Hagberg v. Colonial & Pac. Frigidways, Inc.

• Decision Date: 08 March 1968
• Docket Number: 40739,Nos. 40675,s. 40675
• Parties: Duane HAGBERG, Respondent, v. COLONIAL & PACIFIC FRIGIDWAYS, INC., Appellant.
• Court: Minnesota Supreme Court

Page 33

157 N.W.2d 33

279 Minn. 396

Duane HAGBERG, Respondent, v. COLONIAL & PACIFIC FRIGIDWAYS, INC., Appellant.

Nos. 40675, 40739.

Supreme Court of Minnesota.

March 8, 1968.

Syllabus by the Court

1. An action authorized by Minn.St. 176.031 for damages resulting from an employment-connected accident covered by the Workmen's Compensation Act exists because of the contract of employment and arises from it within the meaning of § 303.13, subd. 1(3), permitting a special form of service on foreign corporations.

2. If an employer conducts a substantial amount of business in this state, it is localized in this state and subject to our workmen's compensation laws with respect to resident employees whose duties to a substantial extent consist of implementing its Minnesota business activity. This applies to an accident occurring in another state as well as to accidents occurring within Minnesota's territorial limits.

3. The question of whether there is an employment relationship is a question of fact. This court's only function with regard to this issue is to determine whether the trial court's finding is reasonably supported by the evidence. The finding of such a relationship in the instant case is supported by evidence of contract provisions involving the right to control the details of the work.

4. Where a motor vehicle leaves the road with no apparent explanation, a jury may reasonably draw the inference that a resulting accident was caused by the negligence of the driver.

5. A verdict of $14,500 is held not grossly excessive, there being evidence of a substantial loss of earning capacity attributable to the accident.

6(a). The trial judge correctly refused to submit the question of willful negligence to the jury where the evidence would not permit such a finding.

6(b). The equitable 'clean hands' doctrine is not applicable to an action for damages authorized by Minn.St. 176.031.

Gislason, Reim, Alsop & Dosland, New Ulm, for appellant.

Mott, Grose, Von Holtum & Hefferan, Worthington, for respondent.

OPINION

SHERAN, Justice.

Appeal from a judgment of the district court.

Duane Hagberg commenced this action against Colonial & Pacific Frigidways, Inc., a Delaware corporation, by process served pursuant to Minn.St. 303.13, subd. 1(3). The theory of his suit is that he is entitled to recover damages as allowed by § 176.031 for injuries sustained as the result of an employment-related accident occurring in the State of Montana on June 8, 1963, because (a) he is entitled to receive from Colonial the benefits provided by the Minnesota Workmen's Compensation Act under the circumstances of the accident; (b) defendant's liability for this workmen's compensation was neither insured nor self-insured as required by the laws of this state; and (c) the accident was caused by the negligence of plaintiff's fellow employee, whose fault is attributable to defendant as employer.

Plaintiff prevailed in the trial court and defendant, its post-trial motion denied, now contends:

(1) The service of process pursuant to § 303.13, subd. 1(3), was not effectual because the action is for a tort, no part of which occurred in Minnesota.

(2) The Workmen's Compensation Act of Minnesota has no application to an accident occurring in Montana under the circumstances here involved.

(3) There was no relationship of employer and employee.

(4) Negligence attributable to Colonial was not established.

(5) The verdict was excessive.

(6) The trial court omitted essential instructions to the jury pertaining to (a) willful negligence and (b) 'clean hands.'

The injuries sustained by plaintiff occurred because a truck-tractor owned and leased by him to defendant, but operated by one Bierman while plaintiff was sleeping, and an attached trailer, owned by defendant and used for the transportation of commodities in the furtherance of its business as a common carrier, left a straight, level Montana roadway and overturned at a time when weather and road-surface conditions were normal. Additional facts will be stated in connection with the pertinent issues.

1. The jurisdictional question involves interpretation of Minn.St. 303.13, subd. 1(3), which provides:

'If a foreign corporation makes a contract with a resident of Minnesota to be performed in whole or in part by either party in Minnesota, or if such foreign corporation commits a tort in whole or in part in Minnesota against a resident of Minnesota, such acts shall be deemed to be doing business in Minnesota by the foreign corporation and shall be deemed equivalent to the appointment by the foreign corporation of the secretary of the State of Minnesota and his successors to be its true and lawful attorney upon whom may be served all lawful process in any actions or proceedings against the foreign corporation arising from or growing out of such contract or tort * * *.'

The essential elements of this statute presently relevant are:

(1) A foreign corporation and a resident of Minnesota must have made a contract to be performed in whole or in part in Minnesota.

(2) The action must arise from or grow out of this contract.

There is no dispute about the first element. Defendant was a foreign corporation with its base in Storm Lake, Iowa; plaintiff was a Minnesota resident. They had entered into an employment contract in Iowa to be performed in part in Minnesota. But does this action arise from or grow out of the employment contract?

As noted, the present action is one brought under the provisions of § 176.031 of the Workmen's Compensation Act. It provides in part:

'The liability of an employer prescribed by this chapter is exclusive and in the place of any other liability to such employee * * *. If an employer * * * fails to insure or self-insure his liability for compensation to his injured employees * * *, an injured employee * * * may elect to claim compensation under this chapter Or to maintain an action in the courts for damages on account of such injury or death. In such action it is not necessary to plead or prove freedom from contributory negligence. The defendant may not plead as a defense that the injury was caused by the negligence of a fellow servant, that the employee assumed the risk of his employment, or that the injury was due to the contributory negligence of the employee, unless it appears that such negligence was wilful on the part of the employee. The burden of proof to establish such wilful negligence is upon the defendant.' (Italics supplied.)

The rights afforded by our compensation act are incidents of the employment relationship. ¹ The specific right to bring an action under this law is derived from that relationship. In this sense, the right of action provided by § 176.031 is one arising from the employment contract.

Defendant argues that the action, to be covered by the statute, must not only arise from the contractual relationship, but must in addition be in the traditional form of a contract action. The cause pleaded here involves negligence and is in the form of a tort claim. But it is not an action for common-law negligence. If it were, such defenses as contributory negligence and assumption of risk would be available to the defendant. ² It is, instead, a cause of action which exists only because § 176.031 gives it to the employee as a term of his employment.

Defendant cites Marshall Egg Transport Co. v. Bender-Goodman Co. Inc., 275 Minn. 534, 148 N.W.2d 161, in support of its position on the jurisdictional question. That case deals with the portion of § 303.13, subd. 1(3), which relates to contracts; but it involves a somewhat different problem than the one now before us. We held there that jurisdiction of a New York corporation could not be acquired by service under Minn.St. 303.13, subd. 1(3), when the action was to recover the purchase price of a quantity of eggs to be paid according to the terms of a contract allegedly made, at a time when the eggs were in the possession of the New York defendant, by a telephone conversation between the parties, the plaintiff being in Marshall, Minnesota, and the defendant in New York City. We held in effect that the contacts of the defendant with this state in that transaction, consisting of the telephone conversation followed by the transmittal of a draft in part payment (payment of which was stopped before negotiation), were too meager to justify the assertion of jurisdiction by this state over the corporate defendant there involved. The principle of the Marshall case does not apply here where defendant had conducted a substantial and continuing business in Minnesota over an extended period of time. For example, from January 1, 1963, until the time of the accident in June, over 28 percent of all shipments made by defendant had an origin or destination in Minnesota. Plaintiff furthered this business in Minnesota. An obligation reciprocal to the privilege of doing business in the state as defendant has done is amenability to suit in this state. Fourth Northwestern Nat. Bank v. Hilson Industries, Inc., 264 Minn. 110, 117 N.W.2d 732.

The other cases cited by defendant on the jurisdictional question ³ deal with that portion of § 303.13, subd. 1(3), that is concerned with torts rather than contracts and thus are not applicable.

Under Minn.St. 303.13, in our opinion, the action need only arise out of the contractual relationship and need not in addition be an action in the traditional form of contract. The court therefore properly assumed jurisdiction over defendant in the instant case.

2. The second issue raises the question of whether the relationship between defendant and plaintiff was such as to permit application of our Workmen's Compensation Act.

The trial court found that defendant did a substantial amount of business in Minnesota and held the Minnesota act applicable. The court's determination that defendant's business was localized in Minnesota is adequately supported by the evidence. From January 1,...