Oregon Farm Bureau v. Thompson

• Decision Date: 30 January 1963
• Citation: 235 Or. 162,378 P.2d 563
• Parties: OREGON FARM BUREAU, a corporation, Appellant, v. Frank THOMPSON and Dean Kellar, Respondents.
• Court: Oregon Supreme Court

Page 563

378 P.2d 563

235 Or. 162

OREGON FARM BUREAU, a corporation, Appellant, v. Frank THOMPSON and Dean Kellar, Respondents.

Supreme Court of Oregon, Department 1.

Argued and Submitted Jan. 9, 1963.

Decided Jan. 30, 1963.

Duane Vergeer, Portland, argued the cause for appellant. On the brief were Vergeer & Samuels and Charles S. Crookham, Portland.

Kenneth E. Roberts, Portland, argued the cause for respondent Thompson. With him on the brief were Mautz, Souther, Spaulding, Kinsey & Williamson, Portland, and David B. Williamson, St. Helens.

Before McALLISTER, C. J., and ROSSMAN, SLOAN, GOODWIN and LUSK, JJ.

ROSSMAN, Justice.

This is an appeal by the plaintiff, Oregon Farm Bureau, an Oregon insurance corporation, from a decree which the circuit court entered in favor of the defendants Frank Thompson and Dean Kellar. The suit which ended in the challenged decree was instituted by the plaintiff under ORS 28.010 through 28.160 to secure a declaration of the rights of the parties under a policy of liability insurance issued by it July 5, 1960, to the defendant Thompson. Thompson, who identified himself (1) in his 1960 federal income tax return as a 'logger' and (2) in his testimony as 'a tree farmer,' owned a tract of land in Columbia County upon which the defendant Dean Kellar sustained an injury. In March 1960 Kellar entered the employ of Thompson and on September 21, 1960, while working for the latter, sustained the injury. This suit was filed after he instituted an action for damages based upon the injury. Thompson claims that Kellar was working as 'a farm employee' at the time of his injury; the plaintiff contends that at that time Kellar was working as a logger. Kellar's testimony was in accord with the latter view. The issue thus developed is important due to provisions of the policy of insurance which we will presently quote.

The suit for declaratory relief prayed for a decree determining whether the plaintiff is required to defend Thompson in the personal injury action just mentioned, and, if so, whether it is required to pay a judgment which Kellar may recover against Thompson. The decree that was entered and which is challenged by this appeal ruled that the policy just mentioned.

'* * * insures and provides coverage to the defendant Thompson for the claim of the defendant Kellar and that the plaintiff is required to defend the defendant Thompson in the action filed against him by the defendant Kellar and is required to pay any judgment rendered in favor of the defendant Kellar against the defendant Thompson.'

The briefs mention the following provisions of the policy:

'Insuring Agreements

'I. Coverages

'Coverage A--Bodily Injury Liability. To pay on the behalf of the insured all sums which the insured shall become legally obligated to pay by reason of the liability imposed upon him by law for damages, because of bodily injury, including death at any time resulting therefrom, sustained by any person or persons.

* * *

* * *

'Exclusions

'This policy does not apply:

* * *

* * *

'(B) Under Coverages A and C:

'(1) to bodily injury to, or sickness, disease or death of any employee of the insured, if benefits therefor are payable or required to be provided, under any Workmen's Compensation Law;

* * *

* * *

'Farm Employers Protective Endorsement

* * *

* * *

'Insuring Agreements

'1. Farm Employers Protective Coverage. To pay on behalf of the insured all sums which the insured shall become obligated to pay by reason of the liability imposed upon him by law for damages because of bodily injury by accident or occupational disease, including death at any time resulting therefrom, sustained by any farm employee while engaged as such in the employment of the Insured.

* * *

* * *

'Exclusions

'This endorsement and the insurance provided herein does not apply:

* * *

* * *

'(c) to bodily injury to, or sickness, disease or death of any employee of the insured, if benefits therefore are payable or required to be provided under any Workmen's Compensation Law.'

According to ORS 656.090, '[f]arming * * * is a non-hazardous occupation' and is not subject to the Workmen's Compensation Act unless the employer files the notice prescribed in ORS 656.034. No notice of that kind was filed. Logging is classified by ORS 656.084(3) as a hazardous occupation. Thompson had not given the notice of rejection required by ORS 656.022 to 656.028 and 656.034 to remove him from the application of the Workmen's Compensation Act. Following the injury, the Industrial Accident Commission held a hearing upon the issue as to whether Kellar, at the time of his injury, was working as a farm employee or as a logger. Thompson testified as a witness in the course of the hearing. At its close the commission entered an order which awarded workmen's compensation to Kellar. The insurance company contends that the ruling is res judicata of the issue logger versus farm laborer. We do not pass upon that contention; but see Holmes v. State Industrial Accident Commission, 227 Or. 562, 362 P.2d 371, 363 P.2d 563.

Possibly the foregoing will be clarified if we gather into one paragraph some of its facts. Since farming is not listed by the Workmen's Compensation Act as hazardous, and since Thompson had not elected to bring his farming operations, if any, under the act, Kellar was not entitled to receive Workmen's Compensation benefits if his injury befell him while he was engaged as a farm worker. Upon the other hand, if Thompson was engaged in whole or in part in logging operations, and if Kellar was performing that type of work at the time of his injury, he was entitled to receive Workmen's Compensation benefits even though Thompson had not affirmatively accepted the act; work of that kind is classified by the Workmen's Compensation Act as hazardous. If Kellar's action for damages alleges that he was injured while performing farm labor, then plaintiff, as Thompson's insurer, is required to defend Thompson in the action because of the provision of the policy that we have quoted; it requires the plaintiff to defend 'even if such suit is groundless.' However, the provision does not require the plaintiff to defend Thompson if the injury occurred while Kellar was performing logging work. We noticed that Kellar is now receiving benefits under the Workmen's Compensation Act upon a finding by the commission that his injury occurred in logging operations. Thompson, as we have said, was not a contributor to the Industrial Accident Fund, but he had not rejected the act. ORS 656.312 enables a workman who is engaged in a hazardous occupation to receive compensation benefits and at the same time maintain an action for damages against an employer who (1) operates in violation of ORS 656.052 or (2) is in default. In the event that a workman of that kind of an employer recovers a judgment and receives its payment he must repay the commission all sums it paid to him if the amount he was paid upon his judgment is sufficient in amount to enable him to do so. ORS 656.314.

The circuit court found that Kellar was performing farm labor when the injury was sustained September 21, 1960.

Thompson's defense in this suit was conducted upon the basis that he was a farmer and that Kellar was injured while performing farm work. Contending as he does that he (Thompson) was a farmer and that Kellar was performing farm work, Thompson argues that the insurance policy renders it the duty of the plaintiff to defend him in Kellar's action for damages. Thompson, however, conceded that in the six months period that passed after Kellar had entered his employ and until Kellar was injured he (Thompson) did much logging and used Kellar in conducting it. In fact, he testified that the two were partners. The trial judge ruled against that contention, and the latter has not been renewed upon appeal. We will give it no further mention.

The first assignment of error follows:

'The court erred in finding, concluding and decreeing (and overruling plaintiff's objections to the same):

'1. That plaintiff's policy, No. T-2950-70, covered the claim of Kellar against Thompson for injuries alleged to have resulted to Kellar on or about September 21, 1960 (Finding XII).

'2. That plaintiff was under an obligation to defend and/or pay any judgment that might arise from the action brought by Kellar against Thompson (Finding XII).

'3. That Exclusion (c) of the endorsement was not applicable to the claim of Kellar against Thompson (Finding X).

'The court likewise erred in rejecting plaintiff's proposed Findings of Fact, Conclusions of Law and Decree holding that:

'1. Plaintiff's policy was not applicable to the claim of Kellar against Thompson.

'2. Plaintiff was under no obligation to defend against or pay any judgment arising out of this claim.'

The second assignment of error reads:

'The court erred in determining, finding, concluding and decreeing that Frank Thompson was entitled to recover attorney's fees against the plaintiff.'

We will now consider the first assignment of error.

Kellar entered Thompson's employ in March 1960. Thompson described him as 'a farm laborer.' We have mentioned that in his 1960 federal income tax return Thompson identified himself as a logger and that in his testimony he declared that he was 'a tree farmer.' He owned and used in the logging operations that were conducted in the six months period that Kellar was in his employ the following logging equipment: a loader with a power winch which was operated on a vehicle; a Continental motor generating 15 or 20 horsepower which seemingly operated the loader; a swinging crane 16 feet long; a drum attached to the crane which was equipped with 175 feet of half-inch cable; an International logging truck with a bunk bed; a flatbed Ford truck which was equipped with drop tongs; chain saws; a caterpillar tractor; and various items of small tools such as wedges and axes.

Thompson also owned a small sawmill which stood upon...