186 So. 2d 161 | La. Ct. App. | 1966
Lead Opinion
This is a workmen’s compensation suit brought on behalf of an injured minor (“Monroe”)
The principal issue on appeal is: Was there a buyer-seller or instead a principal-subcontractor relationship between Malcolm and Forest Products, to which firm Monroe’s employer Malcolm delivered pulpwood produced by his crews? Additional issues concern (a) whether Forest Products and Southern Casualty are estopped to deny compensation coverage and (b) the duration of the injured workman’s disability.
1. General factual background.
The uncontradicted testimony shows as follows:
Malcolm was a one-truck pulpwood “producer”, sometimes denoted also as a “con
Forest Products, a corporation principally owned by its president (“George”)
Forest Products obtained timber “produced” into pulpwood by these haulers in two manners: A. Forest Products itself through its president George purchased timber on various tracts, which George would then process into pulpwood with his own equipment or else assign his timber rights to an individual hauler for the latter to cut and deliver to International Paper the pulpwood from the tract; B. His producers themselves purchased the timber from landowners directly, and with their own crews and equipment processed such into pulpwood for delivery to International Paper pursuant to the portion of Forest Products’s wood-order allotted by it to such hauler.
2. General legal background.
In the former or A type of situation, where the dealer or broker himself purchases the timber and then secures pulpwood producers or haulers to cut and haul the lumber products, the dealer is ordinarily held liable for compensation benefits to the producer’s injured employees. In this situation, the dealer is regarded as a principal or employer using the producers as his subcontractors or employees to process his own standing timber for delivery and sale to the ultimate purchaser. Stevens v. Mitchell, 234 La. 977, 102 So.2d 237; Jones v. Hennessey, 232 La. 786, 95 So.2d 312; Kline v. C. W. Dawson, 230 La. 901, 89 So.2d 385; Townsend v. International Paper Co., La. App. 3 Cir., 166 So.2d 558; Redding v. Cade, La.App. 3 Cir., 158 So.2d 880.
On the other hand, in the latter or B type of situation, where a producer or hauler has himself acquired the timber from a landowner and then uses his own equipment and employees to process it for delivery to fill a broker’s wood-order, the relationship between the producer and the broker is (in the absence of the broker’s or dealer’s right to control the economic activities of the producer) regarded ordinarily as that of seller and purchaser. This being so, the broker is not liable for compensation to the employees of the producer, since a buyer is not liable for workmen’s compensation benefits for accidental injuries sustained by employees of the seller. Hadnot v. Southern Casualty Ins. Co., La. App. 3 Cir., 166 So.2d 15; Richardson v. Jones, La.App. 3 Cir., 163 So.2d 119; Bryant v. United States Fidelity & Guaranty Co., La.App. 3 Cir., 163 So.2d 95; Garner v. Southern Pulpwood Ins. Co., La. App. 3 Cir., 149 So.2d 157.
Relying upon the latter line of decisions, counsel for Forest Products and Southern Casualty urges that neither Forest Products nor its insurer can be liable for workmen’s compensation under the present facts.
Malcolm’s counsel argues persuasively that various control features are indicative of a principal-subcontractor relationship even though the timber was purchased directly from the landowner by the producer. Nevertheless, under the cited Bryant case, a majority of this court has found these do not constitute such economic control as to convert the relationship between the producers and tire brokers into that of principal-subcontractor rather than that of buyer-seller.
The trial court held, however, that at the time of Monroe’s accident Malcolm was still a subcontractor of Forest Products in continuation of such a relationship previously entered into when Malcolm was working on Forest Products’s own timber. In reaching this conclusion, our trial brother relied upon Vinzant v. L. L. Brewton Pulpwood Co., 239 La. 95, 118 So.2d 117. We will discuss this decision after first discussing the particular facts which bring into question its application.
3. Malcolm’s operations to produce pulpwood for Forest Products.
At the time of the accident Monroe, the injured workman, had been employed by Malcolm as a pulpwood cutter for about three weeks. Malcolm’s crew was then processing timber on the Sanders tract. Malcolm had purchased that tract’s timber directly from the landowner.
At the time of the accident on July 26, 1962, Malcolm had been “producing” pulpwood exclusively for Forest Products for some six or seven weeks. Prior to that, or up until June 6, 1962, Malcolm had been producing pine pulpwood exclusively for T. B. Godfrey, Inc., another broker. The God-frey firm then terminated arrangements with him, following which Malcolm and his crew were unemployed for about a week to ten days. Tr. 458.
He then contacted George, the president and principal owner of Forest Products, near George’s business place in Many. Although the respective versions of the subsequent agreement differ widely, it is certain that on that same Thursday afternoon, immediately after Malcolm and George talked, Malcolm and his crew did go out to the “Duggan” tract (s) and cut hardwood timber into pulpwood for delivery to International Paper for Forest Products’s quota.
Subsequent to this conversation in mid-June 1962, as the evidence shows without contradiction, Malcolm and his crew produced pulpwood exclusively for Forest Products until the last week in August, about two months later. Malcolm then entirely ceased his pulpwood operations since he became disabled by accidental injury.
The general pattern of operations described by Malcolm’s testimony is that he produced hardwood from the Duggan tract for about two days a week and then produced pine from the Sanders (and sometimes the Kelley) tract (s) on the remaining three work days of each week. One of the factual issues is whether Malcolm’s operations on the Duggan tract were as extensive as he claims.
Forest Products’s president George was somewhat equivocal in his testimony, but the evidence without essential dispute shows that George had made arrangements with Mrs. Ada Duggan to purchase the standing hardwood timber on her family’s tracts sometime prior to his directing Malcolm to cut such timber. Therefore, when working on the Duggan tract, under the jurisprudence earlier cited Malcolm was clearly a subcontractor or employee of Forest Products in processing the timber
The trial court held that, since Malcolm was initially employed as a subcontractor to cut the hardwood from the Duggan tract upon which he continued to work intermittently, the transfer of his operations alternatively to the Sanders tract (the timber upon which had been bought by himself rather than by Forest Products) did not change his relationship from subcontractor to mere seller, at least without any clear understanding that such change of status was to result whenever Malcolm left the Duggan tract to work upon other tracts for the same ultimate purpose, i. e., to produce pulpwood to fill the Forest Products’s wood order from International Paper. In so holding, the trial court relied upon Vinzant v. L. L. Brewton Pulpwood Co., 239 La. 95, 118 So.2d 117.
In the Vinzant case, the injured plaintiff had been employed on and off for some four or five years by the defendant Brew-ton. Shortly before the accident the plaintiff had been cutting timber owned by Brewton. Some two or three days prior to the accident, due to bad weather, he had transferred his operation to another tract. In finding that the employer-employee relationship persisted despite the plaintiff’s temporary transfer of operations to produce pulpwood from timber not owned by his employer, the Supreme Court stated, 118 So.2d 120, “ * * * Where one is employed by another over a period of time to do certain work, he has a right to presume that the same relationship continues when he does additional work of the same character, unless it is made clear to him that there will be a new relationship.”
With some reluctance we have determined that in the present circumstances our trial brother erred holding here applicable the principle of Vinzant v. L. L. Brewton Pulpwood Co.
Under the present facts, the agreement between Forest Products and Malcolm did not under our decision in Bryant v. U. S. Fidelity & Guaranty Co., 163 So.2d 95 constitute a continuing relationship by which Malcolm produced wood as subcontractor for Forest Products. Malcolm did enjoy such status when producing pulpwood from the Duggan tract(s), to which Forest Products had purchased the timber rights. Under Bryant, however, this circumstance does not by itself indicate any express or implied agreement that Malcolm remained a subcontractor instead of being a seller when he produced other pulpwood for Forest Products from timber which he himself rather than Forest Products had purchased from the landowner.
We conclude that, under our holding in Bryant, Malcolm was merely a seller to Forest Products when processing into pulpwood the timber which he himself had purchased. The holding in Vinzant v. L. L. Brewton Pulpwood Co. is not applicable in our opinion where there was no initial agreement or a continuing relationship indicating that Malcolm’s services were to be performed principally as subcontractor or employee, so that a temporary or incidental change of work location did not alter the essential or principal relationship between him and Forest Products in the absence of express understanding to such effect.
At this point, we may for the benefit of any further review discuss the contention of Forest Products that Malcolm had actually produced only 5.66 cords of pulpwood from the Duggan tract (s). This contention is chiefly based upon the only settlement sheet between Forest Products and Malcolm produced in evidence, dated June 29, 1962. See Exhibit 6, Tr. 52. (This sheet actually shows that three loads of hardwood total-ling 8.31 cords were so produced from the Duggan tracts, although the landowner was paid for only 5.66 cords.)
However, the settlement sheets produced in evidence by Forest Products in response
Whether or not the landowners were paid the stumpage to which they were entitled, see Tr. 687, the preponderance of the evidence indicates that Malcolm and his crew cut hardwood on the Duggan tract on the Thursday they went to work for Forest Products, hauling one load the following day (Friday June 15th), and that they cut and hauled some six more loads on two days of each of the following two or three weeks.
Following the last or July 3rd delivery
Thus the preponderance of the evidence essentially supports the trial court’s factual finding that Malcolm worked intermittently between the Duggan tract cutting hardwood and the Sanders tract cutting pine, in both instances under a prior arrangement each week with Forest Products to cut and produce respective amounts of pine or hardwood to deliver to the International Paper to fill a portion of the Forest Products wood order.
In our view, however, this circumstance by itself does not justify the application of the principle of Vinzant v. L. L. Brew-ton Co. and a presumption that the initial relationship of principal-subcontractor continued. As earlier stated, under the majority’s holding in Bryant the agreement between the producer and the broker may contemplate that the producer may be a subcontractor while processing timber purchased by the broker-principal but a seller while processing timber individually purchased by the producer (even though for
For the reasons previously stated, therefore, we must disagree with the trial court’s determination that Forest Products and its insurer Southern Casualty are liable in compensation for an injury sustained by Malcolm’s employee when working on timber purchased by Malcolm himself. Accordingly, the judgment must be reversed insofar as holding Southern Casualty liable for compensation benefits. (Forest Products was not sued by the plaintiff.)
4. Third-Party demand by Malcolm against Forest Products and its compensation insurer, Southern Casualty.
Malcolm filed a third party demand against Forest Products and its insurer Southern Casualty alleging that such parties are legally and equitably estopped from denying that Malcolm and his crew were covered by workmen’s compensation insurance while producing pulpwood for the Forest Products quota, whether Malcolm was a vendor or subcontractor. The trial court dismissed this third-party demand, and Malcolm appeals this dismissal.
Before Malcolm commenced producing pulpwood for Forest Products, George, the president of Forest Products, is alleged by Malcolm to have stated that insurance coverage was to be provided by Forest Products. Malcolm testified that in reliance upon these representations he failed to secure compensation insurance protection. It is thus contended that Malcolm’s detrimental reliance upon such representations by George now estops Forest Products from denying compensation liability. Stevens v. Mitchell, 234 La. 977, 102 So.2d 237; Carpenter v. Madden, La.App. 2 Cir., 90 So.2d 508; Hano v. Kinchen, La.App. 1 Cir., 122 So.2d 889.
The trial court, however, did not accept the testimony of Malcolm and his employees, directly contradicted by George, as preponderantly proving that such representations were made. We find no error in this factual determination by the trial court.
At least by implication this finding represents an evaluation of credibility, which appellate courts do not disturb on review in the absence of manifest error. We find none here. The circumstances of the initial conversation, in which Malcolm desired to secure work for his crew after being out of work a week or ten days, somewhat negative Malcolm’s account of his interest in securing assurance of insurance protection before going to work for Forest Products, as does Malcolm’s failure to have obtained liability or other types of insurance for his own protection. Comparison of the pulpwood prices received by Malcolm from his previous broker (who deducted insurance premiums for insurance coverage) with those paid him by Forest Products likewise indicates that the net price paid Malcolm by Forest Products was more probably not intended to withhold part of Malcolm’s price for premiums for insurance protection.
The amount of the workmen’s compensation insurance premium paid to Southern Casualty by Forest Products was measured by the number of cords of pulpwood delivered by Malcolm and the other producers. However, this circumstance does not indicate that the price paid to Malcolm was intended to be the net less a deduction of insurance premiums. In rejecting somewhat similar contentions in Hadnot v. Southern Casualty Insurance Co., 166 So.2d 15, 18, we held that such a method used to compute the premium rate does not extend the compensation policy coverage beyond that imposed by law.
The trial court correctly dismissed Malcolm’s third-party demand against Forest Products and its insurer, Southern Casualty.
5. Disability.
Despite respective contentions of greater or less disability than found, on
Decree.
For the foregoing reasons, the judgment of the District Court is affirmed insofar as it held Malcolm L. Foster liable for compensation and medical expenses to Lee Collier, on behalf of his minor son, Monroe Collier; but it is reversed insofar as it held Southern Casualty Insurance Company (the insurer of Foster Forest Products, Inc.) solidarily liable with Malcolm Foster for such award. In all other respects, the judgment appealed from is affirmed. The defendant Malcolm L. Foster is to pay all costs of the trial and appellate courts.
Affirmed in part; reversed in part.
. Monroe Collier.
. Malcolm Foster.
. Southern Casualty Insurance Company.
. Foster Forest Products, Inc.
. George Foster.
. In Iris dissent in Bryant, 163 So.2d 95 at 103, the writer has indicated his disagreement with the court’s majority on this point. Since writs of review were denied, the writer yields to the majority although personally adhering to the views expressed in the cited dissent.
. Each load of pulpwood contains about three cords. A pulpwood crew could normally cut 2-3 loads per work day.
. See testimony of Malcolm at: Tr. 170, 431-432, 450-453. 485-486; of R. Collier: Tr. 187, 194-195, 196; of Hick- , man: Tr. 248, 258, 263; of Clifton: Tr. 394, 400, 412-413. timber or else a delivery of another’s hardwood delivered at the same time as another load from Duggan property, see Tr. 733, comparing such testimony with Mrs. Ada Duggan’s testimony that at about this date she saw Malcolm’s crew working on the Duggan property, Tr. 683.
.See settlement sheet No. 2055 for hardwood, which either represented Duggan
Concurrence Opinion
(concurring in denial).
The result of our decision is to leave this injured workman, Monroe, with an empty judgment against Malcolm, his immediate employer, who according to the record is himself now crippled and without income or assets.
Both Monroe and Malcolm were injured while working to produce pulpwood for Forest Products, the “broker” or “dealer”. Forest Products in effect had ordered from Malcolm, the “hauler”, the production of a certain number of cords and its delivery to the International Paper Company’s plant; it was in producing this wood that Monroe (and later Malcolm) was injured.
It is important to note that International Paper had purchased this wood from Forest Products, not from Malcolm. The workman was injured as a part of Malcolm’s crew producing pulpwood for Forest Products, not for the open market. For the reasons fully stated in the writer’s dissent in Bryant v. United States Fidelity & Guaranty Co., La.App. 3 Cir., 163 So.2d 95, 103, the writer believes strongly that the only realistic description of the economic relationship between Forest Products, the dealer, and its haulers or “contractors” such as Malcolm, is that the latter are either employees or independent contractors of Forest Products employed at so much per cord to process timber into pulpwood and to deliver it to International Paper. These haulers and their crews are employed to process and deliver pulpwood for Forest Products’ purchase-order with International Paper; they are not producing the wood for sale or resale upon the open market. Their economic activity is solely determined by the portion of Forest Products’ quota allowed to them each week, and the pulpwood they produce cannot, practically, be delivered elsewhere.
The evidence is explicit and uncontradict-ed that no hauler could deliver pulpwood to International Paper or to any other plant in the area except pursuant to prior arrangements with one of the four or so dealers who had standing arrangements with the paper plants by which they the dealers received weekly purchase-orders or “quotas” of pulpwood. The haulers produced wood, not as sellers on the open market, but rather as those previously employed to fill a particular dealer’s order. The dealer accomplished delivery of his weekly purchase-order by contracting out portions of his quota to various impecunious one- or two-truck haulers, who themselves performed the work of cutting and hauling pulpwood — but this activity, to repeat, was predetermined by the dealer’s direction as to the number and variety of cords of pulp
The Supreme Court denied writs in Bryant, stating that “On the facts found by the Court of Appeal, we find no error of law in its judgment.” 246 La. 375, 164 So.2d 360. This denial may have been based upon the Bryant’s majority finding that the injured 'contractor “was free to dispose of the timber which he cut in any manner he saw fit”. 163 So.2d 100. It may be well, therefore, to point out that in the present case any alleged freedom of the hauler to sell on the open market is more clearly shown to be illusory. It is not impossible that the Supreme Court will wish to examine in detail the nature of the present economic arrangements by which the dealer, the true procurer of each cord of pulpwood produced, is enabled to engage in the large-scale production of pulpwood to satisfy the dealer’s orders thorough impecunious intermediaries without exposing itself to compensation liability to workmen injured producing pulpwood for the dealer.
The evidence pretty clearly reflects that no hauler could sell wood to the pulpwood plants in the. area unless they had a prior allocation from a dealer of a portion of the dealer’s quota or purchase-order. Malcolm, the present hauler, testified that, by virtue of specific agreement as well as the custom of the industry, a hauler worked exclusively for one dealer and delivered his entire pulpwood production to such dealer only. Tr. 167, 496. Technically, the dealer might not have been able to prevent the hauler from selling elsewhere if there had been any other market, Tr. 457, 488, but as a matter of fact, there was no other market for pulpwood produced because a hauler could not secure a permit or quota to deliver wood for another dealer while he was working for one dealer.
The facts of this case illustrate the arrangement. Malcolm worked exclusively for one dealer up until early June. He was then in effect discharged. He then made arrangements with Forest Products to haul exclusively for it
This is actually corroborated by the testimony of George, the president of Forest Products. As to a hauler’s freedom to sell pulpwood, he stated: “He can sell wood to anybody that he has an agreement to buy his wood from him.” Tr. 382. However, he testified, such an agreement “must be arranged in advance.” Tr. 383.
In all recent instances when the Supreme Court itself has scrutinized an arrangement such as the present, it has held an alleged “buyer” to be in reality a principal or employer responsible in compensation to workmen injured while processing timber for the buyer, where in reality the buyer is the person actually directing the economic activity of or utilizing a work-crew for the processing and delivery of timber products for the account of the buyer rather than for sale on the open market. Stevens v. Mitchell, 234 La. 977, 102 So.2d 237; Jones v. Hennessy, 232 La. 786, 95 So.2d 312; Kline v. C. W. Dawson Lumber Co., 230 La. 901, 89 So.2d 385.
In the present instance, had Forest Products made the initial arrangements with the landowner on whose tract Monroe was injured, it is conceded that Forest Products would have been liable in compensation as the employer or principal of Malcolm, who had hired Monroe as one of its three-man crew. A different result should not obtain simply because Malcolm himself rather than Forest Products had contacted the landowner to obtain the timber upon which Monroe was injured: Whether the timber was purchased directly by Forest Products or instead by Malcolm; in either event, while processing such timber into pulpwood, Malcolm and his crew were doing so pursuant to previous direction from Forest Products to produce that type of pulpwood in a given amount that week, and they were doing so in order to produce this pulpwood solely for delivery for the account of Forest Products to fill the purchase-order given Forest
Professor Wex Malone, noted Louisiana compensation authority, criticized a line of decisions apparently overruled or at least weakened by the cited Supreme Court decisions (but in part reinstated by our decision in Bryant), stating, pertinently to the present question, at Malone, Louisiana Workmen’s Compensation (1951), Section 123 at 1964 pocket part, pp. 47-48:
“In practical effect the intermediary is no more than a contractor who is paid for severing and hauling the timber. Yet, since the title passes through him, the courts have felt compelled to exclude him from the classification of contractor, because he is regarded as a ‘seller.’ Apparently it is assumed that a person cannot be a ‘seller’ and a ‘contractor’ at the same time, although this writer has never understood why both these relationships cannot exist simultaneously. In fact our courts have recognized that one may be the employee of another who has sold him goods when the seller controls the buyer’s conduct in the reselling of the same goods. As a result of the lumbering practice described above, the employees of the intermediary must rely exclusively upon the intermediary for compensation in the event of injury or death, and, as might be suspected, this intermediary is usually insolvent.”
If the legislature desires to exempt timber industries from the workmen’s compensation act which applies to all other hazardous businesses in this state, then no doubt the workingman crippled in the production of timber should be forced to bear the full loss of his own disability or perhaps the general taxpayer should be forced through welfare payments to provide subsistence for him and his family. Since the legislature' has not so provided, however, an •economic unit of the timber industry functioning solely to obtain the production and delivery of pulpwood, such as Forest Products, should bear the cost of work-injuries sustained in the operation of this hazardous business, passing on this cost to the consumer of its products, in accordance with the principle applying as to all other hazardous industries subject to the Louisiana workmen’s compensation act.
As indicated by his dissent in Bryant, the writer feels strongly that compensation protection was legislatively intended to apply in instances such as the present where workmen are actually being utilized through an intermediary to perform work which is part of a principal’s trade, business, or occupation. LSA-R.S. 23:1061; Shird v. Maride, La.App. 3 Cir., 156 So.2d 476. Although the Supreme Court’s denial of cer-tiorari in Bryant may have been motivated by factual considerations rather than by agreement with the legal principle announced in Bryant; nevertheless, the writer, as a member of this court with the responsibility of not obstructing its processing of its docket through stubborn adherence to a minority position, will accede to the majority’s position in Bryant until such time as it is overruled either by a higher court or by ourselves — and for this reason only I concur in the denial of the rehearing instead of dissenting from it.
Rehearing
On Application for Rehearing.
En Banc, Rehearing denied.
