Parks v. Riverside Insurance Company of America

Decision Date31 August 1962
Docket NumberNo. 6890.,6890.
Citation308 F.2d 175
PartiesDarrell D. PARKS, Carl T. Ramsey and Phillips Petroleum Company, a corporation, Appellants, v. RIVERSIDE INSURANCE COMPANY OF AMERICA, Appellee.
CourtU.S. Court of Appeals — Tenth Circuit

S. E. Floren, Bartlesville, Okl. (William J. Zeman, Lloyd G. Minter, Robert H. Neptune and J. Douglas Lane, Bartlesville, Okl., with him on the brief), for appellants.

Joseph A. Sharp, Tulsa, Okl. (Truman B. Rucker and Rucker, Tabor, Best, Sharp & Shepherd, Tulsa, Okl., with him on the brief), for appellee.

Before MURRAH, Chief Judge, and PHILLIPS and SETH, Circuit Judges.

PHILLIPS, Circuit Judge.

On April 8, 1958, Ramsey was injured while working as an employee for the Phillips Petroleum Company, hereinafter called Phillips, at Phillips Research Center near Bartlesville, Oklahoma. Ramsey filed suit against Parks in the District Court of Washington County, Oklahoma, to recover damages for his injuries, alleging they were caused by the negligence of Patterson, a servant and employee of Parks. Parks made demand upon Riverside Insurance Company of America, hereinafter referred to as Riverside, his individual liability insurance carrier, to defend the suit and to indemnify him from any judgment which might be obtained.

Subsequently Riverside filed the instant action in the United States District Court for the Northern District of Oklahoma against Parks d/b/a Parks Construction Company, Parks individually, Patterson, Ramsey and Phillips, seeking a judgment declaring that a liability policy issued by Riverside to Parks's predecessor in business and thereafter extended to cover Parks did not cover the accident in which Ramsey was injured and that Riverside had no duty to defend the state court action, nor to indemnify Parks from any judgment which might be obtained in such action. The court concluded that the policy did not cover the accident, that Riverside had no duty to defend Parks in the state court action and was not obligated to indemnify Parks for any judgment recovered against him in such action. Judgment was entered accordingly and Parks, Ramsey and Phillips have appealed.

The evidence presented at the trial established the following facts:

On May 6, 1957, Riverside issued its liability policy to John C. Parks d/b/a Parks Construction Company. John C. Parks was the father of Darrell D. Parks. Darrell D. Parks succeeded his father as the operator of Parks Construction Company in July, 1957, and thereafter Riverside extended coverage under the policy to Darrell D. Parks d/b/a Parks Construction Company.

In December, 1957, Patterson, an employee of Parks Construction Company, purchased from Parks for $6,000 a one-half interest in a crane carrier and crane. After such sale Parks opened a checking account under the name of P & P Equipment Company. Parks had authority to issue checks on such account, but Patterson did not. When a job requiring the crane was to be performed, Patterson operated it. For his time spent in operating the crane, Patterson was paid a salary. Such salary, the wages of Patterson's helper and the other costs and expenses arising out of the operation of the crane were paid by checks drawn on the P & P account. Proceeds from jobs performed by Patterson with the crane were deposited by Parks in the P & P account. At the end of each month, any amount of money in the P & P account in excess of $800 was divided equally between Parks and Patterson. P & P Equipment Company kept its own separate set of books and records and filed federal withholding tax returns.

After the sale of the one-half interest in the crane to Patterson, Parks continued to solicit and arrange all jobs on which the crane was to be used, did not consult Patterson in making such arrangements, and took such jobs under the name of Parks Construction Company. Parks also computed the charges for each job on which the crane was used without consulting Patterson. A substantial number of jobs were contracted for and performed by P & P Equipment Company, between December, 1957, and May, 1958, and the net profits therefrom were divided equally between Parks and Patterson. When there were no jobs on which the crane was being used, Patterson operated other equipment for the Parks Construction Company and was paid wages therefor.

The premium on the liability policy was subject to adjustment after payroll audits. The books and records of the P & P Equipment Company were never included in such audits and the auditor for the insurance company had no knowledge of such company or its books and records.

On April 7, 1958, Parks entered into an oral agreement with Phillips to perform certain work at the Research Center and on April 8, Patterson and a truck driver took the crane to the Research Center at Parks's direction. During the course of the work being performed by Patterson with the crane, the accident occurred in which Ramsey was injured. Parks billed Phillips for the work done on April 8, in his own name. The bill was paid by check made out to Parks individually and he deposited the check in the P & P account. The wages of Patterson and the truck driver and other expenses arising out of the Phillips job were paid by checks drawn on the P & P account.

As a result of Ramsey's injuries, Phillips made certain workmen's compensation payments to him and has become subrogated to his rights against third persons to the extent of such payments.

The trial court found that Parks and Patterson were co-owners of the crane and that they shared the profits from the operation of the crane. Based on these findings, the court concluded as a matter of law that their arrangement constituted a joint adventure, doing business as P & P Equipment Company, and that the job at the Research Center was performed by such joint adventure under a subcontract from Darrell D. Parks.

The concept of joint adventure is of comparatively recent origin and, at common law, enterprises of the type which are now called joint adventures were regarded merely as informal partnerships.1 A joint adventure has been defined as "a special combination of two or more persons, whether corporate, individual or otherwise, where in some specific venture a profit is jointly sought without the necessity of any actual partnership or corporate designation."2

In most instances the legal rights, duties and obligations are the same, whether the relationship is a joint adventure or a partnership, and it is frequently stated that the law of partnerships is applicable to joint adventures.3 However, in the instant case it is necessary to make a determination as to the exact nature of the relationship between Parks and Patterson, because, as will be shown, under Oklahoma law a partnership is a distinct legal entity, but a joint adventure is not.

The appellants contend that under Oklahoma law a joint adventure is not a distinct legal entity, and hence Parks was individually liable to Ramsey and such liability was within the coverage of the liability policy. In support of this contention, they cite W. B. Johnston Grain Company v. Self, Okl., 344 P.2d 653. In that case Self was awarded compensation by the Oklahoma State Industrial Commission against W. B. Johnston Grain Company and its insurance carrier and the insurance carrier brought an original proceeding to review the award, contending that Self was not the employee of W. B. Johnston Grain Company, the named insured, but was the employee of a joint adventure designated as W. B. Johnston Grain Company and Associates, and that the carrier was, therefore, not liable for the award. It was stipulated that if Self was the employee of anyone, his master was W. B. Johnston Grain Company and Associates, a joint adventure. The Oklahoma Supreme Court sustained the award and the Syllabus by the Court reads as follows:

"1. When parties associate together in a joint adventure, a status or relationship is established between the members thereof similar to the relationship between partners. But unlike a partnership, the establishment of a joint adventure does not create a distinct legal entity separate and apart from the parties composing it; therefore, an employee engaged in activities of the joint adventure is an employee of each of the joint adventurers, under ordinary principles of agency.
"2. The liability of joint adventurers for Workmen\'s Compensation to an employee engaged in activities of the joint adventure is joint and several, and as to such employee the various members\' insurance carriers, if any, are also jointly and severally liable."

In the case of Oklahoma Farm Bureau Mut. Ins. Co. v. Mouse, Okl., 268 P.2d 886, Mouse obtained a judgment for personal injuries against his employers, a partnership. He then brought garnishment proceedings against Farm Bureau Mutual, the liability insurance carrier of one of the individual partners. The policy of insurance expressly excepted from coverage employees of the named insured. The Oklahoma Supreme Court affirmed a judgment against the garnishee insurance carrier, on the theory that a partnership is a distinct entity and that Mouse was an employee of such entity, rather than the individual copartners, so that the exception in the policy was not applicable. The Syllabus by the Court reads in part as follows:

"1. A partnership is a distinct entity from the individual members constituting it.
"2. A partnership as employer constitutes an entirely different employer than would exist if one of the partners was the individual employer."

Applying Oklahoma law as expressed by these two cases to the instant case, if the relationship between Parks and Patterson was a joint adventure, as the trial court concluded, then, since such joint adventure is not a distinct legal entity, the liability policy must be held to cover the accident in which Ramsey was injured. If, however, such relationship was a partnership, then, since such partnership is a distinct legal entity,...

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12 cases
  • Close-Smith v. Conley
    • United States
    • U.S. District Court — District of Oregon
    • May 20, 1964
    ...my decision. None can be said to be precisely in point. For example, both plaintiffs and defendants cite Parks v. Riverside Insurance Co. of America, 308 F.2d 175 (10 Cir. 1962). There the Court interprets the law of Oklahoma. The Oklahoma Courts maintain a distinction between a partnership......
  • In re Medallion Realty Trust
    • United States
    • U.S. Bankruptcy Court — District of Massachusetts
    • July 11, 1989
    ...The receipt of a share of profits in the form of wages is consistent with the existence of a partnership. Parks v. Riverside Ins. Co. of America, 308 F.2d 175 (10th Cir.1962). Nor is it necessary for the existence of a partnership that the parties expressly agree on the sharing of losses. E......
  • Missouri-Kansas-Texas R. Co. v. State
    • United States
    • Oklahoma Supreme Court
    • December 24, 1985
    ...202 Okl. 359, 213 P.2d 548, 551 (1950).39 W.B. Johnston Grain Company v. Self, 344 P.2d 653, 658 (Okl.1959); Parks v. Riverside Ins. Co. of America, 308 F.2d 175 (10th Cir.1962).40 Tr.Vol. III p. 454.41 640 P.2d 1341, 1346-47 (Okl.1982).42 "Oklahoma Constitution, Art. IX, § 20; Southern Uni......
  • Hamman v. United States
    • United States
    • U.S. District Court — District of Montana
    • March 22, 1967
    ...out that it had held that workmen's compensation actions are contractual in nature. 8 See also Parks v. Riverside Insurance Company of America, 10 Cir. 1962, 308 F.2d 175 (Oklahoma). 9 It does not appear whether Utah follows the distinct entity theory of partnership, the court citing with a......
  • Request a trial to view additional results
1 books & journal articles
  • The Kansas Revised Uniform Partnership Act
    • United States
    • Kansas Bar Association KBA Bar Journal No. 68-10, October 1999
    • Invalid date
    ...codifies the prevailing case law view under the UPA, which recognizes implied agreements. E.g., Parks v. Riverside Ins. Co. of Am., 308 F.2d 175 (10th Cir. 1962) (Okla. law). [FN188]. K.S.A. 1998 Supp. 56a-103(b) states the rights and duties that may not be waived or varied beyond what is s......

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