No. 86-194 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1987 

DARRELL L. SCHROCK, 

Claimant and Cross-Appellant, 

-vsEVANS TRANSFER AND STORAGE, 

Employer, and STATE COMPENSATION 

INSURANCE FUND, Insurer, 

Defendants and Appellants, 

and 

NORTH AMERICAN VAN LINES, Employer, 

and LIBERTY MUTUAL INSURANCE CO., Insurer, 

Defendants and Respondents. 

APPEAL FROM: The Workers' Compensation Court, The Honorable 

Timothy Rea-rdon, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Hughes, Kellner, Sullivan & Alke; Thomas E. Martello, 

Helena, Montana 

David L. Holland and Leonard J. Haxby, Butte, Montana 

For Respondent: 

Garlington, Lohn & Robinson; Larry W. Jones, Missoula, 

Montana 

Submitted on Briefs: Oct. 9, 1986 

Decided: February 13, 1987 

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

Court. 

This appeal arises from a judgment and order of the 

Workers' Compensation Court. That court awarded claimant 

temporary total disability benefits from one of two possible 

employers. Save for a mathematical correction, we affirm in 

full. 

The origins of this case stretch back to December 1983, 

when Evans Transfer and Storage of Butte, Montana, signed an 

agency agreement with North American Van Lines. North 

American is a well known motor vehicle common carrier engaged 

primarily in transporting household goods, wares and 

merchandise throughout the United States and Canada. In the 

ordinary course of its business, North American often leases 

trucks and trailers from smaller, local moving companies such 

as Evans Transfer. 

Under the terms of this agency agreement, Evans 

Transfer leased a moving truck and trailer to North American 

for the latter's exclusive use and possession. Evans 

Transfer, however, was required to furnish a "qualified 

driver" for the truck and any additional necessary labor. 

In January 1984, Evans Transfer hired the claimant, 

Darrell Schrock, to drive the vehicle leased to North 

American. However, before becoming qualified to drive for 

North American, a driver was required to attend a North 

American training school and thereafter be formally accepted. 

So in May 1984, Darrell, along with his wife, Shauna, 

attended a training school held in Billings. Upon successful 

completion of the school, Darrell submitted his formal 

employment application to North American. North American, 

though, rejected Darrell's application because of a 

chronically weak back that rendered him a high risk employee. 

Following Darrell's rejection, Evans Transfer and 

Shauna Schrock submitted to North American an employment 
application under Shauna's name. Shauna had also 

successfully completed North American's training school and 

was technically eligible to apply for employment as a driver. 

However, she did not know how to drive a vehicle such as the 

one leased to North American. Evans Transfer submitted this 

application knowing that if North American approved the 

application, Darrell would do all the actual driving. Evans 

in fact told Shauna to sign a statement indicating that 

Shauna had taken a road test although Shauna had never taken 

such a test. North American ultimately approved Shauna's 

employment application, certifying her to drive for North 

American. 

Evans Transfer had earlier entered into an "Independent 

Interstate Contractor's Agreement" with Darrell, whereby 

Evans provided Darrell the tractor and trailer leased to 

North American. Once Shauna's application was accepted, 

Evans allowed Darrell to drive this vehicle containing North 

American shipments. Because he was not qualified to drive 

for North American, Darrell would print Shauna's North 

American authorized driver number on log book entries and 

give her authorized driver number to the North American 

dispatch office when calling to request a shipment. With 

Evans' knowledge, Darrell would have Shauna sign, or forge 

her signature on, log book entries submitted to North 

American. North American was not told of the fact that 

Darrell was actually driving. 

On December 11, 1984, Darrell, working alone, was 

injured by a falling piece of equipment while unloading a 

truck carrying a North American shipment. Darrell suffered a 

depressed skull fracture and has not worked since December 

20, 1984. He timely filed a workers' compensation claim, but 

both Evans Transfer and North American denied liability. 

The Workers' Compensation Court found that Darrell was 

an employee of Evans Transfer but not of North American and 
that he was entitled to weekly temporary total disability 

benefits of $224.52. Darrell and Evans Transfer now appeal. 

The issues before this Court on appeal are (1) whether 

the court below correctly held that claimant was an employee 

of Evans Transfer rather than an independent contractor; (2) 

whether the court properly held that claimant was not also an 

employee of North American; and (3) whether the court 

properly computed claimant's disability benefits. 

We first consider Darrell's employment status with 

Evans Transfer. FJe note initially that the mere fact that 

the contract in effect between Evans Transfer and Darrell 

designated Darrell as an independent contractor is not 

dispositive. Darrell must have been independent in fact. 

Carlson v. Cain (Mont. 1983), 664 P.2d 913, 920, 40 St.Rep. 

865, 875. 

This analysis is founded upon our statutory definition 

of independent contractor. Section 39-71-120, MCA, defines 

an independent contractor as one 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. 

To determine whether one is actually free from control, 

we adopted in Sharp v. Hoerner Waldorf Corp. (1978), 178 

Mont. 419, 425, 584 P.2d 1298, 1301-02, a four factor test 

set forth in Larson's Workman's Compensation Law, Vol lC, 

S 44.00, p. 8-40. The four factors to be considered are: 

(1) direct evidence of right or exercise of control; 

(2) method of payment; (3) furnishing of equipment; and 

(4) right to fire. 

The factual determinations reached by the court below 

remain largely unchallenged; Evans Transfer essentially 
disputes only the legal conclusions. Therefore, this issue 

is one of law and this Court is free to reach its own 

conclusions from the evidence presented. See Solheim v. Tom 

Davis Ranch (Mont. 1984), 677 P.2d 1034, 1038, 41 St.Rep. 

326, 329. Nevertheless, our own review of the evidence 

persuades us that the court below correctly found that 

Darrell was not free from control in fact and therefore was 

an employee of Evans Transfer, rather than an independent 

contractor. 

First, under their agreement, Evans Transfer furnished 

Darrell the equipment necessary to perform his obligations. 

When the employer furnishes valuable equipment, an employment 

relationship is strongly suggested. 1C Larson, 5 44.34 (a) , 

p. 8-121. This notion is closely related to the right of 

control. Any owner who furnishes equipment as valuable as a 

tractor and trailer naturally maintains an interest in its 

care and typically will retain a right to supervise its use. 

In its agreement with Darrell, Evans Transfer required 

Darrell to maintain properly the equipment provided him and 

required Darrell to account for all the assigned equipment 

"as often as required" by Evans. For these reasons, Larson 

finds it "not surprising that there seems to be no case on 

record in which the employer owned the truck but the driver 

was held to be an independent contractor." 1C Larson, 

5 44.34(b), p. 8-139. 

Further, the parties agree that Evans Transfer enjoyed 

the right to fire Darrell if he failed to perform proper 

maintenance on the equipment furnished him. 

Consideration of the factors in this test is not a 

balancing process. Direct employment status can be 

established upon satisfaction of one of the four factors. 

Sharp, 584 P.2d at 1302. Our study of the record convinces 

us that Darrell was not in fact free from control and 

therefore was an employee of Evans Transfer at the time of 

the accident. 
Our second issue is whether Darrell was also a employee 

of North American as of the date of his injury. The Workers' 

Compensation Court held that Darrell was not an employee of 

North American as it found no contractual relationship 

between the two parties. We agree. 

Appellants' only argument of merit rests upon the fact 

that Darrell was injured in his capacity as a helper, not as 

a driver. Evans Transfer correctly notes that the agency 

agreement in effect between Evans and North American 

authorized Evans to provide on its own any necessary 

additional labor and obligated North American to maintain 

workers' compensation insurance for these helpers. Thus, 

runs the argument, Evans Transfer, as an agent, had the 

express authority to bind North American when it hired 

additional helpers. 

Had Evans employed Darrell merely as a helper, its 

argument might be persuasive. But such is simply not the 

case. Evans Transfer intended that Darrell drive its truck 

leased to North American. Of this there is no argument. 

That North American rejected Darrell's application to drive 

this truck had little effect. After Darrell's rejection, Ron 

and Linda Evans and Francine Coombe, respectively the 

owners/operators and secretary of Evans Transfer, had Shauna 

submit her application to North American, knowing that 

Darrell would drive the vehicle. Evans Transfer then allowed 

Darrell to drive its vehicle containing North American 

shipments by having Shauna sign, or by having Darrell forge 

his wife's name on, the log book entries submitted to North 

American. Shauna did not even accompany her husband on every 

shipment. Evans and the Schrocks took great pains to see 

that North American was not told of the fact that Darrell was 

driving the vehicle. The Schrocks, the Evanses and Francine 

Coombe all testified as to these facts. The fact that 

drivers help load and unload shipments did not turn Darrell 

into a helper. 
Looking at these facts, it is clear that Evans Transfer 

exceeded its authority by hiring Darrell as a driver. The 

agency agreement allowed Evans Transfer to hire only 

"qualified" drivers. North American's rejection of Darrell 

obviously indicated that Darrell was not qualified. 

Further, an agent never has authority to perform an act 

"which is and is known or suspected by the person with whom 

he deals to be a fraud upon the principal." Section 

28-10-409, MCA. Fraud is defined in S 28-2-405, MCA, as 

follows: 

Actual fraud, within the meaning of this 

part, consists in any of the following 

acts committed by a party to the contract 

or with his connivance with intent to 

deceive another party thereto or to 

induce him to enter into the contract: 

(3) the suppression of that which is 

true by one having knowledge or belief of 

the fact; 

(5) any other act fitted to deceive. 

It is clear from the facts presented in the record that 

Evans Transfer and the Schrocks actively worked to deceive 

North American. The activities of Evans Transfer and the 

Schrocks, which allowed Darrell to drive the vehicle leased 

to North American in the face of North American's rejection 

of Darrell's application constituted actual fraud. The 

Schrocks and Evans Transfer cannot now be allowed to argue 

that this is irrelevant because of the fortuitous 

happenstance that Darrell was not injured while actually 

driving. Following North American's rejection, Evans' 

employment of Darrell as a driver went beyond the scope of 

its authority and did not bind North American. 
Finally, all parties challenge the Workers' 

Compensation Court's computation of weekly disability 

benefits. Pursuant to § 39-71-701, MCA, Darrell is entitled 

to 66 2/3% of his weekly wage. In its findings, the court 

found that Darrell's average weekly wage was $336.61. In 

arriving at this amount, the court accepted as accurate a 

computer printout of Darrell's earnings submitted by Evans 

and relied upon by both Evans and North American. 

Darrell now objects to the lower court's reliance on 

this printout. He does not dispute the accuracy of this 

printout, only that it was never introduced into evidence. 

We find no error. While this printout was not presented for 

admission, it represents a true and concise summary of three 

exhibits, all of which were admitted by stipulation of the 

parties. Had Darrell any problem with the figures contained 

within the exhibits, he had ample opportunity to question 

their accuracy, either at the time of their admission or 

during the testimony of the exhibits' authors. One of these 

exhibits consists of several hundred pages and was thrust 

upon the lower court by Darrell's counsel without benefit of 

explanation. The defendants distilled these voluminous 

records into a manageable summary and presented it to the 

court as an appendix to Evans' brief. The court' s reliance 

upon this summary was not in error. 

The computer printout relied upon by the court shows 

Darrell's net income from May through December, 1984. 

However, the court utilized only the months of June through 

November, 1984, to determine Darrell's average weekly wage. 

The court accepted these months as the only full months of 

income submitted. 

Aside from a mathematical error, we find the court's 

computation correct. Given the often lengthy delay that 

typically resulted before Darrell received his payment from 

North American via Evans Transfer, plus the fact that Darrell 

worked only portions of the months of May and December, the 
court did not abuse its discretion in limiting its analysis 

to the June-November period. 

However, the Workers' Compensation Court did not make 

clear its method of computation. The court evidently 

totalled Darrell's earnings for the six-month span and then, 

to find his average weekly wage, divided by 24 (apparently 

six months at four weeks per month). Obviously, there are 

more than 24 weeks in six months. We therefore remand and 

instruct the Workers' Compensation Court to recompute 

Darrell's weekly disability benefits in accordance with this 

opinion. We otherwise affirm in full. 

n 

We concur: 

44(7v ief Justice