No. 86-194
IN THE SUPREME COURT OF THE STATE OF MONTANA
1987
DARRELL L. SCHROCK,
Claimant and Cross-Appellant,
-vs-
EVANS TRANSFER AND STORAGE,
Employer, and STATE COMPENSATION
INSURANCE FUND, Insurer,
Defendants and Appellants,
and
NORTH AMERICAN VAN LINES, Employer,
and LIBERTY MUTUAL INSURANCE CO., Insurer,
Defendants and Respondents.
APPEAL FROM: The Workers' Compensation Court, The Honorable
Timothy Rea-rdon,Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Hughes, Kellner, Sullivan & Alke; Thomas E. Martello,
Helena, Montana
David L. Holland and Leonard J. Haxby, Butte, Montana
For Respondent:
Garlington, Lohn & Robinson; Larry W. Jones, Missoula,
Montana
Submitted on Briefs: Oct. 9, 1986
Decided: February 13, 1987
Clerk
Mr. Justice John Conway Harrison delivered the Opinion of the
Court.
This appeal arises from a judgment and order of the
Workers' Compensation Court. That court awarded claimant
temporary total disability benefits from one of two possible
employers. Save for a mathematical correction, we affirm in
full.
The origins of this case stretch back to December 1983,
when Evans Transfer and Storage of Butte, Montana, signed an
agency agreement with North American Van Lines. North
American is a well known motor vehicle common carrier engaged
primarily in transporting household goods, wares and
merchandise throughout the United States and Canada. In the
ordinary course of its business, North American often leases
trucks and trailers from smaller, local moving companies such
as Evans Transfer.
Under the terms of this agency agreement, Evans
Transfer leased a moving truck and trailer to North American
for the latter's exclusive use and possession. Evans
Transfer, however, was required to furnish a "qualified
driver" for the truck and any additional necessary labor.
In January 1984, Evans Transfer hired the claimant,
Darrell Schrock, to drive the vehicle leased to North
American. However, before becoming qualified to drive for
North American, a driver was required to attend a North
American training school and thereafter be formally accepted.
So in May 1984, Darrell, along with his wife, Shauna,
attended a training school held in Billings. Upon successful
completion of the school, Darrell submitted his formal
employment application to North American. North American,
though, rejected Darrell's application because of a
chronically weak back that rendered him a high risk employee.
Following Darrell's rejection, Evans Transfer and
Shauna Schrock submitted to North American an employment
application under Shauna's name. Shauna had also
successfully completed North American's training school and
was technically eligible to apply for employment as a driver.
However, she did not know how to drive a vehicle such as the
one leased to North American. Evans Transfer submitted this
application knowing that if North American approved the
application, Darrell would do all the actual driving. Evans
in fact told Shauna to sign a statement indicating that
Shauna had taken a road test although Shauna had never taken
such a test. North American ultimately approved Shauna's
employment application, certifying her to drive for North
American.
Evans Transfer had earlier entered into an "Independent
Interstate Contractor's Agreement" with Darrell, whereby
Evans provided Darrell the tractor and trailer leased to
North American. Once Shauna's application was accepted,
Evans allowed Darrell to drive this vehicle containing North
American shipments. Because he was not qualified to drive
for North American, Darrell would print Shauna's North
American authorized driver number on log book entries and
give her authorized driver number to the North American
dispatch office when calling to request a shipment. With
Evans' knowledge, Darrell would have Shauna sign, or forge
her signature on, log book entries submitted to North
American. North American was not told of the fact that
Darrell was actually driving.
On December 11, 1984, Darrell, working alone, was
injured by a falling piece of equipment while unloading a
truck carrying a North American shipment. Darrell suffered a
depressed skull fracture and has not worked since December
20, 1984. He timely filed a workers' compensation claim, but
both Evans Transfer and North American denied liability.
The Workers' Compensation Court found that Darrell was
an employee of Evans Transfer but not of North American and
that he was entitled to weekly temporary total disability
benefits of $224.52. Darrell and Evans Transfer now appeal.
The issues before this Court on appeal are (1) whether
the court below correctly held that claimant was an employee
of Evans Transfer rather than an independent contractor; (2)
whether the court properly held that claimant was not also an
employee of North American; and (3) whether the court
properly computed claimant's disability benefits.
We first consider Darrell's employment status with
Evans Transfer. Fe note initially that the mere fact that
J
the contract in effect between Evans Transfer and Darrell
designated Darrell as an independent contractor is not
dispositive. Darrell must have been independent in fact.
Carlson v. Cain (Mont. 1983), 664 P.2d 913, 920, 40 St.Rep.
865, 875.
This analysis is founded upon our statutory definition
of independent contractor. Section 39-71-120, MCA, defines
an independent contractor as one who renders service in the
course of an occupation and:
(1) 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
(2) is engaged in an independently
established trade, occupation,
profession, or business.
To determine whether one is actually free from control,
we adopted in Sharp v. Hoerner Waldorf Corp. (1978), 178
Mont. 419, 425, 584 P.2d 1298, 1301-02, a four factor test
set forth in Larson's Workman's Compensation Law, Vol lC,
S 44.00, p. 8-40. The four factors to be considered are:
(1) direct evidence of right or exercise of control;
(2) method of payment; (3) furnishing of equipment; and
(4) right to fire.
The factual determinations reached by the court below
remain largely unchallenged; Evans Transfer essentially
disputes only the legal conclusions. Therefore, this issue
is one of law and this Court is free to reach its own
conclusions from the evidence presented. See Solheim v. Tom
Davis Ranch (Mont. 1984), 677 P.2d 1034, 1038, 41 St.Rep.
326, 329. Nevertheless, our own review of the evidence
persuades us that the court below correctly found that
Darrell was not free from control in fact and therefore was
an employee of Evans Transfer, rather than an independent
contractor.
First, under their agreement, Evans Transfer furnished
Darrell the equipment necessary to perform his obligations.
When the employer furnishes valuable equipment, an employment
relationship is strongly suggested. 1C Larson, 5 44.34 (a),
p. 8-121. This notion is closely related to the right of
control. Any owner who furnishes equipment as valuable as a
tractor and trailer naturally maintains an interest in its
care and typically will retain a right to supervise its use.
In its agreement with Darrell, Evans Transfer required
Darrell to maintain properly the equipment provided him and
required Darrell to account for all the assigned equipment
"as often as required" by Evans. For these reasons, Larson
finds it "not surprising that there seems to be no case on
record in which the employer owned the truck but the driver
was held to be an independent contractor." 1C Larson,
5 44.34(b), p. 8-139.
Further, the parties agree that Evans Transfer enjoyed
the right to fire Darrell if he failed to perform proper
maintenance on the equipment furnished him.
Consideration of the factors in this test is not a
balancing process. Direct employment status can be
established upon satisfaction of one of the four factors.
Sharp, 584 P.2d at 1302. Our study of the record convinces
us that Darrell was not in fact free from control and
therefore was an employee of Evans Transfer at the time of
the accident.
Our second issue is whether Darrell was also a employee
of North American as of the date of his injury. The Workers'
Compensation Court held that Darrell was not an employee of
North American as it found no contractual relationship
between the two parties. We agree.
Appellants' only argument of merit rests upon the fact
that Darrell was injured in his capacity as a helper, not as
a driver. Evans Transfer correctly notes that the agency
agreement in effect between Evans and North American
authorized Evans to provide on its own any necessary
additional labor and obligated North American to maintain
workers' compensation insurance for these helpers. Thus,
runs the argument, Evans Transfer, as an agent, had the
express authority to bind North American when it hired
additional helpers.
Had Evans employed Darrell merely as a helper, its
argument might be persuasive. But such is simply not the
case. Evans Transfer intended that Darrell drive its truck
leased to North American. Of this there is no argument.
That North American rejected Darrell's application to drive
this truck had little effect. After Darrell's rejection, Ron
and Linda Evans and Francine Coombe, respectively the
owners/operators and secretary of Evans Transfer, had Shauna
submit her application to North American, knowing that
Darrell would drive the vehicle. Evans Transfer then allowed
Darrell to drive its vehicle containing North American
shipments by having Shauna sign, or by having Darrell forge
his wife's name on, the log book entries submitted to North
American. Shauna did not even accompany her husband on every
shipment. Evans and the Schrocks took great pains to see
that North American was not told of the fact that Darrell was
driving the vehicle. The Schrocks, the Evanses and Francine
Coombe all testified as to these facts. The fact that
drivers help load and unload shipments did not turn Darrell
into a helper.
Looking at these facts, it is clear that Evans Transfer
exceeded its authority by hiring Darrell as a driver. The
agency agreement allowed Evans Transfer to hire only
"qualified" drivers. North American's rejection of Darrell
obviously indicated that Darrell was not qualified.
Further, an agent never has authority to perform an act
"which is and is known or suspected by the person with whom
he deals to be a fraud upon the principal." Section
28-10-409, MCA. Fraud is defined in S 28-2-405, MCA, as
follows:
Actual fraud, within the meaning of this
part, consists in any of the following
acts committed by a party to the contract
or with his connivance with intent to
deceive another party thereto or to
induce him to enter into the contract:
(3) the suppression of that which is
true by one having knowledge or belief of
the fact;
(5) any other act fitted to deceive.
It is clear from the facts presented in the record that
Evans Transfer and the Schrocks actively worked to deceive
North American. The activities of Evans Transfer and the
Schrocks, which allowed Darrell to drive the vehicle leased
to North American in the face of North American's rejection
of Darrell's application constituted actual fraud. The
Schrocks and Evans Transfer cannot now be allowed to argue
that this is irrelevant because of the fortuitous
happenstance that Darrell was not injured while actually
driving. Following North American's rejection, Evans'
employment of Darrell as a driver went beyond the scope of
its authority and did not bind North American.
Finally, all parties challenge the Workers'
Compensation Court's computation of weekly disability
benefits. Pursuant to § 39-71-701, MCA, Darrell is entitled
to 66 2 / 3 % of his weekly wage. In its findings, the court
found that Darrell's average weekly wage was $336.61. In
arriving at this amount, the court accepted as accurate a
computer printout of Darrell's earnings submitted by Evans
and relied upon by both Evans and North American.
Darrell now objects to the lower court's reliance on
this printout. He does not dispute the accuracy of this
printout, only that it was never introduced into evidence.
We find no error. While this printout was not presented for
admission, it represents a true and concise summary of three
exhibits, all of which were admitted by stipulation of the
parties. Had Darrell any problem with the figures contained
within the exhibits, he had ample opportunity to question
their accuracy, either at the time of their admission or
during the testimony of the exhibits' authors. One of these
exhibits consists of several hundred pages and was thrust
upon the lower court by Darrell's counsel without benefit of
explanation. The defendants distilled these voluminous
records into a manageable summary and presented it to the
court as an appendix to Evans' brief. The court' s reliance
upon this summary was not in error.
The computer printout relied upon by the court shows
Darrell's net income from May through December, 1984.
However, the court utilized only the months of June through
November, 1984, to determine Darrell's average weekly wage.
The court accepted these months as the only full months of
income submitted.
Aside from a mathematical error, we find the court's
computation correct. Given the often lengthy delay that
typically resulted before Darrell received his payment from
North American via Evans Transfer, plus the fact that Darrell
worked only portions of the months of May and December, the
court did not abuse its discretion in limiting its analysis
to the June-November period.
However, the Workers' Compensation Court did not make
clear its method of computation. The court evidently
totalled Darrell's earnings for the six-month span and then,
to find his average weekly wage, divided by 24 (apparently
six months at four weeks per month). Obviously, there are
more than 24 weeks in six months. We therefore remand and
instruct the Workers' Compensation Court to recompute
Darrell's weekly disability benefits in accordance with this
opinion. We otherwise affirm in full.
n
We concur:
44(7v
ief Justice