Meyer v. State Farm Mut. Auto. Ins. Co.

• Decision Date: 02 January 1975
• Docket Number: No. 39492,39492
• Citation: 192 Neb. 831,224 N.W.2d 770
• Parties: , 89 A.L.R.3d 824 Walter J. MEYER et al., Appellees, Cross-Appellants, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, a corporation, Appellant, Cross-Appellee, Impleaded with Raymond W. Foreman et al., Appellees, Cross-Appellees and Roscoe Hill Hatchery, Inc., et al., Appellees, Cross-Appellees.
• Court: Nebraska Supreme Court

Page 770

224 N.W.2d 770

192 Neb. 831, 89 A.L.R.3d 824

Walter J. MEYER et al., Appellees, Cross-Appellants, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, a corporation, Appellant, Cross-Appellee, Impleaded with Raymond W. Foreman et al., Appellees, Cross-Appellees and Roscoe Hill Hatchery, Inc., et al., Appellees, Cross-Appellees.

No. 39492.

Supreme Court of Nebraska.

Jan. 2, 1975.

Syllabus by the Court

1. Usually any labor supplied by a father to a son is presumed to be gratuitous.

2. The presumption of gratuity with respect to the services of a parent is a rebuttable one. It may be overcome by proof of an express contract regarding compensation or of such facts and circumstances as show an understanding of the parties that payment was to be made. In the absence of such proof, recovery will be denied.

3. The relationship of master and servant is a contractual relationship.

4. The contract under which service is performed and the performance thereunder determine the relationship between the contracting parties.

5. In determining whether an individual is a servant as distinguished from an independent contractor, the basic test is whether or not his physical conduct in the performance of the service is controlled or subject to the right of control. A pertinent question in this respect is whether under the arrangement the workman only possesses the same independence that employees in general enjoy.

6. The facts of each particular case must be considered in determining whether a master and servant relationship exists.

7. The usual exchange of work arrangement does not as a matter of law constitute employment so as to create an employee and employer relationship.

Ray C. Simmons, Fremont, for appellant, cross-appellee.

Barlow, Watson & Johnson, Lincoln, for Walter J. Meyer and others.

Mattson, Ricketts, Davies, Stewart & Calkins, Lincoln, for Raymond W. Foreman and others.

Knudsen, Berkheimer, Endacott & Beam, Lincoln, for Roscoe Hill hatchery, inc.

Heard before WHITE, C.J., and SPENCER, BOSLAUGH, McCOWN, NEWTON, CLINTON and BRODKEY, JJ.

SPENCER, Justice.

Appellant, State Farm Mutual Automobile Insurance Company, appeals from a declaratory judgment finding that appellee Walter J. Meyer was an employee of his son, appellee Warren Meyer, State Farm's insured, under a work arrangement agreement. We reverse.

The accident which gave rise to this litigation arose during the operation of a farm tractor on a highway in Seward County, Nebraska. The issue presented is whether or not at the time of that accident Walter J. Meyer was an employee of his son Warren Meyer within the terms of the following provision of a State Farm policy: 'Insured--means * * * (5) under cover AF, any employee of an insured with respect to agricultural vehicles and implements while engaged in his employment by an insured.'

The father and son, along with two neighbors, Eicher and Schmidt, had been involved for several years in what has been characterized as a 'work exchange' program in which each of the parties aided with particular tasks on the farms of each of the others. Warren was putting up hay on his own land with the assistance of his father and two neighbors. Warren supplied a tractor, rake, and baler. Eicher brought a tractor and started raking the hay. Warren followed with his baler. When Walter and Schmidt arrived, they were informed that another tractor and trailer were required in addition to the trailer in the field. At Warren's suggestion Walter and Schmidt left in Schmidt's car to get Walter's tractor and Schmidt's trailer. After attaching the trailer to the tractor, Schmidt returned to the hay field in his car and Walter started back pulling the trailer with the tractor.

On the trip to Warren's hay field, and before he reached it, Walter was involved in an accident in which Raymond W. Foreman was injured. Foreman brought an action against Walter. Walter and Warren each carried liability policies of $25,000 with State Farm. Coverage under Walter's policy was admitted. This action was brought to determine coverage for the father, Walter, under Warren's policy.

Warren testified that when the three others came over to his farm, he decided what equipment the other three would bring and when they would start baling hay. He also decided where to put the hay. It was the practice that whoever owned the hay to be cut would be the person to give the orders, and it was the understanding among the parties that the owner of the land gave the directions.

Schmidt testified that the four of them never discussed the particular legal relation between them in exchanging labor operations. They never discussed whether they were employers or employees. They just helped each other out and didn't discuss anything along those lines. They were neighbors and they had to get along and needed each other's help. It was a neighborly and Christianly thing to do, and that was at least part of the basis of their exchange of work among themselves. When he worked on the farms of the other three in these exchange of labor operations, he did not consider himself their employee, and when they worked on his farm he did not consider himself their employer. When he went over and helped Warren with his haying operation he expected Warren to come back later and help him with his. That was the agreement. He traded his services for Warren's services.

The parties to this appeal agree that this case presents one of first impression in Nebraska. Appellant asserts it is a case of first impression nationally. Appellees, however, claim that similar facts have been found to support a finding of an employer-employee relationship on two occasions in Iowa: Gonzhorn v. Reep (1943), 234 Iowa 495, 12 N.W.2d 154, and Erickson v. Erickson (1959), 250 Iowa 491, 94 N.W.2d 728.

Ganzhorn v. Reep, Supra, involved an action between two neighboring farmers for injuries resulting from an automobile accident. Defendant had called plaintiff and asked him for assistance in fixing a broken pump. After working for a time, defendant determined it was necessary to go to town for additional equipment. Defendant asked plaintiff to ride with him since nothing more could be done until he returned. On the ride to town the accident occurred. The record indicates that for several years plaintiff and defendant had exchanged work with each other. No money ever changed hands and no accounting of time took place. The trial court submitted the question of master-servant relationship to the jury and the jury returned a verdict for the plaintiff, which was affirmed.

In Erickson v. Erickson, Supra, the plaintiff and defendant were brothers. They had exchanged work over the years, had kept accounts of time spent, and made cash payments to settle any imbalance. Plaintiff had been called to do chores for defendant while he was away. In performing those chores plaintiff was injured while working with certain machinery owned by defendant. The trial court, sitting without a jury, found an employer-employee relationship existed. The judgment for the plaintiff was affirmed.

In Patty v. State Farm Mut. Auto. Ins. Co. (1955), 228 F.2d 363, the United States Court of Appeals for the Sixth Circuit held the practice of swapping work does not as a matter of law constitute employment. A judgment for the insurer was reversed to determine whether the agreement of the insured to pay for new parts for the mower was by way of compensation to the plaintiff, or to make the mower fit for operation.

St. Aubyn v. Thogmartin (1970), 206 Kan. 62, 476 P.2d 248, involved the definition of 'employee' within an employee-exclusionary clause of an insurance policy. The driver of a newspaper delivery truck brought a third-party action against the insurer for a declaratory judgment, alleging that the insurer was obligated to defend him and pay within policy limits any judgment obtained against him by a newsboy who was injured in a collision while throwing newspapers from the truck. The Kansas Supreme Court determined that the driver, who was an old friend of the truck owner, had volunteered to drive the truck for the owner without any agreement for compensation, while the owner went on a hunting trip. The court held the subsequent payment of $5 was a gratuity and sustained a finding that the driver was not an employee within the exclusionary clause of the owner's policy.

In Bean v. Gibbens (1954), 175 Kan. 639, 265 P.2d 1023, a neighbor boy was killed while guiding insured's truck which was being towed into town. Nothing was said about pay, and no pay was offered. The Kansas Supreme Court held the boy was not an employee within a clause of a liability policy excluding coverage of employees of the insured.

Kentucky Farm Bureau Mut. Ins. Co. v. Snell (Ky.App., 1958), 319 S.W.2d 462, involved a member of a group of neighbors who voluntarily helped each other in harvesting their tobacco crops, keeping track of the hours worked, and agreeing to make up any difference in amount of work performed by payment of an agreed amount. The trial court submitted to the jury the question of control of the neighbor while working. The jury found against the plaintiff. The Kentucky Court of Appeals affirmed, holding the injured man was not an employee of the neighbor owning the truck upon which the accident occurred.

Usually any labor supplied by a father to a son is presumed to be gratuitous. See cases collected on this point in Annotation, 7 A.L.R.2d at p. 88. The presumption of gratuity, however, with respect to the services of a parent is a rebuttable one. It may be overcome by proof of an express contract regarding compensation or of such facts and circumstances as show an understanding of the parties that payment was to be made. In the absence of such proof, recovery will be denied. Houser v. Houser (1965), 178 Neb. 401, 133 N.W.2d 618.

Warren could not recall any cash payments with any of the other three parties when the four...