Krentz v. Union Carbide Corporation, 16477.

• Decision Date: 01 August 1966
• Docket Number: No. 16477.,16477.
• Citation: Krentz v. Union Carbide Corporation, 365 F.2d 113 (6th Cir. 1966)
• Parties: William KRENTZ, Administrator of the Estate of Roy P. Stewart, Jr., Plaintiff-Appellant, v. UNION CARBIDE CORPORATION and Worthington Corporation, Defendants-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

365 F.2d 113 (1966)

William KRENTZ, Administrator of the Estate of Roy P. Stewart, Jr., Plaintiff-Appellant, v.UNION CARBIDE CORPORATION and Worthington Corporation, Defendants-Appellees.

No. 16477.

United States Court of Appeals Sixth Circuit.

August 1, 1966.

William D. Eggenberger, Detroit, Mich. (Eggenberger & Eggenberger, Detroit, Mich., Raubolt, MacDonald & Dodge, Don F. Dodge, Trenton, Mich., on the brief), for appellant.

Buell Doelle, Detroit, Mich.(Vandeveer, Haggerty, Doelle, Garzia, Tonkin & Kerr, Detroit, Mich., on the brief; Ashley Cole, Legal Dept., Union Carbide Corp., New York City, of counsel), for appelleeUnion Carbide Corp.

G. Cameron Buchanan, Detroit, Mich., for Worthington Corp.

Before WEICK, Chief Judge, O'SULLIVAN, Circuit Judge, and CECIL, Senior Circuit Judge.

CECIL, Senior Circuit Judge.

This appeal arises out of an action brought in the United States District Court for the Eastern District of Michigan, Southern Division, by William Krentz, Administrator of the Estate of Roy P. Stewart, Jr., against Union Carbide Corporation and Worthington Corporation.Jurisdiction of the Court was invoked by virtue of diversity of citizenship (Section 1332(a),Title 28, U.S.C.).

The plaintiff is a resident of the State of Michigan and is the duly appointed and qualified administrator of the Estate of Roy P. Stewart, Jr., deceased.Union Carbide Corporation is a New York corporation and Worthington Corporation is incorporated in Delaware.Both corporations are authorized to do business in the State of Michigan and at the time the cause of action herein accrued, they were doing business in the Southern Division of the Eastern District of Michigan.We will refer to these corporations as Union Carbide and Worthington.The case was tried to a jury and at the conclusion of the plaintiff's evidence the district judge directed a verdict in favor of the defendants, Union Carbide and Worthington.The plaintiff appealed.

Roy P. Stewart, Jr., the plaintiff's decedent whom we will call the deceased, met his death on June 21, 1961, as a result of a fire or an explosion in Union Carbide's oxygen manufacturing plant at Ecorse, Michigan.This plant went into operation in May of 1960.Prior thereto the combustion department of Great Lakes Steel Corporation posted bids on its bulletin boards throughout the plant notifying its employees of nine available jobs in the new oxygen plant, known as the Linde Plant, a division of Union Carbide.The deceased submitted a bid and was given an examination by Great Lakes Steel to determine whether he was qualified for one of the jobs.The examination was prepared and given by Great Lakes Steel with the assistance and cooperation of the superintendent of the Linde Plant.Union Carbide, through this plant, supplied oxygen to Great Lakes Steel for its manufacture of steel.

The deceased was found to be qualified for one of the nine available jobs and subsequently went to work in the new oxygen plant of Union Carbide.He waived seniority rights at Great Lakes Steel in favor of the better job at Union Carbide.He had worked in this plant about a year before his accidental death.He continued to be a member of United Steel Workers of America, the union representing Great Lakes Steel employees.He was paid his wages by Great Lakes Steel and he punched a Great Lakes Steel time card in a Great Lakes Steel time clock.His time card had to be counter-signed by a Great Lakes Steel foreman in order to receive his pay.He was entitled to all of the fringe benefits provided for in the Union contract with Great Lakes Steel.Any grievances were processed through the Union with Great Lakes Steel.Great Lakes Steel paid workmen's compensation benefits as a result of his death.The deceased was schooled in the new operation at the Linde Plant by Union Carbide employees.He took orders regarding work and shifts from Union Carbide.He was working in the plant and on the property of Union Carbide.His work of producing oxygen was the work of Union Carbide.The control and supervision of the operation was by Union Carbide employees.Great Lakes determined only the amount of oxygen it required.

The plaintiff brought the action against Union Carbide on the ground of common law negligence.Union Carbide claimed that the deceased was a loaned employee from Great Lakes Steel and as such became an employee of Union Carbide and subject to workmen's compensation benefits under that employment.

The Workmen's Compensation Law of Michigan has the following pertinent sections:

Section 17.145 M.S.A., C.L. 1948, § 411.5 defines private employer as,

"2.Every person, firm and private corporation, including any public service corporation, who has any person in service under any contract of hire, express or implied, oral or written."

Section 17.147 M.S.A., C.L.S. 1961, § 411.7 defines private employee as,

"2.Every person in the service of another, under any contract of hire, express or implied, * * *"

Section 17.144 M.S.A., C.L. 1948, § 411.4 provides,

"Where the conditions of liability under this act exist, the right to the recovery of compensation benefits, as herein provided, shall be the exclusive remedy against the employer."

It is a well established doctrine of Workmen's Compensation Law that an employee of a general employer may be loaned to a special employer who then becomes liable for workmen's compensation.Such an employee is referred to as a lent employee.The essentials for a lent employee relation are set forth in 1 Larson's Workmen's Compensation Law, Section 48.00 at p. 710,

"When a general employer lends an employee to a special employer, the special employer becomes liable for workmen\'s compensation only if

(a) The employee has made a contract of hire, express or implied, with the special employer;

(b) The work being done is essentially that of the special employer; and

(c) The special employer has the right to control the details of the work."

In passing on Union Carbide's motion for a directed verdict the trial judge said,

"Since this is an action between employer and employee, and compensation law is involved, the first question that must be determined is whether the deceased made a contract of hire with the alleged special employer, as there can be no compensation liability in the absence of a contract for hire between the employee and the borrowing employer.The employee\'s consent to the new employment relation may however be implied from the employee\'s acceptance of the special employer\'s control and direction.

"In the present case, there is undisputed evidence, in the opinion of this Court, that there was such consent on the part of the employee.He volunteered for the work, took the necessary tests, waived certain seniority rights, reported for work at the plant for about a year up to the time of the accident and acquiesced to the work assigned to him by Union Carbide\'s employees.There was, therefore, an implied contract for hire, and the Court must then pass to the second and third questions, namely, whether he was at the time of the accident doing work essentially that of the special employer and whether the special employer assumed the right to control the details of the work.

"In the opinion of the Court, on the undisputed evidence in the case, both questions must be answered in the affirmative.The compressor upon which he worked and the plant in which it was located were property of Union Carbide.The work of producing the oxygen was that of Union Carbide, even though it was for the use of Great Lakes Steel.All the control and supervision of the operation was by Union Carbide employees, with the exception of determining how much oxide was required by the Great Lakes Steel and the payment of wages.On the basis of these indicia, the Court cannot escape the conclusion, based upon the authority of Denton vs. Yazoo & M. V. R. Co., 284 U.S. 30552 S. Ct. 141, 76 L.Ed. 310, that the deceased was at the time of the accident a lent employee of the Union Carbide and was therefore subject to the State compensation laws and not liable under negligence laws."

We agree.

Jurisdiction being based on diversity of citizenship, the substantive law of Michigan is controlling, Erie Railroad Company v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188.It is argued on behalf of the plaintiff that the Supreme Court of Michigan in determining who is an employer has abandoned control as a test and has substituted therefor the test of economic reality which must be determined from all of the facts of the case.It is claimed that under this theory there was a factual question to be submitted to the jury.

The cases¹ cited by counsel for the plaintiff do not persuade us that the Supreme Court of Michigan has changed the law with reference to the doctrine of lent employee.In Schultethe Court held that an employee of a general contractor could sue the owner for common law negligence.The owner whose contract price included the cost of workmen's compensation insurance could not claim the benefits of workmen's compensation as an exclusive remedy.He was in no sense an employer.

In Tata v. Muskovitz, the question was whether Muskovitz was liable to Tata's widow for workmen's compensation.Muskovitz was a plumbing contractor who employed Tata to dig trenches for his work in laying pipe.The Court held that Muskovitz was the employer.

Goodchild is another case in which the question involves the payment of workmen's compensation by an employer.While the Court stated that it had abandoned the control test, it said at p. 193 of 134 N.W.2d:

"Even if the so-called control test were determinative, this passage quoted by Erickson in his brief would require our affirmance of the award he seeks altered.Erickson\'s own testimony, which indicates that he retained substantial control over his employee Goodchild while the latter was helping unload the van fails to meet the Arnett Arnett v.

...