Herrera v. A. D. Fulton Const. Co.

• Decision Date: 27 January 1968
• Docket Number: No. 45132,45132
• Citation: 200 Kan. 468,436 P.2d 364
• Parties: John C. HERRERA, Appellee, v. A. D. FULTON CONSTRUCTION COMPANY, (Respondent), and Alliance Mutual Casualty Company (Insurance Carrier), Appellants.
• Court: Kansas Supreme Court

Page 364

436 P.2d 364

200 Kan. 468

John C. HERRERA, Appellee, v. A. D. FULTON CONSTRUCTION COMPANY, (Respondent), and Alliance Mutual Casualty Company (Insurance Carrier), Appellants.

No. 45132.

Supreme Court of Kansas.

Jan. 27, 1968.

Syllabus by the Court

1. The purpose of K.S.A. 44-503(a) is to give employees of a subcontractor a remedy against a principal attempting to evade liability by contracting with outsiders to do part of the work which is undertaken by the principal.

2. Whether a workman is an independent contractor or an employee depends upon the facts and circumstances of each particular case.

3. The record in a proceeding under the Workmen's Compensation Act is examined and it is held the findings of the trial court are supported by substantial competent evidence.

Harrison Smith, of Garden City, argued the cause and was on the briefs for appellants.

Lelyn J. Braun, Garden City, argued the cause, and Dale H. Corley and Patrick J. Regan, Garden City, were with him on the briefs for appellee.

KAUL, Justice.

This is an appeal by respondent and its insurance carrier from an award of workmen's compensation. The question involved is whether claimant was an employee or a partner of a subcontractor.

The appellant-respondent, sometimes referred to as Fulton, was engaged in the business of building houses. The respondent subcontracted with one Lewis L. Kemper and claimant (Herrera) to do bricklaying jobs and masonry work on some of its building projects. The appellants contend that claimant and Kemper held themselves out as partners and that claimant was a member of a subcontractor-partnership rather than an employee. Claimant contends he was not a partner of Kemper but merely an employee. After he suffered an injury claimant informed respondent that he was not a partner of Kemper and sought relief under respondent's workmen's compensation insurance. Claimant contended that even though employed by Kemper he was engaged in work that was a part of respondent's business and under the provisions of K.S.A. 44-503(a) respondent was liable as if claimant had been immediately employed by him. The workmen's compensation examiner awarded compensation. The respondent and insurance carrier appealed to the director who denied the claim. Claimant appealed to the district court which reversed the director and reinstated the examiner's award. Thereafter respondent and its insurance carrier perfected this appeal.

The trial court made comprehensive findings which may be summarized as follows: Claimant was a common laborer with an 8th grade education; that he worked as a mud tender for Lewis L. Kemper, a bricklayer, for about three months prior to the injury. Claimant was either paid $2 an hour or received a third of the profits made by him and Kemper on the job. Kemper got the jobs, made the bids on them, received the checks and divided the money. The trial court found that Kemper and claimant held themselves out to be partners but the claimant actually knew nothing about the construction business except his work as a mud tender, and that he merely followed Kemper's orders and did what he was told to do. The trial court concluded:

'* * * The arrangement was a transparent attempt upon the part of Kemper to avoid the responsibilities of an employer. Claimant was merely an employee who was paid by getting a shore of the profits. He had no part in making the decisions of the business and no say as to the bids, no say as to when and where or how the work was to be done. He took his orders from Kemper. The respondent, A. D. Fulton, is a general contractor, who is presumed to know at least the rediments of his business. He was aware of the arrangement between Kemper and Herrera since they had worked upon other jobs for him and also since he was personally working on the job with them. He could see and observe the relationship between Kemper and Herrara. Regardless of what he might have been told by Kemper or even perhaps by Harrera, from his own knowledge of the contracting business and from his actual observations he either knew of should have known that Herrera was not actually a partner but was an employee. The Workmen's Compansation law is designed to protect working men. It is a complete and separate code of law unto itself and it cannot be evaded by any such transparent arrangement as attempted by Kemper in this case, Kemper was the sub-contractor of Fulton and the claimant was the employee of Kemper, and as such employee is covered by the workmen's compensation act and is entitled to recover herein.'

The sole question confronting this court on review is whether there is sufficient substantial evidence to support the findings of the trial court. The rules governing our review and the many decisions of this court, adhering thereto, are set out in Phillips v. Skelly Oil Co., 189 kan. 491, 370 P.2d 65, are as follows:

'* * * (1) it is the function of the trial court not that of the appellate court to pass upon the facts and this court has no jurisdiction over questions of fact on appeal under the Workmen's Compensation Act * * *; (2) the question whether the disability of a workman is due to an accident arising out of and in the course of his employment is a question of fact and when it is determined by the district court will not be disturbed by this court where there is substantial evidence to sustain it * * *; (3) whether the judgment is supported by substantial competent evidence is a question of law as distinguished from a question of fact * * *; and (4) in reviewing the record to determine whether it contains substantial evidence to support the district court's judgment, this court is required to review all the evidence in the light most favorable to the party prevailing below, and if there is any evidence to support the judgment it must be affirmed even though the record discloses some evidence which might warrant the district court making a contrary decision * * *.' (pp. 492, 493, 370 P.2d p. 66.)

The basis for the award in this case is found in the provisions of K.S.A. 44-503(a) which we quote in pertinent part as follows:

'(a) Where any person (in this section referred to as principal) undertakes to execute any work which is a part of his trade or business or which he has contracted to perform and contracts with any other person (in this section referred to as the contractor) for the execution by or under the contractor of the whole or any part of the work undertaken by the principal, the principal shall be liable to pay to any workman employed in the execution of the work any compensation under this act which he would have been liable to pay if that workman had been immediately employed by him; * * *.'

The purpose of the statute quoted is to give employees of a subcontractor a remedy against a principal evading liability by contracting with outsiders to do part of the work which is undertaken by the principal. (Schafer v. Kansas Soya Products Co., 187 Kan. 590, 358 P.2d 737; Durnil v. Grant, 187 Kan. 327, 356 P.2d 872; Bailey v. Mosby Hotel Co., 160 Kan. 258, 160 P.2d 701.)

Bearing in mind the rules limiting our review of the trial court's application of the statute quoted, we turn to the specific question whether there is substantial competent evidence to support the trial court's finding that claimant was an employee rather than a partner of subcontractor Kemper. The record discloses the respondent (contractor) furnished all the material, and the subcontractor (Kemper) owned and furnished all of the equipment. The work being done at the time of the injury was the bricking of a fireplace, and it was paid for on a per brick basis.

The claimant testified concerning his arrangement with Kemper as follows:

'Q. All right. Now, to get to the general work, what were you and Mr. Kemper doing for Mr. Fulton? A. Well, we was bricking a house.

'Q. Bricking a private residence? A. Yes, sir.

'Q. All right. Now, what kind of arrangement did you and Mr. Kemper have with Mr. Fulton? A. Well, I didn't have any arrangement. I just worked with Lewis and Lewis would give me a third of what we'd make on the job.

'Q. All right. Explain what you mean by 'Lewis would give me a third of what we'd make.' A. Well, on the job that we went on he'd either pay me $2 an hour or he would take and figure up whatever we made and I got a third of what the job was.

'Q. Now, were these jobs bid? A. Yes.

'Q. Well, how were they bid, John, if you know. A. Well, I don't know how they was bid because Lewis would bid on them and he'd say, 'We got to go to so and so place,' and I'd just go with him.

'Q. All right. And then how were you paid. A. Well, sometimes it would be-they made the check out to Lewis and I, or all the time, rather, and then we'd come in to the bank were he'd make a personal check to me of his own and he'd take the full amount.'

Lewis L. Kemper testified in part as follows:

'Q. Did you bring your books and records with you? A. There are none in existence.

'Q. Going to the issues in this case, on July 23, 1965, Mr. Kemper, who were you performing a contract for? A. We were-Well, we were working for A. D. Fulton Construction Co. on a contract.

'Q. Okay. What kind of a contract did you have with Mr. Fulton? A. We had two kinds there. The work was mixed enough-We put in a base for a fireplace, then we went up to start on the brick, on the outside, so at the time we were working with the brick it was a per brick basis.

'Q. How did you and Mr. _ _ or who made the contracts? A. It is an oral contract, usually honored by bricklayers and contractors. I made it, mostly because of the experience in the work.

'Q. What kind of arrangement did you and Mr. Herrera have? A. We called ourselves partners and tried to set it up, all our business arrangements, in that manner.

'Q. How did you and Mr. Kemper settle up-I mean you and Mr. Herrera settle up your accounts? A. By taking the expenses off the top and then splitting the...