KIMBALL v CONTINENTAL OIL CO

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No. 13194 I N THE SUPREME COURT O THE STATE OF M N A A F OTN 1976 FATAL: WILLIAM C. KIMBALL, V I V I E N N E F. KIMBALL, Widow, Claimant and A p p e l l a n t , CONTINENTAL OIL COMPANY, Employer, HARTFORD ACCIDENT AND INDEMNITY COMPANY, Defendants and Respondents. Appeal from: D i s t r i c t Court o f t h e T w e l f t h J u d i c i a l D i s t r i c t , Honorable B. W. Thomas, Judge p r e s i d i n g . Counsel o f Record : For Appellant: M o r r i s o n , E t t i e n and B a r r o n , Havre, Montana R o b e r t D. Morrison a r g u e d , Havre, Montana Burns, Solem and MacKenzie, Chinook, Montana F o r Respondents: A l e x a n d e r , Kuenning, M i l l e r and Ugrin, G r e a t F a l l s , Montana Edward C. Alexander a r g u e d , G r e a t F a l l s , Montana Submitted: A p r i l 19, 1976 Decided : JUM SLIP! Filed : - d, 1976 - 4 lq~ M r . J u s t i c e John Conway Harrison d e l i v e r e d t h e Opinion of t h e Court. T h i s i s an appeal from an o r d e r of t h e d i s t r i c t c o u r t , Blaine County, a f f i r m i n g t h e d e c i s i o n of t h e Workmen's Compensat i o n Division of t h e Department of Labor and I n d u s t r y o f t h e s t a t e of Montana, awarding compensation. This c a s e began w i t h an I n d u s t r i a l Accident Board AccidentI n j u r y I n v e s t i g a t i o n r e p o r t f i l e d w i t h t h e Board on June 19, 1973. A copy of t h e r e p o r t f i l e d w i t h t h e Board was s e n t t o C o n t i n e n t a l O i l Company, whose consignee Richard Brainard had i t s b u l k p l a n t i n Chinook, Montana, where t h e a c c i d e n t occurred. Thereafter, on J u l y 30, 1973, C o n t i n e n t a l O i l Company f i l e d w i t h t h e Workmen's Compensation Division i t s Form 37, "Employer's F i r s t Report of Occupational I n j u r y o r is ease". T h e r e a f t e r t h e r e was correspondence between t h e c l a i m manager of Hartford Accident & Indemnity Company ( C o n t i n e n t a l ' s i n s u r e r ) and t h e Workmen's Compensation D i v i s i o n a s t o whether o r n o t Brainard was an independent c o n t r a c t o r o r an employee of C o n t i n e n t a l O i l Company by reason of h i s c o n t r a c t . I n t h e meantime t h e law f i r m of Alexander, Kuenning, M i l l e r & Ugrin o f Great F a l l s , Montana, was asked by Hartford f o r an opinion on t h e l e g a l problems r a i s e d by t h e a c c i d e n t . O June n 1 2 , 1973, M r . Alexander wrote t o Richard C. Sherman, c l a i m manager f o r H a r t f o r d , g i v i n g t h e opinion t h a t t h e r e was probable coverage under t h e workmen's Compensation Act. O October 31, 1973, Vivienne Kimball, widow o f William n H. Kimball v i c t i m of t h e r e p o r t e d a c c i d e n t , employed counsel t o r e p r e s e n t h e r b e f o r e t h e I n d u s t r i a l Accident Board. Counsel p e t i t i o n e d t h e Board f o r a d e t e r m i n a t i o n of c l a i m f o r compensation by b e n e f i c i a r i e s . 1974. T h e r e a f t e r , t h e m a t t e r was heard on August 21, Following t h e d e c i s i o n of t h e h e a r i n g examiner and a f f i r m - ance of t h a t d e c i s i o n by t h e a d m i n i s t r a t o r of t h e Workmen's Comp e n s a t i o n Division, t h e m a t t e r was appealed by Vivienne Kimball t o t h e d i s t r i c t c o u r t which on September 3 , 1975, a f f i r m e d t h e d e c i s i o n of t h e Workmen's Compensation Division. W note e h e r e t h a t t h e b e n e f i c i a r i e s r e c e i v e d t h e maximum b e n e f i t s t h a t could b e given under t h e workmen's Compensation Act. Here, t h e f a c t s i t u a t i o n i s an unusual one and t h e s t a t u s of t h e deceased was d i f f i c u l t t o a s c e r t a i n . The l e g a l pro- cedures followed by t h e widow were of h e r own c h o i c e , n o t t h i s court's. The d i s s e n t i n g opinion h e r e i n t a k e s t h e p o s i t i o n t h a t t h e m a j o r i t y would prevent a deserving widow from o b t a i n i n g a j u s t recovery from an o i l company which f a i l e d t o o p e r a t e w i t h i n t h e laws of t h i s s t a t e by denying t h a t Kimball was an employee and t h u s e n t i t l e d t o s o c i a l s e c u r i t y b e n e f i t s , minimum wage, unemployment compensation b e n e f i t s o r workmen's cornpetmation. This does n o t appear i n t h e record b e f o r e t h i s Court, n o r i s t h e r e any f i n d i n g o f r e s p o n s i b i l i t y on t h e p a r t i e s based on t h e f a c t s of t h e a c c i d e n t on l i a b i l i t y . The r e c o r d r e v e a l s : 1. Claimant on May 2, 1974, p e t i t i o n e d t h e I n d u s t r i a l Accident Board f o r d e t e r m i n a t i o n o f c l a i m f o r compensation by beneficiaries. 2. The m a t t e r was heard and determined, w i t h c o u n s e l of c l a i m a n t ' s c h o i c e r e p r e s e n t i n g h e r , b e f o r e a h e a r i n g examiner and a d i s t r i c t judge. P r o c e d u r a l l y , whether o r n o t t h i s was t h e way t o s e t t l e whether o r n o t h e r husband was o r was n o t an employee o f t h e o i l company, we w i l l n o t comment upon o t h e r than t o n o t e t h a t a s a r e s u l t s h e was awarded 598.20 weeks of compensation b e n e f i t s and medical c o s t s i n c u r r e d t o t h e time o f h e r husband's d e a t h . Her l a t e r p o s i t i o n b e f o r e t h e d i s t r i c t c o u r t and t h i s Court, t h a t h e r husband was n o t an employee of e i t h e r Brainard o r t h e C o n t i n e n t a l O i l Company could only be decided i n t h e f i n a l i n s t a n c e by t h e c o n t r o l l i n g s t a t u t o r y and c a s e law of Montana. On May 11, 1973, William G. Kimball was severely burned while loading a gas truck on premises owned by the Continental Oil Company located in Chinook, Montana and died ten days later as a result of the injuries. At the time of the accident Kimball was performing services for Richard Brainard, a friend, who was the bulk plant operator for Continental. Brainard was away on active duty in the Army Reserve and had asked Kimball to make deliveries of gas during his absence. Prior to leaving,Kimball had accompanied Brainard on several delivery trips for the purpose of familiarizing himself with the equipment and the various customers. Kimball did not appear on ~rainard'sbooks as an employee, no withholding or social security was paid for him, nor any workmen's compensation payments made to protect him. His relationship was character- ized as one of friendship, rather than that of employer-employee. However, following ~imball'sdeath, Brainard paid the widow $307.00, an amount based on a penny a gallon for the gasoline delivered by Kimball during ~rainard's absence. The Workmen's Compensation Division, following investigation of the accident, held a hearing and found that under the facts Kimball was an employee of Continental Oil Company. On appeal to the district court, the decision was affirmed. The sole issue before this Court is whether William C. Kimball was an employee of the Continental Oil Company bulk plant operator, Richard Brainard, at the time of the accident. Appellant Vivienne F. Kimball, widow of William C. Kimball, argues the services performed by her,husband were strictly 11 gratuitous" and therefore there could not have been the necessary employer-employee relationship within the meaning of section 92-411, R.C.M. 1947. She urges that applying the control test set forth in State ex rel. Ferguson v. District Court, 164 Mont. 84, 519 P.2d 151, the necessary elements to determine the employee rela- t i o n s h i p a r e l a c k i n g , f o r h e r e t h e r e i s no s p e c i f i c c o n t r a c t of employment, no s p e c i f i c o r d e r on what he should do, and no withholding o r s p e c i f i c s a l a r y . Respondents a r g u e t h e a p p l i c a t i o n of t h e " c o n t r o l t e s t " i s n o t a p p r o p r i a t e h e r e a s t h a t t e s t i s f o r determining whether one r e n d e r i n g s e r v i c e i s an employee o r an independent c o n t r a c t o r . Here, no one contended t h a t Kimball was an independent c o n t r a c t o r , f o r t h a t p o s i t i o n would be i n c o n s i s t e n t w i t h t h e c l a i m t h a t h i s s e r v i c e s peformed w e r e g r a t u i t o u s . Respondents argue t h e c o r r e c t r u l e t o b e followed i s t h a t when compensation i s p a i d , i t i s presumed an employer-employee r e l a t i o n s h i p e x i s t s . From t h e evidence i t i s c l e a r t h a t Kimball expected compensation f o r h i s work and i n f a c t r e c e i v e d one c e n t p e r g a l l o n he d e l i v e r e d . The h e a r i n g examiner found : "3. That t h e deceased claimant was employed by Richard B r a i n a r d , t h e b u l k p l a n t o p e r a t o r , t o handle h i s d u t i e s w h i l e he was away on m i l i t a r y d u t y , f o r a period of seventeen days from about A p r i l 25, 1973 through May 11, 1973, t h e day of h i s i n j u r y , a period o f 2.42 weeks, d u r i n g which he earned an amount of $307.-- which was p a i d t o h i s widow on May 30, 1973, an amount t h a t would average $126.86 per week. "7. That pursuant t o t h e p r o v i s i o n s of Finding of Fact No. 5 , s u p r a , and pursuant t o t h e p r o v i s i o n s o f $92-604, R.C.M. 1947, t h e deceased claimant was covered by t h e workmen's compensation i n s u r a n c e c a r r i e d by t h e C o n t i n e n t a l O i l Company.'' The d i s t r i c t c o u r t heard t h e a p p e a l from t h e D i v i s i o n ' s d e c i s i o n , and upon examination of t h e r e c o r d found t h e r e was s u b s t a n t i a l evidence t o support t h e f i n d i n g s of t h e examiner. Having s o found, i t was incumbent on t h e d i s t r i c t c o u r t t o s u s t a i n t h o s e f i n d i n g s and t h e r e s u l t i n g c o n c l u s i o n s . R.C.M. S e c t i o n 92-834, 1947; DeLeary v. Anaconda Aluminum Co., 541 P.2d 788, 32 St.Rep. Mon t . , 538 Mon t . 9 1041; Hurlbut v. V o l l s t e d t Kerr Company, P.2d 344, 32 St.Rep. 752. I n c a s e s a r i s i n g under t h e Workmen's Compensation Act t h i s Court must s u s t a i n t h e Division a c t i o n i f t h e evidence i s s u f f i c i e n t t o support t h e f i n d i n g s , even though some e v i d e n t i a r y c o n f l i c t may e x i s t . Lewis v. Anaconda Company, 543 P.2d 1339, 32 St.Rep. 1227. Mont . The a p p l i c a b l e r u l e h a s remained unchanged s i n c e i t s adoption i n Cartwright v. I n d u s t r i a l Acc.Bd., 115 Mont. 596, 599, 147 P.2d 909: It Our f u n c t i o n i n t h i s c a s e i s t o determine whether o r n o t t h e r e i s s u b s t a n t i a l evidence t o s u p p o r t t h e judgment of t h e d i s t r i c t c o u r t . JC' * *" The judgment o f t h e d i s t r i c t c o u r t i s affirmed. W Concur: e P Hun. Arnold Olsen, D i s t r i c t Judge, s i t t i n g i n p l a c e of Chief J u s t i c e James T. Harrison, d i s s e n t i n g : The f a c t s a s r e l a t e d i n t h e m a j o r i t y opinion a r e agreed to. However, t h i s Judge d i s s e n t s . Under t h e common law, " t h e r e a r e f o u r elements which a r e considered upon t h e q u e s t i o n whether t h e r e l a t i o n s h i p of master and s e r v a n t exists--namely, t h e s e l e c t i o n and engagement of t h e s e r v a n t , t h e payment of wages, t h e power of d i s m i s s a l , and t h e power o f c o n t r o l of t h e s e r v a n t ' s conduct--the r e a l l y e s s e n t i a l element of t h e r e l a t i o n s h i p i s t h e r i g h t of c o n t r o l , t h a t i s , t h e r i g h t of one person, t h e master t o o r d e r and c o n t r o l a n o t h e r , t h e s e r v a n t , i n t h e performance of work by t h e l a t t e r , and t h e r i g h t t o d i r e c t t h e manner i n which t h e work s h a l l b e done. " 53 Am J u r 2d, Master and Servant, $2, p. 82. The m a j o r i t y o p i n i o n , p a r e n t h e t i c a l l y , without e x p r e s s l y wording s o , upholds a workmen's Compensation r u l e f a v o r i n g c l a i m a n t s t o q u a l i f y a contending claimant-employee who can e s t a b l i s h "compensation i n whatsoever kind" i s an employee. Appellant h e r e b r i n g s t o q u e s t i o n whether o r n o t Contine n t a l O i l Company can escape t h e g r e a t e r l i a b i l i t y o f common law by i n s i s t i n g t h a t Kimball was an employee a t t h e time o f h i s f a t a l a c c i d e n t and t h u s Appellant d e n i e s Kimball was an employer. The C o n t i n e n t a l O i l Company has gone t o g r e a t l e n g t h s denying an employee-employer r e l a t i o n s h i p w i t h t h e o p e r a t i o n o f t h e premises h e r e i n . This i s a s p e c i f i c c a s e of example. of t h e C o n t i n e n t a l O i l Company p r a c t i c e o f denying t h a t t h e b u l k p l a n t o p e r a t o r , Brainard, i s an employee and denying t h a t anybody on ~ r a i n a r d ' s s t a f f i s an employee. Both Brainard and t h e C o n t i n e n t a l O i l Company deny t h a t Kimball was an employee t o be e n t i t l e d t o S o c i a l S e c u r i t y B e n e f i t s , deny t h a t Kimball i s e n t i t l e d t o p r o t e c t i o n under t h e laws r e l a t i n g t o a Minimum Wage, deny t h a t Kimball was an employee e n t i t l e d t o Unemployment Compensation I n s u r a n c e , deny t h a t Kimball was an employee e n t i t l e d t o workmen's Compensation Insurance coverage, o r even entitle- ment t o s a f e t y i n s p e c t i o n p r o t e c t i o n by t h e workmen's Compensat i o n D i v i s i o n of Montana, indeed t h e s e d e f e n d a n t s , now c a l l i n g themselves employers, have denied t o t h e g e n e r a l p u b l i c t h a t Kimball was t h e i r a g e n t . So f o r a l l t h e i r purposes, t o t h e world, Kimball was n o t an employee. But, now, when t h e r e poses a p o s s i b l e g r e a t e r l i a b i l i t y under t h e common law, t h a t ~ i m b a l l ' swidow might be e n t i t l e d t o a g r e a t e r l i a b i l i t y , a g a i n s t C o n t i n e n t a l O i l Company, t h a t company wants t h e b e n e f i t of t h e c l o t h i n g of an employer f o r t h e purpose of denying t h e widow of t h e deceased Kimball an e n t i t l e ment t o come t o t h e c o u r t s of Montana claiming a t common law f o r t h e d e s t r u c t i o n o f t h e l i f e of Kimball. C o n t i n e n t a l O i l Company should n o t b e heard t o s a y any such defense having h e l d i t s e l f o u t a s n o t an employer t o a l l t h e world. C o n t i n e n t a l O i l Company should n o t be heard by a c o u r t of t h i s s t a t e t o escape t h e g r e a t e r l i a b i l i t y now t h a t they have evaded a l l l i a b i l i t i e s of an employer h e r e t o f o r e . The widow Kimball should be e n t i t l e d t o b r i n g a c t i o n a g a i n s t C o n t i n e n t a l O i l Company without c l a s s i f y i n g h e r deceased husband a s an employee and h e r e l e c t i o n t o do s o s h o u l d - n o t exclude h e r from any o t h e r remedy. The Court should s a y , el- come, widow Kimball, you may seek a l l remedies and waive none of them. II I n Montana by S e c t i o n 92-201, R.C.M.1947, i n an a c t i o n t o r e c o v e r damages s u s t a i n e d by an employee i n t h e c o u r s e of h i s employment, o r f o r d e a t h from p e r s o n a l i n j u r i e s so s u s t a i n e d , t h e common law d e f e n s e s of employer a r e r e p e a l e d . 92-211, R.C.M. By S e c t i o n 1947, "No compensation s h a l l b e p a i d t o any employee, whether such employee has e l e c t e d t o come under t h i s act or not, where his employer has failed to elect, and has failed to come under one or the other of the compensation plans herein .provided.I I Under the workmen's Compensation Law of Montana, this Continental Oil Company, has elected not to be covered by the workmen's Compensation Act and can pay the employee no compensation under the workmen's Compensation Act nor can the defendants insure under the Act. The Continental Oil Company, whether an employer or not, is answerable to the widow of Kimball and now the oil company (having admitted its employment) has been stripped of its common law defenses. Regardless of Kimball status, whether he be an invitee to the premises, a volunteer, a gratuitous servant, indeed if Kimball was an employee, liability attaches--but if an employee, the liability is without common law defenses, and the liability is not limited under the Workmen's Compensation Act. There is a wide discussion of "Action Against Employer" in 5 67.10, 2A arson's Workmen's Compensation Law, and s specific ally, I' As a sort of club to drive employers into election of coverage, the typical act makes the noncovered employer subject to commonlaw liability without benefit of the defenses of fellow servant, assumption of risk and contributory negligence." Further, in that same section, "Experience has shown that, although the great bulk of employers do elect to come with the acts, there is a strong temptation, particularly in times of depression when employers are desperately looking for ways in which to cut costs of production, to gamble on the possibility that the costs of common-law suits, even without the defenses, will be less than compensation premiums, especially when there are insurance companies who claim to be able to insure the potential common-law risk at a guaranteed saving below compensation insurance costs. This kind of 'stop loss' insurance, however, has serious pitfalls b o t h f o r employer and employee which d e s t r o y i t s s u r f a c e a t t r a c t i v e n e s s from t h e hard-pressed employers p o i n t of view." Section 67.21 of arson's, "A common exception t o t h e exclu- s i v e n e s s of t h e compensation remedy i s t h e r i g h t o f s u i t a g a i n s t an employer who f a i l s t o s e c u r e h i s compensation l i a b i l i t y by t a k i n g out insurance o r qualifying a s a self-insured." Indeed, one wonders, has t h e C o n t i n e n t a l O i l Company given i t s employees t h e p r o t e c t i o n of s a f e t y i n s p e c t i o n by t h e S a f e t y Division of t h e workmen's Compensation Division. One wonders, has t h e s t a t e of Montana functioned i n i t s lawful d i r e c t e d d u t i e s t o conduct s a f e t y i n s p e c t i o n s of t h e p l a n t s of t h e C o n t i n e n t a l O i l Company. Because Brainard and t h e C o n t i n e n t a l O i l Company were n o t e n r o l l e d with t h e workmen's Compensation D i v i s i o n , undoubtedly t h e S a f e t y Division of t h e Workmen's Compensation Division d i d n o t p r o t e c t t h e employees. A l a r g e q u e s t i o n i n t h i s c a s e i s whether t h e Supreme Court of Montana i s going t o t e l l t h e employers of t h i s s t a t e and t h e world, "YOU d o n ' t have t o a b i d e by t h e Workmen's Compensation Act of Mont- a n a , we w i l l cover you even i f you d o n ' t e l e c t t o p r o t e c t your employees under t h e workmen's Compensation Act and t h e i n c i d e n t a l s a f e t y i n s p e c t i o n laws of Montana, we w i l l p r o t e c t you w i t h t h e l i m i t e d l i a b i l i t y o f t h e Workmen's Compensation Act r e g a r d l e s s of t h e f a c t t h a t you h a v e n ' t been a good employer and a law-abiding employer. tt I say, II No, t h e C o n t i n e n t a l O i l Company has been an i r r e s p o n - s i b l e employer and should s u f f e r t h e p e n a l t y o f t h e Workmen's Compensation Act, namely, t h e C o n t i n e n t a l O i l Company i s denied t h e common law d e f e n s e s by t h e i r f a i l u r e t o e l e c t t o i n s u r e t h e i r employees under t h e workmen's Compensation Act." This Court must announce t o t h e world t h a t employers i n t h i s s t a t e must a b i d e t h e workmen's Compensation Act o r t h e y s h a l l b e s t r i p p e d of t h e common law defenses. The widow Kimball should be heard t o come i n t o t h e c o u r t s o f Montana and s a y , I1 Here I am, a widow. The l i f e o f m husband was y taken by reason o f t h e negligence of Brainard and t h e C o n t i n e n t a l O i l Company. M husband i s dead. y 1 ' m entitled t o compensation a t common law." F u r t h e r , t h i s Court, should announce t h a t t h e only defense of t h e C o n t i n e n t a l O i l Company would have been t h a t Kimball was a t r e s p a s s e r ; b u t t h a t t h e C o n t i n e n t a l O i l Company l o s t t h a t d e f e n s e , t o o , because of i t s admission a g a i n s t i n t e r e s t i n contending i n t h e a c t i o n h e r e t h a t they a r e an employer even though i r r e s p o n s i b l e . The widow Kimball should n o t l o s e t h e success of t h e c l a i m w i t h Workmen's Compensation l i m i t e d recovery. She has n o t e l e c t e d t h a t remedy and she does n o t have t o choose a t h e r p e r i l of l o s i n g a common law remedy. I s e e t h e widow Kimball coming i n t o t h e D i s t r i c t Court and saying, "I am a widow. M y y name i s Kimball. M husband went t o work a t t h e C o n t i n e n t a l O i l P l a n t f o r Brainard and was i n j u r e d t h e r e and d i e d a s a r e s u l t of his injuries. The C o n t i n e n t a l O i l Company and Brainard d i d n o t p r o t e c t m husband by s a f e t y i n s p e c t i o n s n o r by i n s u r a n c e under y t h e workmen's Compensation Act nor by any o t h e r a c t d i d Brainard and t h e C o n t i n e n t a l O i l Company d e s i g n a t e m husband an employee. y y I , t h e widow, am e n t i t l e d t o damages f o r m l o s s e s . 11 Thereupon t h e d i s t r i c t c o u r t snnauncee t h a t Brainard and t h e C o n t i n e n t a l O i l Company do n o t have any o f t h e common law d e f e n s e s and w e w i l l h e a r what t h e damages of t h e widow Kimball are. The cause should be r e v e r s e d and remanded t o t h e d i s t r i c t c o u r t t o determine t h e damages of t h e Appellant, without t h e l i m i t a t i o n s of t h e workmen's T. Harrison.

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