Fiscus v. Beartooth Electric

No. 12685 I N THE SUPREME C U T O T E STATE O M N A A OR F H F OTN 1974 C A T N R . FISCUS, L YO P l a i n t i f f and Respondent, -vs - BEARTOOTH ELECTRIC, Defendant and A p p e l l a n t . ORIGINAL PROCEEDING: Counsel of Record: For A p p e l l a n t : Hutton, Sheehy and Cromley, B i l l i n g s , Montana John C . Sheehy argued, B i l l i n g s , Montana F o r Respondent: Berger, Anderson, S i n c l a i r and Murphy, B i l l i n g s , Montana Richard W. Anderson argued, B i l l i n g s , Montana For Amicus C u r i a e : Gene Huntley a r g u e d , Baker, Montana Bruce R. Toole argued, B i l l i n g s , Montana Submitted: February 27, 1974 Decided : 7 1974 Filed : MAY 7 1974 M r . J u s t i c e Wesley C a s t l e s d e l i v e r e d t h e Opinion of t h e Court. This matter comes on an a p p l i c a t i o n t o accept j u r i s d i c t i o n of an appeal from a summary judgment i n favor of p l a i n t i f f on an i s s u e of law as t o immunity t o a common law t o r t a c t i o n of t h e defendant. N i s s u e i s made of procedural m a t t e r s , and o we t r e a t t h i s as an appeal. The defendant i n t h i s c a s e i s Beartooth E l e c t r i c Co-opera- t i v e , Inc., headquartered a t Red Lodge, Montana. I t s business i s supplying e l e c t r i c i t y i n r u r a l a r e a s i n Carbon, S t i l l w a t e r , and Sweet Grass Counties, and i n p a r t i n Park County, Wyoming. I t i s a Montana corporation, incorporated i n 1938. I t has e l e c t r i c transmission systems, including t h e u s u a l p o l e s and transmission wire over which e l e c t r i c i t y i s conducted t o i t s cus tomer s . P l a i n t i f f i s Clayton R. Fiscus, a r e s i d e n t of B i l l i n g s , Montana, who was on t h e d a t e of t h i s accident 34 years o l d . H e i s employed a s a journeyman lineman f o r High Voltage Systems, Inc., an e l e c t r i c a l c o n t r a c t o r . S h o r t l y before t h e a c c i d e n t h e r e involved, High Voltage Systems, I n c . , had entered i n t o a b i d c o n t r a c t with Beartooth whereby High Voltage Systems, I n c . , would convert f i v e miles of s i n g l e phase l i n e on t h e Beartooth system to t h r e e phase number 2 ACSI w i r e , and a number 4 n e u t r a l . There i s no d i s p u t e between t h e p a r t i e s t h a t i n performing t h e c o n t r a c t f o r Beartooth, High Voltage Systems, I n c . , was an independent c o n t r a c t o r . P l a i n t i f f Fiscus, as an employee of High Voltage Systems, Inc., on May 27, 1971, while on a power pole i n the Beartooth system, came i n contact with the e l e c t r i c power, i n such manner t h a t he sustained i n j u r i e s from which he 10st one arm above the elbow and one l e g below the knee. High Voltage Systems, Inc., had provided workmen's compen- sation coverage to cover i t s employees i n connection with i t s work. P l a i n t i f f Fiscus has been compensated, and i s now being compensated f o r h i s medical expenses, and f o r compensation b e n e f i t s , by t h e workmen's compensation c a r r i e r f o r h i s employer, High Voltage Systems, Inc., a s a r e s u l t of t h e accident. In the action now pending i n the d i s t r i c t court p l a i n t i f f has sued Beartooth f o r h i s personal i n j u r i e s , a l l e g i n g t h a t Beartooth negligently f a i l e d t o provide p l a i n t i f f with a s a f e place t o work, and with s a f e working appliances. Beartooth did n o t s p e c i f i c a l l y r e q u i r e , verbally o r i n writing, t h a t High Voltage Systems, Inc. provide workmen's compensation coverage f o r i t s employees. However, the s t a t u t e s do so r e q u i r e and provide a criminal penalty f o r f a i l u r e t o do so, section 92-207, R.C.M. 1947, and, a s noted above, High Voltage did cover p l a i n t i f f . This proceeding involves a step-out from the holdings of t h i s Court i n Ashcraft v. Montana Power, 156 Mont. 368, 480 P. 2d 812 and Buerkle v. Montana Power C o . , 157 Mont. 57, 482 P.2d 564, with respect t o the l e g a l l i a b i l i t y of an owner t o the injured employee of an /independent contractor. The i n j u r y occurred on May 27, 1971; thus the applicable s t a t u t e s a r e those t h a t applied a t t h e time of the decisions i n Ashcraft and Buerkle. The i s s u e here i s whether immunity t o common law l i a b i l i t y recognized i n Ashcraft and Buerkle extend t o an owner where the contractor i n f a c t provided workmen ' s compensation coverage, but the owner did n o t r e q u i r e i t i n the contract. In Buerkle the p l a i n t i f f disputed the Ashcraf t r u l e and claimed t h a t because the negligence of the general employer, Montana Power Company, was a t l e a s t a concurrent cause of the i n j u r i e s t o the p l a i n t i f f , the defendant power company was n o t immune from common law l i a b i l i t y even under the Ashcraft r u l e . This Court held t h a t Buerkle was ruled by the r u l e i n Ashcraft and explained i t s r a t i o n a l e i n Buerkle a t p. 59: 1I Bearing i n mind the reasoning above, the s e l f - - evident r e s u l t i n Ashcraft was t h a t a general employer under such circumstances i s immune from t h i r d - party l i a b i l i t y s u i t s . The same conclusion would mechanically follow i n the present case except p l a i n t i f f charges section 92-438, R.C.M. 1947, should be limited i n e f f e c t t o the Workmen's Compensation Act and should not be a bar t o t h i r d party l i a b i l i t y s u i t s grounded on the common law. This Court does n o t agree with t h i s reasoning. "To understand the scope of section 92-438,R.C.M. 1947, i t must be read i n conjunction with sections 92-604 and 92-204, R.C.M. 1947. Section 92-604, R.C .M. 1947 provides : 11 1 Where any employer procures any work t o be done, wholly o r i n p a r t f o r him, by a contractor o t h e r than an independent contractor, and the work so procured t o be done i s a p a r t o r process i n the t r a d e o r business of such employer, then such employer s h a l l be l i a b l e t o pay a l l compensation under t h i s a c t t o the same extent a s i f the work were done without the intervention of such contractor. And the work so procured t o be done s h a l l n o t be construed t o be I I casual employment. I l I "The e f f e c t of t h i s s t a t u t e makes a general contractor l i a b l e f o r i n j u r i e s sustained by employees of another - - contractor where the work p r o j e c t i s a p a r t o r process i n t h e trade o r business of the general contractor. For example, i f a general c o n t r a c t o r h i r e d another a s a subcontractor, t h e general c o n t r a c t o r would c o n t r o l and supervise t h e d e t a i l s and means of c a r r y i n g o u t t h e work, and an employee of the subcontractor was i n j u r e d , t h e general c o n t r a c t o r would be l i a b l e f o r t h e employee's i n j u r i e s i f t h e p r o j e c t was a p a r t of t h e business of t h e general c o n t r a c t o r . II But how extensive would t h e general c o n t r a c t o r ' s l i a b i l i t y be? Section 92-204, R.C.M. 1947, provides t h i s answer: "'Where both t h e employer and employee have e l e c t e d t o come under t h i s a c t , t h e provisions of t h i s a c t s h a l l be exclusive, and such e l e c t i o n s h a l l be h e l d t o be a surrender by such employer and t h e s e r v a n t s , and employees of such employer and of such employee, a s among themselves, of t h e i r r i g h t t o any o t h e r method, form o r kind of compensation, o r determination t h e r e o f , o r t o any o t h e r compensation, o r kind of determination t h e r e o f , o r cause of a c t i o n , a c t i o n a t l a w , s u i t i n e q u i t y , o r s t a t u t o r y o r common law r i g h t o r remedy, o r proceeding whatever, f o r o r on account of any personal i n j u r y t o o r death of such employee * * *.' "This p o r t i o n of s e c t i o n 92-204 l i m i t s t h e general c o n t r a c t o r ' s l i a b i l i t y e x c l u s i v e l y t o compensation provided by t h e Workmen s Compensation Act . "How i s t h i s r e l a t i v e t o s e c t i o n 92-438, R.C.M. 1947? The previously quoted p o r t i o n of s e c t i o n 92-438 prevents a general c o n t r a c t o r from using t h e defense of I indepen- dent c o n t r a c t o r ' where he does n o t r e q u i r e an employee's immediate employer t o c a r r y workmen ' s compensation insurance. Therefore, i f t h e general c o n t r a c t o r can n o t u s e t h e I independent c o n t r a c t o r ' defense then h e f a l l s within t h e scope of s e c t i o n 92-604, which a s previously described makes him e x c l u s i v e l y l i a b l e f o r compensation under t h e Workmen s Compensation Act i n accordance with s e c t i o n 92-204. Therefore, i f s e c t i o n 92-438 i n conjunction with s e c t i o n s 92-604 and 92-204 l i m i t t h e l i a b i l i t y of a general c o n t r a c t o r e x c l u s i v e l y t o compensation under t h e Workmen ' s Compensation Act i n circumstances j u s t described, i s i t reasonable under t h e same s t a t u t e s t o assume t h a t where a general c o n t r a c t o r r e q u i r e s t h e employee's immediate c o n t r a c t o r t o c a r r y workmen's compensation insurance, t h e general c o n t r a c t o r i s n o t immune from a common law l i a b i l i t y s u i t as a t h i r d p a r t y ? This Court does n o t b e l i e v e so. "A c o n t r a r y r e s u l t would be abusive of t h e c e n t r a l theory behind t h e Workmen's Compensation Act. I n Yurkovich v. Indus. Acc. Bd., 132 Mont. 77, 83, 84, 314 P.2d 866, i n r e f e r e n c e t o t h e workmen's Compensation Act, we s a i d : "'This a c t i s fundamental l e g i s l a t i o n enacted f i r s t f o r t h e p r o t e c t i o n and b e n e f i t o f t h e i n j u r e d workman, h i s wife and c h i l d r e n , and o t h e r dependents. B f o r c e y of t h e l a w t h e employee surrenders h i s r i g h t of an a c t i o n i n t o r t f o r i n j u r y o r death. The a c t however a s s u r e s him and h i s dependents of t h e p r o t e c t i o n of c e r t a i n b e n e f i t s i n c a s e of i n j u r y o r death. "'Secondly, t h e a c t f i x e s a l i m i t e d l i a b i l i t y of t h e employer so t h a t t h e economic l o s s caused by such a c c i d e n t s s h a l l n o t rest upon t h e employee o r t h e p u b l i c , b u t t h a t t h e i n d u s t r y i n which t h e accident occurs s h a l l pay i n t h e f i r s t i n s t a n c e f o r t h e l o s s occasioned by such accident. 11 1 I n construing a s t a t u t e t h e whole a c t must be r e a d t o g e t h e r , and where t h e r e a r e s e v e r a l provisions o r p a r t i c u l a r s such a c o n s t r u c t i o n i s , i f p o s s i b l e , t o be adopted as w i l l give e f f e c t t o a l l . ' The system of compensation under t h e Workmen ' s II Compensation Act does n o t envision b e n e f i t s drawn from a s i n g l e employer by a common l a w t o r t a c t i o n t o g e t h e r with l i a b i l i t y from workmen's compensation insurance. " (Emphasis supplied.) What makes t h e i n s t a n t c a s e appear d i f f e r e n t from Ashcraft and Buerkle i s t h e language i n s e c t i o n 92-438, R.C.M. 1947, reading i n p a r t "except when such defense i s interposed on behalf of a p a r t y who has previously r e q u i r e d t h e c l a i m a n t ' s immediate employer t o come within t h e workmen's compensation act. " (Emphasis supplied.) The meaning of t h e words "a p a r t y who h a s previously required" i s argued by t h e respondent t o mean a p a r t y who has previously required by c o n t r a c t r a t h e r than a p a r t y who has r e l i e d on t h e l a w with c r i m i n a l sanctions t o r e q u i r e compensation insurance. The argument goes t h a t t h e words "previously r e q u i r e d m must have some meaning i n - t h e s t a t u t e and t h a t t h e mere f a c t of coverage pursuant t o law is not sufficient. W s n o t t h i s compliance with previously a r e q u i r e d coverage? Under Buerkle above, w s a i d t h a t where a general employer e had n o t required h i s independent contractor t o provide workmen ' s compensation, the general employer would be l i a b l e f o r workmen's compensation under section 92-204, R.C.M. 1947. It i s a contin- gent l i a b i l i t y . I f t h e independent contractor did n o t i n f a c t cover the employee, even though required both by c o n t r a c t and by law t o have done so; then, i n t h a t event t h e general employer o r owner i s l i a b l e f o r compensation. This contingent l i a b i l i t y , a c t u a l l y a r e a l l i a b i l i t y i n the sense t h a t i t i s r e f l e c t e d i n the c o s t of doing business i n any event, i s what e n t i t l e s t h e general employer to t h e protection of immunity. The workman i s guaranteed protection. This i s what "statutory employer" i s a l l about. I n the i n s t a n t case, because Beartooth did not r e q u i r e High Voltage Systems t o provide coverage, Beartooth became l i a b l e t o Fiscus f o r coverage i f High Voltage Systems had f a i l e d f o r any reason t o have done so. I n o t h e r words the general employer i s responsible i n the f i r s t instance f o r nonfault l i a b i l i t y even though he may pass i t on to a sub- contractor. The general employer i s under a continuing p o t e n t i a l l i a b i l i t y ; he has thus assumed a burden i n exchange f o r which he i s e n t i t l e d t o immunity from a damage s u i t r e s u l t - ing from the same accident with o r without f a u l t . (See Volume 2, Larson, workmen's Compensation Law, Section 72.31 (Cum. Supp.)) The grant of immunity t o an owner o r general employer who has n o t required h i s independent contractors t o comply with the Workmen's Compensation Act does n o t represent a departure from our p r i o r holdings. I n Ashcraft t h e question was whether o r n o t a general employer who had complied with s e c t i o n 92-438 and r e q u i r e d compliance with t h e Workmen's Compensation Act by h i s independent c o n t r a c t o r s could be sued as a t h i r d p a r t y by t h e c o n t r a c t o r ' s employees. W h e l d t h a t h e could n o t . e Following Ashcraft t h e question was again presented i n Buerkle. I n deciding t h a t c a s e we elaborated our reasoning a s h e r e t o f o r e pointed o u t . Subsequently t h e question was again presented a l b e i t i n s l i g h t d i f f e r e n t form i n F i r s t National Bank and T r u s t Company v. D i s t r i c t Court, 161 Mont. 127, 505 P.2d 408, 412. The reasoning of Buerkle was r e i t e r a t e d i n t h a t decision. I n t h e First Kaitional Bank w e observed t h a t an owner o r general employer would be inrmune t o a t h i r d p a r t y s u i t on e i t h e r of two bases : "* * * F i r s t , i n t h e absence of workmen's compensation coverage by e i t h e r Allen o r American, ( t h e independent c o n t r a c t o r s ) c l e a r l y under t h e s t a t u t e t h e Bank would n o t be e n t i t l e d t o t h e independent c o n t r a c t o r defense, and would thus be deemed p l a i n t i f f ' s ' s t a t u t o r y employer ' . Second, t h e Bank complied with t h e i n t e n t of t h e s t a t u t e t h a t a l l persons working on t h e c o n s t r u c t i o n would be covered by workmen ' s compensation. 11 I n a l l our previous cases t h e element of r e q u i r e d compliance with t h e Workmen's Compensation Act on t h e p a r t of t h e independent c o n t r a c t o r has been present. I n each of those cases we h e l d t h e owner imxmme from s u i t as a t h i r d p a r t y . I n each of those cases we granted t h e immunity because of t h e fundamental u n f a i r n e s s of s u b j e c t i n g an employer t o t h i r d p a r t y l i a b i l i t y which h e could have avoided as a s t a t u t o r y employer had h e n o t r e q u i r e d h i s independent c o n t r a c t o r comply with t h e Workmen's Compensation Act. I n t h i s c a s e we f a c e t h e s i t u a t i o n i n which t h e owner o r general employer d i d n o t r e q u i r e compliance with t h e Workmen ' s Compensation Act and i s accordingly s u b j e c t t o p o t e n t i a l n o - f a u l t l i a b i l i t y f o r b e n e f i t s under the Workmen ' s Compensation Act a s t h e s t a t u t o r y employer of t h e i n j u r e d work- man. Since t h e owner Beartooth i s s u b j e c t t o such l i a b i l i t y i t n e c e s s a r i l y follows t h a t i t i s a l s o immune t o s u i t as a t h i r d p a r t y under s e c t i o n 92-204, R.C.M. 1947, which makes t h e remedies of t h e Workmen's Compensation Act e x c l u s i v e between employer and employee. Also appearing i n t h i s a c t i o n as amicus c u r i a e were S h e l l O i l Company and James B. H a t f i e l d , t h e p a r t i e s l i t i g a n t i n a cause c u r r e n t l y pending i n f e d e r a l d i s t r i c t c o u r t which involves t h e same l e g a l question h e r e i n decided. The o r d e r of t h e d i s t r i c t c o u r t denying summary judgment i s vacated and t h e d i s t r i c t c o u r t i s d i r e c t e d t o g r a n t summary judgment t o Beartoo t h E l e c t r i c Co-operative. W concur: e ............................... - L . Chief J u s t i c e 8 ............................... Justices Mr. Justice Gene B. Daly dissenting: I dissent. This case turns on the interpretation of section 92-438, R.C.M. 1947, as amended by Section 1, Chapter 49 of the Laws of 1965, and since repealed by Section 2, Chapter 251, Laws of 1973. Therefore any in depth discussion on points of disagreement would be by any view academic and of little value to the bar of Montana. I would only point out that the language contained in the 1965 amendment was not clear or as direct as it might have been to aid in the search for legislative intent. My views in the original treatment contained in Ashcraft v. Montana Power, 156 Mont. 368, 480 P.2d 812, recognized the power of the legis- lature to grant immunity from common law liability in return for vicarious statutory liability but the legislative intent must be manifest and of course contained within the Workmen's compensation as restated in Kelleher v. Montana Aeronautics, 160 Mont. 365, 503 P.2d 29. The majority in Ashcraft found the intent to limit third party actions but restricted the application to a narrow application within the terms of the 1965 amendment. We have followed this interpretation since that time. It is my view that the majority here makes a departure from the narrow application of Ashcraft when it considers the mandate of a criminal statute to satisfy the requirements of the Act placed on the employer, Beartooth Electric, if they wish to avoid their responsibility to contractor to respond to a th Justice I concur in the for Gene B. Daly. Justice - 10 -