Haw v. Liberty Mut. Ins. Co.

• Decision Date: 16 January 1950
• Docket Number: No. 10100.,10100.
• Parties: HAW et al. v. LIBERTY MUT. INS. CO., and to Use of GIACOMO.
• Court: U.S. Court of Appeals — District of Columbia Circuit

86 US App. DC 86, 180 F.2d 18 (1950)

HAW et al. v. LIBERTY MUT. INS. CO., and to Use of GIACOMO.

No. 10100.

United States Court of Appeals District of Columbia Circuit.

Argued November 17, 1949.

Decided January 16, 1950.

Mr. John H. Burnett, Washington, D. C. with whom Mr. Charles W. Arth, Washington, D. C., was on the brief, for appellants.

Mr. Edward Bennett Williams, Washington, D. C., with whom Mr. Nicholas J. Chase, Washington, D. C., was on the brief, for appellee.

Before CLARK, WASHINGTON and BAZELON, Circuit Judges.

WASHINGTON, Circuit Judge.

Joseph P. Giacomo was a foreman employed by Mace Properties, Inc., on an extensive building job being conducted by that company on its own land in Arlington, Virginia. The Haw Company, which was in the contracting business, and had a long-standing business relationship with Mace, had agreed with Mace to supply certain equipment, including bulldozers with operators, and to do the excavation work. While the exact nature of the agreement is not clear, it appears that the work here in question was paid for at a stipulated sum per man-hour (of equipment use). In any event the work was for a profit. Haw had a supervisor on the job who generally gave orders to the men Haw supplied. Haw paid its employees and alone had the right to discharge them. Mace exercised a measure of supervisory control over them, as it told them where to work on the job and when, as well as what job was to be done.

On June 19, 1945, a lumber truck delivering supplies to one of Mace's sub-contractors became stuck in the mud on the construction premises. A bulldozer owned by Haw and operated by one of its employees, Bowers, was to help dislodge the truck — a task within the scope of what Haw had agreed to do. Giacomo, with another person, was holding a board against the rear of the truck to prevent direct contact between the truck and the bulldozer blade. When the blade hit the board, Giacomo's hand was caught and injured.

Mace's insurer, the appellee, Liberty Mutual Insurance Company, brought this action against appellant Haw. It sued as subrogee of Giacomo, and for his use. Liberty Mutual alleged that Giacomo's injury was due to the negligence of Haw's employee; that Liberty had paid Giacomo compensation under the Virginia Workmen's Compensation Act, Code 1942, § 1887 (1) et seq.; and that under that Act it was entitled to bring this suit. Haw denied negligence or that Bowers was acting as its agent. Defendant further alleged that Giacomo was contributorily negligent; that Bowers was for the time being a servant of Mace and a fellow servant of Giacomo; and that, accordingly, Haw was not liable for Bowers' negligence, if negligence there was. In addition, among other matters, Haw denied that Liberty had paid anything to Giacomo.

Before the trial it was stipulated, in substance, that if the jury found for the plaintiff, it would render a single verdict, not separating Liberty's and Giacomo's claims. A verdict of $17,500 was rendered, and the trial court, denying appellant's motions for a judgment n. o. v. or for a new trial, entered judgment for the plaintiff. The Haw Company now appeals.

This case does not involve a question of liability to a member of the general public, having no connection with the construction work. Here, a worker is alleged to have been injured through the fault of another worker, hired and paid by a different employer, but engaged in the same general undertaking. In such a situation, where the employer hiring the allegedly derelict worker exercises a sharply reduced degree of control over the latter's actions, by reason of the requirements of the undertaking itself, and where workmen's compensation is available, the question is presented whether that employer should be made liable to the injured man in a suit for damages.

This problem has been considered in a large number of cases closely similar in their facts to the present. In these cases, it has frequently been said that "a servant may be loaned by the master to a third person, to perform services for the third person, and to an extent the servant may assume a relationship to the borrowing master that overshadows and in many respects delimits the relationship to the lending master."¹ This has in numerous instances been carried to the point of relieving the original master of responsibility for the acts of the loaned servant, in spite of the usual doctrine of respondeat superior.² In determining whether the original master-servant relationship has thus been severed or modified, the decisions appear to have drawn no distinction between a case where a member of the public was injured, and a situation, such as the present, where the injury was to another employee on the job. The same criteria have been considered determinative of liability or non-liability in either instance.³

In dealing with this issue, a factor frequently treated as decisive is the locus of the power to control and direct the men in the performance of their work: power is said to carry liability with it.⁴ Evidence of control has been found in such elements as the payment of wages, the right to discharge, and the right to direct what work shall be done as well as the specific manner in which it shall be accomplished.⁵ But where control is divided, there has not been complete agreement as to which elements of control are dominant, and as to the total amount of control prerequisite to the fastening of liability.⁶ Another inquiry is — whose work is the employee doing, whose business is he furthering?⁷ Here also the decisions have not always reached consistent results, for often the work directly advances the interests of both the "borrowing" and the "lending" employer.⁸ Finally, some courts have taken into consideration both the business interests of the employers involved in the work and the division of the elements of control between them.⁹ Apparently implicit in this approach is the feeling that the problem cannot be resolved by purely mechanical tests, and that the factors both of risk prevention and of risk distribution are material considerations.¹⁰ And perhaps also present is the conclusion that often the elements that normally call for respondeat superior liability are so divided that either one of the employers might justifiably be held responsible; that it is not unreasonable for an employer who has both a business interest in the work and some control over its execution to bear the risk of the employee's negligence.¹¹

In this case, both parties regarded Virginia law as governing. This seems correct, as the contacts for choice of law purposes were overwhelmingly in Virginia. We have found no Virginia decision directly in point on the facts presented. In cases generally analogous to the present, the Virginia courts appear to have treated the locus of control as decisive, although giving weight to factors relevant to the question of whose work was involved.¹² The trial court's charge to the jury was in similar terms: the principal emphasis was on control, and, in addition, reference was made to business interest (the "whose work" test). We believe that the charge was adequate, was not prejudicial to the defendant, and was in accord with Virginia law. There was ample evidence to support the jury's verdict. Bowers was selected and paid by Haw and was ultimately responsible to Haw. The latter was shown to have had a substantial business interest in the work, and a large amount of control.

In reaching this conclusion, we have not ignored the strong arguments which may be advanced in support of appellant's position. Giacomo was intimately familiar with the construction work and the construction premises. He was an active participant in the task of dislodging the truck, along with the operator of the bulldozer. He was entitled to workmen's compensation from Mace. It is arguable that the accident which happened to him was simply one of the industrial risks which workmen's compensation was designed to cover.¹³ On the other hand, full redress is not always produced by the statutory compensation formula. And apart from recompense to the employee, the compensation insurer has an interest in any possible recovery which may be obtained against a third party responsible for the industrial accident. We do not think that the fact of the instant case require a departure from the ordinary application of the rules of respondeat superior. We find affirmative support for this result in the Virginia compensation act, which specifically provides for full recovery from a third party tort-feasor, for the benefit of both the injured employee and the compensation insurer.¹⁴

Appellant relies on Western Marine & Salvage Co. v. Ball, 1930, 59 App.D.C. 208, 37 F.2d 1004, decided by this court. In that case Western sold some scrap metal located in a shipyard to one Simon, and as part of the deal rented to him at cost a crane with operator, to be used in breaking up the metal. Ball, one of Simon's employees, was injured through the operator's negligence, and sued Western. It was held that the operator was Simon's employee pro hac vice although Western hired him, paid his wages, and had the right to fire him. Western thus was held not liable. That case is distinguishable on many grounds. First, Western had no real control over the crane operator's work, as Simon's men were the sole supervisors of the job, including the operation of the crane. Second, the crane and operator were lent at cost, as merely ancillary to the major part of the contract, the sale, and the work for which the crane was used was that of Simon. In the case at bar the charge for the men and equipment included a profit, their presence was an integral part of the contract, and their work was Haw's responsibility. Third, in the Western case the contract itself recited that the breaking and loading of the metal were to be at the cost and expense of the vendee, and that the obligations of Western...