Schwarze v. Farm-Rite Implement Company

• Decision Date: 29 August 1960
• Docket Number: Civ. No. 306.
• Citation: 192 F. Supp. 645
• Parties: William H. SCHWARZE, Plaintiff, v. FARM-RITE IMPLEMENT COMPANY, and Jamar-Olmen Company, Defendants. JAMAR-OLMEN COMPANY, Third-Party-Plaintiff, v. NORTH DAKOTA WORKMEN'S COMPENSATION BUREAU; Owen T. Owen, Otis Bryant, and B. M. Ryan as Workmen's Compensation Bureau Commissioners of the North Dakota Workmen's Compensation Bureau, Third-Party Defendants.
• Court: U.S. District Court — District of South Dakota

192 F. Supp. 645

William H. SCHWARZE, Plaintiff, v. FARM-RITE IMPLEMENT COMPANY, and Jamar-Olmen Company, Defendants.

JAMAR-OLMEN COMPANY, Third-Party-Plaintiff, v. NORTH DAKOTA WORKMEN'S COMPENSATION BUREAU; Owen T. Owen, Otis Bryant, and B. M. Ryan as Workmen's Compensation Bureau Commissioners of the North Dakota Workmen's Compensation Bureau, Third-Party Defendants.

Civ. No. 306.

United States District Court D. North Dakota, Northwestern Division.

August 29, 1960.

Richard H. McGee, of McGee & Van Sickle, Minot, N. D., for plaintiff Schwarze.

Herbert L. Meschke, of Ilvedson, Pringle, Herigstad & Meschke, Minot, N. D., for Farm-Rite Implement Co.; E. F. Engebretson, of Cox, Pearce & Engebretson, Bismarck, N. D., for Jamar-Olmen Co.; and Lawrence E. Watson, Bismarck, N. D., Atty. for the Workmen's Compensation Bureau.

REGISTER, Chief Judge.

The within action is before the Court by virtue of an alternative motion filed by the Jamar-Olmen Company, defendant and third-party plaintiff. Movant asks this Court, in the alternative, for a judgment on the pleadings, summary judgment or declaratory judgment. The first two motions, that is, for judgment on the pleadings and for summary judgment, are directed against the plaintiff in the main action; the relief asked by way of declaratory judgment is directed against the third-party defendants. Jurisdiction is based on diversity of citizenship and requisite amount.

The first part of this memorandum will be devoted to a determination of the motions directed against the plaintiff's cause in the main action.

Before proceeding with a discussion of the law involved, it is in order that a résumé of the pertinent facts be here recited.

During all the times here involved, the co-defendant Farm-Rite Implement Company, a foreign corporation, was engaged in the business of constructing certain hangars and buildings at the Minot Air Force Base, Minot, North Dakota, under a contract with the United States Government. On or about August 12, 1958, the co-defendant Jamar-Olmen Company, also a foreign corporation, commenced performing a part of said contract pursuant to a sub-contract with said prime contractor. There thus was developed the relationship of contractor-subcontractor between the Farm-Rite Implement Company as contractor and Jamar-Olmen Company as subcontractor. It is undisputed that the contractor (Farm-Rite Implement Company) complied with all the requisite provisions of North Dakota law with reference to securing the necessary coverage for its employees under the North Dakota Workmen's Compensation Act. The record clearly indicates that said contractor was a "complying employer" on the date of plaintiff's alleged injuries, September 22, 1958, and that said September 22, 1958, was within its period of coverage. The pleadings and other records on file further show that plaintiff Schwarze was an immediate employee of the Jamar-Olmen Company at the time he sustained his alleged injuries.

In its answer to plaintiff's complaint, the defendant Farm-Rite, after denying that plaintiff was an employee of Farm-Rite on the date of the accident (September 22, 1958), affirmatively alleges by way of defense that if it, Farm-Rite, be determined to have been an employer of plaintiff on said date, then it is relieved from all liability for personal injuries received by plaintiff during the course of his employment because it was a complying employer under the provisions of Section 65-0108, NDRC 1943, as amended. In its prayer for relief, said defendant, among other things, asks the Court to dismiss plaintiff's complaint as to said defendant, and for its costs.

Initially, then, the question is presented as to whether the contractor, Farm-Rite Implement Company, is immune from suit by plaintiff for personal injuries received by him during the course of his employment by the subcontractor, Jamar-Olmen Company, on August 12, 1958.

The applicable sections of the Workmen's Compensation Act of the State of North Dakota are quoted: (NDRC 1943, as amended)

"65-0108. Contributing employer relieved from liability for injury to employee. Where a local or out of state employer has secured the payment of compensation to his employees by contributing premiums to the fund, the employee, and the parents of a minor employee, or the representatives or beneficiaries of either, shall have no right of action against such contributing employer or against any agent, servant, or other employee of such employer for damages for personal injuries, but shall look solely to the fund for compensation."

"65-0102. Definitions. — Whenever used in this title:

* * * * * *

"5. `Employee' shall mean every person engaged in a hazardous employment under any appointment, contract of hire, or apprenticeship, express or implied, oral or written, and:

* * * * * *

"c. Persons employed by subcontractor, or by an independent contractor operating under an agreement with the general contractor, for the purpose of this chapter shall be deemed to be employees of the general contractor who shall be liable and responsible for the payments of premium for the coverage of these employees until the subcontractor or independent contractor has secured the necessary coverage and paid the premium therefor. This subdivision shall not be construed as imposing any liability upon a general contractor other than liability to the bureau for the payment of premiums which are not paid by a subcontractor or independent contractor;"

It is the position of defendant Farm-Rite that it was, under Section 65-0102, subsection 5c., a statutory employer of plaintiff and, further, that under Section 65-0108, it was, as such employer, relieved of all common law liability for any injury allegedly sustained by said plaintiff. It is apparently recognized by all parties that, under the statute, Farm-Rite had the absolute obligation to pay the premium, but Farm-Rite contends that is its only obligation and liability.

The reviser's notes accompanying said subsection 5c. reveal a twofold purpose in the statute as it now stands amended: First, to afford the general contractor a general immunity from common law actions arising out of injuries by the employee of the general contractor and the subcontractor or the employee of an independent contractor or subcontractor, or any combination thereof, and, Second, to impose on him (the general contractor) liability for the payment of the required premium until the subcontractor or independent contractor has secured the necessary coverage and paid the premium therefor.

This Court has had on two prior occasions the opportunity of passing on the precise question raised here.

In the unreported case of Jessie Ryland, individually, and as Trustee for the Workmen's Compensation Bureau of North Dakota v. The Manhattan Construction Company of Oklahoma, and John F. Beasley Construction Company, Inc., Civil No. 3403, the issue of whether or not the prime, or general, contractor was immune from suit was raised by timely motion for judgment on the pleadings. In that case, Manhattan was the prime contractor; Beasley was a subcontractor under the prime contract; and plaintiff's decedent was a direct employee of still a third company who was operating under a subcontract from Beasley. The immediate employer of plaintiff's decedent was, at the time of the accident there involved, a subscriber to and complying employer under the North Dakota Workmen's Compensation Act. Following the employee's death, plaintiff Jessie Ryland made application to and subsequently received benefits from the Workmen's Compensation Bureau. As an affirmative defense, both defendants pleaded the status of a statutory employer under the provisions of subsection 5c., Section 65-0102, and claimed immunity from suit. In disposing of that case on Manhattan's motion for judgment on the pleadings and Beasley's motion to dismiss, this Court, in granting both of said motions, held that "the defendants (t)herein are immune from this action under the specific and unambiguous provisions of Section 65-0102, 5(c) of the N.D.R.C.1943, as amended".

In determining the issues presented in the Ryland case, the Court was aware of decisions in certain jurisdictions holding that a general contractor in the position of Manhattan, and operating under a workmen's compensation law similar, though not identical to that in force in North Dakota, was not immune from suit at common law by an injured statutory employee. However, this Court there held, as it does so now, that the prevailing weight of authority is to the effect that such a statutory relationship does bestow immunity on the general contractor.

This Court is unaware of any pronouncement by the Supreme Court of North Dakota construing the provisions of said subsection 5c. of Section 65-0102. In the absence of such guidance, this Court believes it both unrealistic and against public policy to construe such statute in such a manner that the general contractor would be deemed the employer of its subcontractor's employees—and, therefore, entitled to the protection of the Workmen's Compensation Act — up to and only up to such time as the subcontractor itself might come...