Livingston v. Ireland Bank, 21083

• Decision Date: 31 August 1995
• Docket Number: No. 21083,21083
• Citation: 128 Idaho 66,910 P.2d 738
• Parties: Lynn E. LIVINGSTON, Claimant-Appellant, v. IRELAND BANK, Employer, and State Insurance Fund, Surety, Defendants-Respondents. . Pocatello, May 1995 Term
• Court: Idaho Supreme Court

Page 738

910 P.2d 738

128 Idaho 66

Lynn E. LIVINGSTON, Claimant-Appellant, v. IRELAND BANK, Employer, and State Insurance Fund, Surety, Defendants-Respondents.

No. 21083.

Supreme Court of Idaho.

Pocatello, May 1995 Term.

Aug. 31, 1995.

[128 Idaho 67] Dennis R. Peterson, Idaho Falls, for appellant.

Steven R. Fuller, Preston, for respondents.

SILAK, Justice.

This is an appeal from an order of the Industrial Commission (Commission) finding that Appellant Lynn E. Livingston (Livingston) is not entitled to worker's compensation benefits from Respondent State Insurance Fund (the Surety) regarding an industrial accident because he was not an employee of Respondent Ireland Bank (the Bank) at the time of the accident. We affirm.

I. FACTS AND PROCEDURAL BACKGROUND

Livingston was hired by the Bank in January 1990 to conduct inspections, appraisals and repossessions of collateral which secured various loans made by the Bank. The Bank paid Livingston $10.00 per hour for his appraisal and repossession services, plus a mileage allowance of $.25 per mile. Livingston also owned a 42-foot hydraulically-operated equipment trailer that he used on occasion to carry out repossession assignments, at which time he received a greater mileage allowance from the Bank.

Livingston was paid a total of $3,580.00 during 1990, for appraisal and inspection services, which was a small portion of his total annual income. He performed two or three repossessions in 1990 and one in 1991 at the request of the Bank. Generally, the Bank requested Livingston to auction the repossessed items, at which time he deducted his commission and other charges for his services from the amount received from the auction buyer and paid the balance to the Bank. Livingston was paid a total of $460.00 for his services in connection with appraisals and inspections in 1991 through April 14, 1991. From January 1990 through April 14, 1991, the Bank withheld income and unemployment taxes from Livingston's wages for appraisal and inspection services.

On April 14, 1991, Livingston and the Bank entered into a written "Employment Agreement" (the Agreement), because the Bank had identified a need to demonstrate that Livingston rendered his appraisal services at "arms length" from the Bank to satisfy the banking regulatory authorities. The Agreement was to continue until January 1, 1992, and unless terminated pursuant to the notice provisions, would continue from month to month thereafter. Livingston's services were to be nonexclusive, and the Bank acknowledged that he also provided appraisal services for other clients. The Agreement related only to Livingston's services as an appraiser, not his repossession services.

With respect to the Bank's worker's compensation policy, the Surety collected a "deposit premium" from the Bank as security for the premium which would be due for worker's compensation coverage during the calendar year. The deposit premium was an estimate of the premium due at the end of the year and was based upon the actual payroll for the previous calendar year. At the end of the calendar year, the actual total payroll for the calendar year was determined by the Bank and reported to the Surety. The actual premium was calculated, the previously collected deposit premium was credited against the premium due, a new deposit premium for the subsequent calendar year At the end of 1991, the Bank reported its payroll to the Surety and was assessed a premium of $6,667.72. The reported payroll included amounts paid Livingston for appraisal and inspection services to April 14, 1991, in the amount of $460.00, but did not include amounts paid to him after the Agreement was signed on that date. The deposit premium charged by the Surety at the beginning of 1991, $4,543.00, was credited against the premium due. A deposit premium charge of $6,375.00 was made by the Surety for 1992, and the net premium due, $8,499.72, was billed to the Bank. The Bank then paid that amount to the Surety. The payroll reported to the Surety included no payments to Livingston for repossession services for either 1990 or 1991.

[128 Idaho 68] was charged, and the Bank was billed for the net amount due. This resulted in a deposit premium being remitted to the Surety to secure the premium for the ensuing calendar year.

On October 8, 1991, Livingston suffered an industrial accident while he was repossessing a hay baler for the Bank. Because Livingston was hospitalized, the Bank's secretary filed a notice of injury and claim for benefits on his behalf with the Surety.

Livingston received only one check from the Surety in the sum of $154.80, representing total temporary disability benefits to him for the period October 8-14, 1991. In November 1991, Livingston received a denial letter from the Surety, claiming that Livingston was an independent contractor, not an employee of the Bank, at the time and place of the accident.

Livingston then filed a worker's compensation complaint against the Bank and the Surety. After the hearing, the referee issued findings of fact, conclusions of law and proposed order finding that an employer-employee relationship did not exist between the Bank and Livingston at the time of the accident, and that Livingston was, therefore, not entitled to any worker's compensation benefits. The Commission adopted the referee's findings and conclusions and entered an order to that effect. Livingston appeals.

II. ISSUES ON APPEAL

1. Whether Livingston was an employee or an independent contractor at the time he was repossessing the vehicle for the Bank.

2. Whether the Surety is estopped from denying worker's compensation benefits for Livingston, based upon its undisputed receipt and retention of an insurance premium insuring him and computed with respect to his income from the Bank.

3. Whether Livingston is entitled to attorney fees on appeal pursuant I.C. § 12-121 and I.A.R. 41.

III. ANALYSIS

A. THE COMMISSION PROPERLY CONCLUDED THAT LIVINGSTON WAS AN INDEPENDENT CONTRACTOR AT THE TIME HE WAS INJURED WHILE REPOSSESSING THE VEHICLE FOR THE BANK.

I.C. § 72-102 defines employee and independent contractor as follows:

(10) "Employee" is synonymous with "workman" and means any person who has entered into the employment of, or who works under contract of service or apprenticeship with, an employer ...

(14) "Independent contractor" means any person who renders service for a specified recompense for a specified result, under the right to control or actual control of his principal as to the result of his work only and not as to the means by which such result is accomplished.

Coverage under the worker's compensation laws is dependent upon the existence of an employer-employee relationship. Anderson v. Gailey, 97 Idaho 813, 820, 555 P.2d 144, 151 (1976). The determination of whether a claimant is an employee or an independent contractor is a factual one. Mortimer v. Riviera Apartments, 122 Idaho 839, 844, 840 P.2d 383, 388 (1992); Olvera v. Del's Auto Body, 118 Idaho 163, 165, 795 P.2d 862, 864 (1990). This Court will not The test in determining whether a worker is an independent contractor or an employee is whether the contract gives, or the employer assumes, the right to control the time, manner and method of executing the work, as distinguished from the right merely to require certain definite results. Ledesma v. Bergeson, 99 Idaho 555, 558, 585 P.2d 965, 968 (1978); I.C. § 72-102(14). This Court has articulated a four-pronged test to determine if the relationship between a master and servant is that of employer-employee or of independent contractors: 1) there must be evidence of the employer's right to control the employee; 2) the method of payment, i.e., whether the employer withholds taxes; 3) whether the master or servant furnishes major items of equipment; and 4) whether either party has the right to terminate the relationship at will, or whether one is liable to the other in the event of a preemptory termination. Mortimer, 122 Idaho at 844, 840 P.2d at 388; Burdick v. Thornton, 109 Idaho 869, 871, 712 P.2d 570, 572 (1985). The Commission should balance each of the elements present to determine the relative weight and importance of each. Roman v. Horsley, 120 Idaho 136, 138, 814 P.2d 36, 38 (1991); Matter of Hanson, 114 Idaho 131, 134, 754 P.2d 444, 447 (1988).

[128 Idaho 69] overturn factual findings made by the Commission when those findings are supported by substantial and competent, although conflicting, evidence. Mortimer, 122 Idaho at 844, 840 P.2d at 388; I.C. § 72-732.

When doubt exists as to whether an individual is an employee or an independent contractor under the worker's compensation laws, the Act must be given a liberal construction by the Commission in its fact finding function in favor of finding the relationship of employer and employee. Mortimer, 122 Idaho at 845, 840 P.2d at 389; Olvera, 118 Idaho at 165, 795 P.2d at 864. However, in worker's compensation cases, the Commission is not required to construe facts liberally in favor of the worker when evidence is conflicting. Aldrich v. Lamb-Weston, Inc., 122 Idaho 361, 363, 834 P.2d 878, 880 (1992). On appeal, while this Court will review the Commission's individual findings with respect to the four factors, the finding to which we apply the substantial and competent evidence test is the Commission's overall finding, i.e., whether the worker is an employee or an independent contractor.

1. Direct Evidence of Employer's Right to Control.

Livingston claims that the Bank exercised specific control over him by prohibiting him to perform inspections, appraisals or repossessions for the Bank's competitors. This contention is evidently based upon the testimony of the Bank's president that he did not want Livingston to conduct appraisals for a competing bank, just as he would not allow a teller to work both for the Bank and a competitor. The Commission did not interpret the Bank president's testimony to...