Rademaker v. Archer Daniels Midland Co.

• Decision Date: 03 September 1976
• Docket Number: No. 46364,46364
• Citation: 247 N.W.2d 28,310 Minn. 240
• Parties: Joseph N. RADEMAKER, et al., Appellants, v. ARCHER DANIELS MIDLAND CO., defendant and third-party plaintiff, Respondent, v. CUDDY PLUMBING & HEATING CO., INC., third-party defendant, Respondent.
• Court: Minnesota Supreme Court

Page 28

247 N.W.2d 28

310 Minn. 240

Joseph N. RADEMAKER, et al., Appellants, v. ARCHER DANIELS MIDLAND CO., defendant and third-party plaintiff, Respondent, v. CUDDY PLUMBING & HEATING CO., INC., third-party defendant,

Respondent.

No. 46364.

Supreme Court of Minnesota.

Sept. 3, 1976.

Rehearing Denied Dec. 13, 1976.

Syllabus by the Court

When a defendant raises the loaned employee doctrine as an affirmative defense to plaintiff's tort claim, it must prove that plaintiff consented to the alleged special employment relationship. While the requisite consent may be inferred from plaintiff's submission to defendant's right of control, such submission may also imply nothing more than continued obedience to plaintiff's general employer.

Dennis R. Peterson, Rochester, for appellants.

Popham, Haik, Schnobrich, Kaufman & Doty and G. Marc Whitehead, Minneapolis, for Archer Daniels.

Bey, Ochs & Klimek and Norman W. Larsen, Minneapolis, for Cuddy Plumbing & Heating.

Heard before KELLY, YETKA and MARSDEN, JJ., and considered and decided by the court en banc.

DAVID E. MARSDEN, Justice. ^*

We are required in this case to reconcile two legal tests which have developed independently in our precedents for establishing the existence of an employment relationship, the right to control test which has been applied to distinguish employees from independent contractors and the employee's consent test which has been applied specifically in the loaned employee context.

Plaintiff Joseph N. Rademaker was employed by Cuddy Plumbing & Heating Company, Inc., as an apprentice steamfitter. Archer Daniels Midland Company (ADM) engaged Cuddy to install certain plumbing on a linseed oil processing plant being constructed by ADM. Rademaker was part of the Cuddy crew assigned to work on this project. At the time of this accident, Rademaker had been working on the ADM project for approximately 1 1/2 years, although it appears that he may have been temporarily shifted by Cuddy to different jobsites on numerous occasions during this period. Both Rademaker and Cuddy understood that the details of the work on the ADM project would be controlled by Fankhauser, an ADM employee. On October 4, 1971, Fankhauser directed Rademaker to drill a vent hole in a pipe. As Rademaker was drilling, an explosion occurred. Hexane gas had apparently accumulated in the area and had been ignited by sparks from the drill. Rademaker was burned in the fire which followed the explosion.

After collecting workers' compensation benefits from Cuddy's insurer, Rademaker sued ADM in tort, alleging negligence in allowing accumulation of the hexane gas. ADM answered, in part, that the accident was caused by the negligence of 'others over whom this defendant exercised no control or right of control.' ADM then brought Cuddy in as a third-party defendant, alleging that Cuddy 'was in sole charge of the performance and execution of the work.' ADM was subsequently granted leave to amend its answer and plead affirmatively that Rademaker was a loaned employee subject to ADM's control. If proven, this affirmative defense would have the consequence of making ADM a special employer, responsible for workers' compensation but immune from tort liability. Both parties agreed that this issue was ripe for summary judgment and submitted it to the trial court for determination. The trial court determined that Rademaker was a loaned employee and ordered summary judgment in favor of ADM.

I.

The principal basis for the trial court's determination here was ADM's right to control the details of Rademaker's work. Both parties appear to have agreed in their arguments to the trial court that the control test was determinative, Rademaker arguing that ADM lacked the requisite control because (1), under Minn.St. 326.48, Rademaker could only have been supervised by a licensed steamfitter, which would include the foreman of the Cuddy crew but exclude Fankhauser, and (2), apart from the statute, the facts show that Rademaker received his orders from the Cuddy supervisor rather than Fankhauser. Were we to agree that the control test was determinative, we would not hold that the trial court erred in rejecting these arguments. However, we do not agree that the control test is determinative.

In Darvell v. Paul A. Laurence Co., 239 Minn. 55, 59, 57 N.W.2d 831, 834 (1953), we emphasized our adherence to the rule that when an employee's rights will be affected by characterization as a loaned employee, his consent to the special employment relationship is essential. The following quotation from our Darvell opinion emphasizes the strength of our commitment to this principle of law as it has developed in earlier cases:

'In the case of Crawford v. D.M. & I.R. Ry. Co., 220 Minn. 225, 229, 19 N.W.2d 384, 387, the court stated:

"* * * A new master cannot be foisted upon a servant unwittingly. The right to select one's employer is implicit in freedom from involuntary servitude. An employer may loan his employe to another so that for the time being the employe becomes the servant of the latter, but this can be done only with the employe's assent.'

'In the case of Pocrnich v. Snyder Min. Co., 233 Minn. 81, 84, 45 N.W.2d 794, 796, the court again stated:

"* * * An employer, however, may transfer an employe to another employer so that for a time the latter becomes the employer if such transfer is made with the knowledge and consent of the employe. * * *

"The consent to such transfer need not be express. If it be established that an employe thus transferred had or acquired knowledge of the substitution of employers and thereafter, with such information in mind, continued under the new employer, he will be deemed to have accepted such new employer, at least during the period subsequent to such knowledge and continued employment.'

'Other cases with like holdings are Yoselowitz v. Peoples Bakery, Inc. (201 Minn. 600, 277 N.W. 221); Benson v. Lehigh Valley Coal Co., 124 Minn. 222, 144 N.W. 774, 50 L.R.A.,N.S., 170; Dahl v. Wunderlich, 194 Minn. 35, 259 N.W. 399; Melhus v. Sam Johnson & Sons Fisheries Co., Inc., 188 Minn. 304, 247 N.W. 2; and Turner v. Schumacher Motor Express, Inc., 230 Minn. 172, 41 N.W.2d 182.'

To the same effect, see 1A Larson, Workmen's Compensation Law, c. 48:00; and 3 Schneider, Workmen's Compensation Text, § 782. The Larson treatise emphasizes the importance of the employee's consent as follows:

'This must necessarily be so, since the employee loses certain rights along with those he gains when he strikes up a new employment relation. Most important of all, he loses the right to sue the special employer at common law for negligence; and when the question has been presented in this form, the courts have usually been vigilant in insisting upon a showing of a deliberate and informed consent by the employee before employment relation will be held a bar to common-law suit.' § 48:10.

But ADM argued to this court that the consent criterion has been superseded and implicitly repudiated by recent decisions in Minnesota which have identified the employer's right to control as determinative.

The principal cases relied upon by ADM are Nepstad v. Lambert, 235 Minn. 1, 50 N.W.2d 614 (1951); Lindbery v. J. A. Danens & Son, Inc., 266 Minn. 420, 123 N.W.2d 695 (1963); Guhlke v. Roberts Truck Lines, 268 Minn. 141, 128 N.W.2d 324 (1964); Ismil v. L. H. Sowles Co., 295 Minn. 120, 203 N.W.2d 354 (1972); and St. Claire v. Minnesota Harbor Service, Inc., 211 F.Supp. 521 (D.Minn.1962) (applying Minnesota law).

In Nepstad, the issue was whether one of the defendants in a tort action was a loaned employee so as to impose vicarious liability on the special employer. In applying the control test, we explained:

'The so-called 'right of control or direction' test assumes to place the responsibility for the servant's negligence upon the employer having the right to control his actions at the time the negligent act occurs. The theoretical basis for this test is probably the desire to impose the liability upon the employer who was in the best position to prevent the injury.' 235 Minn. 10, 50 N.W.2d 620.

Thus, the Larson treatise discusses the reasons for applying the control test in this context as follows:

'* * * For vicarious liability purposes, the spotlight was entirely on the two employers--what they agreed, how they divided control, how they shared payment, and whose work, as between themselves, was being done. No one paid much attention to the employee or cared whether he had consented to the transfer of his allegiance, since, after all, his rights were not usually as a practical matter involved in the suit.' § 48:10.

Ismil and Guhlke involved the same issue and are distinguishable for the same reason.

Lindbery involved a determination whether a worker who was killed when struck by a truck owned by defendant Danens was an employee of Danens or an independent contractor rather than whether he was a loaned servant. Nevertheless, Lindbery is closely analogous because the finding there of an employment relationship had the result of precluding a wrongful death action for the worker's next of kin. Thus, the rights of the employee's next of kin were clearly at stake. This court stated:

'* * * The basic test * * * continues to be whether the contract contemplates performance with or without the right to exercise detailed authoritative control over the manner and means by which the work is to be accomplished.' 266 Minn. 422, 123 N.W.2d 697.

The employee's consent was not mentioned as a relevant consideration. The question, then, is whether there is any reason to distinguish the independent contractor situation in Lindbery from the loaned...