Brinkley Heavy Hauling Co. v. Youngman

• Decision Date: 08 February 1954
• Docket Number: No. 5-283,5-283
• Citation: 223 Ark. 74,264 S.W.2d 409
• Parties: BRINKLEY HEAVY HAULING CO. et al. v. YOUNGMAN et al.
• Court: Arkansas Supreme Court

Page 409

264 S.W.2d 409

223 Ark. 74

BRINKLEY HEAVY HAULING CO. et al. v. YOUNGMAN et al.

No. 5-283.

Supreme Court of Arkansas.

Feb. 8, 1954.

Moore, Burrow, Chowning & Mitchell and Wright, Harrison, Lindsey & Upton, Little Rock, for appellants.

Sharp & Sharp, Brinkley, for appellees.

GEORGE ROSE SMITH, Justice.

This claim under the Workmen's Compensation Act arises from the accidental death of P. L. Youngman. The Tulsa Construction Company, as principal contractor, agreed to lay a gas pipeline for a subsidiary of the Arkansas Power & Light Company. In connection with this project Tulsa subcontracted the heavy hauling to Brinkley Heavy Hauling Company, a partnership in which the decedent was the active partner. While the work was in progress a large pipe accidentally rolled off a loaded truck and struck Youngman, killing him instantly. The appellees, his widow and children, filed this claim for compensation. The Commission found that Youngman was an employee of his own firm and was also a special employee of Tulsa, the principal contractor. An award was accordingly entered against both defendants and their insurance carriers. This appeal challenges both phases of the joint award.

We consider first the liability of the Brinkley partnership. This firm was composed of a farmer, a furniture dealer, and Youngman, who alone had experience in the trucking business. These three men formed a partnership for the purpose of purchasing a heavy hauling concern. Their agreement was that Youngman should devote his entire time to the business, not only as superintendent of the firm's employees but also as an active worker in the field. The other two partners contributed the firm's original capital, but they were not expected to, and did not, devote their time to the business. By the agreement Youngman was to receive one fourth of the gross profits, with any remaining net gains then being divided equally among the three partners.

Youngman met his death in the course of his active participation in the business. The venture was still in its first year, and no profits had yet been distributed. Through a drawing account Youngman had been receiving about $300 a month, which would have been deducted from his share of the income had any profits been realized.

In these circumstances it cannot be said that Youngman was an employee of the partnership. It is of course true, as the Commission observed, that it is possible for a partner to deal with his own firm. A member of a mercantile partnership might, for example, purchase merchandise from the company, and title would pass from the firm to the partner. But this case involves no such special agreement. The partnership contract itself contemplated that Youngman would be the only active partner. His preferential one fourth interest in the profits was not the result of a special contract of employment, by which Youngman relinquished his authority as a partner and assumed a subordinate role. Instead, his status as a worker in the field was simply an important part of the arrangement by which the three men did business together.

With the lone exception of Oklahoma, the authorities are unanimous in holding that a partner, even though he be the sole active member of the firm, is not an employee of the partnership for the purpose of workmen's Compensation. Larson on Workmen's Compensation Law, § 54.30; 4 Ark.L.Rev. 498. In several States the rule has been changed by statute, and we think legislation to be the appropriate method for bringing partners within the scope of the compensation Law. As Larson points out: 'There are two serious obstacles to such an extension of coverage by judicial decision. The first is that a partnership is not, except for a few specific purposes, an entity separate from its members. Therefore, since the partnership is nothing more than the aggregate of the individuals making it up, a partner-employee would also be an employer. The compensation act cannot be supposed to have contemplated any such combination of employer and employee status in one person. * * * Even if, however, this conceptual difficulty could be surmounted, there would remain a far more stubborn obstacle, which is the fact that in any ordinary partnership each partner has by law an equal share in management, and is therefore in actual possession of the powers of the employer. Unless he has contracted away those powers, which he can theoretically do, he is as much the employer as anyone can be, not as a matter of conceptual reasoning but as a matter of actual functions and rights.' Op. cit., §§ 54.31 and 54.32.

Neither of these considerations was discussed by the Oklahoma court in arriving at its minority view. The case of Ohio Drilling Co. v. State Industrial Comm., 86 Okl. 139, 207 P. 314, 25 A.L.R. 367, was one of the earliest American decisions on the question. There the court stressed the fact that the statutory definition of an employer included a partnership, and from this premise the court concluded that a partner might be an employee. A similar argument could be based upon our own definitions of employer and employee, Ark.Stats.1947, § 81-1302; but its fallacy lies in the failure to take into account the statutory scheme as a whole. The Act contemplates that the employer is himself liable for the Commission's award. 'The primary obligation to pay compensation is upon the employer and the procurement of a policy of insurance by an employer to cover the obligation in respect to this Act shall not relieve him of such obligation.' § 81-1305. For a person to be at once an employer and an employee would manifestly involve the contradiction of liability to himself.

Furthermore, we have repeatedly emphasized the matter of control as the most vital factor in the determination of the employer-employee relationship. Who, on behalf of the Brinkley partnership, controlled Youngman's activities in connection with this subcontract? Obviously no one did, except Youngman himself. Indeed, the partnership arrangement contemplated that when Youngman was at the scene of the work he should be vested with the complete authority of the firm. In this situation his status was the antithesis of that of an employee, as far as Brinkley is concerned.

With respect to the Tulsa Construction Company, a different conclusion must be reached. The original written contract between Tulsa and Brinkley required the subcontractor to receive the pipe at a railroad siding, haul it to the site of the work, and string it along the ditch in which Tulsa was to complete the laying of the pipeline. It is shown that Tulsa's superintendent designated the place at which each load of pipe was to be deposited. Tulsa argues, however, that this assumption of control was merely incidental to the relation between a contractor and its subcontractor and therefore falls short of changing Youngman's status to that of a special employee of Tulsa. See Erickson v. Kircher, 168 Minn. 67, 209 N.W. 644; Security Union Ins. Co. v. McLeod, Tex.Com.App., 36 S.W.2d 449; Gibson v. Industrial Comm., 81 Utah 580, 21 P.2d 536.

The trouble with this argument is that the original contract was modified shortly before Youngman's death. In the early stages of the work unforeseen wet weather was encountered, making it very expensive for Brinkley to tow its trucks through the mud between the public highway and the ditch on the pipeline right-of-way. The project was proving to be so costly to Brinkley that the partners decided to abandon the work, even though this decision involved their forfeiting the ten percent of their compensation that Tulsa...