Bassett Furniture Industries, Inc. v. McReynolds

Decision Date23 April 1976
Docket NumberNos. 750781 and 750743,s. 750781 and 750743
Citation224 S.E.2d 323,216 Va. 897
PartiesBASSETT FURNITURE INDUSTRIES, INC. v. Robert F. McREYNOLDS. Robert F. McREYNOLDS v. BASSETT FURNITURE INDUSTRIES, INC. Record
CourtVirginia Supreme Court

S. D. Roberts Moore, James R. Austin, Roanoke (Gentry, Locke, Rakes & Moore, Roanoke, on brief), for Bassett Furniture Industries, Inc.

R. Reid Young, Jr., Jackson L. Kiser, Robert W. Mann, Martinsville (Young, Kiser, Haskins & Mann, Ltd., Martinsville, on brief), for McReynolds.

Before I'ANSON, C.J., and CARRICO, HARMAN, POFF and COMPTON, JJ.

POFF, Justice.

Robert F. McReynolds (plaintiff), an employee of Industrial Air, Inc. (Industrial), suffered injuries rendering him a paraplegic when he fell through a hole in a floor cut to accommodate a conveyor system Industrial was installing in the Virginia plant of Bassett Furniture Industries, Inc. (Bassett). After receiving workmen's compensation benefits from Industrial, plaintiff filed a motion for judgment against Bassett. Bassett moved to dismiss on the grounds that plaintiff was its statutory employee and that the trial court, therefore, had no jurisdiction over the tort action. Upon stipulation, the trial court heard evidence Ore tenus and, having considered memoranda of law and oral argument, overruled the motion.

A jury was then empaneled and, after three days of testimony, returned a verdict awarding plaintiff $1,000,000 in damages. The trial court sustained Bassett's motion to set the verdict aside as excessive and ordered plaintiff to remit $450,000 or submit to a new trial on damages. Exercising his right under Code § 8--350 (Repl. Vol. 1957), plaintiff accepted remittitur under protest. By final order entered March 13, 1975, incorporating a letter opinion dated February 27, 1975, the trial court awarded judgment to plaintiff in the sum of $550,000. We granted writs of error to both parties.

A.

The jurisdictional question whether plaintiff was Bassett's statutory employee is the threshold issue. That issue turns upon a mixed question of law and fact. The trial court sat as the factfinder, and, insofar as the evidence is in conflict, we view the facts and all inferences reasonably deducible therefrom in the light most favorable to the plaintiff and consider whether the trial court correctly applied the law thereto.

Bassett's principal witness in support of its motion to dismiss was James Minter. His job title at Bassett was 'Chief Engineer', although, as he said, 'I am not an industrial engineer.' The facts underlying the jurisdictional issue are found largely in his testimony.

Bassett is a furniture manufacturer with annual sales of 'something over a hundred and fifty million (dollars)'. Its plants in eight states employ about 7000 workers, 5000 of whom work in Virginia plants. In 1971, Bassett decided to enlarge its plant at Bassett, Virginia, by adding a $3,500,000, five-story warehouse adjacent to one of its existing buildings. Plans and specifications were prepared by Minter and the three other employees in Bassett's 'engineering department'. Bassett 'put these out for bids' and awarded separate contracts to different contractors for construction of the 'building shell', for 'demolition of an existing building', for 'installation of an elevator facility', for installation of 'interior sprinkler work', and for certain other work. Bassett's plans called for installation of a conveyor system serving four floors of the new building and connecting with an existing conveyor system in an existing building. Bassett awarded a $173,722 'turn-key job' contract to Industrial. Minter acknowledged that Industrial was 'an independent contractor to install the conveyor system.' Bassett did not prepare the plans and specifications for this contract but, as Minter said, '(w)e only showed the path of flow and the general arrangement of the conveyor, the specific shop drawings or drives on it and so on were done by Industrial Air', and Industrial supplied all materials. While Bassett did the electrical work and periodically inspected Industrial's work for compliance, it had no control over Industrial's employees and never required any 'specific changes'.

In order for the conveyor to pass from the second floor to the ground floor, it was necessary to cut a hole in the second floor of an existing building. Responsibility for the cutting was not included in Industrial's contract, and Bassett's carpenters did the work. It was this hole through which plaintiff fell while working on the conveyor system. The circumstances surrounding his fall will be considered in Part B.

In the last four years, Bassett had spent about $1,000,000 per year on construction work. However, Bassett had no 'separate construction division' and employed only a 'dozen or 'so' carpenters 'on the maintenance crews' and about 60 electricians. These and other Bassett employees were sometimes called upon to perform certain tasks in connection with new construction projects, but '(t)his would normally be confined to electrical, piping, mechanical work and that type of thing.' Minter testified that 'for the past few years, we have been contracting most all of the work outside and using our people to make modifications to tie in with these.' On 'major projects' involving in excess of $25,000, Bassett's policy was to employ independent contractors, because it was uneconomic to assemble Bassett employees from different plants and take them away from their regular jobs. On projects involving less than $25,000, Bassett did all '(o)r a portion of it, depending on our people and the availability of them and what other jobs they were doing.'

Bassett did not maintain a separate work crew 'for the purpose of conveyor systems'. Minter testified that 'we have the capability' and 'we do some designing and building in our own maintenance shops' but that this is done 'with employees who have other jobs and it generally depends upon the need and the time involved as to whether they would do it or we would have it done outside. Generally, on a job of this size, it would always be contracted out.' Minter said that 'we actually build new conveyors' but acknowledged that 'Bassett had never undertaken anything of this magnitude.'

Addressing the jurisdictional issue, Bassett says that when an owner acts as its own general contractor and contracts, in whole or in part, with subcontractors for the performance of construction work, the owner-general contractor becomes a statutory employer and the subcontractor's employees become statutory employees if 'the specific, specialized work being done by the specialty subcontractor and his injured employee is the kind of work which employees of the owner-general contractor usually do.'

Code § 65.1--29 (Repl. Vol. 1973) provides that when an owner 'undertakes to perform or execute any work which is a part of his trade, business or occupation and contracts with' a subcontractor 'for the execution or performance by or under such subcontractor of the whole or any part of the work', the owner becomes a statutory employer and the subcontractor's employees become statutory employees of the owner.

Code § 65.1--30 (Repl. Vol. 1973) provides that when a general contractor contracts with an owner to perform work which 'is not a part of the trade, business or occupation of' the owner, and contracts with a subcontractor for the performance 'of the whole or any part of the work', the general contractor becomes the statutory employer of the subcontractor's employees.

Under Code § 65.1--31 (Repl. Vol. 1973), an owner covered by Code § 65.1--29 or a general contractor covered by Code § 65.1--30 becomes the statutory employer of the employees of a secondary subcontractor to whom a primary subcontractor has awarded a subcontract.

These three statutes must be 'read and reconciled with' the language in what is now Code § 65.1--5 (Repl. Vol. 1973). Sykes v. Stone & Webster Eng. Corp., 186 Va. 116, 121, 41 S.E.2d 469, 471 (1947). That language provides that '(n) othing in this act . . . shall be construed to make . . . the employees of an independent contractor the employees of the person . . . contracting with such independent contractor.'

When so read and reconciled:

'It clearly appears to be the purpose . . . to bring within the operation of the Compensation Act all persons engaged in any work that is a part of the trade, business or occupation of the original party who undertakes as owner, or contracts as contractor, to perform that work, and to make liable to every employe(e) engaged in that work every such owner, or contractor, and subcontractor, above such employe(e). But when the employe(e) reaches an employer in the ascending scale, of whose trade, business or occupation the work being performed by the employe(e) is not a part, then that employer is not liable to that employe(e) for compensation . . .. At that point (Code § 65.1--5) intervenes and the employe(e)'s right of action at common law is preserved.' 186 Va. at 122--23, 41 S.E.2d at 472; quoted with approval in Anderson v. Thorington Construction Co., 201 Va. 266, 271, 110 S.E.2d 396, 399--400 (1959).

In Sears, Roebuck & Co. v. Wallace, 172 F.2d 802, 810 (4th Cir. 1949), the court quoted the above passage from Sykes and concluded:

'(T)he chief purpose of enactments like the Virginia statute . . . is to 'protect the employees of subcontractors who are not financially responsible and to prevent employers from relieving themselves of liability (for compensation) by doing through independent contractors what they would otherwise do through direct employees.' See notes 58 A.L.R. 872; 105 A.L.R. 580. The statute was not intended to relieve employers from liability for their own negligence which causes injury to the employees of independent contractors engaged in the performance of work for employers outside the scope of the latter's occupation.'

Thus, as owner, simply by acting as its own...

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