Court Opinion

ID: 5222390
Source: CourtListenerOpinion
Date Created: 2022-01-06 16:36:59.96211+00
Date Added: 2024-06-11T08:27:32.205997
License: Public Domain

Miller, J. (dissenting):
I agree with Mr. Justice Laughlin that the evidence is sufficient- to sustain the verdict,. both as to plaintiff’s freedom from negligence and the negligence of those doing the work which caused his injury, but I differ with him as to the other issue in the case.
There is no doubt that in form the workmen were employed and paid by the Metropolitan Bridge and Construction Company, which on paper was an independent contractor. There was no question for the jury, unless they were at liberty to find that the paper transaction was a mere subterfuge, and that the employees in form of the Metropolitan Company were in fact doing the work of the defendant, under its direction and control. • In that view 'it was of little consequence that. Beeves was allowed to state his .conclusion that he was in the defendant’s employ, precisely as the defendant’s witnesses stated their conclusion.
The plaintiff’s evidence in chief was at least sufficient to *867require an explanation of the defendant, and the case really turns on that explanation, which consisted mainly of a paper defense, i. e., the contract between the defendant And the Metropolitan Company, made May 1,1904, the defendant’s letter óf May 4, 1908, calling upon .the latter to assume charge, pursuant to said contract, of the steel work for the Delancey street subway, the reply of the latter thereto, the latter’s pay envelopes and the receipts to it of the workmen. The only witness called by the defendant who was in a position to know the facts bearing on the point under discussion, was its vice-president. It is suggestive that he refused to answer questions on cross-examination relating to the organization of the Metropolitan Company, and that his direct examination was carefully confined to proof of the paper defense and to an explanation of the letter recommending Reeves, written by him in the defendant’s name, in which he stated that Reeves had been in its employ for about four years on different jobs named, including the one in question. The Metropolitan Company and the subcontract with it were evidently such mere paper affairs, matters of form, that when there was no motive to conceal the truth, their existence was forgotten. It may be that technically that letter was not evidence against the defendant. Artificial persons have the advantage over natural ones of being unable to write letters except by agents. The artificial person has to "be kept distinct from the natural person who supplies its brain, and whose admissions are not binding on it unless made within the scope of his authority in the furtherance of the business intrusted to him. Thus evidence of great probative value may sometimes be excluded by a rigid adherence to technical rules. However, the letter was admitted without qualification and without objection. It would later have been admissible anyhow to contradict the writer. Although his direct examination suggests to me studied care to keep away from the vital point in the case, he did make two significant statements on cross-examination, viz.: “ The Metropolitan Bridge & Construction Co. had desk room in our office. That is all they (sic) had.” “Well, when we were general contractors, we had a superintendent in our employ on the job who was also in charge—who had also to look after the *868work of the Metropolitan Bridge & Construction Co., and that man was in our direct employ.” It is to he inferred that the president of the Metropolitan Company, Mr. Howarth, was a superintendent of construction, as the witness Holstein testified that he was an assistant superintendent under Howarth. The defendant’s vice-president first denied and then recalled the denial that Howarth had been in the defendant’s employ prior to the organization of the Metropolitan Company. The latter’s secretary was the defendant’s assistant secretary,' and at the time of its organization was employed by the defendant as a stenographer in its office. There was some evidence to show that the defendant’s vice-president exercised personal .supervision and direction over the work, and it was not denied that he did., ..
The defendant, as the record shows, was engaged in very important construction work involving considerable risk of accident claims. It contracted to sublet the “constructive or erective ” part of the work on all contracts, which it might obtain, to another corporation, organized by its employees, under conditions which did not require of its sub-contractor the possession of a dollar of capital. It is a reasonable inference that the latter had such capital as its business required, i. e., “ desk room ” in the defendant’s office and the said contract. Its five per cent commission was doubtless enough to pay the salaries of its superintendents and officers, also employees of the defendant. It is taxing credulity too much to expect one. to believe that in making that contract the defendant had any purpose except to interpose the barrier of another corporation between it and liability to third persons, while in fact retaining control of the execution of its contracts.' If that purpose has been achieved, an effective method ,of insuring against, or, to be accurate, of evading, such liability has been discovered.
While it would seem that the plaintiff might. have elicited, even from the -enemy, more direct evidence on the question, such evidence as there is, in connection with said contract, irresistibly leads to the conclusion that, though -in form the defendant had sublet the work, it was, to all intents and purposes, doing it itself; that, though on paper there was a subcontractor, in truth and in fact the defendant did its work by *869the same agencies, in precisely the same way and with precisely the same control as it would have done it had there heen no paper sub-contract. The jury have so found, and I do not think we should grant a new trial unless we are prepared to hold that the defendant was entitled to a dismissal of the complaint at the close of the case.
The question then is resolved into one of law. Can a corporation take advantage of its impalpable nature to divest itself of responsibility for, while retaining control of, its undertakings, by the stratagem of a mere paper contract with another invisible creature having the same agents? Of course, the defendant would not have made such a contract unless its own and its nominal contractor’s agents were the same. To have actually sublet its work to a mere .paper corporation would have involved too great risk of damages for breaches of its contracts. The last statement involves an inference which I think justified by the record, but which is not necessary to the point to be decided. The more general rule, of course, is that one is not liable to third persons for the acts of ah independent contractor, but the test of non-liability is that the employer shall be concerned only in the result of the work, and shall not retain control of the manner and means of doing it. If one in fact employs an independent contractor to do a piece of work; in other words, if he surrenders control of the maimer and means of doing it, he is not ordinarily liable to strangers for what his independent contractor does, even though the latter be irresponsible. There is in that case not an evasion of responsibility, but a devolution of responsibility from one to the other. But if the contractor be independent on paper only, if his employment be a mere subterfuge to enable his employer to evade responsibility,, while the latter in fact retains full control of the enterprise, can there be any. doubt that the law will go beyond the paper device and fix responsibility upon the one in fact exercising control ? The maxim respondeat superior is applied to make people answerable for the conduct of them own affairs. Liability is imposed on the one exercising or having the power to exercise selection and control. The principle applies alike to both artificial and natural persons.' It is easier of application to the latter because they can be seen; but certainly *870the ones having the greater facility are not on that account to ■ have the greater liberty to evade the law.
As has been shown, the defendant did its work by the same' visible agencies as it would have used had there been no paper' subcontract and no Metropolitan Bridge and Construction Company. The jury were justified in finding that, the latter was only nominally employed to enable the defendant to escape liability for accident claims, and that the defendant actually controlled all the visible means used. Has the invisible entity, the creature existing only in' contemplation.of law, the legal fiction, sufficient substance to screen the defendant from liability ? A natural person cannot evade his legal responsibilities by hiding behind another. ■ Surely courts and juries should be able to see beyond an invisible screen. Two or more per-. sons may form a corporation for the very purpose of conducting a business in an organized capacity so as to limit the risk of - loss to the capital invested; there is in that case not an attempt to evade responsibility, but a substitution of corporate- for individual liability, which the law allows. The joint capital contributed becomes a trust fund for the protection of the public. Notwithstanding the safeguards imposed bylaw, that' capital-may not always be sufficient. But it by no means follows that one corporate organization may be used by another as a device to evade responsibility; that one corporation may be organized to supply the capital and derive the benefits, and another, without capital, to take the responsibility and risk. I think that, upon the proof in this case, the second invisible entity and the subterfuge of a paper sub-contract with it may be disregarded,' and ,that the one for whose benefit, and under whose actual control the work was done, may be held directly responsible upon the application of the maxim respondeat superior.
While the discussion did not take quite the same turn, the same state of facts was involved in McCherry v. Snare & Triest Co. (130 App. Div. 241), and a judgment against this defendant was unanimously affirmed by the Court of Appeals (198 N. Y. 532).
The judgment and order should be affirmed, with costs.
Judgment. and order reversed, new trial ordered, costs to appellant to abide event,