No. 12401 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1972 

STATE OF MONTANA ex rel. FIRST NATIONAL 

BANK AND TRUST COMPANY OF HELENA, 

Relator, 

THE DISTRICT COURT OF THE FIRST JUDICIAL 

DISTRICT OF THE STATE OF MONTANA, IN AND 

FOR THE COUNTY OF LEWIS AND CLARK AND THE 

HONORABLE GORDON Re 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 
Mr. Justice Frank I. Haswell delivered the Opinion of the Court. 

Relator seeks through this original proceeding a writ of supervisory control to require the respondent court to vacate its order denying 

summary judgment on its behalf. 

Relator is one of the defendants named in cause No. 35473,filed 

on December 10, 1971, in the district court of Lewis & Clark County, entitled 

John W. Foster, Plaintiff, vs. First National Bank & Trust Co. of Helena, et 

a1 . , Defendants, wherein plaintiff seeks damages for personal injuries 

suffered during the course of his employment in the construction of drive-in 

parking facilities for the Bank in Helena. 

Relator Bank contracted with American Building Company, the general 

contractor, to construct some drive-in banking facilities. In the construction contract, the Bank required American to carry workmen's compensation 

insurance protecting American from injury claims of its own employees, or 

the employees of any subcontractors. American then subcontracted with Allen 

Electric Company to perform part of the work, American in turn requiring 

A1 len to carry workmen's compensation on A1 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 in 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 negligence. 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 defendant Hazel Anderson, so as to protect plaintiff engaged in 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 dependents. 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 protection 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 compensation 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 in case of his 

death his heirs or personal representatives, shall, 

in addition to the right to receive compensation under 

the Workmen's Comepnsation Act, have a right to prosecute 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 in their behalf. The motion was granted in favor of American, but denied as to the 

Bank. The Bank now seeks through this writ to 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" is defined in the act as anyone " * * * who 

has any person in service, in 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"; it 

also encompasses the concept of "statutory employer" so that if a person is 

deemed to be a "statutory employer" he is liable for compensation and thus 

immune from third party suits. 

We note that the employees of a subcontractor seldom have a direct 

contractual relationship with 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 contracts out if the subcontractor fails to insure compensation of his own 

employees. For a discussion of this see Larson on Workmen's Compensation, 

Vol. 1A, § 49, p. 853. Thus in 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 independent 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 immediate 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 clearly 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 entitled 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 subcontractor, 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 to require the 

imediate employer to carry workmen 's compensation on his own employees. 

The intent of such statute would be self-defeating if the owner who required this was entitled to no immunity from common law actions. Thus 

we held in 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 to 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 to the instant case, we find the following paragraph in the Bank's contract with American: 

"1 0. WORKMEN 'S COMPENSATION INSURANCE: 

"The contractor (American) shal r maintain statutory 

Workmen's Compensation Insurance in the state of 

Montana during the life 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 to 

provide Workmen 's Compensation Insurance. In the event 

any class of employees engaged in work under this 

contract is not protected under the provisions of the 

Workmen's Compensation Act, the contractor and subcontractors shall provide Employer's Liabi 1 i ty Insurance with respect to such employees. 

'The Contractor shall maintain insurance required under 

any other employee benefit acts in force at 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 Subsubcontractor. '' 

Thus there was no contractual relation between the Bank and Allen, 

plaintiff's immediate employer. In fact, the Allen contract with 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 its own employees, clearly is protected from third party suits by the 

Ashcraft rule. The question remains whether the Bank is entitled to the 

same immunity in the absence of a direct contractual requirement that the 

plaintiff's immediate employer carry workmen Is compensation. We hold 

that it is. 

The reason for such a holding is simple. Although there is no 

contractual relation between the Bank and Allen or the plaintiff, yet, 

in paragraph 10 of its contract with American, the Bank guaranteed that all 

workers involved on the construction would be covered by workmen's compensation. 

We can reach this decision in two ways. First, in the absence of 

workmen's compensation coverage by either A1 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 is entitled to its 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. We do not consider a delay 

of three months in this mu1 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 is directed to grant summary judgment to the First 

National Bank. 

Associate Justice