No. 12685 INTHE SUPREME COURT OF THE STATE OF MONTANA 1974

CLAYTON R. FISCUS, Plaintiff and Respondent,

-vs

# - BEARTOOTH 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, Sinclair 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

### Mr. JusticeWesley Castles delivered the Opinion of the Court. This matter comes on an application to acceptjurisdiction of 

### an appeal from a summary judgment in favor of plaintiff on

an issue of law 

### as to immunity to a common law tort actionof the defendant. No issue 

### ismade of procedural matters, and

we treat this 

### as an appeal. The defendant in this case 

### isBeartooth Electric Co-operative, Inc., headquartered atRed Lodge, Montana. Itsbusiness is supplying electricity inrural areas inCarbon, Stillwater, and Sweet Grass Counties, and inpart inPark County, Wyoming. It 

### is a Montana corporation, incorporated in 1938. It has electric transmission systems, including the usual poles and transmission wire over which electricity 

### isconducted to its

customer

### s

# . Plaintiff 

### isClayton R. Fiscus, a resident of Billings, Montana, who was on the date of this accident 34 years old. He 

### isemployed as a journeyman lineman for High Voltage Systems, Inc., 

### an electrical contractor. Shortlybefore the accident here involved, High Voltage Systems, Inc., had entered into a bid contractwith Beartooth whereby High Voltage Systems, Inc., would convert fivemiles of singlephase lineon the Beartooth system to three phase number 2 ACSI 

### wire, and a number 

### 4 neutral. There isno disputebetween the parties that inperforming the contract for Beartooth, High Voltage Systems, Inc., was 

### an independent contractor. Plaintiff Fiscus, 

### as an employee of High Voltage Systems,Inc., on May 27, 1971, while on a power pole in the Beartooth system, came in contact with the electric power, in such manner that he sustained injuries from which he 10s t one arm above the elbow and one legbelow the knee. High Voltage Systems, Inc., had provided workmen's compensation coverage to cover its employees in connection with its work. Plaintiff Fiscus has been compensated, and isnow being compensated forhis medical expenses, and for compensation benefits, by theworkmen's compensation carrier for his employer, High Voltage Systems, Inc., as a result of the accident. In the actionnow pending in the district 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 safeworking appliances. Beartooth didnot specifically require, verbally or in writing, that High Voltage Systems, Inc. provide workmen's compensation coverage for itsemployees. However, the statutes do so require and provide a criminal penalty for failure to do so, section 92-207, R.C.M. 1947, and, asnoted above, High Voltage did cover plaintiff

# . This proceeding involves a step-out from the holdings of this Court inAshcraft v. Montana Power, 156Mont. 368, 480 P.2d 812 and Buerkle v. Montana Power Co., 157Mont. 57, 482 P.2d 564, with respect to the legal liabilityof an owner to the

### injured 

### employee 

### of an /independent contractor. The injury occurred on May 27, 1971;

thus the applicable statutes are those that applied atthe time of the decisions inAshcraft and Buerkle.The issuehere 

### iswhether immunity to common law liability recognized inAshcraft and Buerkle extend to 

### an owner where the contractor in fact provided workmen

## 's compensation coverage, but the owner did not require it in the contract. In Buerkle the plaintiff disputed the Ashcraft rule and claimed that because the negligence of the general employer, Montana Power Company, was atleast a concurrent cause of the injuries to the plaintiff, the defendant power company was not immune from common law liability even under the Ashcraft rule. This Court held that Buerkle was ruled by the rule in Ashcraft and explained itsrationale in Buerkle atp. 59:

1IBearing inmind the reasoning above, the self-

- evident result inAshcraft was that a general employer under such circumstances isimmune from third-party liability 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 theWorkmen's Compensation Act and should not be a bar to third party liability 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, itmust be read in conjunction with sections 92-604 and 92-204, R.C.M. 1947. Section 92-604, R.C 

### .M. 1947 provides:

111 Where any employer procures any work to be done, wholly or inpart for him, by a contractor other than an independent contractor, and the work so procured to be done isa part or process in the trade orbusiness of such employer, then such employer shall be liable to pay allcompensation 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 shallnot be II construed to be casual employment.IlI "The effect of this statutemakes a general contractor liable for injuries sustainedby employees of another

- - contractor where the work project is a part or process in the trade orbusiness of the general contractor.For example, if a general contractorhired 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 subcontractorwas injured, the general contractor would be liable for the employee's injuries if the project was a part of the business of the general contractor.

IIBut how extensive would the general contractor

## 's liabilitybe? Section 92-204, R.C.M. 1947, provides this answer: "'Where both the employer and employee have elected to come under this act, the provisions of this act shallbe exclusive, and such election shallbe 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 right to any other method, form orkind of compensation, or determination thereof, or to any other compensation, orkind of determination thereof, or cause of action, action at law, suit in equity, or statutoryor common law right orremedy, or proceeding whatever, for oron account of any personal injury to or death of such employee 

# **

# *.' "This portion of section 92-204 limitsthe general contractor's liability exclusively to compensation provided by theWorkmen s Compensation Act

# . "How is thisrelative 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 independent contractor' where he does not require an employee's immediate employer to carryworkmen

# 's compensation insurance. Therefore, if the general contractor can I not use the independent contractor' defense then he fallswithin the scope of section 92-604, which as previously described makes him exclusively liable for compensation under theWorkmen 

### s Compensation Act in accordance with section 92-204. Therefore, if section 92-438 inconjunction with sections 92-604 and 92-204 limitthe liabilityof a general contractor exclusively to compensation under theWorkmen

## 's Compensation Act in circumstancesjust described, 

### is itreasonable 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 isnot immune from a common law liability suit 

### as a third party? This Court does not believe so. "A contrary result would be abusive of the central theory behind theWorkmen's Compensation Act. In Yurkovich v. Indus. Acc. Bd., 132Mont. 77, 83, 84, 314 P.2d 

### 866, inreference to theworkmen's Compensation Act, we said: "'This act isfundamental legislation enacted first for the protection and benefit of the injuredworkman, hiswife and children, and other dependents. By force of the 

### lawthe employee surrenders his right of an action in tort for injury ordeath. The acthowever assures him and his dependents of the protection of certain benefits incase of injury or death. "'Secondly, the act fixes 

### a limited liabilityof the employer so that the economic loss caused by such accidents shallnot 

### rest upon the employee or the public, but that the industry inwhich the accident occurs shallpay in the firstinstance for the loss occasioned by such accident.

111In construing 

### a statutethewhole act must be read together, and where there are several provisions or particulars such a construction is, if possible, to be adopted 

### as willgive effect to 

### all.

# '

IIThe system of compensation under theWorkmen

## 's Compensation Act does not envision benefits drawn from a single employer by 

### a common law tort action together with liability from workmen's compensation insurance. " (Emphasis supplied.) What makes the instant case appear different from Ashcraft and Buerkle 

### is the language in section 92-438, 

### R.C.M. 1947, reading inpart "except when such defense 

### is 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" is argued by the respondent to

mean 

### a party who has previously required by contract rather than a party who has relied on the 

### lawwith criminal sanctions to require compensation insurance. The argument goes that the words "previously requiredmmust have some meaning in the statute and that the mere 

# - factof coverage pursuant to 

### law

### isnot sufficient. 

### Was not this compliance with previously required coverage?Under Buerkle above, we said that where a general employer had not required his independent contractor to provide workmen

## 's compensation, the general employer would be liable forworkmen's compensation under section 92-204, R.C.M. 1947. It 

### isa contingent liability. If the independent contractor did not in fact

cover the employee, even though required both by contract and by law to have done so; then, in that event the general employer

orowner 

### is liable for compensation. This contingent liability, actually a real liability in the sense that it 

### isreflected in the cost of doing business in any event, iswhat entitles the general employer to the protection of immunity. The workman 

### is guaranteed protection. This 

### iswhat "statutory employer" 

### is allabout. In the instant case, because Beartooth did not require High Voltage Systems to provide coverage, Beartooth became liable to Fiscus for coverage if High Voltage Systems had failed for any reason to have done so. In other words the general employer 

### isresponsible in the firstinstance for nonfault liability even though he may pass it on to a subcontractor. The general employer isunder a continuing potential liability; he has thus assumed a burden in exchange forwhich he 

### isentitled to immunity from a damage suitresulting from the same accident with orwithout 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 theWorkmen's Compensation Act does not represent a departurefrom our prior holdings. InAshcraft the question was whether

ornot 

### a general employer who had complied with section 92-438 and required compliance with theWorkmen's Compensation Act by his independent contractors could be sued 

### as a third party by the contractor's employees. We held that he could not. FollowingAshcraft the questionwas again presented inBuerkle. In deciding that casewe elaborated our reasoning asheretofore pointed out. Subsequently the question was again presented albeit in slightdifferent form inFirstNational Bank and 

### Trust Company v. District Court, 161Mont. 127, 505 P.2d 408, 412. The reasoning of Buerkle was reiterated inthat decision. In the

### First Kaitional 

### Bank we observed that an owner or general employer would be 

### inrmune to a third party suiton either of two bases: 

# "*** First, in the absence of workmen's compensation coverage by eitherAllen orAmerican, (the independent contractors) clearlyunder the statute 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 statute that allpersons working on the construction would be covered by workmen

# 's compensation. 11 In 

### allour previous cases the element of required compliance with theWorkmen's Compensation Act on the part of the independent contractorhas been present. In each of those cases we held the owner imxmme from suit 

### as a third party. In each of those

cases we granted the immunity because of the fundamental unfairness of subjecting an employer to thirdparty liability which he could have avoided as a statutory employer had he not required his independent contractor comply with theWorkmen'sCompensation Act. In this casewe face the situation inwhich the owner or general employer didnot require compliance with theWorkmen

## 's Compensation Act and is accordingly subject to potential no-fault liability forbenefits under theWorkmen

## 's Compensation Act as the statutory employer of the injured work

### man. Since the owner Beartooth 

### issubject to such liability itnecessarily follows that it 

### is also immune to suit 

### as a third party under section 92-204, R.C.M. 1947, which makes the remedies of theWorkmen's Compensation Act exclusivebetween employer and employee. Also appearing in this action 

### as amicus curiaewere Shell OilCompany and 

### James B. Hatfield, the parties litigant in a

cause currently pending in federal district court which involves the 

### same legal question herein decided. The order of the district court denying summary judgment 

### isvacated and the district court 

### isdirected to grant summary judgment to Beartooth Electric Co-operative.



### We concur:



# ............................... -L. Chief Justice

8



# ............................... JusticesMr. 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 disagreementwould 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 itmight 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 legislature 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 applicationwithin the terms of the 1965 amendment. We have followed this interpretation since that time. It ismy 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

# -