Associated Indem. Co. v. Hartford Acc. & Indem. Co.

• Decision Date: 08 May 1975
• Docket Number: No. 18556,18556
• Citation: 524 S.W.2d 373
• Court: Texas Court of Appeals
• Parties: ASSOCIATED INDEMNITY COMPANY, Appellant, v. HARTFORD ACCIDENT & INDEMNITY COMPANY, Appellee.

Page 373

524 S.W.2d 373

ASSOCIATED INDEMNITY COMPANY, Appellant, v. HARTFORD ACCIDENT & INDEMNITY COMPANY, Appellee.

No. 18556.

Court of Civil Appeals of Texas Dallas.

May 8, 1975.

Rehearing Denied May 22, 1975.

Richard Bernays, Touchstone, Bernays & Johnston, Dallas, for appellant.

Henry Stollenwerck, Dallas, for appellee.

GUITTARD, Justice.

Hartford Accident & Indemnity Company, after paying a workmen's compensation claim, sued Associated Indemnity Company, alleging that the payment was made for Associated's benefit because the loss was covered by Associated's policy. Both parties moved for summary judgment. The trial court denied Associated's motion and granted Hartford's, and Associated appeals.

The question presented is: May the workmen's compensation carrier of a contractor supplying temporary labor, after accepting premiums collected by the contractor from its customers, and after paying a claim to an employee injured when working under the direction and control of a customer, recover the amount of such payment from the customer's regular workmen's compensation carrier? We answer this question in the negative, and, accordingly, we reverse the trial court's judgment and render judgment in favor of Associated.

The facts are undisputed. Hartford issued a policy of workmen's compensation insurance to Greene's Temporaries, Inc., a contractor engaged in the business of supplying temporary employees to industrial concerns. The injured workman in question was hired by Greene's, and was assigned temporarily to Frito-Lay Company. At the time of his injury, he was working at Frito's premises under the direction of Frito's foreman. The contract between Frito and Greene's was oral. Frito agreed to pay Greene's a fixed hourly charge for the workers supplied by Greene's. Out of this charge, Greene's agreed to pay all wages and social security and withholding taxes, and to relieve Frito of all expense and paperwork concerning the temporary employees. Greene's also agreed to furnish workmen's compensation insurance and to pay the workmen's compensation insurance premiums. Greene's paid the employees hourly wages based on the time they were actually at work for Frito. Out of the difference between the hourly charges paid by Frito and the hourly wages paid to the employees, Greene's paid various expenses, including workmen's compensation insurance premiums on the policy issued by Hartford. These premiums were measured by the total payroll of Greene's employees for the time they were working for Greene's customers. Frito had no expense with respect to the temporary employees other than the hourly charges it paid to Greene's. Frito's workmen's compensation insurance was carried by Associated, and Frito's payroll, by which its workmen's compensation premiums were measured, did not include any of the temporary workers supplied by Greene's. This arrangement was typical of Greene's operations, and also, apparently, of other labor contractors supplying temporary employees.

The injured workman in question originally made his claim against Associated, but, on receiving letters from Associated and Frito to the effect that he was Greene's employee, he filed the claim against Hartford. Hartford made no denial of the coverage, and after appeal to the district court from a compensation award, Hartford made a voluntary settlement. This settlement was made in accordance with a general practice of Hartford to pay claims of Greene's employees for injuries sustained by them while working under the direction and control of Greene's customers, such as Frito.

After settlement of the workmen's compensation claim, the claimant filed a tort action against Frito, in which Hartford intervened and asserted its subrogation rights. Hartford also impleaded Associated as a third-party defendant and alleged that Associated owed the compensation which Hartford had paid. The trial court denied all recovery, and on an earlier appeal, this action was affirmed with respect to Frito on the ground that Frito was protected as an employer by workmen's compensation insurance. Waldroup v. Frito-Lay, Inc., Docket No. 4643 (Tex.Civ.App.--Eastland, August 10, 1973) (unreported). The claim against Associated was remanded, and both parties filed motions for summary judgment, which are before us on this appeal.

Associated contends that Greene's could properly agree to carry workmen's compensation insurance on temporary employees furnished to Frito because under the circumstances of this case, such employees must be considered employees of both Greene's and Frito. In support of this dual-employment theory, Associated cites cases from other states involving tort claims of temporary workers against their temporary employers. In such cases the temporary employers have been held to be protected by workmen's compensation statutes. Renfroe v. Higgins Rack Coating & Manufacturing Co., 17 Mich.App. 259, 169 N.W.2d 326, 329 (1969); St. Claire v. Minnesota Harbor Service, Inc., 211 F.Supp. 521, 526 (D.C.Minn.1962).

Hartford takes the position that this dual-employment theory is inconsistent with Texas decisions. It points out that Texas affords a temporary employer the protection of the Workmen's Compensation Law, if he is a subscriber, by applying instead the borrowed-servant doctrine. According to this doctrine, the injured workman is held to be the employee of the employer who had the right of control over the details of the work at the time of the injury. Process Engineering Co. v. Rosson, 287 S.W.2d 511, 514 (Tex.Civ.App.--Galveston 1956, no writ); Cf. Sanchez v. Leggett, 463 S.W.2d 517, 520 (Tex.Civ.App.--Corpus Christi), Writ ref'd n.r.e. per curiam, 468 S.W.2d 63 (Tex.1971), On subsequent appeal, 489 S.W.2d 383, 387 (Tex.Civ.App.--Corpus Christi 1972, writ ref'd n.r.e.). The employer who had that right of control is protected from common-law liability, and his workmen's compensation insurer is liable for statutory benefits. Insurors Indemnity & Insurance Co. v. Pridgen, 148 Tex. 219, 223 S.W.2d 217, 221 (1949). Accordingly, even though an injured workman was carried on the payroll of a subscriber, and even though that subscriber may have paid insurance premiums on the workman's wages, he is held not to be the employee of the subscriber for the purposes of the Workmen's Compensation Act if he was temporarily subject to the right of control of another employer at the time of the injury. United States Fire Insurance...