Nichol v. Billot

• Decision Date: 18 June 1979
• Docket Number: Docket No. 60848,No. 11,11
• Parties: Bertha NICHOL, Administratrix of the Estate of Milo Nichol, Deceased, Plaintiff-Appellant, v. Wayne BILLOT d/b/a, Billot Excavating Company, Defendant-Appellee. Calendar
• Court: Michigan Supreme Court

Page 761

279 N.W.2d 761

406 Mich. 284

Bertha NICHOL, Administratrix of the Estate of Milo Nichol Deceased, Plaintiff-Appellant, v. Wayne BILLOT d/b/a, Billot Excavating Company, Defendant-Appellee.

Docket No. 60848.

Calendar No. 11.

Supreme Court of Michigan.

Argued Dec. 6, 1978.

Decided June 18, 1979.

Marston, Sachs, Nunn, Kates, Kadushin & O'Hare, P. C. by David K. Barnes, Detroit, for plaintiff-appellant.

W. J. Drillock, Drillock, Atkins, Schrope & Marcus, Marlette, for defendant-appellee.

FITZGERALD, Justice.

This appeal arises from a wrongful death action brought by decedent's widow. Plaintiff contended at trial that her husband's death resulted from the negligence of defendant.

Defendant, an excavation contractor, was hired to excavate a trench on the premises of the Sunset Trailer Park in Sandusky, Michigan. The excavation was part of a planned expansion of the trailer park which required that a trench be dug from the existing septic system to the expansion sewer line.

The owner of the trailer park, Thomas Boyle, hired the prior owner, O. J. Campbell, to supervise the work involved in the expansion of the trailer park. Plaintiff's decedent, Milo Nichol, a retiree who resided in the trailer park, was also hired by Boyle to help with the expansion project.

On August 9, 1971, the excavation of the trench took place with defendant Billot, and Campbell and Nichol present. The trench was over 9 feet deep, 10 to 12 feet long, and 30 inches wide, and the walls were not sloped, braced or shored in any fashion.

After the excavation was completed, Nichol climbed into the trench for the purpose of making a hole in the septic tank. Shortly after he entered the trench the west wall collapsed and Nichol, who could not escape, was killed almost instantly.

Subsequently, plaintiff received workmen's compensation benefits from Boyle. Plaintiff then proceeded to bring suit against defendant as a third-party tortfeasor as allowed by M.C.L. § 418.827(1); M.S.A. § 17.237(827)(1).

At trial, plaintiff contended that defendant was an independent contractor and that he had negligently failed to slope the walls of the trench or to use bracing devices as required by accepted safety standards. Defendant relied upon two affirmative defenses. First, defendant claimed that he was not an independent contractor, but that he was a co-employee of decedent. Therefore he claimed that plaintiff's cause of action was barred by that provision of the Worker's Disability Compensation Act which bars all suits against co-employees by employees for injuries sustained in circumstances otherwise compensable under the act. ¹ M.C.L. § 418.827(1); M.S.A. § 17.237(827)(1). Second, defendant claimed that plaintiff's decedent was contributorily negligent.

After a three-day trial in March 1976, the jury returned a verdict of no cause of action.

The Court of Appeals affirmed the jury's verdict, with Judge Brennan dissenting. 80 Mich.App. 263, 263 N.W.2d 345 (1977).

We granted leave to consider the following two issues:

(1) In a tort action where the defendant relies on the affirmative defense that the plaintiff's exclusive remedy is under the Worker's Disability Compensation Act and the basis of such affirmative defense is the co-employee status of the plaintiff and defendant, what is the proper test by which to determine whether the plaintiff and the defendant are co-employees; and

(2) Whether the question of defendant's status is an issue of law for the court or an issue of fact for the jury. 402 Mich. 922 (1978).

I

At trial, plaintiff contended that because defendant asserted an affirmative defense based on a provision of the workmen's compensation statute, the proper test to determine the employment status of defendant was the economic reality test. However, the trial court agreed with defendant that the economic reality test was limited to workmen's compensation cases and instructed the jury to apply the control test.

The Court of Appeals majority agreed with the trial court, stating that the mere fact that a defendant asserts the co-employee immunity from suit provision of the workmen's compensation statute does not mean that the economic reality test must be applied in a tort action. Judge Brennan favored the economic reality test as the logical test to use in deciding whether a defendant can use the Worker's Disability Compensation Act as a shield against a plaintiff.

Prior to Tata v. Muskovitz, 354 Mich. 695, 94 N.W.2d 71 (1959), the only test for determining whether a person was an employee or an independent contractor centered on the question of control. The control theory is the traditional common-law test used to delineate the master-servant relationship. ² The theory, in its delineation of the servant concept, has for its purpose the definition and delimitation of the scope of the master's liability under the doctrine of Respondeat superior. ³ Because most compensation acts contain no specific definition of the term "employee", it was generally taken for granted that the common-law definition of employee, or servant, used for purposes of vicarious tort liability was to be used for purposes of workmen's compensation laws. ⁴

In Tata v. Muskovitz, supra, this Court adopted the dissenting opinion of Mr. Justice Talbot Smith in Powell v. Employment Security Commission, 345 Mich. 455, 75 N.W.2d 874 (1956), in which he set forth the economic reality test as the proper guide to relevant interpretation of the workmen's compensation statute. See, also, Schulte v. American Box Board Co., 358 Mich. 21, 99 N.W.2d 367 (1959); Goodchild v. Erickson, 375 Mich. 289, 134 N.W.2d 191 (1965); Solakis v. Roberts, 395 Mich. 13, 233 N.W.2d 1 (1975); Askew v. Macomber, 398 Mich. 212, 247 N.W.2d 288 (1976).

Justice Smith expanded on the relevant factors to be considered under the economic reality test in Schulte v. American Box Board Co., supra, 358 Mich. p. 33, 99 N.W.2d p. 372:

"This is not a matter of terminology, oral or written, but of the realities of the work performed. Control is a factor, as is payment of wages, hiring and firing, and the responsibility for the maintenance of discipline, but the test of economic reality views these elements as a whole, assigning primacy to no single one."

Also, in determining the economic realities a court is to determine whether the work being performed is an integral part of the regular business of the employer, "a contribution to the accomplishment of a common objective". Powell v. Employment Security Commission, supra, 345 Mich. 478, 75 N.W.2d 886. See, also, McKissic v. Bodine, 42 Mich.App. 203, 201 N.W.2d 333 (1972).

The ultimate purpose of the economic reality test is to effectuate the goals of the social legislation by determining whether or not the relationship is of the type intended to be protected by the act. National Labor Relations Board v. Hearst Publications, Inc., 322 U.S. 111, 64 S.Ct. 851, 88 L.Ed. 1170 (1944); United States v. Silk, 331 U.S. 704, 67 S.Ct. 1463, 91 L.Ed. 1757 (1947); Powell v. Employment Security Commission, supra, 345 Mich. 478, 75 N.W.2d 874.

The circumstances presented in the instant case do not fit neatly into the purposes sought to be effectuated in either the control test or the economic reality test. In the present case, there is no Respondeat superior liability involved, nor is there any application for workmen's compensation benefits involved. Thus, we must determine which test, if either, should be applied in this particular situation. We will consider the application of each test Seriatim.

Defendant argues that because this is a tort suit the control test is applicable and that the economic reality test is inapplicable because that principle has been confined to workmen's compensation cases.

We think that it is necessary to distinguish the present case from those tort actions which involve the vicarious liability of a master for the acts of his servant vis-a-vis a third party. The instant case is atypical of those cases to which the control test has been traditionally applied in that there is no vicarious liability involved here. Rather, the liability of defendant for his own acts is the only liability at issue.

As stated above, the purpose of the control test is to define and delimit the circumstances under which a master should be held liable for the acts committed by a servant which injure a third party. As described by Larson in his treatise on Workmen's Compensation Law:

"The 'servant' concept at common law performed one main function: to delimit the scope of a master's vicarious tort liability. This tort liability arose out of detailed activities carried on by the servant, resulting in some kind of harm to a third person. The extent to which the employer had a right to control these detailed activities was thus highly relevant to the question whether the employer ought to be legally liable for them." ⁵

The control test is also used to determine when an independent contractor has become an employee for purposes of Respondeat superior liability on the part of his employer who has exercised a degree of control inconsistent with independent contractor status. Powell v. Employment Security Commission, supra, 345 Mich. 471, 75 N.W.2d 874.

In his closing argument, defense counsel admitted that his client was for general purposes an independent contractor, but contended that in this instance, because Campbell exercised control over him, defendant became an employee.

In Powell, supra, 345 Mich. 471, 75 N.W.2d 882, Justice Smith stated the following:

"It is a complete perversion of this principle (I. e., that an independent contractor is liable for his own torts unless his employer assumes control) to employ the control exception (an independent contractor does not remain such if made subject to control) as a test for his status as an independent contractor in the first place. It is much as though we employed the well-known exceptions to the...