Meskimen v. Larry Angell Salvage Co.

Citation592 P.2d 1014,286 Or. 87
Decision Date03 April 1979
Docket NumberNo. A7606-08835,A7606-08835
PartiesPaul MESKIMEN, Respondent-Cross-Appellant, v. LARRY ANGELL SALVAGE COMPANY, an Oregon Corporation, Durmac, Inc., an Oregon Corporation, and Lawrence G. Angell, Defendants, Citizens Bank of Corvallis, Appellant-Cross-Respondent. ; SC 25636.
CourtSupreme Court of Oregon

Milton R. Smith, Portland, argued the cause for appellant-cross-respondent. With him on the briefs were Edward H. Warren, and Acker, Underwood, Beers, Smith & Warren, Portland.

John Dudrey, of Frederickson, Weisensee & Cox, Portland, argued the cause and filed briefs for respondent-cross-appellant.


BRYSON, Justice.

Plaintiff brought this action to recover damages to his fishing boat which was struck by the tugboat "Satan," operated by defendant Angell. The accident occurred on March 16, 1976, on the Oregon Slough, north of Portland.

At the time of the accident, defendant Larry Angell Salvage Company was buying and renovating a tugboat, the "Satan," from defendant Citizens Bank of Corvallis. It is not contested on appeal that defendant Angell's negligence caused the accident.

The principal assignments of error raise the issue of whether the bank is liable for Angell's negligence on a respondeat superior theory. The jury found that it was and judgment was entered in favor of plaintiff. The bank appeals. 1 Plaintiff cross-appeals from certain adverse rulings by the trial court.

Defendant bank's connection with the other defendants and the "Satan" began when the bank lent $434,871.15 to defendant Duramac, Inc., to renovate the boat. Duramac defaulted on its loan payments and thereafter reached a amicable agreement with the bank whereby the bank repossessed the boat and entered into a contract regarding the sale of the boat to defendant Larry Angell Salvage Company. The contract by which these arrangements were made (referred to as the March 2 contract) was received as evidence for plaintiff's contention that Angell 2 was the bank's employee. The lengthy March 2 contract provides in part as follows:


"Angell agrees to work in cooperation with Bank to forthwith complete renovation of Vessel for its intended purposes, and thereafter to forthwith place Vessel in operation and operate it in a continuous, good, and workmanlike fashion and manner on a full time basis so long as any unpaid balance is owed on the purchase price or renovation loan for Vessel, and to apply the receipts from such operation as hereinafter provided.


"Angell agrees that Bank will receive monthly one hundred percent (100%) of the net proceeds from the operation of Vessel and its equipment for one (1) full fiscal year from the date that said Vessel commences operation. Net proceeds shall be construed to mean gross receipts from operation, less out-of-pocket costs and expenses, without allowance for depreciation or non-cash expenses. Angell shall receive a salary of Five Hundred Dollars ($500.00) per week and an open expense account of Two Hundred Dollars ($200.00) per month, and no more. Salary and expenses to Angell shall be paid only during monthly periods when Vessel's operation shows a net profit.

"* * * .


"Angell shall forthwith complete registration of said vessel and execute and deliver the aforesaid promissory note and mortgage to Bank and thereafter Angell shall, with funds to be advanced by Bank, undertake immediately the necessary work to complete renovation of Vessel and place it in operation. Angell shall consult with Bank through Bank's representative on work to be performed to complete said renovation prior to incurring expense therefor and Bank shall advance funds only for renovation work for which Bank has given prior approval. Angell and Bank agree to cooperate together to arrive at mutual agreement as to the work to be done and the manner of its accomplishment. In the event that renovation of Vessel cannot be completed within the maximum amount to be advanced by Bank, then Angell agrees to obtain and provide funds from other source to complete renovation and to place Vessel in operation. Expense of payment of moorage site during completion of renovation shall be considered a cost of renovation. So long as renovation proceeds diligently and continuously to completion, Angell shall receive a salary during completion of renovation of Two Hundred Fifty Dollars ($250.00) per week for which he shall work full time to supervise and assist to plan renovation and which will be payable out of renovation funds. Bank designates RONALD McREARY as its representative to work with Angell regarding renovation and approval of procedures thereunder. Bank reserves the right to change its representative. The sales contract dated June 12, 1975, between Duramac and Angell is terminated.

"* * * ."

During trial defendant bank moved for a directed verdict, to strike portions of the complaint, and for judgment notwithstanding the verdict. The trial court's denials of these motions are assigned as error. The assignments raise the issue as to whether plaintiff offered sufficient evidence for the court to submit to the jury plaintiff's contention that Angell, during renovation and at the time of the accident, was the bank's servant. We stated, in Jenkins v. AAA Heating, 245 Or. 382, 386, 421 P.2d 971, 973 (1966), as follows:

"* * * (T)he question whether a given person is a servant or an independent contractor ordinarily is one of law, if the facts are not in dispute and if only one reasonable inference can be drawn from the facts. Before the court submits to the jury a challenged allegation that one person is the servant of another, the court must satisfy itself in a preliminary way that the case is one in which a jury finding to either effect would not be contrary to the law. * * *"

Jenkins states that the existence of the master-servant relationship "is said to turn upon the right of one party to control the activities of the other. * * * As long as such right exists, it is of no consequence that the employer may not have exercised it." Jenkins, at 387, 421 P.2d at 973, also noted that the "definition of a servant in the Restatement (Second), Agency, § 220(1) (1958), is generally accepted by most courts." That section provides:

"A servant is a person employed to perform services in the affairs of another and who with respect to the physical conduct in the performance of the services is subject to the other's control or right to control."

See also Great American Ins. v. General Ins., 257 Or. 62, 66-67, 475 P.2d 415 (1970).

Although the bank did not actually control Angell's activities at the time of the accident, which occurred while the renovations to the "Satan" were being made, the jury could have found from the March 2 contract and the evidence as a whole that the bank had a sufficient right of control to create a master-servant relationship.

As stated in paragraph X of the contract, the bank employed Ronald McReary, an engineer, "as its representative to work with Angell regarding renovation (of the 'Satan') and approval of procedures thereunder."

On March 15, 1976, McReary wrote to the bank stating that "(p)ursuant to our discussion of March 3, 1976, we have proceeded to pursue organizing and scheduling the completion work generally outlined * * *" as to the "Satan" and advised that he had completed the necessary applications by Angell "for radio licenses needed before operating 'Satan' during move from Vancouver, Washington to Angell Salvage moorage." This is the move, with Angell at the wheel of the "Satan," in which plaintiff's boat was damaged.

The contract provides that Angell was to "work full time to supervise and assist to plan renovation," that he was to receive a salary for doing so, and that the bank would have some veto power over Angell's decisions in the form of financial controls as well as their agent McReary's control.

Defendant bank argues there are other ways to read or construe the contract. Arguably, this is correct. However, we have consistently held that if the agreement is ambiguous, its meaning is a matter to be decided by the trier of the facts when, as here, extrinsic evidence is received. David M. Scott Const. v. Roush, 273 Or. 877, 880, 544 P.2d 162 (1975); Rolfe v. N. W. Cattle & Resources, Inc., 260 Or. 590, 600-01, 491 P.2d 195 (1971). Also, the contract, if ambiguous, is construed most strongly against the party which drew it. Busto v. Manufacturers Life Ins. Co., 276 Or. 707, 712, 556 P.2d 96 (1976). Here, the bank, through its attorney, prepared the contract.

We conclude the contract was ambiguous and the jury, assessing the contract together with other evidence received, could conclude that the agreement created an employment relationship between the bank and Angell. The court did not err in submitting the matter to the jury.

Defendant bank next contends the trial court erred by instructing the jury in regard to employer-employee relationship as follows:

"The next thing you would consider in this determination, that is, if you find there was a collision, was the bank acting as an employer of Angell or was the bank merely loaning money to Angell to operate his boat.

"* * * . th

"Now, in determining the question of the bank's responsibility, you are to determine first was the bank the employer of Angell, and in this determination you would consider all of the evidence that has been submitted to you to determine whether the bank had the control, or the right of control of the operation of the Mr. Angell while he was working on the boat. Not a financial control, but the actual operating control of the boat. The bank contends that it was loaning the money to the to Angell, and if you find that it was a loan, then the bank would not be responsible; that is a loan.

"If you find that it was acting as an employer, had the right of control and...

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