Clawson v. General Ins. Co. of America

• Decision Date: 28 March 1966
• Docket Number: No. 9664,9664
• Citation: 90 Idaho 424,412 P.2d 597
• Parties: J. A. CLAWSON and Otis G. Hall, Employers, Employers-Appellants, v. GENERAL INSURANCE COMPANY OF AMERICA and Argonaut Insurance Company, Sureties, Sureties-Respondents. Thomas M. Mack, Jr., Rodney E. Hall, Harold R. Kennedy, W. Lyle Murphy, Earl L. Peterson, Employees, Claimants.
• Court: Idaho Supreme Court

Page 597

412 P.2d 597

90 Idaho 424

J. A. CLAWSON and Otis G. Hall, Employers, Employers-Appellants, v. GENERAL INSURANCE COMPANY OF AMERICA and Argonaut Insurance Company, Sureties, Sureties-Respondents.

Thomas M. Mack, Jr., Rodney E. Hall, Harold R. Kennedy, W. Lyle Murphy, Earl L. Peterson, Employees, Claimants.

No. 9664.

Supreme Court of Idaho.

March 28, 1966.

Kramer, Walker, Pope & Plankey, Twin Falls, for appellants.

Kerr & Williams, Blackfoot, for claimant Earl L. Peterson.

Murphy, Schwartz & Cunningham, Twin Falls, for respondent General Ins. Co. of America.

Moffatt, Thomas, Barrett & Blanton, Boise, for respondent Argonaut ins. co.

McFADDEN, Chief Justice.

The named claimants, while working on the roof of a school building being constructed at Murtaugh, Idaho, sustained injuries on September 30, 1964, when the roof collapsed. Each claimant filed a claim for workmen's compensation benefits; Mack and Peterson listed appellants J. A. Clawson and Otis G. Hall, as their employers, and Hall, Kennedy and Murphy listed Otis Hall Construction Co., as their employer.

The Industrial Accident Board held an investigational hearing, to resolve the dispute between J. A. Clawson and Otis G. Hall, the employers, and their respective sureties, being General Insurance Company of America, (herein referred to as General), as surety for Clawson and Argonaut Insurance Company, (herein referred to as Argonaut), as surety for Hall. The issues before the board at the time of this hearing did not involve the claims of the respective workmen, but only concerned whether the sureties covered the liability of the employers named.

The board in its decision held that neither surety was liable to the claimants. This holding was premised on the conclusion that the relationship of Hall and Clawson was that of joint venturers, and in that capacity, the liability of their respective sureties was only for their individual employees, and not for employees of the joint venture. The facts leading to this determination by the board are generally without dispute by any of the parties.

Both Clawson and Hall were engaged in the construction business for profit, each doing business as a sole proprietor. On May 18, 1962, Clawson and Hall entered into a written joint venture agreement for the purpose of constructing a Junior High School building in Twin Falls, for which the construction contract had been awarded to Clawson on his bid. This agreement was executed with the Twin Falls Junior High School contract awarded to Clawson in mind, and provided that it was also 'for the purpose of future contracts obtained by them (Clawson and Hall) which by future agreement of the parties will be made subject to the terms of this agreement'. The agreement provided that profits and losses would be divided equally between the parties, and that:

'The relationship herein established between the parties shall be limited to the performance of any construction contract described hereunder, and this agreement shall be construed to be a joint venture for the sole purpose of carrying out any construction contract hereunder. Nothing herein shall be construed to create a partnership between the parties nor to offer as (sic) either party to act as general agent for the other party, nor to permit either party to bid for or to undertake any other contract for the other party.'

On June 22, 1962, a bond of General Insurance Company of America was filed as surety for Clawson and Hall as joint venturers for liability of the joint venture under the workmen's compensation law. This bond was cancelled as of June 11, 1963, and no subsequent bond was filed by the joint venture itself. However, the record disclosed that at the time of the accident, J. A. Clawson, doing business as Clawson Construction Company, was secured by a bond of General, effective April 1, 1963, and Otis G. Hall, doing business as Otis Hall Construction Company, was secured by bond of Argonaut, effective from August 23, 1964. Thus, at the time of the accident, both members of the joint venture had sureties, but the joint venture itself did not.

The issues presented by appellants' assignments of error are primarily concerned with whether the workmen's compensation sureties of individual members of a joint venture are liable to workmen injured while performing services in furtherance of the objects of the joint venture.

It is the contention of the respondent sureties that they are not responsible to the workmen injured in work of the joint venture, as the board found. In support of this contention both of them refer to I.C. § 72-1010, which defines an employer as follows:

"Employer,' unless otherwise stated, includes any body of persons, corporate or unincorporated, public or private, and the legal representative of a deceased employer. * * *'.

They both contend that a 'joint venture' is a legal entity, and that as such, the joint venture of Clawson and Hall was the employer of the claimants and not the individual members of the joint venture. In support of this proposition, both sureties cite the case of Doyal v. Hoback, 75 Idaho 431, 272 P.2d 313. General also asserts that in Carter v. Carter Logging Co., 83 Idaho 50, 357 P.2d 660, it was held that an individual partner is not the employer of a workman injured on a partnership project. Argonaut asserts that under I.C. § 72-1010, a joint venture is a body of persons, the same as a partnership, also citing Carter v. Carter Logging Co., supra. Argonaut also cites the cases of Toenberg v. Harvey, 235 Minn. 61, 49 N.W.2d 578 (1951), and Monson v. Arcand, 239 Minn. 336, 58 N.W.2d 753 (1953), for the proposition that a partnership is considered as a legal entity. The sureties contend that a joint venture, being a separate entity, is solely responsible to the injured workmen under the provisions of the workmen's compensation law and hence the sureties of the individual members of the joint venture cannot be held.

Appellants Clawson and Hall take the view that a joint venture is not a separate entity, and that members of a joint venture are joint employers and their employees are joint employees, and hence each member of the joint venture is jointly liable with the other members. Appellants further contend, that by reason of the joint relationship of the employers the sureties of the individual employers are liable to the injured workmen. In support of this contention, appellants cite the following cases: Industrial Commission of Colorado v. Lopez, 150 Colo. 87, 371 P.2d 269 (1962); W. B. Johnson Grain Co. v. Self, 344 P.2d 653 (Okl.1959); Baker v. Billingsley, 126 Ind. 703, 132 N.E.2d 273 (1956); Del Peso v. H. A. Bar and Restaurant Co., Inc., 75 N.J.Super. 108, 182 A.2d 373 (1962).

In Monson v. Arcand, 239 Minn. 336, 58 N.W.2d 753 (1953), the plaintiff Monson, an employee of a partnership of which defendant Arcand was a partner, brought a damage action against defendant Arcand for injuries arising from Arcand's negligent operation of a truck. The Supreme Court of Minnesota held that the partnership, not the partner, was Monson's employer; that since the defendant Arcand did not attempt to show that he, as an individual separate and apart from partnership, employed anyone, the provisions of the workmen's compensation act limiting negligence liability of third persons was not applicable.

In Toenberg v. Harvey, 235 Minn. 61, 49 N.W.2d 578 (1951), Toenberg was injured while working for the Hillcrest Inn, a partnership comprised of Harvey and his wife, which business was insured with Preferred Accident Insurance Company of New York. At the same time Harvey was also operating a timber operation as an individual which business enterprise was insured with Employers Mutual Liability Insurance Company. Harvey reported Toenberg's accident to the Employers Mutual, which paid the claim. The Supreme Court of Minnesota held that the partnership operating the Hillcrest Inn was an entity separate and apart from the individual members, and that Toenberg was an employee of the partnership, not of the individual member in the logging business. That court reasoned that under the statute defining an employer under the workmen's compensation act which read: 'The term 'employer' means every person who employs another to perform a service for hire and to whom the 'employer' directly pays wages, and includes any person, corporation, copartnership, or association, or group thereof, * * *'. '* * * a copartnership is a legal entity for purposes of determining liability under the workmen's compensation act to persons not members of such partnership.' That court also quoted from its prior case of Gleason v Sing, 210 Minn. 253, 256, 297 N.W. 720, 722, as follows:

'While a copartnership at common law was not considered a distinct entity from the partners composing it, the modern tendency is the other way, i. e., to treat a partnership as an entity distinct from and independent of the individuals composing it. * * * The uniform partnership act * * * has wrought decided changes in the common-law conception of such organizations * * *.

'It is well to remember also that liability under the compensation act arises by virtue of a contractual relationship between the employer and the employe. Here we have no such contract between plaintiff and defendant. Plaintiff was hired, paid, and insured by the partnership only. It was his employer, not defendant. * * * If plaintiff suffered 'injury * * * caused by accident arising out of and in the course of the employment,' he was, as a matter of law, entitled to the benefits and advantages provided by the act. These obligations were cast upon the employer and its insurer, and they as such must meet them.'

In several opinions this court has dealt with the nature of joint ventures, i. e., Moon v. Ervin, 64 Idaho 464, 133 P.2d 933; Stearns v. Williams, 72 Idaho 276, 240 P.2d 833; Bowden v. Robert V. Burggraf Construction Co., 85 Idaho...