Lockard v. Murphy Co., 78-4148

• Decision Date: 10 November 1980
• Docket Number: No. 78-4148,78-4148
• Citation: 619 P.2d 283,49 Or.App. 101
• Parties: Calvin LOCKARD, Appellant, v. The MURPHY COMPANY, Respondent. ; CA 16347.
• Court: Oregon Court of Appeals

Page 283

619 P.2d 283

49 Or.App. 101

Calvin LOCKARD, Appellant, v. The MURPHY COMPANY, Respondent.

No. 78-4148; CA 16347.

Court of Appeals of Oregon.

Argued and Submitted Sept. 12, 1980.

Decided Nov. 10, 1980.

J. P. Graff, Eugene, argued the cause for appellant. On the brief were Jack Polance and Larry L. Gildea, P. C., Eugene.

David Graham Novick, Eugene, argued the cause for respondent. On the brief were John E. Jaqua and Jaqua & Wheatley, P. C., Eugene.

Before GILLETTE, P. J., and ROBERTS and CAMPBELL, JJ.

GILLETTE, Presiding Judge.

This is a personal injury action. The issue before this court is whether, under the terms of the Workers' Compensation Law, the plaintiff is an employee of defendant and thus barred from maintaining this action, ORS 656.018, ¹ or whether he is an independent contractor. Alternatively to his contention that he is an independent contractor, plaintiff contends that he is a sole proprietor and thus excluded from coverage under the act, ORS 656.027(7). ² The trial court, on cross-motions for summary judgment, found that the plaintiff was an employe and entered summary judgment for the defendant. We reverse and remand for trial.

Defendant Murphy Company produces veneer at mills located in various places in Oregon. It also operates drying facilities for the veneer. The defendant engages truck drivers to take the veneer from its mills to its drying facilities and to purchasers of the veneer. Plaintiff was one such hauler. On March 2, 1978, the plaintiff went to defendant's mill at Florence to pick up and deliver a load of veneer to one of defendant's purchasers in Medford. As the veneer was being loaded onto plaintiff's truck by defendant's employe, plaintiff was struck by a forklift driven by the employe. This action is based on injuries plaintiff sustained as a result of that accident.

A 'worker' is defined by the Workers' Compensation law as:

'* * * any person, including a minor whether lawfully or unlawfully employed, who engages to furnish services for a remuneration, subject to the direction and control of an employer * * *.' ORS 656.005(31).

An employer is

'Any person * * * who contracts to pay a remuneration for and secures the right to direct and control the services of any person.' ORS 656.005(16).

Under this statute, control is an essential ingredient in the test for determining who is a 'worker' within the meaning of the Workers' Compensation Act. Woody v. Waibel, 276 Or. 189, 196, 554 P.2d 492 (1976); Bowser v. State Indus. Accident Comm., 182 Or. 42, 185 P.2d 891 (1947). The critical inquiry is whether the right of control exists and not whether the control is actually exercised. Collins v. Anderson, 40 Or.App. 765, 769, 596 P.2d 1001 (1979). The principal factors demonstrating right of control are (1) direct evidence of right or exercise of control; (2) method of payment; (3) the furnishing of equipment; and (4) the right to fire. Carlile v. Greeninger, 35 Or.App. 51, 54, 580 P.2d 588 (1978) rev. den., 283 Or. 235 (1978); see also, Bowser v. State Indus. Accident Comm., supra, 182 Or. 42, 185 P.2d 891; 1C Larson, Workmen's Compensation Law, § 44 (1980).

With these factors in mind, we turn to an examination of the facts before us, for which we rely on the parties' stipulation before the trial court as supplemented by our own reading of plaintiff's affidavits. ³

In January, 1978, the plaintiff, Calvin Lockard, purchased a tractor and flatbed trailer for the purpose of starting a lumber hauling besiness of his own. It was his intention to carry all types of lumber products. Plaintiff adopted the assumed business name of CPH Transport and registered as such with the Corporation Commissioner. He applied for and received his PUC plates (motor carrier permit) and was given operating authority to transport lumber products, cord wood, fish scrap and newspaper. Plaintiff purchased his own liability and cargo insurance. He also purchased a disability insurance policy and his own medical insurance. Plaintiff applied for and received an employer identification number from the Internal Revenue Service.

An accountant, engaged by plaintiff, set up the books for his new business. Thereafter, the books were maintained by plaintiff's wife. A checking account, separate from plaintiff's personal account, was established for CPH Transport. Plaintiff planned to draw a regular salary from the business and received one such check before his accident. Plaintiff and his wife filed a joint income tax return for 1978 which included a schedule C form reporting separately the income and expenses of his business, identified as CPH Transport on the return.

The defendant engaged the plaintiff to transport veneer for it on a number of occasions between the time plaintiff began hauling in late January, 1978, and the time of the accident. Plaintiff would call the defendant to find out if loads were available to haul. Sometimes the defendant would contact the plaintiff first. There was no long term contract between the parties and the defendant was under no obligation to continue providing the plaintiff with work. Each work agreement was for a specific load only. The plaintiff was paid on a per load basis at a price agreed upon between the parties. Plaintiff refused to haul loads when he thought the price was insufficient.

The defendant would tell the plaintiff where to pick up the load and where it was to be delivered. When the plaintiff arrived at one of defendant's mills, he was told where to park his truck. One of defendant's employes would then load the veneer. Plaintiff would supervise the loading of his truck and instruct defendant's employe on where to place the bundles of veneer. He could control the amount of weight placed on his truck and, on those occasions when the load exceeded his legal limits, he asked the loader to remove some of the bundles. Plaintiff was free to hire assistants to help him in his business at any time without defendant's consent or approval. Plaintiff was responsible for any overload tickets he might receive. He also paid all the costs necessary to the maintenance of his equipment.

When the plaintiff hauled loads between the defendant's own mills of their drying facility, he would be paid directly by the defendant. The amount paid to plaintiff was treated by the defendant as a hauling expense and not a payroll expense. The defendant did not make payroll deductions from this amount, nor pay unemployment insurance tax on plaintiff's behalf, nor carry workers' compensation insurance for him. The plaintiff did not receive vacation, medical or any other type of employee benefits from the defendant.

The defendant also used other people, driving its own trucks, to deliver and transport veneer. These persons were paid on an hourly basis and the usual payroll deductions were taken from their checks. Contribution to workers' compensation insurance was paid on their behalf. When these truckers hauled veneer, the price charged defendant's purchasers included transportation costs.

Besides CPH Transport, the defendant engaged other transport companies to transport its veneer. Payment to these companies were treated as hauling expenses in the same manner as payments to plaintiff.

The plaintiff hauled woood products for various other companies. No one company could supply him with sufficient business. However, between the time he began working on his own and the time of his accident, three-fourths of plaintiff's income was derived from loads originating at defendant's mills.

From the foregoing, it is apparent that the defendant had the right to control the plaintiff's performance in some respects but not others. Evidence supporting an employment relationship exists in the following:

1. Either party had the right to terminate their relationship at any time without liability;

2. The defendant designated the pickup and destination point for the loads plaintiff was to carry; and

3. The loader was an employe and under the direction of the defendant in loading the truck.

Circumstances that support the conclusion that the plaintiff was an independent contractor are:

1. Plaintiff was paid on the basis of the amount of lumber hauled rather than an established wage;

2. Plaintiff furnished and maintained his own equipment.

3. Plaintiff had a right to object to and have improper loading corrected and, after his truck was loaded, he had the entire responsibility, including the choice of route, for making the delivery to the set destination;

4. Plaintiff could hire assistants and work for others.

The facts before us are substantially the same as those in the cases of Woody v. Waibel, supra, 276 Or. at 191 nn.1, 2, 554 P.2d 492 and Louvring v. Excel Logging Co., 280 Or. 463, 465, 466, 573 P.2d 266 (1977). ⁴ In those cases, the court found that.

'* * * [T]he issue of control was evenly enough balanced that the traditional statutory control test was insufficient with which [sic] to make a determination.' Louvring v. Excel Logging Co., supra, 280 Or. at 466, 573 P.2d 266; Woody v. Waibel, supra, 276 Or. at 197, 554 P.2d 492.

There are also factual differences, which we discuss below, between this case and Woody and Louvring. However, we conclude that those difference do not tip the scales on the issue of control one way or the other.

In Woody, the court held that where the right to control test is insufficient to define the relationship in question, it is then permissible to turn to the purposes of the Workers' Compensation Law to determine if the control retained by the defendant makes the plaintiff an employe. Woody v. Waibel, supra, 276 Or. at 197, 554 P.2d 492; see also Louvring v. Excel Logging Co., supra, 280 Or. at 466, 573 P.2d 266. This calls for an application of 'the relative nature of the work test.' Larson describes the basis of that test:

'The theory of compensation legislation is that the cost of all industrial accidents should be borne by the...