Fisher v. City of Seattle

• Decision Date: 22 August 1963
• Docket Number: No. 36317,36317
• Citation: 384 P.2d 852,62 Wn.2d 800
• Court: Washington Supreme Court
• Parties: Kenneth J. FISHER, Appellant, v. The CITY OF SEATTLE, a municipal corporation, Defendant, and Standard Oil Company of California, Western Operations, Inc., a corporation, Respondent.

Page 800

62 Wn.2d 800

384 P.2d 852

Kenneth J. FISHER, Appellant, v. The CITY OF SEATTLE, a municipal corporation, Defendant, and Standard Oil Company of California, Western Operations, Inc., a corporation, Respondent.

No. 36317.

Supreme Court of Washington, Department 1.

Aug. 22, 1963.

Walsh & Margolis, Seattle, for appellant.

Rosling, Williams, Lanza & Kastner, by Joseph J. Lanza, Seattle, for respondent.

HUNTER, Judge.

This is an action brought by the appellant (plaintiff), Kenneth J. Fisher, to recover for injuries received due to the alleged negligence of the defendant (respondent), Standard Oil Company of California, Western Operations, Inc., and the city of Seattle.

The sole question on this appeal is whether the plaintiff is barred from recovery under RCW Title 51, the Workmen's Compensation Act. RCW 51.24.010 permits the bringing of an action, provided the workman has been employed in extrahazardous work, 'If the injury to a workman is due to negligence or wrong of another not in the same employ * * *.'

Respecting personal injuries in extrahazardous employment, the Workmen's Compensation Act affords immunity to the employer only; it is not a bar to an action against a negligent third party. Greenleaf v. Puget Sound Bridge and Dredging Co., 58 Wash.2d 647, 364 P.2d 796 (1961).

The facts are not in dispute. The plaintiff was hired by Standard Stations, Inc. (Standard Stations herein) as a service station attendant for a station located in the city of Seattle. While in the act of opening the station early one morning, he turned on a switch controlling the oil burner and was injured in an explosion and fire which then occurred. The explosion and fire were caused by the igniting of gases which had generated and accumulated on an adjoining garbage and refuse dump and fill maintained by the city of Seattle. The plaintiff alleges his injuries occurred because of the negligence of the city of Seattle and Standard Oil Company of California, Western Operations, Inc. (Western Operations herein) in permitting the gas to enter the building.

Standard Oil Company of California (Standard of California herein), Western Operations, and Standard Stations are three separate corporations. The latter two are wholly owned subsidiaries of the former. In 1953, Standard of California and Standard Stations entered into an agreement whereby the latter, for a monthly fee of $1,250, undertook to employ station personnel, to operate designated stations, to keep such books and records as required by Standard of California, and to receive and turn over money from operations when requested. Standard of California agreed to furnish all other needed personnel and to provide sufficient funds for station operations and personnel.

In 1956, Standard of California and Western Operations entered into a management agreement whereby the latter undertook, for a monthly fee of $10,000, to manage and operate substantially all of the former's physical properties, businesses, and associated services. Shortly thereafter, these three corporations agreed that all rights and obligations of Standard of California should be performed by Western Operations and that thereafter Standard Stations should look to that corporation in all respects in connection with the 1953 agreement.

The plaintiff set forth in an affidavit that, because he was hired and paid by Standard Stations, he was led to believe that only Standard Stations was his employer. He further stated that he was never informed he was working for Western Operations, that he knew nothing of the agreements between the three corporations, and that he did not know that Western Operations prepared Standard Stations' paychecks and paid industrial insurance premiums for Standard Stations' employees.

Subsequent to the serving and filing of the plaintiff's complaint and Western Operations' answer, Western Operations moved for summary judgment. The plaintiff then made a cross motion for summary judgment for the purpose of striking Western Operations' affirmative defense that the plaintiff's action was barred by the Workmen's Compensation Act. The trial court denied the plaintiff's motion and granted Western Operations' motion on the basis that, by reason of the agency relationship existing between the three corporations, the plaintiff was an employee of Western Operations. From the entry of an order pursuant to this determination, the plaintiff appeals. The city of Seattle is not a party to this appeal.

The plaintiff contends that, since he was hired by Standard Stations and since he had no knowledge of its relation to Western Operations, Standard Stations only is his employer. He argues that disclosure of this relationship is necessary otherwise the essential element of consent to his employment is missing.

Western Operations, on the other hand, contends that, by reason of the agreements between the three corporations, Standard Stations is its agent, and therefore the employment of the plaintiff by its agent, Standard Stations, created an employer-employee relationship between the plaintiff and Standard Stations' principal, Western Operations. In support of its position that Standard Stations was its agent, Western Operations has directed our attention to the complete dominion and control which it retained over the work being done by Standard Stations. It contends it is immaterial whether the plaintiff had knowledge of the relationships involved.

The stress which Western Operations places on its retention of control is directed toward whether Standard Stations is its agent. See Restatement, Agency (2d) § 220 (1958). The fact of this agency is important only insofar as the rule upon which Western Operations relies is applicable to the determination of this case. For the purpose of our determination, we assume that Standard Stations is the agent of Western Operations.

Western Operations relies upon the general rule

'* * * that an agent, who with authority express, implied, apparent or actual, employs help for the benefit of his principal's business, thereby creates the relationship of employer and employee between such help and his principal.' 1 Schneider, Workmen's Compensation Text (Perm. ed.) § 233 (1941).

This rule is derived from the commonlaw rules developed primarily for the purpose of respondeat superior or vicarious liability. (For a general history on the development of the rules of vicarious liability at common law see 8 Holdsworth, A History of English Law 472-482 (2d ed. 1937), and Holmes, Agency, 4 Harv.L.Rev. 345 (1891).) In applying these common-law vicarious liability rules to cases involving workmen's compensation issues, however, difficulty is often encountered. That difficulty is: The basic purpose for which the rules of vicarious liability were used at common law is different from the purpose of the rules used in compensation law.

The rules of vicarious liability at common law were used generally for the adjustment of rights between the master and a third party due to activities carried on by the servant. Insofar as vicarious liability was concerned, it was possible thereunder to strike up a master-servant relationship despite the lack of consent on the part of the servant. See Restatement, Agency (2) §§ 221, 222; Mechem, Outlines of the Law of Agency (3d ed. 1923) § 502. Thus, it made no difference whether there was a mutual agreement, as to their respective status, between the 'master' and 'servant.' The important question was, instead, whether the 'master' accepted and substantially controlled those activities of the 'servant' which led to the third party's injury.

Under workmen's compensation law, however, the spotlight focuses on the employee, i. e., the servant, rather than on the employer, i. e., the master. The important question, here, is: Did the workman consent with the 'employer' to the status of 'employee'? Unlike the common law, compensation law demands that, in order to find an employer-employee relation, a mutual agreement must exist between the employer and employee.

Regarding the necessity of such an agreement in cases involving workmen's compensation issues as compared to cases involving issues of...