Continental Sales Corp. v. Stookesberry

• Citation: 459 P.2d 566,170 Colo. 16
• Decision Date: 22 September 1969
• Docket Number: No. 23524,23524
• Parties: CONTINENTAL SALES CORP., Plaintiff in Error, v. Dennison STOOKESBERRY and the Industrial Commission of Colorado, Defendants in Error.
• Court: Supreme Court of Colorado

Page 566

459 P.2d 566

170 Colo. 16

CONTINENTAL SALES CORP., Plaintiff in Error, v. Dennison STOOKESBERRY and the Industrial Commission of Colorado, Defendants in Error.

No. 23524.

Supreme Court of Colorado, In Department.

Sept. 22, 1969.

Rehearing Denied Oct. 27, 1969.

Winner, Berge, Martin & Clark, James A. Clark, Denver, for plaintiff in error.

Myrick, Branney, Frickey & Criswell, William E. Myrick, Denver, for defendants in error.

HODGES, Justice.

Defendant in error, Stookesberry, was injured as a result of an industrial accident. At the time he was employed by Western Plywood and Lumber, Inc., but had been loaned to Continential Sales Corp. He filed his claim for workmen's compensation as an employee of Western Plywood and Lumber, Inc., and its insurer, the State Compensation Insurance Fund, paid him $2,439.60 in disability benefits and medical expenses. This award was approved by the Industrial Commission of Colorado. Thereafter, plaintiffs Stookesberry and the Industrial Commission of Colorado brought an action against the defendant Continental Sales Corp. It was alleged that plaintiff's Stookesberry's injury was sustained as a result of the negligence of the defendant and that he was entitled to damages. Plaintiff Industrial Commission sought recovery of the amount paid Stookesberry by the State Fund. The parties will be referred to herein as they appeared in the trial court or by name.

Trial was to a jury, which gave the following answers to the special interrogatories submitted at the close of the case:

(1) Plaintiff Stookesberry was a loaned employee or servant of defendant;

(2) Defendant owed a duty to the loaned employee to provide reasonable safety measures and equipment and had breached this duty; and,

(3) Defendant's breach of duty was the proximate cause of Stookesberry's injuries.

The jury returned verdicts in favor of plaintiffs Stookesberry and Industrial Commission for $5,000 and $2439.60 respectively, and judgments were entered on the verdicts.

The main issue presented by this writ of error is whether the defendant was, under the facts here, a negligent third party or an employer and thus, immune to a common law action for negligence under the Workmen's Compensation Act of Colorado (see C.R.S. 1963, 81--1--1 Et seq.)

This issue was framed in the defendant's motion for new trial. It was claimed that since the trial, evidence was secured showing that defendant had workmen's compensation insurance coverage with the State Compensation Insurance Fund. The defendant then contends that if it was covered by workmen's compensation insurance, it could not be held responsible for common law negligence damages. Evidence was presented at a hearing on this motion. The motion was denied. The trial judge made a finding that defendant had no policy of workmen's compensation insurance 'until on or about May 10, 1967, over two years after the accident in question.' It is noted also from the record that during the pertinent period, Stookesberry received his pay from Western Plywood and that defendant had no payroll and inferentially claimed no employees of its own.

Although the trial court specifically found that defendant had no workmen's compensation insurance at the time of the accident, defendant urges, in effect, that the evidence at the hearing on the defendant's motion for a new trial did show workmen's compensation insurance coverage and that the trial court was obviously wrong when it found no insurance. It is also contended by the defendant that the trial court erred when it additionally found, as a matter of law, that even if the defendant had a policy of workmen's compensation insurance issued by the State Compensation Insurance Fund, a division of the Industrial Commission of Colorado, one of the plaintiffs in this action, it would in no way affect the liability of the defendant to the plaintiffs in this case.

We hold that the additional finding of the trial judge as applied to the evidence of the case is a correct statement of law, and therefore, the question of whether the evidence at the hearing on the motion for a new trial did or did not support the trial court's finding of no compensation insurance is moot.

In concluding that the defendant, even though it might have had workmen's compensation insurance coverage, is a 'third party' and therefore subject to this common law action for negligence, we hold that our Workmen's Compensation Act does not immunize the borrowing employer and that the loaning employer is solely responsible for workmen's compensation coverage. This is so unless it is shown that the loaning constitutes a new contract of hire Between the employee and the borrowing employer. See C.R.S. 1963, 81--13--1. The evidence here does not reflect any such new contract of hire, and as we interpret the defendant's arguments, it does not contend that Western Plywood is not the employer responsible for workmen's compensation coverage. Defendant, in effect, concedes this point, but, nevertheless, claims it has a right to new trial because it could then attempt to show coverage, which attempt, if successful, would bar this action. Defendant cites no authority to support this claim and our analysis of the pertinent provisions of our Workmen's Compensation Act and our research demonstrates this unsupported claim by the defendant is without merit.

At the outset, we cite Jacobson v. Doan, 136 Colo. 496, 319 P.2d 975 wherein the injured claimant having been compensated by his employer through workmen's compensation insurance was allowed to recover damages for the negligence of a defendant who had borrowed his services from the employer of the claimant. Although in that case, the precise point we are considering here was not made an issue, it, nevertheless, appears that the basic right of a claimant to recover damages for negligence against a 'borrowing employer' was accepted without question by the parties and by the court.

C.R.S. 1963, 81--3--2, which abolishes all causes of action and all statutory and common law, rights and remedies, applies only to covered employers and covered employees. C.R.S. 1963, 81--2--7(2) defines an employee as being any person 'under any contract of hire, express or implied, * * *'.

C.R.S. 1963, 81--13--1 provides that the 'loaning employer' shall be liable for workmen's compensation:

'* * * unless it shall appear from the evidence in said case that said loaning constitutes a new contract of hire, express or implied, between the employee whose services were loaned and the person to whom he was loaned.'

The foregoing statutory provisions make it clear that as applied to a situation where an employee is loaned to another by his covered employer, he does not become a covered employee of the other, nor does the other become a...