Green Bay Packaging, Inc. v. Department of Industry, Labor and Human Relations

• Decision Date: 07 April 1976
• Docket Number: No. 587,587
• Citation: 240 N.W.2d 422,72 Wis.2d 26
• Parties: GREEN BAY PACKAGING, INC., and Employers Mutual Liability Insurance Company, Respondents, v. DEPATMENT OF INDUSTRY, LABOR AND HUMAN RELATIONS and State of Wisconsin, Appellants, Maria Siemzuch and Arthur Majeske, Defendants. (1974).
• Court: Wisconsin Supreme Court

Page 422

240 N.W.2d 422

72 Wis.2d 26

GREEN BAY PACKAGING, INC., and Employers Mutual Liability Insurance Company, Respondents, v. DEPATMENT OF INDUSTRY, LABOR AND HUMAN RELATIONS and State of Wisconsin, Appellants Maria Siemzuch and Arthur Majeske, Defendants.

No. 587 (1974).

Supreme Court of Wisconsin.

Submitted Feb. 4, 1976.

Decided April 7, 1976.

Bronson C. La Follette, Atty. Gen., and Lowell E. Nass, Asst. Atty. Gen., for appellants.

H. R. Klueter, Wausau, for respondents; and E. E. Larson, Wausau, of counsel; E. E. Larson and Jones, Larson, Charnholm, Anderson & Rouse, Wausau, filed a brief on rehearing. WILKIE, Chief Justice.

In this workmen's compensation case the sole issue is whether the defendant Arthur Majeske, the immediate employer of Marcin Siemzuch, the deceased husband of the claimant Maria Siemzuch, was a 'contractor under' the respondent Green Bay Packaging, Inc., within the meaning of sec. 102.06, Stats. The circuit court reversed a determination to that effect by the Department of Industry, Labor and Human Relations. We reverse, concluding, as a matter of law, that Arthur Majeske was such a 'contractor under.'

The facts in this case are essentially undisputed. Marcin Siemzuch was employed by Arthur Majeske to cut hardwood on land for which Majeske owned the 'stumpage' rights. The wood was to be delivered to the Green Bay Packaging, Inc. (GBP) for use in the manufacture of paper. In October of 1971 Siemzuch was killed by a falling maple tree. Majeske had entered into a contract with GBP for the calendar year 1971, which required Majeske to deliver by truck to the GBP yard 300 cords of mixed hardwoods of specific kinds and dimensions. GBP does not cut hardwood itself, nor does it directly employ men to cut it. Neither was any of the wood to be cut from lands in which GBP had any stumpage rights. In fact, GBP had no interest whatsoever in where Majeske got the wood to deliver. GBP made no advances to Majeske, and did not supply equipment or supplies of any kind. When the wood was delivered to GBP the wood was measured and Majeske was paid accordingly. GBP did reserve in the contract the right to 'from time to time send its representative to inspect the pulpwood as being produced or loaded and for that purpose the Seller (Majeske) agrees to afford such representative such assistance as may be necessary to aid in such inspection.' The only testimony concerning this clause was a statement that the GBP representative would 'occasionally' stop by areas where wood was being cut, but not necessarily to areas where Majeske (or his employees) were working.

Citing the 'inspection' clause of the contract, and the specifications for wood set forth in the contract, DILHR found that GBP had 'a large measure of control over the details of the manner in which the work was performed under the contract,' and that 'Majeske was a contractor under (GBP) as provided by Wisconsin Statute 102.06.'

On GBP's petition for review of the DILHR determination, the circuit court found, as a matter of law, that Majeske was not a 'contractor under' GBP and judgment was entered to that effect, reversing the DILHR determination.

'CONTRACTOR UNDER' WITHIN SEC. 102.06, STATS.

In determining whether Arthur Majeske was a 'contractor under' GBP within sec. 102.06, Stats., it is clear that only a question of law is involved. ¹

One of the most important sections of the Wisconsin Workmen's Compensation statute is sec. 102.06, which provides:

'102.06 Joint liability of employer and contractor; loaned employes. An employer shall be liable for compensation to an employe of a contractor or subcontractor under him who is not subject to this chapter, or who has not complied with the conditions of s. 102.28(2) in any case where such employer would have been liable for compensation if such employe had been working directly for him, including also work in the erection, alteration, repair or demolition of improvements or of fixtures upon premises of such employer which are used or to be used in the operations of such employer. The contractor or subcontractor (if he is subject to the workmen's compensation act) shall also be liable for such compensation, but the employe shall not recover compensation for the same injury from more than one party. In the same manner, under the same conditions, and with like right of recovery, as in the case of an employe of a contractor or subcontractor described above, an employer shall also be liable for compensation to an employe who has been loaned by him to another employer. The employer who becomes liable for and pays such compensation may recover the same from such contractor, subcontractor or other employer for whom the employe was working at the time of the injury if such contractor, subcontractor or other employer was an employer as defined in s. 102.04.'

One of the earliest cases in which this section was considered is Great A. & P. Tea Co. v. Industrial Comm. ² In A. & P., a contractor, Arnold Arndt, was engaged by A. & P. to regularly truck butter from Baraboo to Milwaukee. A truck deliver, Robert Hattle, was killed while making such a delivery and the Industrial Commission's compensation award was affirmed by this court, in the following language:

'. . . As Arndt (subcontractor) was not within the act or covered by insurance, and the service which Hattle (employee) was performing was for (A. & P.'s) benefit and was of such nature that (A. & P.) would have been liable for compensation if (employee) had been working directly for (A. & P.), it is still wholly within the scope and legitimate purposes of the act to impose the compensation burden on (A. & P.) as the proprietor of an industry upon which the Legislature has seen fit to impose the burden of the loss because of such an industrial injury.

'Thus construed, section 102.06, Stats., 'conserves to the employee the indemnity intended to be given him by the Legislature by making contractors liable for injuries received by employees of a subcontractor who is not under the act. They will be careful to protect themselves and will also see to it that their subcontractors are protected against such losses.' Miller v. Industrial Commission, 179 Wis. 192, 190 N.W. 81, 82.' (Emphasis added.) ³

This construction of sec. 102.06, Stats., emphasizes the literal language of the statute making an employer liable where he 'would have been liable for compensation if such employee (of the contractor or subcontractor under) had been working directly for him.'

Two years later this court, in Madison Entertainment Corp. v. Industrial Comm., ⁴ abandoned the A. & P. doctrine. In Madison Entertainment Corp. an injured baseball player (F. J. Kleinheinz) was employed by a team (managed by E. L. Lenahan) which contracted with Madison Entertainment Corporation to perform at Breese Stevens Field. Kleinheinz was injured and attempted to collect workmen's compensation from Madison Entertainment. The court found that the words 'contractor or subcontractor under' must be given a more restricted meaning, consistent with the underlying artifraud purpose of the statute:

'. . . While it may be difficult to set precisely the boundaries of the restriction, we think it may accurately be said that the statute was intended to deal with situations where a person or corporation discharges his or its duties under a contract by subletting work, or where such person or corporation delegates his or its usual business to another under contract.

'The editor of an elaborate note in 58 A.L.R. 872, in commenting upon statutes of this type, states:

"It would seem that the chief purpose of provisions of this type is to protect the employees of subcontractors who are not financially responsible, and to prevent employers from relieving themselves of liability by doing through independent contractors what they would otherwise do through direct employees." (Emphasis supplied.) ⁵ p. 798, sec. 288.

Under this interpretation, Madison Entertainment was not liable because its business was promoting use of the facility, not running a baseball team, and therefore it 'was not attempting to discharge its business through independent contractors,' ⁶ and thus avoid liability under the workmen's compensation law. Madison Entertainment has been followed in a line of cases since 1933. ⁷ The invariable ingredient, the absence of which has prevented recovery under the 'contractor under' provisions of sec. 102.06, Stats., is that the alleged 'contractor under' must be engaged in the principal employer's 'ordinary and usual business.'

This line of cases runs counter to the clear and express language of the statute, as pointed out in the A. & P. case. It is clear from the statute that an employer such as GBP shall be liable for compensation to an employee of a contractor or subcontractor under him, such as Arthur Majeske, '. . . who has not complied with the conditions of s. 102.28(2) in any case where such employer (GBP) would have been liable for compensation if such employe (Marcin Siemzuch) had been working directly for him.' Here there is no question that Majeske did not carry the required workmen's compensation insurance. The language is crystal clear and does not permit of the qualifying restriction added by Madison Entertainment which requires that a contractor under be performing part of the 'ordinary and usual' business of the principal employer.

It is true that for years this court has followed the rule that where the court has placed a certain construction upon a statute, such construction becomes a part of the statute and subsequent legislative inaction is deemed to be approval of such construction. ⁸ But there are two entirely different situations in which the application of this rule is sought. In the first, this court has made an interpretation which is followed by the refusal of the legislature to make any change in the statute, even though bills making such a change are submitted...