STATE EX REL 1ST NAT L BANK TRUS
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No. 12401 I N THE SUPREME COURT O THE STATE O MONTANA F F 1972 STATE OF M N A A ex rel. FIRST NATIONAL OTN BANK AND TRUST C M A Y O HELENA, O PN F Relator, THE DISTRICT COURT O THE FIRST JUDICIAL F DISTRICT OF THE STATE O M N A A I N AND F OTN, FOR THE COUNTY OF LEWIS AND C A K AND THE LR HONORABLE GORDON R e BENNETT, PRESIDING JUDGE THEREOF, Respondents, ORIGINAL PROCEEDING: Counsel o f Record: For R e l a t o r : Small, C u m i n s and Hatch, Helena, Montana. Robert C u m i n s argued, Helena, Montana. P a t r i c k F. Hooks argued, Townsend, Montana. For Respondents: Arthur P. Acher and Robert F. Swanberg, Helena, Montana. Robert F, Swanberg argued, Helena, Montana. Submitted: Decided: November 28, 1972 3nH 9 - 7573 Mr. J u s t i c e Frank I . Haswell delivered the Opinion of t h e Court. Relator seeks through this original proceeding a writ of supervisory control t o require the respondent court t o vacate i t s order denying summary judgment on i t s behalf. Relator i s one of the defendants named i n cause No. 35473,filed on December 10, 1971, in the d i s t r i c t court of Lewis & Clark County, e n t i t l e d John W. Foster, P l a i n t i f f , vs. F i r s t National Bank & Trust Co. of Helena, e t a1 . , Defendants, wherein p l a i n t i f f seeks damages f o r personal i n j u r i e s suffered during the course of his employment in t h e construction of drive-in parking f a c i l i t i e s f o r the Bank i n Helena. Relator Bank contracted with American Building Company, the general contractor, t o construct some drive-in banking f a c i l i t i e s . In t h e construc- tion contract, the Bank required American t o carry workmen's compensation insurance protecting American from injury claims of i t s own employees, o r t h e employees of any subcontractors. American then subcontracted w i t h Allen E l e c t r i c Company t o perform p a r t of the work, American i n t u r n requiring A len t o carry workmen's compensation on A l e n ' s employees. 1 1 P l a i n t i f f was an employee of Allen. The accident took place on February 5 , 1971. P l a i n t i f f was working on a ladder when a car driven by Hazel Anderson, t h e other defendant, ran into the ladder and knocked p l a i n t i f f t o the ground, causing c e r t a i n alleged injuries. Hazel Anderson was a bank customer u t i l i z i n g the drive-in banking f a c i l i t i e s which the Bank had required t o remain i n operation throughout the construction. P l a i n t i f f has received workmen's compensation benefits f o r the i n j u r i e s r e s u l t i n g from t h i s accident and now brings t h i s common law action f o r damages against t h e Bank, American, and Hazel Anderson, alleging negligence. In p a r t i c u l a r , the complaint alleges the Bank t o have been negligent in t h a t "the attendant provided by said bank negligently f a i l e d and omitted t o d i r e c t t r a f f i c entering said drive-in f a c i l i t y , and p a r t i c u l a r l y t h e defendant Hazel Anderson, so a s t o protect p l a i n t i f f engaged i n work on said driveway." To put the case in proper perspective, we review the central theory behind the Workmen's Compensation Act. In Yurkovich v. Indus. Acc. Bd., 132 Mont. 77, 314 P.2d 866, cited in Buerkle v. Montana Power Co., 157 Mont. 57, 61, 482 P.2d 564, we said: " ' * * * This act is fundamental legislation enacted first for the protection and benefit of the injured workman, his wife and children, and other dependents. By force of the law the employee surrenders his right of an action in tort for injury or death. The act however assures him and his dependents of the protection of certain benefits in case of injury or death. "'Secondly, the act fixes a limited liability of the employer so that the economic loss caused by such accidents shall not rest upon the employee or the public, but that the industry in which the accident occurs shall pay in the first instance for the loss occasioned by such accident. "'In construing a statute the whole act must be read together, and where there are several provisions or particulars such a construction is, if possible, to be adopted as will give effect to all .'" Of particular importance is the quid pro quo concept that in return for workmen 's compensation benefits the employer receives immunity from common law negligence actions such as that brought by the plaintiff in the instant case. According to this principle the concept is that although such compensation benefits are the sole remedy against the employer, yet the injured employee is nevertheless permitted to bring a common iaw negligence action .e. against "third partiestt--i parties other than his employer. Both of these concepts are embodied in section 92-204, R.C.M. 1947, which states: "Where both the employer and employee have elected to come under this act, the provisions of this act shall be exclusive, and such election shall be held to be a surrender by such employer and the servants, and employees of such employer and such employee, as among themselves, of their right to any other method, form or kind of compensation, or determination thereof, or to any other compensation, or kind of determination thereof, or cause of action, action at law, suit in equity, or statutory or common-law right or remedy, or proceeding whatever, for or on account of any personal injury to or death of such employee, except as such rights may be hereinafter specifically granted * * *. Provided, that whenever such employee shall receive an injury while performing the d u t i e s of his employment and such injury or i n j u r i e s , so received by such employee, a r e caused by the a c t or omission of some persons or corporations other than his employer, o r the servants or employees of his employer, then such employee, or i n case of h i s death his h e i r s or personal representatives, s h a l l , i n addition t o the r i g h t t o receive compensation under the Workmen's Comepnsation Act, have a r i g h t t o prosecute any cause of action he may have f o r damages against such persons o r corporations, causing such injury * * *." Both the Bank and American moved f o r summary judgment i n t h e i r behalf. The motion was granted i n favor of American, b u t denied a s t o the Bank. The Bank now seeks through this w r i t t o review and reverse this denial of summary judgment t o the Bank. The principal question presented is whether the Bank is a "person or corporation other than h i s employeru--i .e. a " t h i r d party". I f so, then the Bank i s immune from a common law negligence action. The word "employer" i s defined i n the a c t as anyone " *** who has any person i n service, i n hazardous employment, under any appointment or contract of h i r e , expressed or implied, oral or written, and t h e legal representative of any deceased employer o r the receiver or t r u s t e e thereof." Section 92-410, R.C.M. 1947. P l a i n t i f f claims t h a t t h e Bank cannot be considered t o be the "employer" of p l a i n t i f f , since there was no d i r e c t contract between the two. See Sull ivan v. City of Butte, 117 Mont. 215, 157 P.2d 479. However, the employer's 1iabi 1i t y f o r compensation and corresponding immuni t y from t h i r d party s u i t s does n o t depend s o l e l y on t h e above d e f i n i t i o n of "employer"; i t a l s o encompasses the concept of "statutory employer" so t h a t i f a person i s deemed t o be a " s t a t u t o r y employer" he is l i a b l e f o r compensation and thus immune from t h i r d party suits. W note t h a t the employees of a subcontractor seldom have a d i r e c t e contractual relationship w i t h the general contractor o r owner, and f o r t h i s reason cannot be considered actual employees of the l a t t e r . However, most s t a t e s impose a special compensation l i a b i l i t y upon an employer who cont r a c t s out i f the subcontractor f a i l s t o insure compensation of h i s own employees. Vol. 1A, ยง For a discussion of this see Larson on Workmen's Compensation, 49, p. 853. Thus i n Montana we have section 92-604, R.C.M. 1947, which provides : "Where any employer procures any work to be done, who1 ly or in part for him, by a contractor other than an independent contractor, and the work so procured to be done is a part or process in the trade or business of such employer, then such employer shall be liable to pay all compensation under this act to the same extent as if the work were done without the intervention of such contractor. And the work so procured to be done shall not be construed to be 'casual employment'". The effect of this statute is to make the owner a "statutory employer" of the employees of contractors other than independent contractors so that the owner i s 1 iabl e for their workmen's compensation coverage. The act then defines "independent contractor'' in section 92-438, R.C.M. 1947, which provides: " 'An independent contractor ' is one who renders service in the course of an occupation, representing the will of his employer only as the result of his work, and not as to the means by which it is accomplished. But the legal defense of independent contractor shall not bar otherwise compensabl e industrial accident claims against employers except when such defense is interposed on behalf of a party who has previously required the claimant's immediate employer to come within the Workmen 's Compensation Act " . This statute makes the owner the 'statutory employer' of employees of an independent contractor and permits him the use of the independent contractor defense if he requires the independent contractor to carry workmen's compensation on his own employees. The purpose of these two statutes is clearly to guarantee that all employees will be protected under the act, and that no employer or general contractor will escape 1 iability for compensation by contracting out, except when he requires the independent contractor to carry the compensation insurance. How does all this affect the owner's liability to a third party suit? Clearly when the owner is the claimant's employer, the owner is entitled to the quid pro quo immunity from such third party suits. We also hold that where the owner requires the independent contractor to provide workmen 's compensation coverage against claims of employees of a subcontractor, the owner is immune from third party claims of such employees of the subcontractor. The i n t e n t of the s t a t u t e is t o guarantee the protection of a1 1 employees working on the job by encouraging the owner t o require t h e i m e d i a t e employer t o carry workmen 's compensation on his own employees. The i n t e n t of such s t a t u t e would be self-defeating i f t h e owner who required this was e n t i t l e d t o no immunity from common law actions. Thus we held i n Ashcraft v. Montana Power, 156 Mont. 368, 480 P.2d 812, t h a t when the owner by requiring the independent contractor t o carry workmen's compensation is e n t i t l e d t o t h e independent contractor defense, he is also e n t i t l e d t o immunity from t h i r d party suits under section 92-204, R.C.M. 1947. See a l s o Buerkle v . Montana Power Co., 157 Mont. 57, 482 P.2d 564; Kelleher v. S t a t e , Larson v. Watters Const. Co., , 503 P.2d 29, 29 St.Rep. 897; Mont. - , P.2d , 29 S t . Rep. 1068; Mont. Larson on Workmen's Compensation, Vol . 2, g 72.31 . Directing our a t t e n t i o n t o the i n s t a n t case, we find the following paragraph i n the Bank's contract w i t h American: "1 0. WORKMEN 'S COMPENSATION INSURANCE: "The contractor (American) shal r maintain s t a t u t o r y Workmen's Compensation Insurance in the s t a t e of Montana during the l i f e of this contract. Such Workmen's Compensation Insurance shall protect the contractor from claims made by his own employees, t h e employees of any subcontractor and a l s o claims made by anyone d i r e c t l y or i n d i r e c t l y employed by the contractor o r subcontractor. In case any work is s u b l e t , the contractor may require each subcontractor s i m i l a r l y t o provide Workmen ' s Compensation Insurance. In the event any c l a s s of employees engaged i n work under t h i s contract i s n o t protected under the provisions of the Workmen's Compensation Act, the contractor and subcontractors s h a l l provide Employer's Liabi 1i t y Insurance w i t h respect t o such employees. 'The Contractor shall maintain insurance required under any other employee benefit a c t s in force a t t h e place of building." Another provision of the same contract s t a t e d : "5.1.3 Nothing contained in the Contract Documents s h a l l create any contractual r e l a t i o n between the Owner or the Architect and any Subcontractor o r Subsubcontractor. '' Thus there was no contractual r e l a t i o n between the Bank and Allen, p l a i n t i f f ' s immediate employer. In f a c t , the Allen contract w i t h American was entered into 19 days a f t e r the principal contract between the Bank and American. American, by requiring Allen t o carry Workmen's Compensation on i t s own employees, clearly i s protected from third party s u i t s by the Ashcraft rule. The question remains whether the Bank i s entitled t o the same immunity i n the absence of a d i r e c t contractual requirement t h a t the p l a i n t i f f ' s immediate employer carry workmen Is compensation. W hold e that i t i s . The reason f o r such a holding i s simple. Although there i s no contractual relation between the Bank and Allen or the p l a i n t i f f , y e t , in paragraph 10 of i t s contract w i t h American, the Bank guaranteed t h a t a l l workers involved on the construction would be covered by workmen's compensation. W can reach this decision i n two ways. e F i r s t , in the absence of 1 workmen's compensation coverage by e i t h e r A 1en or American, clearly under the s t a t u t e the Bank would not be entitled t o the independent contractor defense, and would thus be deemed the p l a i n t i f f Is "statutory employer". Second, the Bank complied with the intent of the s t a t u t e t h a t a l l persons working on the construction would be covered by workmen Is compensation. Accordingly, the Bank i s e n t i t l e d t o i t s quid pro quo--immunity from third party negl i gence actions Additionally respondent contends that the f i l i n g of the petition f o r supervisory control here was not timely. W do not consider a delay e of three months in t h i s mu1 t i p l e party 1i t i g a t i o n involving conflicting i n t e r e s t s with different ideas as how to best proceed t o be f a t a l t o the r e l i e f asked. The order of the d i s t r i c t court denying summary judgment is vacated and the d i s t r i c t court i s directed t o grant summary judgment t o the F i r s t National Bank. Associate Justice
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