Title: Lewis v. Gardner Engineering Corp.

State: arkansas

Issuer: Arkansas Supreme Court

Document:

491 S.W.2d 778 (1973) Ralph LEWIS and Julia Lewis, Appellants, v. GARDNER ENGINEERING CORP., Appellee. No. 5-6203. Supreme Court of Arkansas. March 12, 1973. Rehearing Denied April 16, 1973. Floyd Lofton and Jack Sims. Little Rock, for appellants. Wright, Lindsey & Jennings, Little Rock, for appellee. BROWN, Justice. Ralph Lewis and wife brought suit for damages against Gardner Engineering Corporation and its employee, Travis Green, for injuries sustained while employed by S.O.G. of Arkansas, as a pile driving foreman on Lock and Dam No. 4 near Pine Bluff. Gardner Engineering manufactured the pile driver that became unhitched and caused the steel piling to fall upon Lewis. It was the theory of Lewis that poor workmanship caused a defect in the hitching device made into the pile driver. On motion of Gardner Engineering for summary judgment the trial court held that S.O.G. *779 of Arkansas was a joint venture entered into by Gardner Engineering and San Ore Construction Co., a partnership for the sole and exclusive purpose of bidding upon and performing the construction on Lock and Dam No. 4; that Ralph Lewis as employee and S.O.G. as employer were subject to the Arkansas Workmen's Compensation Law; and that the employee of a joint venture is barred from claiming in tort against one of the joint venturers, the exclusive remedy being under the workmen's compensation act. Appellants contend it was error to apply the general rule that an individual member of a joint business adventure is exempt from tort liability under the workmen's compensation law "because in this case a joint adventure was of itself an employing entity, separate and distinct from the parties thereto". Appellants recognize the general rule which we follow, namely, that a joint venturer who is also an employer is immune from tort liability under the workmen's compensation law. Smith v. Rodgers, Admx., 251 Ark. 994, 477 S.W.2d 831 (1972). The rule has been well stated thusly: Under their first point for reversal appellants contend that the parties went much further than creating a joint venture "so far in fact as to create a separate employing entity. . . . S.O.G. of Arkansas was so autonomous, so vested with independent control, as to take on the nature of a de facto corporation". Appellants point to the provisions in the agreement of joint venture for each party to appoint a designee and alternate designees to act for it with full and complete authority over problems arising out of the joint venture. They also point up a provision governing the settlement of any dispute between the venturing parties or between their designees, which provision provides for full and complete arbitration of the problem or problems. Appellants cite other working provisions of the venture to sustain their position that a separate employing entity was in fact established. Of course the purpose of the argument is to sustain appellants' position that Gardner Engineering Corporation was a third party rather than an employer within the contemplation of the workmen's compensation act. Ark.Stat.Ann. § 81-1302(a) (Repl. 1960). Appellants cite not a single authority which sustains their position that the nature of the organization of S.O.G. removes it from the general rule we applied to joint ventures in Smith v. Rodgers. Appellants rely heavily on Abbott v. United States, 207 F. Supp. 468 (D.C., 1962). Steers, Inc., was a member of a joint venture which constructed an offshore radio tower for the United States Navy. The work was completed and the joint venture terminated in 1957. Three years later, Steers alone contracted to perform repair work on the tower and while so engaged the tower collapsed and the decedents were on it. The deaths were covered by workmen's compensation provided by Steers alone. The death actions against the joint venture were predicated upon the original design and construction and Steers argued that there could be no recovery against it as a joint venturer. The court sustained plaintiffs' theory of possible liability of the joint venture, giving two reasons. First, it was said that the joint venture was not responsible for workmen's compensation for the deaths. Second, it was pointed out that some of the decedents *780 were not employed by Steers until after the joint venture ended. This case fails as a precedent for appellants' position because in the case at bar Gardner Engineering is responsible for payment of workmen's compensation payments to appellant Ralph Lewis. It is nothing more than a coincidence that Gardner, one of the joint venturers, happens to have manufactured the hoist. The final argument is that Gardner should be estopped from invoking the exclusive remedy provision of the compensation law "in order to escape its liability as the manufacturer of a product separate and apart from the joint venture". We find no merit in the argument. Gardner is discharging its responsibility to Ralph Lewis as an employee. And under the law, which was settled in Smith v. Rodgers, that is the extent of Gardner's obligation. Affirmed. FOGLEMAN, Justice (dissenting). I believe that the court has overlooked the thrust of the principal argument of appellants on this appeal in applying Smith v. Rodgers, 251 Ark. 994, 477 S.W.2d 831, to one of appellants' arguments. The argument which I think has merit is advanced in connection with their points II and III, stated as follows: These points are rather lightly treated by the majority, apparently on the basis that it is nothing more than a coincidence that Gardner happened to have manufactured a hoist used on the job. This coincidence provides the distinction between this case and Smith v. Rodgers, supra, and calls upon the court to meet the question posed head on and not as if it were either incidental or coincidental. Because of the "coincidence" I would reverse the summary judgment and remand the case for further proceedings. The appellants alleged in their complaint that Lewis was injured because of the malfunction of an automatic hooking device (not a hoistprobably properly a hoisting clamp) manufactured by appellee and furnished for use on the hoist utilized for lifting and moving sheet piling on the job where Lewis was employed by the joint venturers. They alleged that appellee negligently and carelessly manufactured the device under a design which made it dangerous for its intended use, that appellee was negligent in the adoption of the design, in failing to test or periodically inspect the device and in failing to warn users of the dangers inherent in its use. Appellants asserted that they relied upon express and implied warranties that the device was safe and fit for the purposes intended and that Lewis' injuries were the direct result of the negligence of and breach of warranty by appellee. The documents constituting the agreement between the joint venturers were exhibited with appellee's motion for summary judgment. Nothing therein obligated either of the venturers to furnish any particular equipment, and there was no obligation on the part of Gardner Engineering Corporation to design, invent or furnish the device in question. The agreement did require the payment of rent to each party for its equipment that was used by the joint venture. A schedule of the major equipment rental was attached. Keeping of complete books of account of the venture *781 was required. There is also a provision that each venturer shall have a one-half interest in any property and equipment acquired in connection with the project undertaken. The cost of equipment purchased was classified by the agreement as a construction cost. Sale of equipment purchased to one or the other of the joint venturers at a price to be agreed upon was permissible upon completion of the work contracted, but not required. The deposition of Elmer C. Gardner discloses that the particular hoisting clamp was invented by him and another officer of appellee and built at appellee's shop in Houston, Texas, and that the joint venture was charged a fee for the device. Ralph Lewis made an affidavit that he was injured when struck by sheet piling being lifted out of the Arkansas River by means of this automatic clamp attached to a 150-ton crane. He said that the clamp bore a plate reading "Manufactured by Gardner Engineering Corporation, Houston, Texas, Shop No. 493 Date 8-67." He also stated that there were two methods of attaching and releasing the sheet piling, other than by use of the automatic hoisting clamp. By deposition, Lewis testified that this device had been used on the job only a few months, and that the parts of the clamp seemed to wear with use so that the spring which made the hooking device automatic would fail to function. He also deposed that when this occurred, the sheet piling would fall from the hook, that employees of the venture had worked on the device and that the last such hook used was different from the one first used in that two or three remodeling changes had been made. In passing, I note that appellee's workmen's compensation insurance applied only while a member of the joint venture was acting within the scope of his duties as such. Appellants do not seek to recover for the furnishing of unsafe equipment by the joint venture or the joint venturer. They seek to recover from appellee as a "third party," under allegations hereinabove referred to on the basis of negligence or breach of warranty in the manufacture and distribution of a faulty device, a step that certainly was outside the purposes of the joint venture, i. e., the construction of a lock and dam. With this factual background I submit that the "dual-capacity" doctrine should be invoked. See 2 Larson, Workmen's Compensation Law 226.20, et seq., § 72.80. Professor Larson states it thus: "* * * an employer normally shielded from tort liability by the exclusive remedy principle may become liable in tort to his own employee if he occupies, in addition to his capacity as employer, a second capacity that confers on him obligations independent of those imposed on him as employer." So much of what this eminent authority has to say is applicable here that I take the liberty of extensive quotation. He adds: The cases mentioned in the above quotation are: Duprey v. Shane, 109 Cal. App. 2d 586, 241 P.2d 78 (1951), aff'd 39 Cal. App. 2d 781, 249 P.2d 8; Reed v. The Yaka, 373 U.S. 410, 83 S. Ct. 1349, 10 L. Ed. 2d 448 (1963); Costanzo v. Mackler, 34 Misc.2d 188, 227 N.Y.S.2d 750 (1962), aff'd 17 App.Div.2d 948, 233 N.Y.S.2d 1016. In Reed, the court was treating an act, which, like our own, permitted actions for damages against "third persons" but provided that compensation liability of an employer was exclusive in place of all other liability on his part. The United States Supreme Court, in reaching its result, stated the rule of liberal construction to conform with the purpose of the act so often applied by this court. It was never intended that our workman's compensation statutes should immunize one who happens to be an employer from any and all liability to one who happens to be his employee. Amendment 26 of our Constitution only authorized the General Assembly to enact laws prescribing the amount of compensation to be paid by employers for injuries to employees. It prohibits any other limitation on the amount to be recovered for injuries. This certainly means that the General Assembly can only prescribe limitations relating to injuries arising out of the employer-employee relationship. Any effort to extend the limitation to insulate the employer from a liability which does not arise out of the relationship seems to me to violate this provision of the Constitution, particularly when read in the light of Article 2, Section 13. See Emberson v. Buffington, 228 Ark. 120, 306 S.W.2d 326. To say the least, a limitation having this effect is not authorized by this section. In my opinion, the legislature has not even attempted to do *784 that which the majority opinion makes it appear to have done. A review of the statute reveals no such intention to me. The remedy under the act is made exclusive by Ark.Stat.Ann. § 81-1304 (Repl. 1960), but I submit that this applies only to liabilities arising out of the employer-employee relationship. We have said that the purpose of the act is to compensate only for losses resulting from the risks to which the fact of engaging in the industry exposes the employee. Birchett v. Tuf-Nut Garment Mfg. Co., 205 Ark. 483, 169 S.W.2d 574. Liability under the act is based, not upon any act or omission of the employer, but upon the existence of the relationship which the employee bears to the employment because of and in the course of the employment. McGregor & Pickett v. Arrington, 206 Ark. 921, 175 S.W.2d 210. Because of this purpose, we should not extend the limitation on the injured employees' remedy beyond the purposes of the act or beyond the constitutional limitation on the act. Failure to recognize the dual capacity doctrine in this case does both. I observe that Smith v. Rodgers, supra, fully recognizes the possible application of the dual capacity doctrine. We only held that under the facts of that case "Smith was nothing more or less than a joint venturer and as such is exonerated from liability as an employer by the Workmen's Compensation Law." We went on to say that even if Smith were considered as something other than an employer, the evidence failed to show any liability in any other capacity (i. e., intermediate supervisor or bailor). My question is: Why should Gardner Engineering Corporation be relieved of its liability as a designer and manufacturer by the fortuitous circumstance that it happened to be the employer of the injured party in an unrelated undertaking? I would reverse the summary judgment, recognizing that there may well be factual issues to be determined as to the capacity in which appellee acted in the premises.