No. 12401 INTHE 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, INAND 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:

# 3nH9

# - 7573

### Mr. Justice Frank I. Haswell delivered the Opinion of the Court. Relator seeks through 

### this original proceeding a writ of supervisory control 

### torequire the respondent court tovacate itsorder denying summary judgment on itsbehalf. Relator is one of the defendants named incause 

### No. 35473,filed

on December 10, 1971, in the districtcourt of Lewis & Clark County, entitled John W. Foster, Plaintiff, 

### vs. FirstNational 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 facilitiesfor the Bank inHelena. Relator Bank contracted with American Building Company, the general contractor, toconstruct 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 withAllen Electric Company to perform part of thework, American in

### turnrequiring A1len tocarry workmen's compensation on A1len'semployees. 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 tothe ground, causing certain alleged injuries. Hazel Anderson was a bank customer utilizing the drive-in banking facilities which the Bank had required toremain inoperation 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 toprotect plaintiff engaged inwork on said

### driveway." To put the case in proper perspective, we review the central theory behind the Workmen'sCompensation Act. In Yurkovich 

### v. Indus. Acc. Bd., 132Mont. 77,314 P.2d 866,

### cited 

### in Buerkle

### v. Montana Power Co., 157Mont. 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. "'Inconstruing 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'scompensation 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 surrenderby such employer and the 

### servants,and employees of such employer and such employee, as among themselves, of their right to any othermethod, 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 rightsmay be hereinafter specifically granted 

## * * *. Provided, that whenever such employee shall receive an injury whileperforming the duties of his employment and such injury or injuries, soreceived by such employee, are caused by the actor omission of some persons or corporations other than his employer, or the servants or employees of his employer, then such employee, or incase of his death his heirs or personal representatives, shall, inaddition to the right toreceive compensation under the Workmen's Comepnsation Act, have a right toprosecute any cause of action he may have for damages against such persons or corporations, causing such injury

## * *

## *." Both the Bank and American moved for summaryjudgment intheirbehalf. The motion was granted infavor of American, but denied as to the Bank. The Bank now seeks through this writ 

### toreview 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" isdefined inthe act as anyone 

### " 

## * * * who has any person inservice, inhazardous 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 tobe the "employer" of plaintiff, since there was no direct contract between the two. See Sullivan 

### v. City of Butte, 117 Mont. 215, 157 P.2d 479. However, the employer's 1 iabi1 ity for compensation and corresponding immunity from third party suitsdoes 

### not depend solely on the above definition of "employer"; it also encompasses the concept of "statutory employer" so that if a person is deemed tobe a "statutoryemployer" he is liable forcompensation 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 failsto insure compensation of his own employees. For a discussion of 

### this see Larson on Workmen's Compensation, Vol. 1A, § 49, p. 853. 

### Thus inMontana we have section 92-604, R.C.M.

### 1947,which provides: 

### "Where any employer procures any work to be done,who1ly 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 compensationunder this act to the same extent as if the work were done without the interventionof 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 "statutoryemployer" of the employees of contractors other than independent contractors so that the

owner i

### s 

### 1iable for their workmen's compensation coverage. The act then defines "independentcontractor''

### 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 compensable industrial accident claims against employers exceptwhen such defense is interposed on behalf of a party who has previously required the claimant's immediate employer to come within the Workmen'sCompensation Act

# ." 

### This statute makes the owner the 'statutoryemployer' of employees of an independent contractor and permits him the use of the independent contractor defense if he requires the independent contractor to carryworkmen's compensation on his own employees. The purpose of these two statutes is clearly to guarantee that all employeeswill be protected under the act,and that

no employer or general contractorwill escape 1

### iability for compensation by contracting out, exceptwhen 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'scompensation 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 toguarantee the protection of a11 employees working on thejob by encouraging the owner torequire the imediate employer to carry

### workmen

### 'scompensation on his own employees. The intent of such statutewould be self-defeating if theowner who required this was entitled to no immunity from common law actions. Thus

we held inAshcraft v. Montana Power, 156Mont. 368, 480 P.2d 812, that when the owner by requiring the independent contractor tocarryworkmen's compensation is entitled tothe independent contractor defense, he is also entitled to immunity from third party 

### suits under section 92-204, R.C.M. 1947. See alsoBuerkle 

### 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 tothe instant case, we find the following paragraph inthe Bank's contract withAmerican: "10. WORKMEN'S COMPENSATION INSURANCE: "The contractor (American) shalr maintain statutory Workmen's Compensation Insurance in the stateof Montana during the lifeof 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 similarlyto provide Workmen's Compensation Insurance. In the event any class of employees engaged inwork under this contract is

### not protected under the provisions of the Workmen's Compensation Act, 

### the contractor and subcontractors shall provide Employer's Liabi1 ity Insurance with respect tosuch employees. 'The Contractor shall maintain insurance required under

any other employee benefit acts in force atthe 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 Americanwas entered into 19 days after the principal contract between the Bank and American. American, by requiring Allen to carry Workmen's Compensation

on itsown employees, clearly isprotected from third party suits by the Ashcraft rule. The question remains whether the Bank isentitled to the

same immunity inthe absence of a direct contractual requirement that the plaintiff's immediate employer carry workmen

### Is compensation. We hold that itis. The reason for such a holding issimple. Although there isno contractual relation between the Bank and Allen or the plaintiff, yet, in paragraph 10 of itscontract with American, the Bank guaranteed that all workers involved 

### on the construction would be covered by workmen's compensation. We can reach this decision intwo ways. First, in the absence of workmen's compensation coverage by eitherA11 en or American, clearly under the statutethe 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 statutethat all persons working on the construction would be covered by workmen

### Is compensation. Accordingly, the Bank isentitled 

### to itsquid pro quo--immunity from third party negligence 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 mu1tiple 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 districtcourt denying summaryjudgment is vacated and the districtcourt isdirected to grant summaryjudgment to the First National Bank.

Associate Justice