Title: FISCUS v BEARTOOTH ELECTRIC

State: montana

Issuer: Montana Supreme Court

Document:

No. 12685 I N T H E S U P R E M E C O U R T O F T H E STATE O F M O N T A N A 1974 C L A Y T O N R. FISCUS, P l a i n t i f f and Respondent, -vs - B E A R T O O T H ELECTRIC, Defendant and Appellant. ORIGINAL PROCEEDING: Counsel of Record: For Appellant : Hutton, Sheehy and Cromley, Billings, Montana John C . Sheehy argued, Billings, Montana For Respondent: Berger, Anderson, S i n c l a i r and Murphy, Billings, Montana Richard W. Anderson argued, Billings, Montana For Amicus Curiae : Gene Huntley argued, Baker, Montana Bruce R. Toole argued, Billings, Montana Filed : MAY 7 1974 Submitted: February 27, 1974 Decided : 7 1974 M r . Justice Wesley Castles delivered the Opinion of the Court. This matter comes on an application to accept jurisdiction of an appeal from a summary judgment i n favor of plaintiff on an issue of law as to immunity to a common law t o r t action of the defendant. N o issue i s made of procedural matters, and we t r e a t t h i s as an appeal. The defendant i n t h i s case i s Beartooth Electric Co-opera- tive, Inc., headquartered a t Red Lodge, Montana. Its business i s supplying e l e c t r i c i t y i n r u r a l areas i n Carbon, Stillwater, and Sweet Grass Counties, and i n part i n Park County, Wyoming. It i s a Montana corporation, incorporated i n 1938. It has electric transmission systems, including the usual poles and transmission wire over which e l e c t r i c i t y i s conducted to i t s cus tomer s . Plaintiff i s Clayton R. Fiscus, a resident of Billings, Montana, who was on the date of t h i s accident 34 years old. H e i s employed as a journeyman lineman for High Voltage Systems, Inc., an e l e c t r i c a l contractor. Shortly before the accident here involved, High Voltage Systems, Inc., had entered into a bid contract with Beartooth whereby High Voltage Systems, Inc., would convert five miles of single phase l i n e on the Beartooth system to three phase number 2 ACSI w i r e , and a number 4 neutral. There i s no dispute between the parties that i n performing the contract for Beartooth, High Voltage Systems, Inc., was an independent contractor. Plaintiff Fiscus, as an employee of High Voltage Systems, Inc., on M a y 27, 1971, while on a power pole i n the Beartooth system, came i n contact with the electric power, in such manner that he sustained injuries from which he 10s t one arm above the elbow and one leg below the knee. High Voltage Systems, Inc., had provided workmen's compen- sation coverage to cover i t s employees i n connection with i t s work. Plaintiff Fiscus has been compensated, and i s now being compensated for his medical expenses, and for compensation benefits, by the workmen's compensation carrier for his employer, High Voltage Systems, Inc., as a result of the accident. In the action now pending in the d i s t r i c t court plaintiff has sued Beartooth for his personal injuries, alleging that Beartooth negligently failed to provide plaintiff with a safe place to work, and with safe working appliances. Beartooth did not specifically require, verbally or in writing, that High Voltage Systems, Inc. provide workmen's compensation coverage for i t s employees. However, the statutes do so require and provide a criminal penalty for failure to do so, section 92-207, R.C.M. 1947, and, as noted above, High Voltage did cover plaintiff . This proceeding involves a step-out from the holdings of this Court in Ashcraft v. Montana Power, 156 Mont. 368, 480 P. 2d 812 and Buerkle v. Montana Power Co., 157 Mont. 57, 482 P.2d 564, with respect to the legal l i a b i l i t y of an owner to the injured employee of an /independent contractor. The injury occurred on M a y 27, 1971; thus the applicable statutes are those that applied a t the time of the decisions i n Ashcraft and Buerkle. The issue here i s whether immunity to common law l i a b i l i t y recognized i n Ashcraft and Buerkle extend to an owner where the contractor i n fact provided workmen ' s compensation coverage, but the owner did not require it in the contract. In Buerkle the plaintiff disputed the Ashcraf t rule and claimed that because the negligence of the general employer, Montana Power Company, was a t least a concurrent cause of the injuries to the plaintiff, the defendant power company was not immune from common law l i a b i l i t y even under the Ashcraft rule. This Court held that Buerkle was ruled by the rule i n Ashcraft and explained i t s rationale i n Buerkle a t p. 59: 1 I Bearing i n mind the reasoning above, the self- - evident result i n Ashcraft was that a general employer under such circumstances i s immune from third- party l i a b i l i t y suits. The same conclusion would mechanically follow in the present case except plaintiff charges section 92-438, R.C.M. 1947, should be limited in effect to the Workmen's Compensation Act and should not be a bar to third party l i a b i l i t y suits grounded on the common law. This Court does not agree with this reasoning. "To understand the scope of section 92-438,R.C.M. 1947, it must be read i n conjunction with sections 92-604 and 92-204, R.C.M. 1947. Section 92-604, R.C .M. 1947 provides : 11 1 Where any employer procures any work to be done, wholly or i n part for him, by a contractor other than an independent contractor, and the work so procured to be done i s a part or process i n the trade o r business of such employer, then such employer shall be liable to pay a l l compensation under t h i s act to the same extent as i f the work were done without the intervention of such contractor. And the work so procured to be done shall not be II construed to be casual employment. I l I "The effect of this statute makes a general contractor liable for injuries sustained by employees of another - - contractor where the work project i s a part or process in the trade or business of the general contractor. For example, i f a general contractor hired another as a subcontractor, the general contractor would control and supervise the details and means of carrying out the work, and an employee of the subcontractor was injured, the general contractor would be l i a b l e for the employee's injuries i f the project was a part of the business of the general contractor. I I But how extensive would the general contractor ' s l i a b i l i t y be? Section 92-204, R.C.M. 1947, provides t h i s answer: "'Where both the employer and employee have elected to come under t h i s act, the provisions of t h i s act s h a l l be exclusive, and such election shall be held to be a surrender by such employer and the servants, and employees of such employer and of such employee, as among themselves, of their r i g h t to any other method, form o r kind of compensation, o r determination thereof, o r to any other compensation, o r kind of determination thereof, o r cause of action, action a t l a w , s u i t i n equity, o r statutory o r common law right o r remedy, o r proceeding whatever, for o r on account of any personal injury to o r death of such employee * * *.' "This portion of section 92-204 l i m i t s the general contractor's l i a b i l i t y exclusively to compensation provided by the Workmen s Compensation Act . " H o w i s t h i s relative to section 92-438, R.C.M. 1947? The previously quoted portion of section 92-438 prevents I a general contractor from using the defense of indepen- dent contractor' where he does not require an employee's immediate employer to carry workmen ' s compensation insurance. Therefore, i f the general contractor can I not use the independent contractor' defense then he f a l l s within the scope of section 92-604, which as previously described makes him exclusively l i a b l e for compensation under the Workmen s Compensation Act i n accordance with section 92-204. Therefore, i f section 92-438 i n conjunction with sections 92-604 and 92-204 l i m i t the l i a b i l i t y of a general contractor exclusively to compensation under the Workmen ' s Compensation Act i n circumstances just described, i s it reasonable under the same statutes to assume that where a general contractor requires the employee's immediate contractor to carry workmen's compensation insurance, the general contractor i s not immune from a common law l i a b i l i t y s u i t as a third party? This Court does not believe so. "A contrary r e s u l t would be abusive of the central theory behind the Workmen's Compensation Act. In Yurkovich v. Indus. Acc. Bd., 132 Mont. 77, 83, 84, 314 P.2d 866, i n reference to the workmen's Compensation Act, w e said: "'This a c t i s fundamental legislation enacted f i r s t for the protection and benefit of the injured workman, h i s wife and children, and other dependents. B y force of the l a w the employee surrenders h i s right of an action i n t o r t for injury o r death. The a c t however assures him and h i s dependents of the protection of certain benefits i n case of injury o r death. "'Secondly, the act fixes a limited l i a b i l i t y of the employer so that the economic loss caused by such accidents shall not rest upon the employee o r the public, but that the industry i n which the accident occurs shall pay i n the f i r s t instance for the loss occasioned by such accident. 11 1 In construing a s t a t u t e the whole act must be read together, and where there are several provisions o r particulars such a construction is, i f possible, to be adopted as w i l l give effect to all. ' I I The system of compensation under the Workmen ' s Compensation Act does not envision benefits drawn from a single employer by a common l a w t o r t action together with l i a b i l i t y from workmen's compensation insurance. " (Emphasis supplied.) What makes the instant case appear different from Ashcraft and Buerkle i s the language i n section 92-438, R.C.M. 1947, reading i n part "except when such defense i s interposed on behalf of a party who has previously required the claimant's immediate employer to come within the workmen's compensation act. " (Emphasis supplied.) The meaning of the words "a party who has previously required" i s argued by the respondent to mean a party who has previously required by contract rather than a party who has relied on the l a w with criminal sanctions to require compensation insurance. The argument goes that the words "previously requiredm must have some meaning i n the s t a t u t e and that the mere - f a c t of coverage pursuant to l a w is not sufficient. W a s not t h i s compliance with previously required coverage? Under Buerkle above, w e said that where a general employer had not required his independent contractor to provide workmen ' s compensation, the general employer would be liable for workmen's compensation under section 92-204, R.C.M. 1947. It i s a contin- gent liability. If the independent contractor did not i n fact cover the employee, even though required both by contract and by law to have done so; then, i n that event the general employer or owner i s liable for compensation. This contingent l i a b i l i t y , actually a real l i a b i l i t y i n the sense that it is reflected i n the cost of doing business i n any event, i s what entitles the general employer to the protection of immunity. The workman is guaranteed protection. This is what "statutory employer" is a l l about. In the instant case, because Beartooth did not require High Voltage Systems to provide coverage, Beartooth became liable to Fiscus for coverage i f High Voltage Systems had failed for any reason to have done so. In other words the general employer is responsible i n the f i r s t instance for nonfault l i a b i l i t y even though he may pass it on to a sub- contractor. The general employer i s under a continuing potential l i a b i l i t y ; he has thus assumed a burden i n exchange for which he i s entitled to immunity from a damage s u i t result- ing from the same accident with o r without fault. (See Volume 2, Larson, workmen's Compensation Law, Section 72.31 (Cum. Supp.)) The grant of immunity to an owner or general employer who has not required his independent contractors to comply with the Workmen's Compensation Act does not represent a departure from our prior holdings. In Ashcraft the question was whether o r not a general employer who had complied with section 92-438 and required compliance with the Workmen's Compensation Act by h i s independent contractors could be sued as a third party by the contractor's employees. W e held that he could not. Following Ashcraft the question was again presented i n Buerkle. In deciding that case we elaborated our reasoning as heretofore pointed out. Subsequently the question was again presented a l b e i t i n s l i g h t different form i n F i r s t National Bank and T r u s t Company v. District Court, 161 Mont. 127, 505 P.2d 408, 412. The reasoning of Buerkle was reiterated i n that decision. In the First Kaitional Bank w e observed that an owner o r general employer would be inrmune to a third party s u i t on either of two bases : "* * * F i r s t , i n the absence of workmen's compensation coverage by either Allen o r American, (the independent contractors) clearly under the s t a t u t e the Bank would not be entitled to the independent contractor defense, and would thus be deemed plaintiff ' s ' statutory employer ' . Second, the Bank complied with the intent of the s t a t u t e that a l l persons working on the construction would be covered by workmen ' s compensation. 11 In a l l our previous cases the element of required compliance with the Workmen's Compensation Act on the part of the independent contractor has been present. In each of those cases we held the owner imxmme from s u i t as a third party. I n each of those cases we granted the immunity because of the fundamental unfairness of subjecting an employer to third party l i a b i l i t y which he could have avoided as a statutory employer had he not required h i s independent contractor comply with the Workmen's Compensation Act. In t h i s case we face the situation i n which the owner o r general employer did not require compliance with the Workmen ' s Compensation Act and is accordingly subject to potential no-fault l i a b i l i t y for benefits under the Workmen ' s Compensation Act as the statutory employer of the injured work- man. Since the owner Beartooth i s subject to such l i a b i l i t y it necessarily follows that it i s also immune to s u i t as a third party under section 92-204, R.C.M. 1947, which makes the remedies of the Workmen's Compensation Act exclusive between employer and employee. Also appearing i n t h i s action as amicus curiae were Shell O i l Company and James B. Hatfield, the parties l i t i g a n t i n a cause currently pending i n federal d i s t r i c t court which involves the same legal question herein decided. The order of the d i s t r i c t court denying summary judgment is vacated and the d i s t r i c t court i s directed to grant summary judgment to Beartoo th Electric Co-operative. W e concur: ............................... - L . Chief Justice 8 ............................... Justices Mr. Justice Gene B. Daly dissenting: I dissent. This case turns on the interpretation of section 92-438, R.C.M. 1947, as amended by Section 1, Chapter 49 of the Laws of 1965, and since repealed by Section 2, Chapter 251, Laws of 1973. Therefore any in depth discussion on points of disagreement would be by any view academic and of little value to the bar of Montana. I would only point out that the language contained in the 1965 amendment was not clear or as direct as it might have been to aid in the search for legislative intent. My views in the original treatment contained in Ashcraft v. Montana Power, 156 Mont. 368, 480 P.2d 812, recognized the power of the legis- lature to grant immunity from common law liability in return for vicarious statutory liability but the legislative intent must be manifest and of course contained within the Workmen's compensation as restated in Kelleher v. Montana Aeronautics, 160 Mont. 365, 503 P.2d 29. The majority in Ashcraft found the intent to limit third party actions but restricted the application to a narrow application within the terms of the 1965 amendment. We have followed this interpretation since that time. It is my view that the majority here makes a departure from the narrow application of Ashcraft when it considers the mandate of a criminal statute to satisfy the requirements of the Act placed on the employer, Beartooth Electric, if they wish to avoid their responsibility to contractor to respond to a th Justice I concur in the for Gene B. Daly. Justice - 10 -