Honaker v. W. C. & A. N. Miller Development Co.

Decision Date29 May 1979
Docket NumberNos. 55,60,s. 55
PartiesDallas A. HONAKER et ux. v. W. C. & A. N. MILLER DEVELOPMENT COMPANY. Gary J. COFFEY et al. v. The DERBY STEEL COMPANY.
CourtMaryland Court of Appeals

Ferdinand J. Mack, Rockville, for appellants in No. 55.

Wade J. Gallagher, Rockville (William H. Clarke and Galiher, Clarke, Martell & Donnelly, Rockville, on brief), for appellee in No. 55.

John T. Enoch, Baltimore (Jeffrey S. Chernow, Baltimore, on brief, for Gary J. and Marsha Coffey and Hugh E. Donovan, Rockville, on brief, for St. Paul Fire & Marine Ins. Co.), for appellants in No. 60.

David M. Buffington, Baltimore (Donald L. DeVries, Jr. and Semmes, Bowen & Semmes, Baltimore, on brief), for appellee in No. 60.

Argued before MURPHY, C. J., and SMITH, DIGGES, ELDRIDGE and COLE, JJ.

SMITH, Judge.

In each of these appeals an injured employee has been paid workmen's compensation for injuries sustained while working in the construction of a building. In each instance, after collecting such compensation through the insurance carrier of his immediate employer, he has brought suit against the corporation with which his employer had contracted, alleging that negligence attributable to such corporation was responsible for his injury. Each such corporation is an appellee here. Each has been held to be a statutory employer under Maryland Code (1957) Art. 101 (the Workmen's Compensation Act), § 62 and thus immune from any liability other than that for workmen's compensation. We shall affirm as to No. 55, Honaker, but in No. 60, Coffey, we shall reverse and remand for trial.

The facts in these cases are similar but not identical. We consolidated the cases for argument because the same statute is involved and the facts in the two cases resemble one another so closely.

I No. 55 Honaker

Dallas A. Honaker (Honaker) and his wife sued W. C. and A. N. Miller Development Company (Miller). Miller builds and sells houses in Montgomery County. It normally does not build homes to order. In this instance, however, it contracted to build one for an individual who, among other things, desired a slate roof. Miller did not have the men and equipment to install such a roof. Therefore, it employed another corporation to do this particular work. Honaker, an employee of that corporation, was injured while installing the roof. He was paid workmen's compensation by the roofing contractor's insurer. He and his wife then docketed this action against Miller, alleging that the latter provided scaffolding for Honaker's use in the installation of the roof and that this scaffolding was so "negligently constructed and maintained" as to break, causing the injury to Honaker. The first count was to Honaker's use and to the use of the insurer. The Honakers recovered a judgment against Miller in the Circuit Court for Montgomery County. The Court of Special Appeals reversed in W. C. & A. N. Miller Dev. Co. v. Honaker, 40 Md.App. 185, 388 A.2d 562 (1978), holding that Miller met the test relative to Art. 101, § 62 laid down by Judge Orth for this Court in Honaker v. W. C. & A. N. Miller Dev. Co., 278 Md. 453, 365 A.2d 287 (1976) (Honaker I ). We held in the earlier case that the trial court had erred in entering summary judgment in favor of Miller. Accordingly, we remanded the case for trial.

Honaker regards as significant here the fact that Miller was the owner of the land on which the building was being constructed. He likewise contends that the installation of the roof here was not a part of the "trade, business or occupation" of Miller as that term is used in Art. 101, § 62.

II No. 60 Coffey

A general contractor was engaged to erect a building at Anne Arundel Community College. The Derby Steel Company, Inc. made an agreement with the general contractor to furnish and erect the structural steel for the building. Derby in turn contracted with The Prosser Company for the actual erection of the steel. Gary J. Coffey, an employee of Prosser, was injured while working on the structure. Coffey and his wife sued Derby. They alleged negligence on the part of Derby in its design and manufacture of certain of the steel and also claimed a breach of warranty by Derby in its sale of the manufactured goods.

Derby at sometime in the past has erected steel. Its president testified in a deposition that at the time relevant here it had 25 to 30 employees, none of whom were engaged in erection of steel. He said, "Companies in our business generally take the erection, too. In other words, we have always been in the erection business but we don't actually do it, if you see what I mean. We handle it as a sub." Filed as an exhibit in the trial court were copies of pages in the classified section of the Baltimore City telephone directory for the years 1971 to 1976, inclusive, reflecting that Derby advertised itself as a steel fabricator and not as an erector. Derby's president testified that the men who did the actual erection were employed by Prosser, the erection company. He further explained relative to the steel erection:

Q. And these men, they are not employed by you? A. They are employed by the erection company.

Q. They are employed by Prosser? A. That's right. They are a subcontractor of mine. My men are capable of doing it, but if I took them all out of the shop and out into the field and we spent several weeks out there putting it up, I wouldn't be able to produce anything more, would I? That is why I got out of that business, doing the actual work years ago, you see what I mean? When I was a real small company, why we lots of times did our own erection, and I don't know but it has been an industry trade what is the word I am thinking of it is usual practice to buy steel from the fabricator erected.

The Circuit Court for Anne Arundel County granted summary judgment in favor of Derby. The trial judge made the finding required by Maryland Rule 605 a, thus permitting an appeal prior to the end of the whole case. On appeal the Court of Special Appeals affirmed in an unreported opinion (Coffey et al. v. The Derby Steel Company, Inc., et al., No. 1402, September Term, 1977, filed July 20, 1978), relying upon its opinion in W. C. & A. N. Miller v. Honaker Dev. Co., supra.

III The law

The matter here before the Court is whether either Miller or Derby is "a principal contractor" who has "undertake(n) to execute any work which is a part of his trade, business or occupation," a part of which he has contracted with some "other person as subcontractor" to perform. If Miller or Derby is found to come within these terms, then under §§ 62 and 15 of the Workmen's Compensation Act the exclusive remedy of the employee in each instance would be under that act. 1 Roland v. Lloyd E. Mitchell, Inc., 221 Md. 11, 13, 155 A.2d 691 (1959), and cases there cited. If either Miller or Derby is held not to be a statutory employer of its respective claimant, such claimant may maintain the tort action here for alleged negligence in accordance with § 58 of the Workmen's Compensation Act. Roland, supra, 221 Md. at 13, 155 A.2d 691, and cases there cited.

At common law, a worker injured in the course of his employment could seek compensation for his injuries and other damages only through an action in tort. American Coal Co. v. Allegany Co., 128 Md. 564, 98 A. 143 (1916), was a case arising under a statute originally enacted by Chapter 153 of the Acts of 1910 for the relief and sustenance of employees injured in coal and clay mining in Allegany and Garrett Counties and the dependents of employees injured or killed in such mining. Judge Burke in that instance was writing for our predecessors subsequent to the passage of our Workmen's Compensation Act concerning a case which arose prior to its enactment. The Court there said:

The application of the principles of the common law to suits for personal injuries sustained in hazardous employments resulted in many cases in injustice to the parties concerned as well as to the State. It filled the courts with litigation; it became the fruitful source of perjury; it engendered bitterness between employer and employee; it resulted in great economic waste, and it turned out an army of maimed and helpless people as dependents upon the charity of friends or the public. The operation of these rules came to be regarded as "foolish, wasteful, inefficient, and barbarous," and the national government and a number of the states have now replaced them by efficient and humane laws. (Id. at 574, 98 A. at 146.)

It was reactions such as this which led to the appointment by Governor Phillips Lee Goldsborough on May 11, 1913, of a commission "to prepare a bill on the question of Employers' Liability and Workmen's Compensation Laws to be submitted to the General Assembly at its session held in 1914," and the enactment of our Workmen's Compensation Act by Chapter 800 of the Acts of 1914. 2 See the preamble to that statute quoted in Solvuca v. Ryan & Reilly Co., 131 Md. 265, 267, 101 A. 710 (1917). The statute as passed contained a major loophole in that, under its terms, an employer could, by entering into a subcontract for the performance of parts of an entire project, escape liability under the act. Chapter 597 of the Acts of 1916 contained a number of amendments to the existing sections of the Workmen's Compensation Act and added a new section which became § 62. The need for these changes no doubt had been indicated by experience under that act. The purpose of § 62, which has remained unchanged since its enactment, was discussed at length in State v. Bennett Bldg. Co., 154 Md. 159, 140 A. 52 (1928):

It is common practice in certain trades for one party to agree for a reward to complete a certain work or undertaking, and then to enter into subcontracts with various parties providing for the execution by them respectively of specified parts of the whole work or undertaking, so that the whole or part thereof would be done by such...

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