No. 90-345 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1991 

JESS K. WALLING, 

Claimant and Appellant, 

-vsHARDY CONSTRUCTION, 

Employer, 

and 

CIGNA INSURANCE COMPANY, 

Defendant and Respondent. 

MAR 19 '199% 

APPEAL FROM: Workers' Compensation Court 

The Honorable Timothy W. Reardon, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Tom L. Lewis; Reqnier, Lewis & Boland, P.C., Great 

Falls, Montana 

For Respondent: 

Randall H. Gray; James, Gray & McCafferty, Great 

Falls, Montana 

Chip McKenna, CIGNA Insurance Company, Portland, 

Oregon 

Filed: 

Submitted on Briefs: February 21, 1991 

Decided: March 19, 1991 

Clerk 
Justice John Conway Harrison delivered the Opinion of the Court. 

On June 6, 1990, the Montana Workers' Compensation Court 

determined that claimant Jess K. Walling, as an independent 

contractor, could not recover workers1 compensation benefits from 

Hardy Construction, the general contractor. From this decision, 

Walling appeals. We affirm. 

The following issues are presented: 

1. Was the evidence sufficient for the Workers' Compensation 

Court to find that Walling was an independent contractor, rather 

than an employee of Hardy Construction? 

2. In concluding that walling was an independent contractor, 

did the Workers1 Compensation Court err in its analysis of the 

control factor of 5 39-71-120, MCA? 

3. Did the Workers1 Compensation Court err by applying 5 39- 

71-401, MCA, as a basis for denying Hardy Constructionls liability 

under the Workers1 Compensation Act? 

Summary of Facts 

In September 1984 Hardy Construction, a general contractor, 

was awarded a $6.5 million contract for construction of a new 

Fergus County high school. Hardy Construction negotiated a 

subcontract, signed on January 10, 1985, with Jess Walling, 

proprietor of Walling Construction, a business in operation from 

1976 to 1985. In submitting his bid for the concrete flatwork, 

Walling advised Hardy Construction that Walling did not want to 

set the forms, but only wanted to do the pouring and finishing. 
Walling agreed to pour and finish concrete slabs on the school 

construction project for 28 cents per square foot. 

Paragraph VII of the subcontract provided that Walling was to 

Ivobtain, maintain and pay for such workmen's compensation insurance 

as may be required by the General Contract or by law . . . .Iv 

Walling complied with this requirement of the subcontract by 

providing workers' compensation insurance through the State Fund 

for his employees. As allowed by law, Walling elected not to pay 

for workersv compensation insurance for himself. 

The agreement specified that the subcontractor was to Ivproceed 

with the work in the sequence directed by the Contractor and to 

abide by the Contractor's decision as to the allotment of all 

storage and working space on the Project." 

The subcontract required Walling to provide vv[l]abor and 

equipment to place and finish concrete. Iv Equipment provided by 

Walling included shovels, rakes, wheelbarrows, cement finishing 

machines worth $200 to $350, and hand tools. Under the terms of 

the subcontract, Hardy Construction provided concrete, cure, 

sealer, hardener, concrete saw worth $1,000, installation of forms, 

reinforcing steel, and visqueen. 

On one occasion Hardy Construction allowed Walling to use a 

forklift, operated by a Hardy Construction employee, for lifting 

concrete to mezzanine level. On three occasions, in order to speed 

up the work, Hardy Construction made available to Walling a Bobcat 

tractor driven by a Hardy Construction employee. 

Under the terms of the subcontract, Hardy Construction had the 
authority, which it never exercised, to fire any Walling employee 

Hardy Construction considered objectionable. If the subcontract 

were terminated, the subcontractor retained the right to withhold 

service and to extend the time for completion of the work if delay 

were the fault of Hardy Construction. 

On the job Hardy Construction s superintendent, Norm ~j orndal , 

pursuant to the subcontract, controlled the sequence of work by 

subcontractors. Walling checked with Bjorndal daily to find out 

when and where concrete was to be poured. Bjorndal told Walling 

and his employees where they had to work and how much concrete to 

pour each day. At times, Bjorndal ordered Walling to pour concrete 

over Walling's objections that rain would ruin the concrete. By 

altering the method of setting the screed, Bjorndal changed 

Walling1 s procedure for making the concrete surface flat . Bj orndal 

also determined whether to "burn the floor," giving the concrete 

a high gloss finish, or whether to leave the concrete with a rough 

finish. Walling worked along with his employees. 

On the other hand, Walling or one of his foremen, Jim 

Plovanich or Dan Oblander, supervised the Walling employees. 

Bjorndal did not instruct Walling on which employees or how many 

employees to have on the construction site. Bjorndal did not tell 

Walling which Walling employees were to perform certain tasks or 

what tools to use. Walling, rather than Bjorndal, controlled when 

the Walling employees would take lunch and coffee breaks or could 

leave the job site. 

Walling employees did not make out time cards as did Hardy 
Construction employees. Rather, Walling paid his own employees. 

According to the subcontract, Walling was paid within sixty days 

of submittal of a certified monthly estimate to Hardy Construction, 

provided that the architect had certified the monthly estimate, 

that Walling was not in default, and that Hardy Construction had 

been paid by the project owner. Payment to Walling was usually 

made monthly. In contrast, Hardy Construction employees were paid 

weekly whether or not Hardy was paid by the owner of the project. 

Each month Hardy Construction obtained lien waivers from 

Walling and its other subcontractors. 

On May 28, 1985, Walling, while working, severely injured his 

back when he slipped on some wet forms at the construction site. 

Due to his injuries, Walling underwent surgery on June 27, 1985. 

About 90 per cent of Walling's work had been completed at that 

point. After Walling's injury, Bjorndal took over Walling's crew 

until the work was finished in July, 1985. 

Walling claimed that he was eligible for workers1 compensation 

benefits as an employee of Hardy Construction, rather than an 

independent contractor. On December 6, 1989, a trial was held 

before the Workers' Compensation Court on the issue of liability, 

which was bifurcated from the question of the nature and extent of 

Walling's injury. From the court's decision in favor of Hardy 

Construction, Walling appeals. 

I 

Was the evidence sufficient for the Workers1 Compensation 

Court to find that Walling was an independent contractor, rather 
than an employee of Hardy Construction? 

Walling claims that he was an employee of Hardy Construction, 

not an independent contractor. See 5 39-7-181 (a) , MCA. An 

"independent contractorI1 is defined as follows: 

[Olne who renders service in the course of an occupation 

and : 

(1) has been and will continue to be free from 

control or direction over the performance of the 

services, both under his contract and in fact; and 

(2) is engaged in an independently established trade, 

occupation, profession, or business. 

Section 39-71-120, MCA. 

The parties agree that Walling Construction, as an 

independently established trade or business, satisfies subsection 

(2) of 39-71-120, MCA. However, Walling alleges that when 

working for Hardy Construction, he was not "free of direction or 

control over the performance of service^,'^ as required by 

subsection (1) . 

In Sharp v. Hoerner Waldorf Corp. (1978), 178 Mont. 419, 584 

P.2d 1298, this Court developed a four-part test for determining 

whether or not an employer has the right of control: (1) direct 

evidence of right or exercise of control; (2) method of payment; 

(3) furnishing of equipment; and (4) right to fire. Sharp, 178 

Mont. at 425, 584 P.2d at 1301-02. A finding that an individual 

is an independent contractor demands l1la convincing accumulation 

of these and other tests, 'I1 while a finding of employee status 

"'can if necessary often be solidly proved on the strength of one 

of the four items.I1' Sharp, 178 Mont. at 425, 584 P.2d at 1302 
(quoting 1C A. Larson, Workmen's Compensation Law § 44.10, at 8- 

35 (1952) ) . 

Control 

The traditional test of employer/employee status is the riqht 

of the employer to control details of the work, not necessarily the 

exercise of that control. Carlson v. Cain (1983), 204 Mont. 311, 

324, 664 P.2d 913, 919. An employer of an independent contractor 

controls the "end result" of the contractor's work, while control 

of the llmeansll by which the work is accomplished indicates that the 

worker is an employee. Johnson v. Department of Labor & Industry 

(1989), 240 Mont. 288, 292-93, 783 P.2d 1355, 1358. Without 

destroying independent contractor status, the owner or general 

contractor ''is entitled to as much control of the details of the 

work as is necessary to ensure that he gets the end result from the 

contractor that he bargained for.'' 1C A. Larson, Workmen's 

Compensation Law 5 44.20, at 8-57 (1990). 

Walling contends that Hardy Construction exercised control 

over Walling's work by determining when and where Walling would 

work. The subcontract provided that Hardy Construction could 

control the sequence of the work, a condition necessary to ensure 

the end result on a project employing as many as forty Hardy 

Construction employees and approximately fifteen subcontractors. 

This provision in the subcontract was not enough to strip Walling 

of control. 

Walling cites Bjorndalls ordering some concrete work to be 

performed in bad weather against Walling's advice as one way in 
which Hardy Construction exercised direction and control over 

Walling. These actions of Bjorndal fell within Hardy 

Construction's right to control the sequence of the work on the 

construction project. 

Walling argues that Hardy Construction managed the means by 

which the work was accomplished when Bj orndal changed Walling s 

screeding method. Bjorndal made the change because Hardy 

Construction altered its method of setting forms, a responsibility 

of Hardy Construction under the subcontract. 

Bjorndalls decisions as to what type of finish to put on the 

concrete also were within Hardy Construction's prerogative to 

control the end result. When Walling's crews were working, either 

Walling himself or one of his foreman directed their activities. 

We hold that Hardy Construction did not exert any more control over 

Walling than necessary to oversee construction of the project and 

ensure the end result. 

Method of Payment - 

Walling was paid 23 cents per square foot of completed 

concrete. Walling had to submit certified monthly estimates to 

the contractor and payment had to be certified by the project 

architect. Final payment to Walling was conditioned upon the 

architect's certification of final payment to Hardy and provided 

that Walling would be paid only if Hardy Construction were paid by 

Fergus County. Hardy Construction paid its employees weekly, 

whether or not Hardy Construction received payments from the 

County. Walling paid his own employees. According to 1C A. 
Larson, Workmen's Compensation Law, 5 44.33, at 8-94 (1990): 

[playment on a time basis is a strong indication of the 

status of employment. Payment on a completed project 

basis is indication of independent contractor status. 

Payment on a piece-work or commission basis is consistent 

with either status. 

"When payment is by quantity or percentage, the method of payment 

test . . . largely cancels itself out and becomes neutral." 1C A. 

Larson, Workmen's Compensation Law 5 44.33 (b) , at 8-106 (1990) . 

We hold that the method of payment to Walling was at best a neutral 

factor, and more indicative of independent contractor status when 

compared with the manner in which other Hardy Construction 

employees were paid and the conditions which had to be met for 

Walling to be paid. 

Furnishins of Equipment - 

Providing valuable equipment indicates employment status as 

explained in IC A. Larson, Workmen's Compensation Law § 44.34(b), 

When it is the employer who furnishes the equipment, the 

inference of right of control is a matter of common sense 

and business. The owner of a $10,000 truck who entrusts 

it to a driver is naturally going to dictate details such 

as speed, maintenance, and the like, in order to protect 

his investment. Moreover, since he has capital tied up 

in this piece of equipment, he will also want to ensure 

that it is kept as productive and busy as possible. 

Walling or his employees provided the equipment, including 

expensive cement finishing machines, ordinarily used during the 

course of work. On the few occasions when a Bobcat and forklift 

were used, the machines were operated by Hardy Construction 

workers. Provision and use of equipment were consistent with 

independent contractor status. 
Risht to Fire 

Termination at will or for failure to perform certain details 

unrelated to the end result strongly indicates employee status. 

Carlson, 204 Mont. at 324, 664 P.2d at 919. Although, pursuant to 

the subcontract, Hardy Construction reserved the right to fire 

unsatisfactory employees of Walling, Hardy Construction could not 

"firen Walling without terminating the contract and incurring 

liabilities. Walling could withhold service and extend the time 

for completing its work due to the fault of Hardy Construction. 

The conditions set forth in the contract for termination are 

consistent with independent contractor status. 

Unless the facts are undisputed, the question of independent 

contractor versus employee status is not a matter of law. Carlson, 

204 Mont. at 317, 664 P.2d at 916. Since certain facts were 

disputed, in this case the I1sufficiency of the evidence" standard 

is appropriate. Solheim v. Tom Davis Ranch (1983), 208 Mont. 265, 

272, 677 P.2d 1034, 1038. 

When determining whether evidence supports the findings and 

conclusions of the Workers1 Compensation Court, the scope of review 

is limited. The Supreme Court cannot substitute its judgment as 

to the weight of the evidence and cannot overturn the judgment of 

the Workers1 Compensation Court if substantial evidence supports 

the findings. Schrapps v. Safeway Stores, Inc. (1989), 238 Mont. 

355, 356-57, 777 P.2d 887, 888. 

We hold that substantial evidence supports the finding of the 

Workers1 Compensation Court that Walling was not an employee of 
Hardy Construction, but an independent contractor. 

In concluding that Walling was an independent contractor, did 

the Workers1 Compensation Court err, as a matter of law, in its 

analysis of the control factor of 5 39-71-120, MCA? 

In considering questions of law, this Court is not bound by 

the conclusions of the Workers1 compensation Court, but is free to 

draw its own conclusions fromthe evidence presented. Carlson, 204 

Mont. at 317, 664 P.2d at 916. Walling alleges that the Workers1 

compensation Court erred as a matter of law by examining the 

control granted to Hardy construction according to the "four 

corners of the contract itself," as stated in the court's 

conclusions of law: 

All of the functions of control exercised by Hardy fit 

within the four corners of the contract itself. Hardy 

reserved to itself the ability or right to determine when 

and where to pour concrete as the sequence of work was 

solely at Hardy's discretion. The fact that Bjorndal 

ordered certain work performed against Walling's advice 

due to weather does not alter that contract provision. 

The same is true of the furnishing of equipment which 

paragraph XIX permits by agreement. No additional duties 

outside the terms of the contract were imposed on Walling 

as was the case in Sharp . . . . 

~ccording to the statutory definition, an independent contractor's 

direction and control must be determined "both under his contract 

and in fact.'' Section 39-71-120, MCA. As stated in Sharp, "in 

determining this right of control, attention must be directed to 

the employment contract and the fact of the employment situation.I1 

Sharp, 178 Mont. at 425, 584 P.2d at 1301. 

We find no error because we read the court's conclusion as 
examining both the subcontract and what in fact occurred on the job 

site. Hardy ~onstruction's control over the sequence of work 

performed and provision of equipment, gave Hardy construction no 

more direction and control over Walling than necessary to ensure 

the end result. 

Did the Workers1 compensation Court err by applying subsection 

(3) of § 39-71-401, MCA, as a basis for denying Hardy 

Construction's liability under the Workersr Compensation Act? 

Since we have upheld the Workers' Compensation Court's 

determination that Walling was an independent contractor, we need 

not discuss the court's application of § 39-71-401(3), MCA. 

Walling further contends that he should be afforded insurance 

coverage by Hardy construction under the statutory provision 

governing liability of an employer who contracts out work: 

(2) Where an employer contracts to have any work to 

be done by a contractor other than an independent 

contractor, and the work so contracted to be done is a 

part or process in the trade or business of the employer, 

then the employer is liable to pay all benefits under 

this chapter to the same extent as if the work were done 

without the intervention of the contractor, and the work 

so contracted to be done shall not be construed to be 

casual employment. Where an employer contracts work to 

be done as specified in this subsection, the contractor 

and the contractor's employees shall come under that plan 

of compensation adopted by the employer. 

Section 39-71-405 (2) , MCA (emphasis added). 

We have previously interpreted this statutory subsection, 

identical to the 1983 version, in State Insurance Compensation Fund 

v. Castle Mountain Corporation (1987), 227 Mont. 236, 739 P.2d 461. 

While this Court recognized that subsection (2) could be read to 
require a general contractor to provide benefits for a 

subcontractor if the subcontractor were a non-independent 

contractor, we concluded that "the subsection was not intended to 

address situations where the contractor is sufficiently independent 

to carry its own workers1 compensation insurance.I1 Castle 

Mountain, 227 Mont. at 241, 739 P.2d at 464. 

Since we have held that the evidence was sufficient to find 

that Walling was an independent contractor, 5 39-71-405(2), MCA, 

does not apply. 

The judgment of the Workers' Compensation Court is affirmed. 

We concur: