Huffstettler v. Lion Oil Co., 14797.

• Decision Date: 11 December 1953
• Docket Number: No. 14797.,14797.
• Parties: HUFFSTETTLER v. LION OIL CO.
• Court: U.S. Court of Appeals — Eighth Circuit

208 F.2d 549 (1953)

HUFFSTETTLER v. LION OIL CO.

No. 14797.

United States Court of Appeals Eighth Circuit.

December 11, 1953.

Griffin Smith, Jr., Little Rock, Ark. (John F. Gibson, Dermott, Ark., and Warren E. Wood, Little Rock, Ark., were with him on the brief), for appellant.

Frank E. Chowning, Little Rock, Ark. (J. Merrick Moore and Moore, Burrow, Chowning & Mitchell, Little Rock, Ark., were with him on the brief), for appellee.

Before JOHNSEN and COLLET, Circuit Judges, and NORDBYE, District Judge.

NORDBYE, District Judge.

Appellant, sometimes referred to as Huffstettler, appeals from the trial court's order granting appellee's motion for a summary judgment. The action is one for personal injury based upon negligence. At the time of the injury, appellant was employed by one M. F. Taylor, a distributor of appellee's petroleum products in a certain exclusive territory assigned to Taylor, whose duties and the respective obligations of the parties thereto are to be found in a written contract as amended from time to time and which is designated as a distributor's contract. Under the provisions of this contract, appellee Lion agreed to ship from time to time the petroleum products as listed in the contract to Taylor at the bulk plant of Lion located at Hamburg, Arkansas. The petroleum products thus delivered were to be sold by Taylor in behalf of Lion to all the latter's customers in the territory assigned to Taylor at prices fixed by Lion, and as compensation Taylor was to receive a certain commission as listed in his contract upon the products thus sold and accounted for by him. Taylor was to furnish at his own expense the necessary trucks and other equipment for the distribution and sale of Lion's petroleum products in the territory. He also was required to hire at his own expense the necessary labor in the performance of the distributorship.

One Joe Kusturin was a retail dealer of Lion's in Taylor's territory under a written contract with Lion. During the existence of the contract, however, and in 1945, Kusturin died. Apparently his estate was not probated. His widow thereafter continued to operate the station substantially in the same manner as operated by her husband, but she did not, and was not requested to, enter into any written contract with Lion. On the day of the accident, February 6, 1952, Huffstettler was instructed by Taylor to deliver certain gasoline to the Kusturin Service Station. In filling this order at the bulk plant at Hamburg, Arkansas, a valve releasing the gasoline stored in the bulk plant was allegedly out of order. The gasoline escaped and spilled on Huffstettler, and the resulting vapor came in contact with an open gas stove nearby, causing a fire which resulted in Huffstettler's injury. Taylor was not qualified under the Arkansas Workmen's Compensation Act. Huffstettler thereafter brought this action for damages against Lion charging it with negligence. Lion moved the court for a summary judgment upon the ground that Huffstettler's exclusive remedy was to proceed against Lion under the Arkansas Workmen's Compensation Act, because the Act provides that where a subcontractor fails to secure the compensation required by its terms, the prime contractor shall be liable for compensation to the employees of the subcontractor.

Section 6 of the Arkansas Workmen's Compensation Law, Section 81-1306, Arkansas Statutes 1947, Annotated (1951 Supplement), provides:

"Where a subcontractor fails to secure compensation required by this Act, the prime contractor shall be liable for compensation to the employees of the subcontractor. * * *"

In disposing of the motion for summary judgment, the court concluded that

"Lion was a contractor and Taylor a subcontractor, and in view of the fact that Taylor did not carry insurance as required by the Workmen\'s Compensation Law of Arkansas * * * Lion was the statutory employer of Taylor\'s employees, including plaintiff, and is liable to plaintiff for compensation under the act."

And in view of Section 81-1304, Arkansas Statutes 1947, Annotated (1951 Supp.); Init.Meas.1948, No. 4, Section 4, which provides that "The rights and remedies herein granted to an employee subject to the provisions of this Act (§§ 81-1301 — 81-1349), on account of injury or death, shall be exclusive of all other rights and remedies of such employee," the court concluded that because Lion had afforded compensation coverage, the rights of Huffstettler against Lion were limited exclusively by the rights afforded to him under the provisions of the Workmen's Compensation Act, and therefore dismissed the action upon the ground that it lacked jurisdiction.

Huffstettler assigns error as follows: (1) That Lion is not a contractor within the meaning of Section 6 of the Workmen's Compensation Act because it is a producer and merchandiser of goods and not one who agrees to render service or perform work in connection with the sale of goods; (2) that his injury was not incurred in the course of and in the performance of any contract between Lion and one of its retail dealers and hence Section 6 of the Act would not apply; and (3) under the Arkansas Constitution, no limitation of liability for personal injuries could be imposed except in the employer-employee relationship, which is not present here.

Appellee's customers who purchased petroleum products from it for resale at their gasoline service stations operated under a Dealer's Sales Agreement and an Equipment Rental Agreement. These contracts and their fulfillment constituted something more than a mere sale of petroleum products. There were substantial services to be rendered by Lion in connection with the fulfillment of these contracts with its retail dealers, and substantial services to be rendered by Taylor to Lion under his distributor's contract. Under its contracts with its dealers, Lion was required to and did, maintain adequate bulk stations in the territory so as to insure expeditious delivery of its products. It agreed to sell to its dealers any of its petroleum products offered in the immediate territory assigned to Taylor and served by its bulk plant at the prices which prevailed in the territory. It agreed to lease to the dealers for a nominal consideration suitable equipment for the dispensing of its petroleum products. It agreed to install at its own expense the leased equipment, such as tanks, pumps, and miscellaneous paraphernalia. Lion reserved the right and privilege of placing its advertising material in and about the premises of the dealer. The dealer agreed to purchase a minimum amount of gasoline, motor oil and kerosene each month to keep the tanks substantially full of the required petroleum products so as to insure an adequate supply for the trade. The dealer also agreed to indemnify Lion for any and all liability for loss and damage caused by leakage, fire or explosion of gasoline and kerosene in and about the service station, whether due to imperfections of equipment or negligence, and to keep the property belonging to Lion in good working order, together with other miscellaneous duties and obligations.

In determining whether or not Lion was a prime contractor and Taylor a subcontractor in doing that which was done at the time of Huffstettler's injury, the relationship of Lion to Taylor and of Lion to the various retail gasoline stations selling Lion's petroleum products in this territory must be considered and appraised. Taylor was assigned as a distributor of Lion's products to all of Lion's dealers in certain assigned territory in Ashley and Drew counties in the State of Arkansas. All of these retail distributors which Taylor served were operating under contracts similar to that which was held by Joe Kusturin during his lifetime. All of these customers were served through Taylor and from Lion's bulk plant located at Hamburg, Arkansas. All orders for petroleum products given to Taylor by such customers and filled by him were not mere sales of petroleum products, but were actually the performance by Taylor of a duty essential to the fulfillment of one of the several substantial services which Lion agreed to perform for its customers and the discharge of a duty which Taylor had agreed to perform under his contract with Lion. Lion had contracted to furnish its customers petroleum products as they might require for their particular needs. That obligation and that service rested upon Lion at all times. Indeed, that was Lion's primary liability. The only way in which Lion could comply with that obligation and service was through the services of Taylor, and when Huffstettler was filling the Kusturin order he was performing work in furtherance of that obligation and that service to one of Lion's customers. Thus, certain requirements of the retail dealers for Lion's petroleum products, which Lion had agreed to make available under its contract, had to be fulfilled by Taylor. Under these circumstances, the teachings of the Arkansas cases unmistakably indicate that Lion was the contractor, and Taylor, in fulfilling his duties to Lion in supplying the service stations with the necessary petroleum products, was the subcontractor. Hobbs-Western Company v. Craig, 209 Ark. 630, 192 S.W.2d 116; Brothers v. Dierks Lumber & Coal Company, 217 Ark. 632, 232 S.W.2d 646. At the time Huffstettler was injured, it is clear that he was acting in the course and scope of his employment with Taylor as such subcontractor.

In Brothers v. Dierks Lumber & Coal...