Schultz & Lindsay Construction Company v. Erickson

Decision Date02 November 1965
Docket NumberNo. 17957.,17957.
Citation352 F.2d 425
PartiesSCHULTZ & LINDSAY CONSTRUCTION COMPANY and Industrial Builders, Inc., Appellants, v. Bruce ERICKSON, for Himself and as Trustee for the North Dakota Workmen's Compensation Bureau, Appellee.
CourtU.S. Court of Appeals — Eighth Circuit


Mart R. Vogel, of Wattam, Vogel, Vogel, Bright & Peterson, Fargo, N. D., for appellant. Schultz & Lindsay Construction Co.

O. C. Adamson, II, of Meagher, Geer, Markham, & Anderson, Minneapolis, Minn., made argument for appellant, Industrial Builders, Inc., and filed brief with F. J. Smith, of Fleck, Smith, Mather & Strutz, Bismarck, N. D.

Kelton S. Lynn, of Whiting, Lynn, Freiberg & Shultz, Rapid City, S. D., made argument for appellee and filed brief with William S. Murray, of Cox, Pearce, Engebretson, Murray & Anderson, Bismarck, N. D.

Before MATTHES, RIDGE and GIBSON, Circuit Judges.

MATTHES, Circuit Judge.

In this personal injury action the defendants below have appealed from the judgment, entered on a jury verdict, awarding plaintiff $95,000. Diversity of citizenship and the requisite amount in controversy establish jurisdiction.

The trial commenced on October 5, 1964, and the jury's verdict was returned on October 16, 1964. The record before us consists of 854 printed pages, in addition to which there are numerous exhibits. Notwithstanding this, there is remarkable unanimity among the parties as to the material facts.

Emmons County, North Dakota, employed Staven Engineering Company (Staven) to design and draw plans for a bridge across Big Beaver Creek, and to supervise its construction. Plaintiff, a graduate civil engineer, was an employee of Staven and was the project "inspector and engineer". The accident, out of which this litigation arose, occurred on October 1, 1962. At that time plaintiff was 23 years of age.

Schultz & Lindsay Construction Company (Schultz & Lindsay) was the general contractor hired by Emmons County for the construction of roads and bridges. Industrial Builders, Inc., (Industrial) was the subcontractor of Schultz & Lindsay for the construction of the bridge across Big Beaver Creek.1

A brief description of the bridge will aid comprehension of the issues before us. Its deck extends in a north-south direction and rests upon a north abutment, a north pier, a south pier, and a south abutment. The deck is supported by two large sectioned beams (the east interior beam and the west interior beam), each of which is 300 feet in length from abutment to abutment. Each beam is made up of five structural steel girders of the "I" beam form. The five girders are of unequal length; they are 36 inches in height and weigh 194 pounds per foot of length. Under the plans, the girders were to be held together, as they were being erected, by "erection bolts", i. e., the ends of the girders were to be bolted together by a metal plate and four bolts. This was to provide a temporary splice. The temporary splice was necessary to enable the camber (curve) of the beam to be adjusted after all of the girders in each beam were in place, but before they were permanently fastened together. The plans then contemplated that the steel girders would be permanently fastened together, end to end, by a "welded" splice, i. e., the end of each girder would be welded to the end of the next girder.

The accident happened during the course of the erection of the steel beams. Appellee, who was supervising the erection and the splicing of the girders, was sitting on the portion of the east beam which had been erected when the temporary splice, joining the first two girders of the east beam, gave way. The girders and plaintiff fell to the ground. Plaintiff received serious and permanent injuries, reflected by the size of the judgment.

Appellee sued Schultz & Lindsay and Industrial. In his complaint, he alleged, in general terms, that both appellants were negligent in the construction of the bridge. However, appellee tried the case on the theory that Industrial, the subcontractor, was negligent in the erection of the steel girders, and that Schultz & Lindsay, the general contractor, was vicariously liable under the "inherent danger" doctrine.

Staven, Schultz & Lindsay, and Industrial were contributing employers to the North Dakota Workmen's Compensation fund. Appellee, as an employee of Staven, was paid compensation. Appellants contended below, and assert here, that they were statutory employers of appellee and, as such, were immune from liability for damages in this action. From this premise, appellants argue that the court erred in not granting their motion to dismiss, on the ground that appellee's action was barred by the North Dakota Workmen's Compensation Act. Two sections of that Act require consideration.

Section 65-01-08 of the North Dakota Century Code provides that, where an employer has secured the payment of compensation to his employees by contributing to the North Dakota Workmen's Compensation fund the employee shall have no right of action against the contributing employer, "but shall look solely to the fund for compensation". In order to correctly interpret and apply this provision, the word "employee" must be defined. Section 65-01-02, subd. 5(c) of the North Dakota Century Code provides:

"Persons employed by subcontractor, or by an independent contractor operating under an agreement with the general contractor, for the purpose of this chapter shall be deemed to be employees of the general contractor who shall be liable and responsible for the payments of premium for the coverage of these employees until the subcontractor or independent contractor has secured the necessary coverage and paid the premium therefor."

Statutes like 65-01-02 have been adopted in nearly all of the states. They are referred to as "statutory-employer" or "contractor-under" statutes. See Larson, The Law of Compensation, Vol. 2, § 72.31, p. 175. As Larson points out, such statutes provide that the general, or principal, contractor shall be liable for compensation to the employee of an uninsured subcontractor, doing work which is part of the business, trade or occupation of the principal contractor. Manifestly, this type of statutory provision is designed to afford protection for employees not otherwise protected by insurance, but, as Larson also observes:

"Since the general contractor is thereby, in effect, made the employer for the purpose of the compensation statute, it is obvious that he should enjoy the regular immunity of an employer from third-party suit when the facts are such that he could be made liable for compensation; and the great majority of cases have so held." Ibid.

Appellants argue that:

"Since all the employers, Staven, Schultz & Lindsay and Industrial were operating as contractors under contract to a common employer, Emmons County, and since plaintiff was employed by one of such contractors, he became a `statutory employee\' of Schultz & Lindsay, the general contractor which the County hired to carry out the entire job, operating under an agreement to work with Staven, plaintiff\'s employer."

This ingenious argument is neither supported by the facts nor by the cases of Schwarze v. Farm-Rite Implement Co., 192 F.Supp. 645 (D.N.D.1960), and Ryland v. The Manhattan Construction Co., unreported, (D.N.D.), upon which appellants place reliance. It is significant that the Schwarze and Ryland cases were decided by the Honorable George S. Register, the same judge who presided over this trial, and who, of course, ruled that appellee's cause of action was not barred by the statutes we have discussed.

Schwarze involved an action for damages by an employee against his employer (a subcontractor) and the general contractor. The latter had secured compensation coverage for its employees. Judge Register held that under the Act, particularly § 65-01-02, supra, the general contractor was immune from an action by the injured employee of the subcontractor.

The Ryland case was discussed by Judge Register in his Schwarze opinion. From that discussion, it appears that the question presented in Ryland was whether the general contractor was immune from suit brought by the survivor of an employee of the second subcontractor. The court held that the general contractor was a statutory employer of the injured employee, so was immune from the action.

We cannot agree with appellants' claim that the facts of the instant case fall within the rule of the Schwarze and Ryland cases. Here, unlike in Schwarze and Ryland, appellee was not an employee of a subcontractor. Neither was he an employee of the general contractor, Schultz & Lindsay. It should be noted again that an employee is defined to be a person "employed by subcontractor, or by an independent contractor operating under an agreement with the general contractor, * * *". (Emphasis supplied). North Dakota Century Code, § 65-01-02, subd. 5(c). Even if we could characterize Staven as an independent contractor, appellants' position would still be untenable, because it is clear that Staven was not "operating under an agreement" with Schultz & Lindsay, but rather with Emmons County.

We are satisfied that Judge Register, who is eminently qualified to interpret North Dakota law, properly concluded that appellee was entitled to maintain this action under § 65-01-09 of the North Dakota Century Code.2

Appellants challenge the sufficiency of the evidence to make a submissible case and assign error for failure to grant their timely motions for directed verdict. They contend that the evidence reveals, as a matter of law, that there was no actionable negligence on the part of Industrial.

We recognize that, in this diversity case, since the accident occurred in North Dakota, the substantive law of that state is applicable.

However, we are confronted with the question, not raised by the parties, and never decided by the Supreme Court of the United States, Dick v. New York Life...

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