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 -