Corollo v. SS Kresge Company

• Decision Date: 06 March 1972
• Docket Number: 71-1320.,No. 71-1319,71-1319
• Citation: 456 F.2d 306
• Parties: Grayce E. COROLLO, Appellee, v. S. S. KRESGE COMPANY, d/b/a K-Mart, Appellant.
• Court: U.S. Court of Appeals — Fourth Circuit

456 F.2d 306 (1972)

Grayce E. COROLLO, Appellee, v. S. S. KRESGE COMPANY, d/b/a K-Mart, Appellant.

Nos. 71-1319, 71-1320.

United States Court of Appeals, Fourth Circuit.

Argued October 6, 1971.

Decided March 6, 1972.

George E. Lewis, Columbia, S. C. (Turner, Padget, Graham & Laney, Columbia, S. C., on brief), for appellant.

Henry Hammer, Columbia, S. C. (Roy A. Powell, Columbia, S. C., on brief), for appellee.

Before CRAVEN and BUTZNER, Circuit Judges, and DUPREE, District Judge.

DUPREE, District Judge:

In this diversity action plaintiff obtained a $20,000 jury verdict for personal injuries sustained in a slip-and-fall accident which occurred in defendant's department store in Columbia, South Carolina. On appeal defendant urges as grounds for reversal that there was insufficient evidence of negligence to be submitted to the jury and that in any event plaintiff was guilty of contributory negligence as a matter of law. We agree with the District Court that these questions were properly left for jury determination, but we find merit in defendant's affirmative defense that at the time of the accident the plaintiff was a "statutory employee" of defendant and as such was limited to the rights and remedies accorded covered employees under the workmen's compensation laws of South Carolina. The decisions of that state which govern here have led us to conclude that the judgment should be reversed and the action dismissed.

In a cross-appeal plaintiff contends that the jury awarded inadequate damages, and she seeks a new trial on this issue alone. In view of our conclusion on the workmen's compensation issue consideration of this contention becomes unnecessary.¹

The defendant S. S. Kresge Company owns and operates a large chain of "discount department stores" throughout the United States and in some foreign countries using the trade name "K-Mart"², and henceforth we will refer to the defendant as K-Mart. At the time of plaintiff's accident there were 88 stores in the chain, and the plaintiff had been employed by K-Mart in the lingerie department at the time its Columbia store was opened in 1963. There were 40 or more different departments in this store about eight of which were licensed by K-Mart to various specialty merchandisers. In 85 of the K-Mart stores, including the one in Columbia, the millinery departments were licensed to Benjamin Kraft & Sons, Inc. (hereafter "Kraft"). Because of space limitations the remaining three K-Mart stores did not have millinery departments.

With the view to obtaining more convenient working hours for herself the plaintiff resigned her position with K-Mart and obtained employment by Kraft to fill a position which became open in its licensed millinery department. She was so employed by Kraft on the morning of August 4, 1964, when shortly after her arrival at the K-Mart store for work she slipped and fell at a place in a hallway where K-Mart's janitor had failed to mop up some soapy water which he had been using in cleaning the floor in the hallway. Although the plaintiff was familiar with the custom of the janitor to clean and mop this hallway daily, he had not been known to leave soapy water on the floor on any previous occasion, and as plaintiff had just turned a corner when this happened, she did not see the hazard in time to avoid it. As a result of her fall the plaintiff sustained painful and perhaps permanently-disabling injuries.

The store building in which this occurred contained approximately 94,000 square feet all under one roof. The area within the store is completely open, and Kraft and the other licensees of departments are allotted space in the store. The store is opened each morning and closed each evening by K-Mart employees, and no one else has authority to open or close the store. The various licensee departments cannot operate except during K-Mart's established hours. All counters, display cases and store fixtures used by the licensed departments are furnished by K-Mart and are the same kind and appearance as those used by K-Mart in its own departments. There are no partitions separating the licensed departments from those of K-Mart.

All persons who worked in the store wore badges which identified them as K-Mart employees. While the plaintiff was directly employed by K-Mart her badge contained a number and her name. After she was employed by Kraft in addition to her name the badge contained the words "Millinery Department Supervisor". There was no sign in or about the business indicating that Kraft was the licensee of the millinery department, and neither plaintiff nor Kraft's other employee in the store handled any money. Instead, tickets were written for sales made in the millinery department, and as in the case of all sales made by any department in the store, payment was made at a checkout counter where a number of cash registers, all owned and operated by K-Mart, were located. Separate key designators on the cash registers enabled the cashiers to segregate the money of K-Mart from that of the various licensees as it was taken in. K-Mart accounted directly to Kraft's home office for the proceeds of Kraft's sales.

The written agreement between K-Mart and Kraft was contained in a document entitled "K-Mart License Agreement", apparently a standard form contract used by K-Mart with all its licensees. Kraft's agreement, dated March 19, 1963, was for the operation of "a department for the sale of certain merchandise described and classified as follows: millinery and handbags". The essential terms of the agreement are set forth in the margin.³

Kraft had less than fifteen employees and was therefore not required by law to carry workmen's compensation insurance. In compliance with its agreement with K-Mart, however, Kraft did carry such insurance. K-Mart carried its own workmen's compensation insurance. Plaintiff made claim and was paid workmen's compensation benefits by Kraft's carrier. Any recovery by plaintiff in this common law action would inure by subrogation to Kraft's carrier to the extent of such benefits paid.

Title 72, South Carolina Code of Laws for 1962, Section 111, provides:

"When any person, in this section and §§ 72-112 and 72-114 referred to as `owner\', undertakes to perform or execute any work which is a part of his trade, business or occupation and contracts with any other person (in this section and §§ 72-113 to 72-116 referred to as `subcontractor\') for the execution or performance by or under such subcontractor of the whole or any part of the work undertaken by such owner, the owner shall be liable to pay to any workman employed in the work any compensation under this Title which he would have been liable to pay if the workman had been immediately employed by him."

Title 72, Section 121, of the same Code, provides as follows:

The rights and remedies granted by this Title to an employee when he and his employer have accepted the provisions of this Title, respectively, to pay and accept compensation on account of personal injury or death by accident, shall exclude all other rights and remedies of such employee, his personal representative, parents, dependents, or next of kin as against his employer, at common law or otherwise, on account of such injury, loss of service or death."

Since we hold that defendant was not entitled to a directed verdict on the negligence issues, the only remaining question for decision is whether under the undisputed facts the South Carolina workmen's compensation laws constituted a bar to the maintenance of this common law tort action in the District Court. K-Mart contends that it was an "owner" and that the millinery department in its store was operated by Kraft as a subcontractor within the purview of Section 72-111 of the South Carolina Code quoted above; that plaintiff was therefore a "statutory employee" of K-Mart; and that as such she was limited to the exclusive remedy of the Workmen's Compensation Act as provided by Section 72-121 of the Code. We agree.

Plaintiff alleged in her complaint that the defendant was "engaged in the business of distributing and selling at retail divers goods and merchandise" and "that on or about August 4, 1964, the defendant in the course of its business was the owner, in control of and maintained a large retail merchandising establishment known as K-Mart on Jackson Boulevard in the City of Columbia, Richland County, South Carolina, in which were certain licensed departments, including the millinery department leased by Benjamin Kraft & Sons." These allegations were admitted by the defendant. That K-Mart was a department store in the ordinary sense of the term is not open to question.⁴ That the agreement with Kraft for the operation of the millinery department did not remove that department from the scope of K-Mart's "trade, business or occupation" as those terms are used in the statute is equally clear.

We think the decision of the South Carolina Supreme Court in Adams v. Davison-Paxon Company, 230 S.C. 532, 96 S.E.2d 566 (1957) is indistinguishable and that it controls decision here.

In that case the Davison Company operated "a general retail department store" which included departments of men's and ladies' ready-to-wear, shoes, hats, etc., but its ladies' hat department was operated by Emporium World Millinery Company under a contract very similar in its terms to the license agreement between K-Mart and Kraft in this case. For instance, the space occupied by Emporium in its operation of the millinery department was selected by Davison; all Emporium's sales were conducted in Davison's name and the cash resulting was run through Davison's cash registers; Davison furnished all utilities, janitor service, fixtures and building maintenance; the conduct of Emporium's business was subject to Davison's rules and regulations; Emporium was responsible for its employees' salaries; Emporium paid for fire, workmen's compensation and liability insurance and all taxes on...