No. 90-573 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1991 

KENNETH DOIG, 

Claimant and Appellant, 

WILLIAM GRAVELEY , Employer 

and APR - 2 1991 

STATE COMPENSATION INSURANCE FUND, 

Defendant and Respondent. 

Ed SLtL 

CLERKOFSUPREMECOURT 

STATE OF MONTANA 

APPEAL FROM: Workers' Compensation Court 

The Honorable Timothy Reardon, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Norman H. Grosfield; Utick & Grosfield; Helena, 

Montana 

For Respondent: 

Elizabeth A. Horsman; State Compensation Mutual 

Insurance Fund; Helena, Montana 

Filed: 

Submitted on Briefs: February 21, 1991 

Decided: April 2, 1991 
Justice Fred J. Weber delivered the Opinion of the Court. 

Claimant, Kenneth Doig, appeals from the decision of the 

Workersv Compensation Court finding him to be an independent 

contractor and denying him workersv compensation benefits. We 

affirm. 

The issues for our review are: 

1. Did the Workersv Compensation Court err in its finding 

that Mr. Doig was an independent contractor rather than an employee 

at the time of his injury? 

2. Did the Workers' Compensation Court err in its finding 

that Mr. Doig was not a statutory employee under the provisions of 

§ 39-71-401(3), MCA? 

Mr. Doig, a horseshoer, advertised his availability as an 

experienced horseshoer in veterinary clinics and feed stores in 

and around Deer Lodge, as well as in the Western Shopper newspaper. 

Mr. Doig set his own appointments, and shod the horses where they 

were kept, not at his own home. He was paid on a per horse basis 

in the amount of $30 per horse for shoeing and $20 per horse for 

trimming. He had not applied to the Division of Workers' 

Compensation for a certificate to designate himself as an 

independent contractor. 

Mr. Charles Graveley, of the Graveley Ranch, called Mr. Doig 

and arranged for him to come to the ranch to shoe three horses on 

May 21, 1988. This was the first time Mr. Doig had ever shod any 

of the Graveley Ranch horses. Mr. Graveley caught the horses and 

tied them to the corral for Mr. Doig to replace the shoes. 

2 
One of the horses, Hobo, had been diagnosed as having 

navicular disease, which is a hoof condition not uncommon in 

Western Montana. Mr. Graveley conveyed brief instructions to Mr. 

Doig that he be shod "short in the front and long in the heels." 

When Mr. Doig began his work with Hobo, Mr. Graveley left to 

buy horseshoes. When he returned to the ranch, he found Mr. Doig 

dazed, wandering around looking for a lens to his glasses. Mr. 

Doig told Mr. Graveley he had been kicked by the horse. Mr. Doig 

then went back to work finishing Hobo and filing the hooves of the 

second horse. Mr. Graveley stayed with Mr. Doig because of concern 

for his injury. Mr. Graveley did not assist with the horseshoeing, 

but only talked to Mr. Doig and was available if the second horse 

gave him trouble. Mr. Doig was trimming the third or fourth leg 

of the second horse when a sharp pain in his head caused him to 

fall to his knees. Mr. Graveley immediately drove him to the 

hospital in Deer Lodge. 

Mr. Doig was 34 years old at the time of the accident. The 

injury has left Mr. Doig confined to a wheelchair and totally 

disabled. 

Mr. Doig filed a claim for workerst compensation benefits with 

the State Compensation Mutual Insurance Fund as an employee of the 

Graveley Ranch. Liability was denied, based on its conclusion that 

Mr. ~oig was an independent contractor at the time of the accident. 

Mr. ~oig filed a request for rehearing in the Workerst compensation 

Court claiming that he was an employee rather than an independent 

contractor. A rehearing was denied. Mr. Doig appeals the Workers' 
compensation Court's decision. 

Did the Workers' Compensation Court err in its finding that 

Mr. Doig was an independent contractor rather than an employee at 

the time of his injury? 

This appeal presents both questions of law and questions of 

fact. The parties agree that the proper standard of review in such 

cases was set out in Solheim v. Tom Davis Ranch (1984), 208 Mont. 

Where both factual determinations and legal conclusions 

are challenged, two standards of review apply. To the 

extent that factual determinations are questioned, we 

must apply the test set forth in Sharp and defer to the 

fact-finder where substantial evidence exists to support 

the determinations. When, however, an issue raises only 

a question of law, this Court is free to reach its own 

conclusions from the evidence presented. 

Mr. Doig maintains that the Workers' Compensation Court erred 

in concluding that he was an independent contractor rather than an 

employee. The applicable statute, 5 39-71-120, MCA (1987), defines 

"independent contractorn: 

(1) An "independent contractorg~ is one who renders 

service in the course of an occupation and: 

(a) 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 

(b) is engaged in an independently established 

trade, occupation, profession, or business. 

(2) An individual performing services for remuneration 

is considered to be an employee under this chapter unless 

the requirements of subsection (1) are met. 

The key element is the control factor. There are four factors to 

consider when determining a right of control in a given situation: 
(1) Direct evidence of right or exercise of control; 

(2) Method of payment; 

(3) Furnishing of equipment; and 

(4) Right to fire. 

Sharp v. Hoerner Waldorf Corp. (1978), 178 Mont. 419, 584 P.2d 

1298. 

Direct Evidence of Riqht or Exercise of Control 

Mr. Doig maintains that the instructions as to how Hobo should 

be shod "short in the front and long in the heelsf1 established that 

Mr. Graveley was in control. He also contends that the fact he 

would always defer to the wishes of the horse owner and proceed 

only on the instructions of the rancher revealed control by Mr. 

Graveley . 

State Fund maintains that the instructions as to how a horse 

should be shod are nothing more than control over those few matters 

necessary to insure a satisfactory end result. State Fund further 

maintains that the fact that Mr. Doig was hired on a one-day, 2- 

3 hour horseshoeing job where there was no evidence that a 

continuing employment relationship was intended to exist past the 

completion of the job, is indicative of an independent contractor. 

We agree. Therefore, we conclude that there is substantial 

evidence to support the conclusion of the court that the first 

factor indicated an independent contractor status. 

Method of Payment 

Mr. Doig maintains that his method of payment on a per horse 

basis is an indication of employee status. This method of payment 
is the standard for horseshoers. 

State Fund urges that given the method of payment and the fact 

that this was the only time Mr. Doig had worked on the Graveley 

Ranch, it cannot be said the Mr. Doig was under the control of Mr. 

Graveley . 

The Workers' Compensation Court held that there was no payment 

on a per-hour, per-week or per-month basis that would indicate an 

employee status, and that "payment on a completed project basis is 

consistent with, but not conclusive of, an independent contractor 

status." The court also found that at the time of the injury, Mr. 

Doig had shod one horse and trimmed all four feet of another horse. 

Mr. Graveley paid Mr. Doig on the per-unit basis of one horse shod 

and one horse trimmed. We conclude that substantial evidence 

supports the Workers' Compensation Court's conclusion. 

Furnishinq of Equipment 

Mr. Doig maintains that the type and manner of the equipment 

furnished for the shoeing operation, such as those provided by the 

ranch in this case, are of significant importance as a contribution 

by the horse owner. He argues that while he did bring his own 

tools to perform the services, these items were of no greater 

significance than the facilities, halters, and shoes provided by 

the Graveley Ranch. Mr. Doig relies on Larson's The Law of 

Workman's Compensation, by Arthur Larson, for the proposition that 

when an employer furnishes valuable equipment, an employment 

relationship almost invariably exists. 

State Fund maintains that the only "tools'1 or "equipmentn 
allegedly provided by the Graveley Ranch are generic ranch items, 

not analogous to the professional tools Mr. Doig brought to the 

ranch. The Ranch provided a halter and lead rope, a corral fence 

and horseshoes. State Fund urges that the items provided by the 

Graveley Ranch are not "equipmentN as contemplated by the Larson 

treatise. Mr. Doig provided nippers, a nail clincher, a hammer, 

anvil, nails, rasps and horseshoeing chaps. State Fund argues that 

the tools provided by Mr. Doig himself are the tools of the trade. 

The fact that a horse owner supplies a halter for his horse 

is not indicative of supplying ltequipmentll for the horseshoer. 

The halter itself is not part of horseshoeing equipment anymore 

than a corral or enclosure that the horse is kept in. We conclude 

that substantial evidence exists to support the Workers' 

Compensation Court's holding that the tools necessary to perform 

the service were furnished by Mr. Doig, indicating an independent 

contractor relationship. 

Riqht to Fire 

Mr. Doig maintains that the right existed for either party to 

end the operation without liability, a fact not consistent with the 

concept of an independent contractor relationship. He argues that 

Mr. Graveley could have terminated the horseshoeing for any reason 

with no obligation to pay. 

State Fund maintains that Mr. Doig's argument disregards the 

nature of both the horse-owner's property interest and of the 

horseshoeing operation itself. State Fund contends that an 

incompetent horseshoer can lame a horse. It argues that a horse 
owner cannot be expected to stand quietly by while a horseshoer 

lames his horse. State Fund maintains that the Workers1 

Compensation Court correctly held that an independent contractor 

can be terminated if the service are not being performed to the 

accepted standards. We agree. We affirm the Workers' Compensation 

Court's conclusion that the right to terminate services of the 

claimant was consistent with independent contractor status. 

Independent Occupation 

The second part of the test set forth in 5 39-71-120 (1) (b) , 

MCA (1987), requires that the worker must be engaged in an 

independently established trade, occupation, profession, or 

business. Mr. Doig maintains that as part of his general ranch 

work throughout his working life, he has done horseshoeing. Mr. 

Doig argues that as a part-time horseshoer, he was not engaged in 

an independent occupation. 

State Fund maintains that there is substantial evidence to 

support the Workers1 Compensation Court's finding that horseshoeing 

is itself an independently established trade. State Fund cites 

Taylor v. Local No. 7, Intll Union of Journeyman Horseshoers (4th 

Cir. 1965) , 353 F. 2d 593, for its holding that horseshoers were not 

employees of the horse trainers and owners. State Fund contends 

that Mr. Doig was clearly engaged in an independent trade or 

business as an independent contractor because he: (1) publicly 

advertised his services as a horseshoer; (2) brought his own tools 

to the work place; (3) maintained an appointment book in the course 

of his business; (4) had no social security, FICA or other 
deductions or withholding by Mr. Graveley or any of the other 

ranchers for whom he had shod horses; and (5) continued 

horseshoeing in the area prior to his injury even though he had 

begun fill-time work at the Montana State Prison two weeks before 

his injury. We agree with the Workers' Compensation Court's 

conclusion that Mr. Doig met the independent occupation test. 

We affirm the conclusion of the Workers' Compensation Court 

that Mr. Doig was an independent contractor at the time of his 

injury . 

Did the Workers1 Compensation Court err in its finding that 

Mr. Doig was not a statutory employee under the provisions of 5 39- 

71-401(3), MCA? 

Section 39-71-401 (3) (a), MCA (1987) , provides: 

(3) (a) A sole proprietor or a working member of a 

partnership who holds himself out or considers himself 

an independent contractor . . . must elect to be bound 

personallv and individually by the provisions of 

compensation plan No. 1, 2, or 3, but he may apply to the 

division for an exemption from the Workers' Compensation 

Act for himself. (Emphasis added). 

Mr. Doig contends that during the 1983 legislative session, 

the ~ivision of Workers' compensation attempted to address the 

problem of independent contractors who seek to become employees 

after an industrial injury. He urges that it was the position of 

the Division that the solution to this recurring problem was to 

establish a system whereby any person who wished to be exempt from 

workers' compensation coverage had to seek certification from the 

Division as an independent contractor. If so certified, the person 
in question would then be exempt from coverage under the Workers1 

Compensation Act. Mr. Doig urges that if a person hired someone 

to do work for him or her, such person would be required to ask if 

the prospective worker had a certificate of exemption as an 

independent contractor or could show proof of coverage. 

In the present case, Mr. Doig did not have coverage on 

himself, and did not have a certificate of exemption from the 

Division. Mr. Graveley did not inquire as to Mr. Doigls exemption 

or coverage. Therefore, Mr. Doig maintains that he is to be 

treated by the insurer as an employee. 

The Workers1 Compensation Court addressed this issue as 

follows: 

As enacted, Section 39-71-401(3) (a), MCA (1987) 

allows an independent contractor to elect to be bound by 

the provisions of compensation plan No. 1, 2, or 3, or 

he may apply to the Division for an exemption from the 

Workers1 Compensation Act for himself. Nowhere in the 

statutes or the Division rules is the independent 

contractor exemption from workers1 compensation coverage 

made specifically mandatory in order for independent 

contractor status to exist. No Court has held that any 

independent contractor without such a certificate is 

automatically an employee and such an interpretation is 

not warranted from a reading of the statute or its 

history since enactment. 

Administrator Gary Blewettls statement in favor of 

HB 277 suggested a result which was not achieved by the 

Division of Workers1 Compensation rules adopted to 

implement this legislation. Such administrative ruled 

did not create a llstatutory employeell if an independent 

contractor failed to obtain a certificate of exemption 

in ARM 24.29.706 (Eff. 6/30/84) . In fact, the opposite 

result was reached in ARM 24.29.706(5), which states: 

The exemption provided for under this rule is 

for workers1 compensation purposes. The fact 

that an independent contractor neither applies 

for nor receives an exemption does not imply 

independent contractor status. 
Had the legislature intended in 1983 . . . that an 

independent contractor exemption was to be mandatory, it 

could have been clearly stated. Absent such specific 

language in Sections 39-71-401, 39-71-118 and 39-71-120, 

MCA, this Court must conclude that failure to obtain an 

independent contractor exemption does not create a 

"statutory employeevv by operation of law. 

As the lower court explained, the failure to obtain a 

certificate of exemption did not specifically create a statutory 

employee. In the construction of a statute, a judge is vlsimply to 

ascertain and declare what is in terms or in substance contained 

therein, not to insert what has been omitted . . . g 1-2-101, 

MCA. We agree with the interpretation of the Workersv Compensation 

Court. We hold that the Workers' Compensation Court did not err 

in its finding that Mr. Doig was not a statutory employee under the 

provisions of b 39-71-401(3), MCA. 

Affirmed. 

We Concur: ./ 

/f-T&/ Chief Justice 
Justice William E. Hunt, Sr., dissenting: 

I dissent. I do not agree with the analysis and result of 

this case. I would hold that Mr. Doig was not an independent 

contractor but was an employee of Mr. Graveley. I would reverse 

the Workers' Compensation Court.