Court Opinion

ID: 9666425
Source: CourtListenerOpinion
Date Created: 2023-08-24 01:14:43.401967+00
Date Added: 2024-06-11T18:15:28.670198
License: Public Domain

ROBERTSON, Judge,
concurring in part and dissenting in part.
I concur in Part I of the majority opinion. However, I believe that Section 287.030.1, RSMo 1986, and Crall v. Hickman, 460 S.W.2d 668 (Mo. banc 1970), require a reversal of the award of the Labor and Industrial Relations Commission as to appellant Medwick Johnston and a remand for reconsideration in light of Crall. I, therefore, respectfully dissent from Part II of the majority opinion.
Crall decided that “a partnership is a separate employing entity under sec. 287.-030.” Id. at 672. Crall reaches this conclusion fully aware of and contrary to general partnership law in Missouri which follows the aggregate, rather than entity, theory of partnership. Ward v. State Farm Mut. Tornado Ins. Co. of Mo., 441 S.W.2d 1, 4 (Mo.1969).
Because the Workers’ Compensation Act (“the Act”) is substitutional for the common law, Wengler v. Druggists Mutual Insurance Co., 583 S.W.2d 162 (Mo. banc 1979), its remedies and its definitions are exclusive of common law remedies and definitions; courts are without the authority to alter the provisions of the Act, no matter how appropriate the court’s generous and humanitarian, but contrary-to-law, motivation. Crall correctly reasons, therefore, that the General Assembly possesses the authority to designate a partnership as a separate entity for purposes of the workers’ compensation law and exercised that authority by its adoption of Section 287.-030. The majority is incorrect, therefore, in concluding that factual distinctions between this case and Crall render the underlying legal principle established in Section 287.030 — that a partnership for purposes of the Act is a separate entity from its partners — inapposite.
In my opinion, if the Workers’ Compensation Act mandates that the partnership must be treated as a separate entity — and it does — that mandate must be applied consistently across the Act. Consistency in the law is not the hobgoblin of small minds. Instead, consistency in legal interpretation provides the predictability and stability by which persons can choose their conduct with some assurance of its propriety and safety. The demand of consistency is particularly acute where a court is interpreting statutes adopted by elected representatives and subject to amendment should those representatives disagree with a judicial interpretation.
The majority, however, points to courts that “have not consistently applied the separate employing entity concept when dealing with partnerships in the context of the Workers’ Compensation Act.” At 79. The cases upon which the majority relies, however, do not lend support to a doctrine of inconsistency. On careful examination, each of the cases to which the Court looks *83for succor are consistent with the extant law in the state vis-a-vis entities and a Workers’ Compensation Act.
Chambers v. Macon Wholesale Grocer Co., 334 Mo. 1215, 70 S.W.2d 884, 887 (1934), was decided thirty-five years before Crall and relied on the aggregate theory of partnership under the Act expressly rejected in Crall. Indeed, Chambers’ author, then-Commissioner Hyde, turned from the aggregate theory of partnership upon which Chambers is constructed, in dissent in Blew v. Conner, 328 S.W.2d 626, 631-33 (Mo. banc 1959) (Eager, J. dissenting, joined by Hyde, J.). After Crall, Chambers is an incorrect statement of the law. It is of no assistance to the Court.
Waller v. Keene, 276 Md. 605, 349 A.2d 628 (1976), to which the Court next turns, was decided on the basis of Maryland’s rule that a partnership is to be treated under the aggregate, not entity theory, for purposes of Maryland’s workers’ compensation law. Obviously, Waller is consistent with the Maryland law, but inconsistent with Section 287.030.
The Court next considers Soars v. Soars-Lovelace, Inc., 346 Mo. 710, 142 S.W.2d 866, 869 (1940). Under the then-extant Workers’ Compensation Act in Missouri, an employee was statutorily defined as “every person in the service of any employer ... under any contract of hire, ... but shall not include persons whose annual average earnings exceed three thousand six hundred dollars.” Section 3305(a), RSMo 1929. Because claimant Soars earned more than $3,600 annually, the Court found him statutorily excluded from coverage. As an additional, though unnecessary, basis for its holding, the Court found that claimant Soars served in a dual capacity within his corporation — executive officer and employee. Ignoring totally the statutory definition of “employer” and focusing solely on the definition of “employee,” the Court held that the legislature did not intend to permit claimant Soars, who owned more than 75 percent of the corporate stock and served as chief executive officer, to come under the coverage of the Act. The Court cited a line of Missouri cases holding that a controlling corporate shareholder/officer could not be an employee since the corporation as an entity could not “control” such an “employee.”
Soars, or so it seems to me, is an indefensible product of this Court’s willingness to manufacture artificial legal distinctions in contravention of statutory language. Even at the time of Soars, the statutory definition of employer contained in Section 3304(a), RSMo 1929, would have required the Court to treat the corporation as an entity. Indeed the fiction of corporate personage is among the vital purposes for which that business organization is often chosen. Soars failed the tests of common sense and legal consistency. As the Court of Appeals noted in Lynn v. Lloyd A. Lynn, Inc., 493 S.W.2d 363, 364 (Mo.App.1973), the Soars dual capacity test created the anomaly of extending coverage under the Act to some corporate officers and refusing coverage to others.
Subsequently, the legislature rejected Soars, as the majority acknowledges, adopting statutory language expressly including corporate officers within the coverage of the Act. That legislative correction reached for both the common sense and legal consistency lacking in Soars and attempted to ensure that courts would treat entities as entities for purposes of construing coverage under the Act.
The majority also finds Humphries v. Bray, 271 Ark. 962, 611 S.W.2d 791 (Ark.App.1981), instructive, again to show that courts have not always treated entities, particularly corporations, as entities for purposes of workers’ compensation acts. Even refusing to consider the legislative correction of Soars for Missouri, Bray is of little help to the majority. There the Arkansas court found that the corporate entity should be disregarded for purposes of Arkansas’ workers’ compensation law. The court found that the sole shareholder operated the corporation not as a corporation but as a sole proprietorship, as his alter ego. “If we were faced with a corporation that complied with the principles of corporate law both as to form and practice, *84we would hold [that the corporation] ... was not the same employer as appellant. ... However, under the set of facts in this case, [the corporation] ... may be considered in determining the number of employees of the appellant.” Id. 611 S.W.2d at 793.
Bray stands for the proposition that a court can pierce the veil of a corporation under a workers’ compensation act in the same manner it can pierce that veil outside the act. The reliance of an employer on an entity for any purpose depends on its legal existence. Yet I fail to see that Bray, founded on a doctrine allowing a court to disregard an employer’s claim that his corporation protects him from liability under a workers’ compensation law, applies where, as here, the employer claims that the entity does not exist. Bray teaches that a court can disregard the shield of a “sham” entity behind which an employer would hide.
This case is different. In this case, the employer seeks no shelter behind a sham entity, yet the Court insists that the partnership and its election under Section 287.-090 continue beyond the death of the entity, sentencing Medwick Johnston to a Promethean punishment for his temerity in continuing as a building contractor as a sole proprietorship.
There is simply no basis in law for this Court to apply the entity theory of partnership for some purposes under the Act and the aggregate theory for others. Even though the legislature has not passed legislation changing Crall’s reading of Section 287.030, if the Court wishes to overrule Crall, it should say so.
The relevant inquiry, it seems to me, is whether the entity that made the election under Section 287.090 exists for purposes of attribution to Medwick Johnston. Just as corporate law determines whether the corporation exists for purposes of disregarding it as an entity under Bray, general partnership law controls to determine whether the partnership as an entity (for purpose of the Workers’ Compensation Act) exists.
Where there is no violation of a partnership agreement, a partnership is dissolved “[b]y the express will of all partners who have not assigned their interests or suffered them to be charged for their separate debts.” Section 358.310(l)(c), RSMo 1986. Dissolution does not terminate the partnership until the partnership affairs are wound up. Section 358.300, RSMo 1986. A partnership is “wound up” and its existence terminates when the partnership assets are liquidated and distributed to the partners.
The facts of this case show that Rainbow Builders, as a partnership, did not exist at the time Johnston entered his agreement with Keith Edwards. Johnston testified, without contravention, that his partnership with Fred Storey terminated by mutual agreement in August, 1986, and that he and Storey had closed the bank account and divided the partnership’s tools prior to Johnston contracting with Edwards. The record also shows, again consistent with Johnston’s testimony, that Rainbow Builders cancelled its workers’ compensation insurance in August, 1986, effective September 1, 1986, even though the policy purchased by Rainbow Builders did not expire until October 22, 1986. The exhibits in the record further show that Johnston paid the claimant, Jackie Scott, with checks bearing the imprint “Johnston Building — Remodeling, Medwick or Evelyn Johnston.”
The only evidence in this case supporting the majority’s conclusion that Johnston “disregarded the separateness of the businesses in which he engages” is the so-called contract between Keith Edwards and Medwick Johnston on a printed form bearing the name “Rainbow Builders” entitled “Proposal and Acceptance”. Yet that evidence is suspect. First, the form has been substantially altered. (See attachment “A”). Most of the address is deleted and it appears that a telephone number is also removed, leaving “Rainbow Buildings” and Medwick Johnston’s telephone number. Second, Edwards did not rely on any representations concerning the existence of a partnership. He testified that he had no knowledge of any partnership, nor had he heard of Fred Storey. “I thought Rainbow *85Buildings was Mr. Johnston,” Edwards stated at the hearing.
Under these unchallenged facts, it is difficult to agree with the majority. If the partnership ceased to exist as an entity prior to Johnston’s contract with Edwards, it is not possible to conclude that Johnston commingled a single business. One cannot commingle a single thing. Yet this is the basis of the Court’s holding.
Moreover, if, as Crall says, “ ‘[a]ll liability under the Compensation Act arises by virtue of a specific contract relationship between an employer and an employee,’ ” id. at 671, quoting with approval the dissenting opinion of Judge Eager in Blew, 328 S.W.2d at 632, there is simply no evidence that the claimant, Jackie Scott, had any contractual relationship with the partnership entity which made the election to accept the Workers’ Compensation Act. He could not; the partnership did not exist.
In my view, the election made by Rainbow Buildings under Section 287.090 terminated with the demise of the Rainbow Buildings partnership entity. Once the partnership ceased to exist as an entity, so did its election. The mere fact that Johnston used an obviously altered partnership form for, as he testified, the sake of convenience in submitting his bid to Edwards, is not sufficient to revive the election of a dead partnership. No one in this transaction thought the partnership was either involved or alive.
A final point on the legal issues must be made. The Labor and Industrial Relations Commission’s decision merely affirms, without legal reasoning or factual finding, the decision of the administrative law judge. That judge based his award on Brollier v. Van Alstine, 236 Mo.App. 1233, 163 S.W.2d 109 (1942), a case expressly overruled by Crall. At a minimum, the Court should remand this case for fact finding under current law.
Given the majority’s position there is no need to consider further Johnston’s points on review. It is sufficient for purposes of this separate opinion to say that I would also find that Johnston was not a major employer within the meaning of Section 287.030.
Last year, the General Assembly amended Section 287.030.1(3), RSMo Cum Supp. 1990, adding to that subsection language bringing “construction employers” within the mandatory coverage of the Workers’ Compensation Act “if they have one or more employees.” Thus, issues concerning the obligation of Medwick Johnston, a construction employer, to provide workers’ compensation coverage to Jackie Scott raised in this case will not recur.
The view I take would result in reversing the Commission’s decision as to Johnston. However, because the administrative proceedings in this case relied improperly on Brollier, I would remand for reconsideration in light of Crall. I, therefore, respectfully dissent from Part II of the majority opinion.
*86APPENDIX
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