the independent contractor defense, he is also entitled to immunity from third party suits under section 92-204, R.C.M. 1947. See also Buerkle v. Montana Power Co., 157 Mont. 57, 482 P.2d 564; Kelleher v. State, Mont. , 503 P.2d 29, 29 St.Rep. 897; Larson v. Watters Const. Co., Mont. -- , P.2d , 29 St. Rep. 1068; Larson on Workmen's Compensation, Vol . 2, g 72.31 . Directing our attention t o the instant case, w e find the follow- ing paragraph i n the Bank's contract w i t h American: "1 0. WORKMEN 'S C O M P E N S A T I O N INSURANCE: "The contractor (American) shal r maintain statutory Workmen's Compensation Insurance in the state of Montana during the l i f e of this contract. Such Workmen's Compensation Insurance shall protect the contractor from claims made by his own employees, the employees of any subcontractor and also claims made by anyone directly or indirectly employed by the contractor or subcontractor. In case any work is sublet, the contractor may require each subcontractor similarly t o provide Workmen ' s Compensation Insurance. In the event any class of employees engaged i n work under this contract i s not protected under the provisions of the Workmen's Compensation Act, the contractor and sub- contractors shall provide Employer's Liabi 1 i ty Insur- ance w i t h respect t o such employees. 'The Contractor shall maintain insurance required under any other employee benefit acts in force a t the place of building." Another provision of the same contract stated: "5.1.3 Nothing contained in the Contract Documents shall create any contractual relation between the Owner or the Architect and any Subcontractor or Sub- subcontractor. '' Thus there was no contractual relation between the Bank and Allen, plaintiff's immediate employer. In fact, the Allen contract w i t h American was entered into 19 days after the principal contract between the Bank and American. American, by requiring Allen to carry Workmen's Compensation on i t s o w n employees, clearly i s protected from third party suits by the Ashcraft rule. The question remains whether the Bank i s entitled to the same immunity i n the absence of a direct contractual requirement that the plaintiff's immediate employer carry workmen Is compensation. W e hold that i t is. The reason for such a holding i s simple. Although there i s no contractual relation between the Bank and Allen or the plaintiff, yet, in paragraph 10 of i t s contract w i t h American, the Bank guaranteed that all workers involved on the construction would be covered by workmen's compen- sation. W e can reach this decision i n two ways. First, in the absence of workmen's compensation coverage by either A 1 1 en or American, clearly under the statute the Bank would not be entitled to the independent contractor defense, and would thus be deemed the plaintiff Is "statutory employer". Second, the Bank complied with the intent of the statute that all persons working on the construction would be covered by workmen Is compensation. Accordingly, the Bank i s entitled t o i t s quid pro quo--immunity from third party negl i gence actions Additionally respondent contends that the filing of the petition for supervisory control here was not timely. W e do not consider a delay of three months in this m u 1 tiple party 1 itigation involving conflicting interests with different ideas as how to best proceed to be fatal to the relief asked. The order of the district court denying summary judgment is vacated and the district court i s directed to grant summary judgment to the First National Bank. Associate Justice